1. FINRA Regulatory Notice 19-36 FINRA Requests Comment on a Proposed Rule to Limit a Registered Person from Being Named a Customer’s Beneficiary or Holding a Position of Trust for or on Behalf of a Customer

    Investment professionals often develop close and trusted relationships with their customers, which in some instances have resulted in the investment professional being named the customer’s beneficiary, executor or trustee, or holding a power of attorney or a similar position for the customer. Being a customer’s beneficiary or holding a position of trust may present significant conflicts of interest, and FINRA has previously taken steps to address misconduct in this area. To further address potential conflicts of interest, FINRA is proposing a new rule to limit any associated person of a member firm who is registered with FINRA (each a “registered person”) from being named a beneficiary, executor or trustee, or to have a power of attorney or similar position of trust for or on behalf of a customer. The proposed rule would protect investors by requiring all member firms to affirmatively address registered persons being named beneficiaries or holding positions of trusts for customers. The proposed rule would require the member firm with which the registered person is associated, upon receiving written notice from the registered person, to review and approve the registered person assuming such status or acting in such capacity. The proposed rule would not apply where the customer is a member of the registered person’s “immediate family.”

    11/11/2019

  2. MSRB Regulatory Notice 2019-20 SEC Approves Amendments to Underwriters’ Fair Dealing Obligations to Issuers Under Rule G-17

    The Municipal Securities Rulemaking Board (MSRB) received approval from the U.S. Securities and Exchange Commission (SEC) on November 6, 2019 to amend and restate the MSRB’s August 2, 2012 Interpretive Notice regarding the fair dealing obligations underwriters owe to issuers of municipal securities under MSRB Rule G-17 (the “SEC approval order”).

    11/8/2019

  3. SR-NASDAQ-2019-086 Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Make Permanent Certain Options Market Rules That Are Linked to the Equity Market Plan to Address Extraordinary Market Volatility

    The purpose of the proposed rule change is to make permanent certain options market rules in connection with the equity market Plan to Address Extraordinary Market Volatility (the “Limit Up-Limit Down Plan” or the “Plan”). This change is being proposed in connection with the recently approved amendment to the Limit Up-Limit Down Plan that allows the Plan to continue to operate on a permanent basis (“Amendment 18”). This proposed rule change is substantially similar to a recently-approved rule change by Cboe Exchange, Inc. (“Cboe”).

    10/21/2019

  4. MSRB Regulatory Notice 2019-19 MSRB Revises Content Outline for the Municipal Advisor Principal Qualification Examination

    The MSRB filed a proposed rule change with the SEC, on October 18, 2019, to revise the content outline for the Municipal Advisor Principal Qualification Examination (Series 54).1 The content outline for the Series 54 examination has been revised to incorporate MSRB Rule G-40, on advertising by municipal advisors, add a description of the functions and knowledge required to perform the supervisory tasks related to Rule G-40, and make other technical changes to clarify topic descriptions. The MSRB filed the revisions to the content outline for the Series 54 examination for immediate effectiveness and intends to make the permanent Series 54 examination available on November 12, 2019. As provided for under MSRB Rule G-3, municipal advisor principals 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. To facilitate the transition to the new examination requirement, the MSRB is providing a one-year grace period, sunsetting on November

    10/18/2019

  5. 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

    10/18/2019

  6. 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.

    10/11/2019

  7. 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

    10/2/2019

  8. 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.

    10/2/2019

  9. 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.

    9/26/2019

  10. 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.

    9/25/2019

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