FINRA Board of Governors Approves Four Rule Proposals

During its July 18 and 19 meeting, the Board of Governors of the Financial Industry Regulatory Authority (FINRA) approved four new rule proposals. The proposals relate to the following topics:

1. Expansion of books and records custodians—The Board approved filing with the Securities and Exchange Commission proposed rule amendments to expand the categories of persons eligible to serve as books and records custodians.
2. Electronic signatures—The Board approved filing with the SEC proposed rule amendments to permit electronic signatures to authorize discretion over a customer’s account.
3. Expansion of over-the-counter (OTC) equity volume data published online—The Board approved publication of a Regulatory Notice that will seek comment on a proposal to expand the summary firm data published on the FINRA website relating to OTC trading volume.
4. Identifying and reporting hedge transactions in US Treasury securities—The Board approved filing with the SEC a proposal that would provide firms with additional time to report to the Trade Reporting and Compliance engine (TRACE) transactions in US Treasury securities to hedge primary-market transactions. The proposal would also adopt a new modifier to identify such transactions.

More information about the recent meeting is available here.

FINRA Amends Rules to Provide an Option for Simplified Arbitration

On July 23, the Financial Industry Regulatory Authority (FINRA) released Regulatory Notice 18-21, which summarizes recent amendments to the Code of Arbitration Procedure for Customer Disputes (Customer Code) and the Code of Arbitration Procedure for Industry Disputes (Industry Code).

The Codes offer two options for administering cases that have claims of $50,000 or less (excluding interest and expenses). In the default option, a single arbitrator makes a decision based on the parties’ pleadings and other materials submitted by the parties. Alternatively, the parties have a full hearing with a single arbitrator. Under the Customer Code, a customer may request a hearing, regardless of whether the customer is a claimant or respondent. Under the Industry Code, only the claimant may request a hearing. Hearings are generally held in person, and there are no limits on the number of hearing sessions.

Claimants can now select a third hearing option known as a “Special Proceeding” for cases involving claims of $50,000 or less (excluding interest and expenses), which is designed to give parties an opportunity to present cases to an arbitrator in a convenient and cost-effective manner. A Special Proceeding is held by telephone and limits the time parties can present their cases, rebuttals and closing statements. FINRA expects that arbitrators will follow the usual order of proceedings.

Notice 18-21 is available here.