Finra reviews effectiveness of broker-dealer rules

Tackles broker communications with the public as well as gifts, gratuities and non-cash payments; will look at other regulations

Apr 8, 2014 @ 12:54 pm

By Mark Schoeff Jr.

Finra on Tuesday began reviewing existing broker-dealer rules to see if they are keeping pace with the markets.

The first two areas that the Financial Industry Regulatory Authority Inc. will assess are rules dealing with broker communications with the public and those that govern gifts, gratuities and non-cash payments to brokers.

“Finra believes it is important to look back at its significant rulemakings to determine whether those rules and rule sets are meeting their intended investor protection objectives by reasonably efficient means,” Robert Colby, Finra's chief legal officer, said in a statement. “By thoroughly assessing the impact of existing rules, Finra will be able to ensure that its rules remain pertinent to current industry and market conditions and carefully tailored to protect the interests of the investing public.”

Finra, the industry-funded broker-dealer regulator, will conduct the rules review in two phases.

First, Finra staff will analyze whether the rules are duplicative or ineffective, out of step with current market conditions or leave regulatory gaps.

Part of the first phase includes a request for public input. The comment period for each of the first two reviews is May 8.

The Finra staff will recommend to the organization's board whether the rules should be kept intact, modified or ended. If the board decides to change a rule, amendments will be proposed and comments solicited through the normal rule-making process.

Last year, Finra hired its first chief economist, Jonathan Sokobin. His office is responsible for analyzing the costs and benefits of proposed rules as well as those that are already on the books.

The regulatory notice for the first two reviews indicates that more are coming.

“Finra intends to select relevant rules and to conduct retrospective rule reviews on an ongoing basis to ensure that its rules remain relevant and appropriately designed to achieve their objectives, particularly in light of environmental, industry and market changes,” according to the notice.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

How to explain risk to a client

Most investors know investing involves risks as well as rewards and that the higher the risk, the greater the potential reward. But there are different types of risk and some are easier to understand than others, says Kendrick Wakeman of FinMason.

Latest news & opinion

Nontraded BDC sales in worst year since 2010

The illiquid product's three-year decline is partially due to new regulations and poor performance.

Tax reform debate sparks fresh interest in donor-advised funds

Schwab reports new accounts up 50% from last year, assets up 33%.

Nontraded REITs to post worst sales since 2002

The industry is on track to raise just $4.4 billion, well off the $19.6 billion it raised just four years ago, as new regulations hinder sales.

Broker protocol for recruiting a boon for clients

New research finds advisers whose firms have joined the agreement take better care of customers.

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print