08-41 GENERAL SECURITIES FIRMS
FINRA Announces Amendments to Make Permanent the Portfolio Margin Pilot Program
Portfolio margin is method of computing margin requirements for an account based on the greatest projected net loss on all positions in a product class or group and uses modeling using multiple pricing scenarios to assess risk. A pilot program using portfolio margin expired July 31 and was made permanent August 1 through amendments to Rule 2520.
08-42 GENERAL SECURITIES FIRMS
Guidance on Transactions in TRACE-eligible Securities under SEC Rule 144
FINRA reminds firms that all secondary market transactions in TRACE-eligible securities must be reported. This includes securities issued under Section 4(2) of the Securities Act of 1933 and subsequently traded pursuant to SEC Rule 144.
08-43 GENERAL SECURITIES FIRMS
SC Approves Expanding Disseminated Real-Time TRACE Data
Beginning November 3, 2008, FINRA will begin providing additional data elements for corporate bond transactions reported through TRACE. The additional data includes whether the transaction is an inter-dealer trade or a transaction with a customer and whether the broker/dealer is on the buy or sell side in customer transactions.
08-45 ALL FIRMS
FINRA to Deduct All Delinquent Arbitration and Mediation Fees from CRD Accounts
Effective September 22, 2008, FINRA began deducting all delinquent arbitration and litigation fees from the member firm’s accounts through WebCRD. Fees are considered delinquent if they are outstanding more than 60 days. FINRA will notifies firms as to fees and will now include information on the invoice advising firms that delinquent fees will be deducted from balances in their CRD accounts.
08-46 GENERAL SECURITIES FIRMS
Interpretative Guidance on Capital Treatment of Introducing BD’s Clearing Deposits
This Notice actually include interpretations relative to net capital impact of Termination Clauses as well as the treatment of Clearing Deposits when a BD terminates their clearing arrangement.
In the case of Termination Clauses, FINRA states that if a firm’s clearing agreement contains a termination clause and does not contain specific language as outlined in the notice, then the portion of the clearing deposit up to amount of the termination penalty still in effect would be considered non-allowable. FINRA will begin enforcing this as of January 2, 2009 so if your clearing agreement contains a termination clause you will want to review this notice to find out what steps need to be taken by you and your clearing firm so you can continue to treat 100% of your clearing deposit as allowable.
The second interpretation in this notice dealt with clearing deposits after termination. Basically, as it stood the clearing deposit could continue to be treated as allowable for up to 30-days after the clearing agreement was terminated. However, since the return of the deposit is predicated on the transfer of account and there may be a delay in these transfers that would cause the clearing firm to hold the deposit for longer than 30-days and thus make the clearing deposit non-allowable. In this interpretation, FINRA recognizes the potential delays and clarifies that the 30-day period does not begin until 5 days after the initial transfer of customer accounts thereby allowing firms to treat the deposit as allowable for a longer period after termination.
08-47 ALL FIRMS
Changes to Customer Complaint Reporting Procedures under NASD Rule 3070(c)
Additional operational problem codes and descriptions were added under the general heading Account Administration and Processing relative to Account Opening, Account Maintenance and Daily Activities. In addition, a new Online Issue code was added, a code for Poor Recommendations was added in the Sales Practice section and a code for Structured Products was added as an Operational and Sales Practice Product Code.
08-48 GENERAL SECURITIES FIRMS
MUTUAL FUND FIRMS
Bulk Exchanges of Shares of Certain Reserve Funds
As a result of the credit crisis, the Reserve Primary Fund, Reserve Yield Plus Fund and the Reserve International Liquidity Fund announced they had “broken the buck,” meaning the shares of these money market funds were trading below $1 per share. In response to this announcement a number of firms contact FINRA about the need to transfer client out quickly. FINRA announced it would allow members to transfer clients out of these three funds into shares of another money market mutual fund with a NAV of $1 per share or for deposits in an FDIC-insured bank without complying with all of the requirements of NASD Rule 2510(d) as long as the firm provides prompt written notification to the effected clients following the exchange.
Note - As of 10/3, these three Reserve Funds had been closed and no transfers into or out of the funds were being permitted.
08-49 GENERAL SECURITIES FIRMS
MUTUAL FUND FIRMS
Trading Ahead of Customer Limit Orders
Effective November 11, 2008, IM-2110-2 is amended to include OTC equity securities. In addition, the minimum price improvement that firms must provide to trade ahead of customers, based on tiered standards that vary based on the price of the customer limit, will apply to both OTC equity securities and NMS stocks. The tiered standards are outlined in the Notice and in the revised version of IM-2110-2.
08-50 MARKET MAKERS
Procedures for Submitting Written Attestations of Bona Fide Market Making
This Notice outlines the process market makers must utilize under SEC Rule 240T to submit written attestations to extend the close-out requirements for fail-to-deliver positions established solely for the purpose of meeting its bona fide market making obligations.
08-51 GENERAL SECURITIES FIRMS
SEC Approves Amendments to FINRA’s Transaction Reporting Rules to Require Prompt Last Sale Reporting of Transactions in Foreign Securities
Beginning October 27, 2008, the reporting and dissemination of in all OTC securities, including domestic securities, foreign securities and ADRs, will be treated consistently. As of that date, members will be required to report transactions in foreign securities within 90 seconds of execution unless a specific exemption applies. In addition, FINRA will disseminate last sale information regarding those transactions on a real time basis. Rule 6620 has been amended to reflect the addition of foreign securities in reporting requirements.
8-52 GENERAL SECURITIES FIRMS
SEC Approves Amendment to Eliminate Yield Reporting to TRACE
Effective November 3, 2008, Rule 6230 Is amended so that firms reporting transactions to TRACE will no longer be required to report yield information. In place of this yield information, FINRA will calculate and disseminate a standard yield in TRACE data.
Trade Reporting Notice – August 14, 2008 GENERAL SECURITIES FIRMS
FINRA announced the inclusion of a Trade Reporting Frequently Asked Questions area on their website. You can access this information at www.finra.org/tradereportingfaq.
Information Notice – August 26, 2008 FIRMS OFFERING OPTIONS
On June 26, 2008, the SEC approved a supplement to the Options Disclosure Document (ODD) (www.optionsclearing.com/publications/risks/riskstoc_apr08_sup.pdf). This supplement provides additional disclosures regarding certain binary options on stock and broad-based indexes and delayed start options.
Information Notice – September 15, 2008 ALL FIRMS
FINRA has been providing a complimentary subscription to the loose-leaf version of the Manual to Executive Representatives. Given the prevalence of the online version and environmental concerns, FINRA is moving to an opt-in format. Executive representative who wish to continue receiving this subscription must complete an opt-in form at www.finra.org/manual/optin by October 31 or their subscription will be discontinued in January 2009. This change does not effect paid subscriptions.
Back to top
Back to Newsletter
|
