1. FINRA Regulatory Notice 19-34 Annual Compliance Meetings Retrospective Rule Review Report and Guidance

    In April 2018, FINRA launched a retrospective review of the annual compliance meeting (ACM) requirement in Rule 3110(a)(7) and corresponding Supplementary Material .04 (SM .04), to assess its effectiveness and efficiency. The review is part of an ongoing initiative to periodically look back at a rule or set of rules to ensure they remain relevant and appropriately designed to achieve their regulatory objectives, particularly in light of industry, market and technology changes. Based on the assessment, which involved feedback from both internal stakeholders and a wide range of external stakeholders, FINRA has determined to maintain the requirement without change. This Notice summarizes the review process, the predominant themes that emerged from stakeholder feedback and the basis for the determination. While the review confirmed the continuing importance of Rule 3110(a)(7), some stakeholders asked for some clarifying guidance concerning the various ways in which annual compliance meetings may be conducted. That guidance is also set forth in this Notice


  2. MSRB Regulatory Notice 2019-18 MSRB to Launch Permanent Series 54 Examination November 12, 2019

    The MSRB permanent Municipal Advisor Principal Qualification Examination (Series 54) will be available beginning November 12, 2019. As provided for under MSRB Rule G-3, municipal advisor principals2 are required to take and pass the Series 54 examination in order to become appropriately qualified to engage in the management, direction or supervision of the municipal advisory activities of the municipal advisor and its associated persons.3 To facilitate the transition to the new exam requirement, the MSRB is providing a one-year grace period, sunsetting on November 12, 2020, during which individuals qualified with the Series 50 examination will be able to take the Series 54 examination while continuing to engage in principal-level activities. The score required to pass the Series 54 examination is 70 percent.


  3. SR-NASDAQ-2019-064 Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend Certain Cutoff Times for On-Close Orders Entered for Participation in the Nasdaq Closing Cross and Adopt a Second Reference Price for Limit-on Close Orders

    The Nasdaq Closing Cross is the Exchange’s process for determining the price at which orders would be executed at the close and for executing those orders. Currently, the Exchange disseminates the Order Imbalance Indicator (“NOII”) for the Nasdaq Closing Cross beginning at 3:55 p.m. ET or five minutes prior to the early closing time on a day when the Exchange closes early. The NOII is an electronically disseminated message containing information about market-on-close (“MOC”), limit-on-close (“LOC”), and imbalance only (“IO”) orders, as well as close eligible interest and the price at which those orders would execute at the time of the NOII dissemination. The Exchange recently also adopted rules for the early order imbalance indicator (“EOII”), which the Exchange will begin disseminating at 3:50 p.m. ET or ten minutes prior to the early closing time on a day when the Exchange closes early and will contain a


  4. FINRA Information Notice 10/02/19 Cybersecurity Alert: CloudBased Email Account Takeovers

    Several member firms recently notified FINRA that they have experienced email account takeovers (ATOs) while using cloud-based email platforms, including Microsoft Office 365 (O365). Attackers used compromised email accounts to defraud member firms by requesting fraudulent wire requests or stealing confidential firm information or non-public personally identifiable information (PII). This Notice outlines the attackers’ tactics in executing ATOs, as well as steps taken by member firms to address ATO risks when using cloud-based email systems.


  5. FINRA Regulatory Notice 19-32 FINRA Amends Rules 2210 and 2241 to Conform to the Fair Access to Investment Research Act of 2017

    The SEC has approved a proposed rule change to amend FINRA Rules 2210 (Communications with the Public) and 2241 (Research Analysts and Research Reports) to conform to the requirements of the Fair Access to Investment Research Act of 2017 (FAIR Act). The rule change creates a filing exclusion under Rule 2210 for investment fund research reports that are covered by SEC rules under the FAIR Act, and eliminates the “quiet period” restrictions in Rule 2241 on publishing a report or making a public appearance concerning such funds. The implementation date was August 16, 2019.


  6. SEC Release No. 33-10695 Exchange-Traded Funds

    The SEC is adopting a new rule under the Investment Company Act of 1940 (the “Investment Company Act” or the “Act”) that will permit exchange-traded funds (“ETFs”) that satisfy certain conditions to operate without the expense and delay of obtaining an exemptive order. In connection with the final rule, the Commission will rescind certain exemptive relief that has been granted to ETFs and their sponsors. The Commission also is adopting certain disclosure amendments to Form N-1A and Form N-8B-2 to provide investors who purchase and sell ETF shares on the secondary market with additional information regarding ETF trading and associated costs, regardless of whether such ETFs are structured as registered open-end management investment companies (“open-end funds”) or unit investment trusts (“UITs”). Finally, the Commission is adopting related amendments to Form N-CEN. The final rule and form amendments are designed to create a consistent, transparent, and efficient regulatory framework for ETFs that are organized as openend funds and to facilitate greater competition and innovation among ETFs. The Commission also is adopting technical amendments to Form N-CSR, Form N-1A, Form N-8B-2, Form N-PORT, and Regulation S-X.


  7. SEC Release No. 33-10699 Solicitations of Interest Prior to a Registered Public Offering

    The SEC is adopting a new communications rule under the Securities Act of 1933 that permits issuers to engage in oral or written communications with certain potential investors, either prior to or following the filing of a registration statement, to determine whether such investors might have an interest in a contemplated registered securities offering.


  8. FINRA Regulatory Notice 19-30 TRACE Reporting of Transactions in U.S. Treasury Securities

    Effective June 1, 2020, members must report transactions in U.S. Treasury Securities executed to hedge a primary market transaction with an appropriate identifier. Members will have additional time to report such transactions—until the next business day during TRACE system hours. The rule text is available in the online FINRA Manual.


  9. FINRA Regulatory Notice 19-31 Disclosure Innovations in Advertising and Other Communications with the Public

    This Notice responds to questions that FINRA has received from members about how they can comply with FINRA rules when communicating with customers—particularly when using websites, email and other electronic media—while ensuring fair and balanced presentations. Our goal is to facilitate simplified and more effective disclosure in communications withthe public. FINRA welcomes the opportunity to consult with members about expanding their use of alternative and innovative design techniques—such as technology that offers customized information—in their marketing communications to help investors better understand their products and services. We are interested in ways that members can make communications more interesting and informative and how, together, we can improve the effectiveness of disclosure. Firms are encouraged to contact the Advertising Regulation Department directly at (240) 386-4500 to discuss these approaches.


  10. SEC Release No. 34-87005 Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based Swap Participants, and Broker-Dealers

    In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the SEC, pursuant to the Securities Exchange Act of 1934 (“Exchange Act”), is adopting recordkeeping, reporting, and notification requirements applicable to security-based swap dealers (“SBSDs”) and major security-based swap participants (“MSBSPs”), securities count requirements applicable to certain SBSDs, and additional recordkeeping requirements applicable to broker-dealers to account for their security-based swap and swap activities. The Commission also is making substituted compliance available with respect to recordkeeping, reporting, and notification requirements under Section 15F of the Exchange Act and the rules thereunder.


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