Customer Account Statements. FIF members continued their discussion on implementing recent amendments to FINRA Rule 2231 (Customer Account Statements), including scenarios where an agent under a power of attorney provides an address change for the account holder, how firms should respond to a potential challenge from an agent under a power of attorney who challenges a firm’s refusal to stop delivery to an incapacitated account holder, and whether firms intend to apply to FINRA for exemption requests.   Retiring TRF Reporting Requirements that are Duplicative of CAT. FIF hosted...

Fractional Share or Fractional Bond Received from a Corporate Action. FIF members discussed processing and reporting for a scenario where a customer receives a fractional share or fractional bond as a result of a corporate action, and the fractional share or fractional bond allocation is subsequently liquidated as an account maintenance function. Reconciliation Process for Section 31 Fees. FIF members discussed enhancing the reconciliation process for Section 31 fees. Customer Account Statements. FIF members continued their discussion of the recent amendments to FINRA Rule 2231...

Fried Frank Presentation on Recent Financial Risk Rulemaking Initiatives. Steven Lofchie and Nihal Patel of Fried Frank presented on the following recent SEC and FINRA financial risk rulemaking initiatives: (i) FINRA Seeks Comment on Concept Proposal for a Liquidity Risk Management Rule (FINRA Regulatory Notice 23-11); (ii) Proposed Rule Change to Provide Relief Relating to Specified Option Transactions under FINRA Rule 4210 (Margin Requirements) (SR-FINRA-2023-010); and (iii) the SEC rule proposal on Daily Computation of Customer and Broker-Dealer Reserve Requirements under the...

Retiring TRF Reporting Requirements that are Duplicative of CAT. FIF hosted a call for FIF members to discuss retiring TRF reporting requirements that are duplicative of CAT (for example, regulatory reports to the TRF). Back Office Committee; FINRA Trading Activity Fee. The Back Office Committee reviewed applicable FICC, DTC, NSCC, SEC, MSRB, OCC, IRS and FINRA updates during the past month. FIF reviewed a recent rule filing by FINRA to amend the FINRA Trading Activity Fee. Please find the agenda here.  FIF CAT Transaction Reporting Working Group. FIF hosted three calls this week...

Compliance and Surveillance Working Group. The Compliance and Surveillance Working Group discussed expanded surveillance by FINRA based on CAT data (including cross-product, cross-symbol and cross-broker surveillance) and potential steps industry members could take to enhance their internal surveillance in response to FINRA’s enhanced surveillance. Customer Account Statements. FIF members discussed the use of “combined statement groups” (sending a single statement to separate account holders for multiple accounts) when the recent FINRA amendments to Rule 2231 (Customer Account...

FIF CAT Monthly Update Working Group. The CAT Monthly Update Working Group reviewed guidance and updates from the CAT Plan Participants and FINRA CAT on CAT Transaction Reporting and CAT CAIS reporting during the prior month. The Working Group reviewed the current areas of focus for FIF members and the current open issues for CAT Transaction Reporting and CAT CAIS reporting. Section 31 Fee Collection Process. FIF hosted a call to discuss requesting that FINRA provide additional transparency to assist industry members in reconciling Section 31 fees and potential changes to address...

Data and Technology Committee. The Data and Technology Committee reviewed capacity, latency and volume data for the prior month for the equity, options, currency, crypto and futures markets. The spotlight presenter was Adrian Griffiths of MEMX, who discussed the launch of the new MEMX options exchange. Please find the meeting materials here and the full capacity report here.  Front Office Committee. The Front Office Committee reviewed applicable updates and notices from the SEC, FINRA, FINRA CAT and the equity and option exchanges. The spotlight presenter was Michael Soderberg ...

FIF Rule 605 Working Group. The Working Group reviewed and discussed final edits to the draft supplemental FIF comment letter on the SEC’s rule proposal on Disclosure of Order Execution Information. FIF Back Office Committee. The Back Office Committee reviewed applicable FICC, DTC, NSCC, SEC, MSRB, OCC, IRS and FINRA updates during the past month. FIF CAT CAIS Working Group. The CAIS Working Group reviewed and discussed the plan by the CAT Plan Participants and FINRA CAT to reload historical CAIS data to the CAIS system. The Working Group discussed issues identified by FIF members after...

FIF Cybersecurity and Compliance and Surveillance Working Groups. FIF members discussed the amended rule proposal for notification of cybersecurity incidents filed by The Options Clearing Corporation (OCC) with the SEC. The amended rule proposal by the OCC incorporates certain changes requested by FIF members in a prior FIF comment letter. FIF CAT CAIS Working Group. The CAIS Working Group discussed the reopening of the CAIS test environment. The Working Group reviewed a draft letter to the SEC and the CAT Operating Committee on the retirement of legacy reporting rules and systems. The...