FINRA Regulatory Notice 22-04 FINRA Reminds Member Firms of Obligation to Execute Marketable Customer Orders Fully and Promptly
In light of the increasingly automated markets for NMS stocks, FINRA is issuing this Notice to remind member firms of their obligation to execute marketable customer orders fully and promptly. We also are reminding firms of their obligation to ensure that their supervisory systems are reasonably designed to achieve compliance with this obligation.
FINRA adopts amendments to clarify the application of FINRA rules to security-based swaps. Effective Dates: February 6, 2022 (Rules 0180, 4120 and 9610) and April 6, 2022 (Rules 4210, 4220 and 4240).
FINRA Regulatory Notice 21-45 FINRA Announces Update of the Interpretations of Financial and Operational Rules
FINRA is updating the imbedded text of Securities Exchange Act (SEA) financial responsibility rules in the Interpretations of Financial and Operational Rules to reflect the effectiveness of amendments the Securities and Exchange Commission (SEC) adopted. The updated imbedded text relates to SEA Rules 15c3-1, 15c3-1a, 15c3-1b, 15c3-1d, 15c3-1e, 15c3-3, 15Fi-1 through 15Fi-5, 17a-3, 17a-4, 17a-5, 17a-11 and 18a-3. FINRA is also making available related updates of the Interpretations of Financial and Operational Rules that have been communicated to FINRA by the staff of the SEC’s Division of Trading and Markets (SEC staff). The updated interpretations relate to SEA Rules 15c3-1, 17a-3, 17a-4 and 17a-5.
SEC Release No. 34-93784 Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions
The Securities and Exchange Commission is reproposing for comment a rule under the Securities Exchange Act of 1934 which would be a new rule designed to prevent fraud, manipulation, and deception in connection with effecting transactions in, or inducing or attempting to induce the purchase or sale of, any security-based swap. The rule is designed specifically to take into account the unique features of a security-based swap and would explicitly reach misconduct in connection with the ongoing payments and deliveries that typically occur throughout the life of a security-based swap.
In August 2019, FINRA launched a retrospective review that, among other things, sought stakeholders’ input on the effectiveness of Rule 3240 (Borrowing from or Lending to Customers). Based on feedback received during the review, FINRA is proposing amendments to Rule 3240.
MSRB Information Notice 2021-18 Second Request for Comment on Fair Dealing Solicitor Municipal Advisor Obligations and New Draft Rule G-46
The Municipal Securities Rulemaking Board (MSRB) is requesting a second round of comments on a new draft Rule G-46 that would codify certain statements in a notice issued in 2017. Those statements relate to the obligations of “solicitor municipal advisors” under MSRB Rule G-17, on conduct of municipal securities and municipal advisory activities (the “G-17 Excerpt for Solicitor Municipal Advisors”) and were originally included in a larger notice regarding the application of MSRB rules to solicitor municipal advisors. In addition to codifying the general substance of the G-17 Excerpt for Solicitor Municipal Advisors, the draft rule, Rule G-46, also would add additional requirements that would better align some of the obligations imposed on solicitor municipal advisors with those applicable to non-solicitor municipal advisors under Rule G-42, on duties of non-solicitor municipal advisors, to underwriters under Rule G-17, on fair dealing, and to certain solicitations undertaken on behalf of third-party investment advisers under the U.S. Securities and Exchange Commission’s marketing rule for investment advisers (the “IA Marketing Rule” or “IA Rule 206(4)-1”).
FINRA Regulatory Notice 21-42 FINRA Alerts Firms to “Log4Shell” Vulnerability in Apache Log4j Software
FINRA is alerting firms to a recently identified vulnerability in Apache Log4J software, which is an open-source, Java-based logging utility widely used by enterprise applications and cloud services. The “Log4Shell” vulnerability presents risk for member firms because they may be using this software in internal applications, or the software may be embedded in third-party software packages. In addition, many applications written in Java are potentially vulnerable.
MSRB Information Notice 2021-17 Request for Information on Environmental, Social and Governance (ESG) Practices in the Municipal Securities Market
The Municipal Securities Rulemaking Board is issuing [a] Request for Information (RFI) to solicit public input on environmental, social and governance (ESG) practices in the municipal securities market. The purpose of this RFI is to obtain input from market participants and the general public in furtherance of the MSRB’s mandate of protecting investors, municipal issuers and the public interest by promoting a fair and efficient municipal securities market.
The SEC is adopting amendments to finalize interim final rules that revised Forms 20-F, 40-F, 10-K, and N-CSR to implement the disclosure and submission requirements of the Holding Foreign Companies Accountable Act. The final amendments apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the Public Company Accounting Oversight Board is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction.
FINRA Regulatory Notice 21-41 FINRA Amends Rules 1210 and 1240 to Enhance the Continuing Education Program for Securities Industry Professionals
FINRA has adopted important changes to its continuing education (CE) and registration rules to train registered persons more effectively while accommodating registered persons, particularly women and underrepresented minorities, whose personal circumstances take them away from the industry for a time. The changes to Rules 1210 and 1240: provide eligible individuals who terminate any of their representative or principal registration categories the option of maintaining their qualification for any terminated registration categories by completing annual CE through a new program, the Maintaining Qualifications Program (MQP); require registered persons to complete CE Regulatory Element annually for each representative or principal registration category that they hold; and expressly allow firms to consider other required training toward satisfying an individual’s annual CE Firm Element and extend the Firm Element requirement to all registered persons.
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