Online commodity trading and broker forex 2130
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Purchases can be financed up to 80 per cent of the purchase price for added leverage. Royal Golden General Trading is one of the leading international trading companies, having prospective customers worldwide and is engaged in the trade of various agro. Our aim is to become the leading. As part of FINRA's program to monitor for compliance with Regulation M, FINRA's Market Regulation Department reviews over-the-counter OTC trading and quoting activity for prohibited purchases, bids or attempts to induce bids or purchases during the applicable restricted period and for prohibited short sales during the five-day period prior to the pricing of an offering.
Pursuant to its rules, FINRA must receive pertinent distribution-related information in a timely fashion to facilitate this component of its Regulation M compliance program. The guidance in this Notice relates only to firms' Regulation M-related notification obligations under FINRA rules and does not address other obligations that may apply, e. Unlike FINRA's current rules, the new rule applies uniformly to distributions of listed and unlisted securities.
Requirements applicable to distributions subject to a restricted period Rule c 1. Rule c 1 sets forth the notification requirements applicable to distributions of listed and unlisted securities that are "covered securities" 13 subject to a restricted period under Rule or of Regulation M.
Specifically, firms must determine, in accordance with Regulation M, whether the applicable restricted period commences one day or five days prior to pricing a "one-day" or "five-day" restricted period , and notify FINRA in writing of the firm's determination and the basis for such determination. While the new rule places the responsibility of determining the applicable restricted period on the firm, as a practical matter, FINRA will accept a firm's notification that the five-day restricted period applies to a prospective distribution without providing the basis for that determination.
If, on the other hand, a firm asserts that a one-day or no restricted period applies to a particular distribution, FINRA will require that the firm demonstrate the basis for that determination. As discussed below, firms must notify FINRA that the "actively traded securities" exception applies, and hence there is no restricted period, under new Rule d. Firms must provide notification no later than the business day prior to the first complete trading session of the applicable restricted period, unless later notification is necessary under specific circumstances.
Firms must submit the notification no later than the close of business the next business day following the pricing of the distribution, unless later notification is necessary under specific circumstances. Requirements applicable to issuers or selling security holders subject to a restricted period Rule c 2. Rule c 2 requires that any firm that is an issuer or selling security holder in a distribution of a security, including an "actively traded" security, subject to a restricted period under Rule of Regulation M comply with the notification requirements of Rule c 1 , discussed above.
This requirement ensures that FINRA is notified of any distribution in which a firm is participating as an issuer or selling security holder, to the extent that notice of such distribution has not already been provided under Rule Requirements applicable to distributions of "actively traded" securities Rule d.
Rule d sets forth the notification requirements applicable to distributions of listed and unlisted securities that are considered "actively traded" securities and thus are not subject to a restricted period under Rule of Regulation M.
In connection with such distributions, firms must notify FINRA in writing of the firm's determination that no restricted period applies and the basis for such determination. Upon pricing a distribution of a security that is considered "actively traded," firms must provide written notification to FINRA, including the pricing-related information required under Rule c 1 B , discussed above, and identify the distribution participants and affiliated purchasers.
Firms must notify FINRA of their intention to conduct such activity prior to imposing the penalty bid or engaging in the first syndicate covering transaction, and identify the security and its symbol and the date such activity will occur. In addition, firms are required to subsequently confirm such activity within one business day of completion, and identify the security and its symbol, the total number of shares and the date s of such activity.
Pursuant to paragraphs c 1 and d of Rule , the member firm acting as manager or in a similar capacity is responsible for notifying FINRA of the distribution. However, if no member firm is acting as manager or in a similar capacity , then each firm that is a distribution participant or affiliated purchaser is required to notify FINRA, unless another member firm has assumed responsibility in writing for compliance with the notification requirement.
Pursuant to Rule c 2 , a firm that is an issuer or selling security holder must comply with the notification requirements of paragraph c 1 , unless another member firm has assumed responsibility in writing for compliance with those requirements. Similarly, pursuant to Rule e , a firm that intends to impose a penalty bid or effect a syndicate covering transaction is responsible for notifying FINRA, unless another member firm has assumed responsibility in writing for compliance with the rule.
Firms must use the following forms to provide notification under Rule Submission to the Corporate Financing Department does not constitute compliance with Rule Firms are reminded that they must update any notification submitted to the Market Regulation Department, as necessary e.
Nasdaq Stock Exchange rules impose certain notification requirements that are similar to those of Rule Consistent with the amendments discussed above, and as part of the rule change approved by the SEC, FINRA has clarified the scope and application of these marketplace-specific requirements.
Because firms can withdraw their quotes in OTC Equity Securities without first requesting excused withdrawal status as required under ADF rules , there is no notification requirement under Rule As part of that request, the firm must notify FINRA of the date and time of the pricing of the offering, the offering price and the time the offering terminated.
The obligation to request excused withdrawal status and to subsequently rescind excused withdrawal status is on the ADF Market Maker that is posting quotations in the ADF; however, another member firm can assume responsibility—which must be in writing—for compliance on the ADF Market Maker's behalf.
As amended, the rule no longer requires the manager of the distribution to submit the request on behalf of each firm participating in the distribution of course, under the rule, a member firm acting as manager can agree, in writing, to do so on behalf of the firms. Firms must use the following forms to satisfy their notification obligations under Rule See also Regulatory Notice October For all other securities, the following standards apply in determining when the applicable restricted period commences: In general terms, a "stabilizing bid" is a bid that is intended to maintain the price of the offered security and is necessary to prevent or retard a decline in the security's price.
A "penalty bid" allows a lead underwriter to reclaim a selling concession paid to a syndicate member if that member's customers sell their allocated shares in the immediate aftermarket. A "syndicate covering transaction" is generally defined as placing a bid or effecting a purchase to reduce a syndicate short position. FINRA recognizes that conditions may arise that may affect when or whether the offering actually prices.
For example, there may be instances where the nature of the transaction has made it impossible to provide timely notice e. Below is the text of the rule change. Those rule filings are available at http: Please provide the following information preferably at least two 2 business days prior to commencement of the restricted period or, if no restricted period applies, at least one 1 business day prior to pricing the distribution.
Acting in our capacity as manager of a potential secondary distribution of securities that are listed on the Nasdaq Stock Market, we request an underwriting activity report for the above covered security subject and reference securities, as defined under SEC Regulation M Rule Additionally, for the dealers that are market makers, we request an excused withdrawal or, for Nasdaq-listed securities only, to be designated as passive market maker, as indicated: Communications that would previously have been considered "educational material" are now classified as either "advertisements" or "sales literature.
Additionally, NASD Rule a 3 defines the term "standardized option" to mean any option contract issued, or subject to issuance, by The Options Clearing Corporation OCC , that has standardized terms for the strike price, expiration date and amount of the underlying security, and is traded on a national securities exchange registered pursuant to Section 6 a of the Securities Exchange Act of Exchange Act.
This definition will help firms understand the meaning of this term as it is used in new NASD Rule d 1 , which details the standards applicable to communications regarding standardized options exempted under Rule of the Securities Act of Securities Act that are used prior to delivery of the ODD, and to communications regarding standardized options not exempted under Rule that are used prior to delivery of a prospectus that meets the requirements of Section 10 a of the Securities Act.
Amended NASD Rule b adds "independently prepared reprints" to the types of options communications that require pre-use approval by a Registered Options Principal and deletes the outdated term "educational material" from that requirement. FINRA excluded completed worksheets because the definition of "sales literature" includes "worksheet templates. In addition, amended NASD Rule b includes new requirements for principal review of correspondence that are consistent with previously amended correspondence principal approval requirements in NASD Rule Also consistent with NASD Rule , any written letters, emails, or instant messages to 25 or more prospective retail customers within any 30 calendar-day period are deemed "sales literature" and, as such, must be approved prior to use by an options principal.
Amended NASD Rule b also includes new requirements for principal review of institutional sales material that are consistent with the principal review requirements for general institutional sales material in NASD Rule As noted above, NASD Rule adopts NASD Rule 's definition of "institutional sales material," which classifies institutional sales material as any communication that is distributed or made available only to institutional customers.
NASD Rule b 4 also requires that a firm retain copies of the options communications in accordance with Rule 17a-4 of the Exchange Act. Additionally, a firm must retain the names of the persons who prepared the communications and the source of any recommendations contained in the communications and keep them in the form and for the time period required for options communications in Rule 17a-4 of the Exchange Act. The effect has been that widely disseminated communications i.
Communications that are likely to be widely disseminated such as advertisements, sales literature as newly defined , and independently prepared reprints are subject to the filing requirements of NASD Rule c 1. In contrast, more targeted communications—generally correspondence—that will be used once the applicable ODD or prospectus has been delivered continue to be exempt from the filing requirements.
NASD Rule c 1 also clarifies that an options communication that falls within the filing requirements must be filed at least ten calendar days prior to use or such shorter period as FINRA staff may allow in particular instances. Specifically, NASD Rule d 1 A provides that communications regarding standardized options exempted under Securities Act Rule that are used prior to delivery of the ODD must be limited to general descriptions of the options being discussed.
This text, however, may contain a brief description of options, including a statement that identifies the registered clearing agency for options and a brief description of the general attributes and method of operation of the exchanges on which such options are traded, including a discussion of how an option is priced.
Additionally, such options communications must contain contact information for obtaining a copy of the ODD and must not contain recommendations or past or projected performance figures, including annualized rates of return, or names of specific securities. These options communications may also include any statement required by any state law and administrative authority and may include any advertising designs and devices, provided such material is not misleading.
Additionally, new NASD Rule d 1 B provides that options communications regarding options not exempted under Securities Act Rule that are used prior to delivery of a prospectus that meets the requirements of Section 10 a of the Securities Act must conform to Securities Act Rules or a, as applicable. The approved rule amendments also make several changes to the content standards in NASD Rule d 2 General Standards that apply to all options communications.
First, NASD Rule d 2 no longer refers to disclaimers or the outdated term "hedge clauses" and instead generally prohibits the use of illegible, misleading or inconsistent cautionary statements or caveats. In addition, NASD Rule d no longer requires institutional sales material to disclose that options are not suitable for all investors. In addition, the approved amendments make certain changes to the restrictions on the use of historical and performance figures.
Previously, only communications defined as sales literature could contain projected and historical performance figures. However, NASD Rules d 3 and d 4 now permit this information in any options communications provided that all such communications regarding standardized options must be preceded or accompanied by the ODD.
The other restrictions on the use of historical and performance figures generally remain the same as they were prior to the amendments. Second, a firm may effect delivery of the ODD via a hyperlink to that document if a customer has consented to receive documents electronically from the firm. Options communications that qualify as public appearances e. For example, the writing of a print media article would generally qualify as both an advertisement and a public appearance.
Seminar scripts, handouts, slides, or other visual presentations would also generally be deemed to be sales literature. Where such procedures do not require review of all institutional sales material prior to use or distribution, they must include provision for the education and training of associated persons as to the firm's procedures governing institutional sales material, documentation of such education and training, and surveillance and follow-up to ensure that such procedures are implemented and adhered to.
Evidence that these supervisory procedures have been implemented and carried out must be maintained and made available to FINRA upon request. Questions concerning this Notice should be directed to Kathleen A. The fees are designed to recover the costs related to the government's supervision and regulation of the securities markets and securities professionals.
Pursuant to Section 31 of the Act Section 31 , FINRA is required to pay fees to the SEC for sales of securities subject to prompt last sale reporting pursuant to the rules of the SEC or FINRA or registered on a national securities exchange when those sales are transacted by or through its member firms otherwise than on a national securities exchange. This includes sales transacted by or through a member in securities that are off-exchange trades of exchange-registered securities, sometimes referred to as third market transactions, and to sales of equity securities that are non-exchange-registered securities that are subject to prompt last sale reporting.
The Section 3 regulatory transaction fee applies only to sales transactions effected otherwise than on a national securities exchange.
However, not all sales transactions effected otherwise than on a national securities exchange are subject to a regulatory transaction fee. Certain sales transactions are expressly exempt from Section 31 and are, therefore, not subject to a regulatory transaction fee pursuant to Section 3.
The following types of sales transactions are exempt from Section 31 and, consequently, from the regulatory transaction fee in Section 3: Accordingly, in general, FINRA is responsible for paying fees for sales transacted by or through its member firms otherwise than on a national securities exchange.
The fees apply to equity securities subject to prompt last sale reporting, including sales transacted by or through its member firms in equity securities that are off-exchange trades of exchange-registered securities. As noted above, the regulatory transaction fee is applicable to off-exchange trades of exchange-registered securities. Member firms are required to report such trades i. For instance, if the primary listing market considers transactions in a particular security to be subject to Section 31, "FINRA will also assess the regulatory transaction fee on off-exchange trades of that security.
FINRA believes that reliance on the primary listing market's classification of an exchange-registered security is necessary to ensure consistent treatment of transactions involving the same security for Section 31 purposes across self-regulatory organizations.
The regulatory transaction fee is also applicable to sales of equity securities that are traded otherwise than on a national securities exchange and are subject to prompt last sale reporting pursuant to the rules of the SEC or FINRA.
The types of transactions currently excluded from the second reporting requirement include:. As expressly stated in the Act, sales of bonds, debentures, or other evidence of indebtedness debt securities are excluded from Section As noted above, for securities that are registered on an exchange, FINRA will defer to the primary listing market to determine whether a particular security is a debt security or an equity security for purposes of assessing the regulatory transaction fee on off-exchange trades of those securities.
To determine whether a non-exchange-registered security is an equity security or a debt security for purposes of assessing the regulatory transaction fee, FINRA relies on the facility to which the transaction is reported.
If the transaction must be reported to the ORF, the transaction is treated as one involving an equity security and is subject to the regulatory transaction fee. If the transaction must be reported to TRACE, the transaction is treated as one involving a debt security and thus is not subject to the regulatory transaction fee. Transactions reported on Form T are also assessed a regulatory transaction fee.
For example, among others, transactions that are part of a primary distribution by an issuer and transactions made in reliance on Section 4 2 of the Securities Act of are expressly excluded from FINRA's trade reporting rules. The fee, therefore, applies to transactions in these securities executed outside normal trading hours that would be subject to prompt last sale reporting if the transactions were executed during normal trading hours.
See Regulatory Notice September FINRA encourages all interested parties to comment on the proposal. Comments must be received by December 29, To help FINRA process and review comments more efficiently, persons should use only one method to comment on the proposal. FINRA uses the reported information for regulatory purposes. Among other things, the information assists FINRA to identify and investigate firms, offices and associated persons that may pose a regulatory risk. The proposed rule also includes a "Supplementary Material" section that contains certain clarifications and definitions as well as codifications of existing staff guidance.
The most significant proposed changes are described generally below. However, FINRA urges firms to carefully review the entire attached proposed rule text to understand the full extent of the proposed changes. NASD Rule a 1 requires that a firm report whenever the firm or an associated person of the firm has been found to have violated, among other things, "any" rule or standard of conduct of any governmental agency, self-regulatory organization SRO , or financial business or professional organization, or engaged in conduct that is inconsistent with just and equitable principles of trade.
This provision requires firms to report findings of violations by an external body. The proposal generally retains the requirement under NASD Rule a 1 , though it limits the scope of reportable findings of violation by an external body to violations of any securities, insurance, commodities, financial or investment-related laws, rules, regulations or standards of conduct of any domestic or foreign regulatory body, SRO or business or professional organization.
FINRA believes that defining the scope of the rule in this manner will make it more effective and relevant to FINRA's program, as well as enhance firms' ability to more accurately report such information.
NYSE Rule a 1 requires that a firm report whenever it or its associated persons have violated, among other things, "any" rule or standard of conduct of any governmental agency, SRO, or business or professional organization, or engaged in conduct that is inconsistent with just and equitable principles of trade. This provision requires firms to report their internal conclusions of the enumerated violative conduct. Similar to the scope of proposed FINRA Rule a 1 A discussed above, the proposed rule requires a firm to report whenever the firm has concluded on its own that an associated person of the firm or the firm itself has violated any securities, insurance, commodities, financial or investment-related laws, rules, regulations or standards of conduct of any domestic or foreign regulatory body or SRO.
However, the requirement to report certain internal conclusions of violations would not extend to violations of rules or standards of conduct of business or professional organizations. In addition, proposed Supplementary Material. The proposal clarifies that a firm has an obligation to report under the rule the specified events and quarterly statistical information regarding written customer complaints, regardless of whether such information is reported or disclosed pursuant to any other rule or requirement, including the requirements of the Forms BD Uniform Application for Broker-Dealer Registration , U4 Uniform Application for Securities Industry Registration or Transfer or U5 Uniform Termination Notice for Securities Industry Registration collectively referred to as the Uniform Forms.
FINRA notes that it will work toward the goal of eliminating duplicative reporting of information disclosed on the Uniform Forms. Consistent with the requirements of NYSE Rule , the proposal extends the time period for reporting any of the specified events to no later than 30 calendar days after the firm knows or should have known of the existence of the event rather than the 10 business days currently provided under NASD Rule b. Currently, both NASD Rule and NYSE Rule make frequent reference to, for example, "any" regulatory or self-regulatory body, without denoting that it includes both domestic and foreign regulators.
The proposal clarifies that the rule applies to both domestic and foreign actions and that it applies to actions by a "regulatory body," which includes governmental regulatory bodies and authorized non-governmental regulatory bodies, such as the Financial Services Authority.
The proposal merges for simplification the reporting provisions pertaining to any securities or commodities-related civil litigation or arbitration and any other claim for damages disposed of by judgment, award or settlement for certain monetary thresholds current NASD Rules a 7 and a 8 and NYSE Rules a 7 and a 8. In addition, consistent with other provisions of the current rules, the proposal extends the provision to include any insurance-related civil litigation or arbitration.
Consistent with NYSE Rule a 9 , the proposal requires a firm to report whenever the firm itself is subject to a "statutory disqualification" and clarifies that a firm is required to report whenever an associated person of the firm is subject to a "statutory disqualification. Similar to NASD Rule a 10 and NYSE Rule a 10 , the proposal continues to require a firm to report certain disciplinary actions taken by the firm against its associated persons.
NASD Rule f requires firms to file copies of certain criminal and civil complaints and arbitration claims with FINRA, including copies of any securities or commodities-related private civil complaint or arbitration claim filed against the firm in any forum other than FINRA Dispute Resolution. Consistent with revisions discussed above, the proposal extends such filing requirement to copies of insurance-related private civil complaints and arbitration claims.
See SEA Section 19 and rules thereunder. NYSE Rules f , These provisions will be addressed as part of the supervision rules and research analyst conflict of interest rules, respectively. FINRA is issuing this guidance to apprise firms of the circumstances in which extraordinary cooperation by a firm or individual may directly influence the outcome of an investigation. The types of extraordinary cooperation by a firm or individual that could result in credit can be categorized as follows: These steps alone or taken together can be viewed in a particular case as extraordinary cooperation and, depending on the facts and circumstances, can have an impact on FINRA's enforcement decisions.
The cornerstone of the investigative and enforcement authority of self-regulatory organizations in the securities industry is the requirement that firms and individuals employed in the industry comply with regulatory requests for information or testimony. Depending on the facts and circumstances, there are instances where cooperation by a firm or individual is so extraordinary that it should be taken into consideration in determining the appropriate regulatory response.
There is significant regulatory value in crediting conduct that rises to the level of extraordinary cooperation. This enables FINRA to achieve its mission of investor protection and market integrity more effectively.
Credit for extraordinary cooperation in FINRA matters may be reflected in a variety of ways, including a reduction in the fine imposed, eliminating the need for or otherwise limiting an undertaking, and including language in the settlement document and press release that notes the cooperation and its positive effect on the final settlement by FINRA Enforcement.
In an unusual case, depending on the facts and circumstances involved, the level of extraordinary cooperation could lead FINRA to determine to take no disciplinary action at all. By publishing these standards of cooperation, FINRA seeks to increase transparency as to the basis for sanctions imposed in cases and to encourage firms to root out, correct and remediate violative behavior.
By making clear that FINRA has given credit for extraordinary cooperation in a particular case, FINRA will inform firms and associated persons of the types of conduct considered and the degree to which such actions are to the individual or firm's benefit. It is important to note that the level of cooperation is just one factor to be considered in determining the appropriate disciplinary action and sanctions.
Other factors include the nature of the conduct, the extent of customer harm, the duration of the misconduct, and the existence of prior disciplinary history, all of which impact the appropriate sanction in any particular matter. Crediting extraordinary cooperation by firms and individuals in appropriate situations advances important regulatory goals. Among other things, it can shorten investigations, thereby reducing regulatory burdens on firms and FINRA resources, as well as apprise FINRA staff of wrongdoing beyond the scope of the original investigation and alerting staff to industry-wide, systemic problems.
Encouraging firms and individuals to take immediate, proactive and meaningful steps and appropriately acknowledging the cooperative conduct in settlement documents may encourage others to take similar steps and will provide transparency into sanction terms and how the conduct was actually credited. While FINRA staff will continue to assess the particular facts and circumstances in each case, including the nature of the conduct, the extent of customer harm, the duration of the misconduct and the existence of disciplinary history, the extent of a firm's extraordinary cooperation will be an important factor in determining the appropriate disciplinary action and the sanctions that will be sought by FINRA Enforcement.
These Guidelines and Principal Considerations provide a foundation for much of what we say here, although it is important to note that they apply, strictly speaking, to adjudicators in contested matters. The relevant Principal Considerations that apply to adjudicators in determining sanctions in contested matters are:. These rules will be harmonized in the rulebook consolidation project.
The type of self-reporting contemplated as extraordinary and deserving of credit would go significantly beyond these regulatory requirements. Self-reporting deserving of credit for cooperation would, at a minimum, have to include a detailed account of the discovered conduct and an offer to explain in complete detail all aspects of the conduct and provide relevant documents.
Morgan Stanley DW, Inc. A firm that believes its procedures are adequate and does not change them promptly or until the very end of an investigation should not expect to receive a sanction reflecting credit for extraordinary cooperation in any settlement.
AXA Advisors also unilaterally took steps to enhance its systems and procedures and to close accounts that were not appropriate for the fee based program. FINRA considered these steps in determining the sanctions in this case. Banc of America Investment Services, Inc. Firms often assert attorney-client privilege in connection with a firm's internal investigation.
Such a firm could still receive credit for extraordinary cooperation if it found other ways to inform FINRA staff of pertinent facts without waiving the privilege. Indeed, consistent with FINRA's duty "to provide a fair procedure for the disciplining of members and persons associated with members," FINRA as a general matter recognizes the attorney-client privilege in its adjudicatory forum.
Securities Exchange Act of , 15 U. Therefore, the waiver or non-waiver of the privilege itself will not be considered in connection with granting credit for cooperation. Moreover, it is not the waiver of attorney-client privilege that warrants credit for cooperation but rather the extraordinary assistance to the staff in uncovering the facts in an investigation that yields the benefit.
By that date, member firms subject to these regulations must have in place a written program to identify, detect and respond to patterns, practices or specific activities that could indicate identity theft. Those regulations require any member firms that issue credit or debit cards to have reasonable policies and procedures to assess the validity of change-of-address notifications.
Also, member firms that use consumer reports must develop reasonable policies and procedures to respond to the receipt of a consumer reporting agency's notice of address discrepancy. This Notice describes these FTC rules. Member firms should understand that the purpose of this Notice is informational only.
Its purpose is solely to inform member firms about federal regulations, which FINRA has neither engaged in rulemaking nor has the authority to interpret. Nevertheless, given the importance and possible application of these regulations to member firms, FINRA believes it is important to provide this Notice in addition to what has been published in the Federal Register.
Member firms should not rely on this Notice as a substitute for their understanding and application of these regulations and should seek their own counsel to address any issues under these regulations.
As noted at the conclusion of this Notice, the FTC has indicated its willingness to work with FINRA in addressing industry-wide questions pertaining to the application of these provisions to member firms.
As previously noted, this Notice describes rules of the Federal Trade Commission, and the FTC is responsible for interpreting and applying these rules.
Nevertheless, the FTC has indicated a willingness to work with FINRA to resolve on a consistent and industry-wide basis, interpretive questions that arise under these rules as applied to broker-dealers. Full compliance with the FTC's regulations was originally required by November 1, However, during the course of the FTC's education and outreach efforts following publication of the regulations, the FTC learned that some industries and entities within the FTC's jurisdiction were confused and uncertain about their coverage under the rule, especially the Red Flags Rule.
Many entities also noted that because they generally are not required to comply with FTC rules in other contexts, they had not followed or even been aware of the rulemaking, and therefore learned of the requirements of the rule too late to be able to comply by November 1, Given this confusion and uncertainty, the FTC has delayed the enforcement of the Red Flags Rule until May 1, , to allow these entities to develop and implement their programs.
Such term includes demand deposits, negotiable order of withdrawal accounts, savings deposits subject to automatic transfers, and share draft accounts. Comments must be received by December 18, The proposed rule includes standards and obligations derived from both existing rules.
Aspects of the proposed rule are described more fully below. Effective January 16, , member firms must submit all qualification examination waiver requests and Series 16 experience acceptability requests electronically through the FINRA Firm Gateway. This new process will replace the current paper-based submission format and, for Dual Member firms, the electronic submissions via the Electronic Filing Platform EFP.
To facilitate the transition, beginning December 1, , member firms may begin submitting qualification examination waiver requests and Series 16 experience acceptability requests electronically via the Firm Gateway. Any person associated with a member firm who is engaged in the securities business of the firm must register with FINRA. As part of the registration process, securities professionals must pass a qualification examination to demonstrate competence in each area in which they intend to work.
The NASD Rule Series specifies, among other things, registration and qualification requirements for registered representatives and principals associated with firms. With respect to Dual Members, Incorporated NYSE Rule and its Interpretation also specifies certain registration and qualification requirements applicable to such members.
Incorporated NYSE Rule and its Interpretation requires candidates for the registration category of "supervisory analyst" to take and pass the Series 16 examination and present evidence of three years of appropriate experience, as described in Incorporated NYSE Rule Currently, firms submit Series 16 experience acceptability requests to FINRA on behalf of "supervisory analyst" candidates to provide evidence of such experience.
However, Dual Members have continued to submit certain requests i. Effective January 16, , FINRA will require that member firms submit all requests for qualification examination waivers and Series 16 experience acceptability requests through the Firm Gateway, 6 a tool that provides consolidated access to FINRA regulatory and filing applications. To facilitate the transition to the Firm Gateway process, beginning December 1, , FINRA will begin accepting electronic examination waiver and Series 16 experience acceptability requests via the Firm Gateway at https: Firms will use one online form to submit examination waiver requests and a second online form to request Series 16 experience acceptability.
The new process will replace both the paper-based submission process and the EFP system. The Form U4 must request an open examination window for each examination requested waived and each Series 16 experience acceptability request.
The new process will require the same information currently required for qualification examination waivers and Series 16 experience acceptability submissions, and will allow firms to attach supporting documentation to such requests.
FINRA will continue to convey decisions on waiver requests to firms in writing, along with a courtesy telephone call. By December 1, , each firm's primary account administrator for Web CRD will be automatically granted waiver submission entitlement privileges. Account administrators may give entitlement privileges to individuals in their organizations who require access to the waiver and Series 16 experience acceptability forms by setting privileges for them through the FINRA Entitlement Account Management Tool.
If a member firm employee requires access to the waiver and Series 16 experience acceptability forms but does not know his or her firm's account administrator s , the employee can call FINRA's Gateway Call Center at to find out the name of the firm's account administrator s.
Two types of entitlement privileges may be granted: A Manager will be able to complete and submit examination waiver and Series 16 experience acceptability requests and, in addition, view waiver and Series 16 experience acceptability requests submitted by other users within the firm. The transition of all examination waiver and Series 16 experience acceptability requests to Firm Gateway will occur as follows:. See Exchange Act Release No. The retail over-the-counter foreign currency exchange retail forex market is opaque, volatile and risky.
Broker-dealers who engage in forex business with their retail customers must comply with the FINRA rules that apply to those activities. The primary forex market is the interbank market, in which large banks, financial institutions and other eligible participants trade currencies amongst themselves.
In recent years, however, an electronic, secondary over-the-counter OTC market has developed. Retail customers participate in the secondary OTC market with retail dealers, albeit typically at different prices and with higher spreads than those that occur in the interbank market.
In the retail market, customers trade currencies through spot, forward and swap transactions with forex dealers acting as counterparties. These transactions are quoted in pairs, with the first currency representing the base currency and the second currency representing the quote currency.
The quoted price, or rate, is the amount of the quote currency required to purchase one unit of the base currency. Most retail trading occurs online through electronic platforms provided by the dealer, who acts as counterparty to the retail customer's trades and sets the execution price and the spread. The retail customer typically does not have pricing information and cannot determine whether the price quoted by the dealer is fair. Moreover, the dealer acts as counterparty and establishes the price, which means that the dealer has a conflict of interest in the transaction.
Price comparisons are also complicated by different compensation structures: Some firms charge per-trade commissions, others impose wider spreads, and some do both. Other transaction costs can include account maintenance charges, software licensing fees and commissions paid to introducing brokers or other third-party service providers.
The currency market is extremely volatile and retail forex customers are exposed to substantial currency risk. Some currencies are significantly more volatile than others. Many forex dealers extend leverage to their customers at ratios of The high leverage ratios magnify even minor fluctuations in currency rates, exponentially increasing a customer's losses and gains.
Even a small move against a customer's position can result in a significant loss. Unlike margin in a securities account, forex customers are typically closed out of their position once their loss exceeds their initial investment. However, if, for any reason, the position is not closed out at a zero balance, the customer could be liable for additional losses.
Customers also face counterparty risk, as there is no central clearing organization for forex transactions. Customers may not know where their funds will be held or by whom. They may also not know that, unlike securities, funds deposited into an account with a broker-dealer for investment in any currency, or which are the proceeds of the sale of a currency position, or any currency in an account with a broker-dealer, are not protected by the Securities Investor Protection Corporation SIPC.
For all of these reasons, retail forex trading is risky, and the only funds that should be invested in the retail forex market are those that the investor can afford to lose. Nonetheless, retail interest in the market is growing, in part due to aggressive, and sometimes misleading, advertising that minimizes risks and exaggerates potential returns.
Under the Commodity Exchange Act CEA , only certain regulated entities may act as counterparty to a retail forex transaction. Among other things, the amendments:.
However, Congress did not extend these new net capital requirements or other provisions to registered broker-dealers or the other financial institutions that are not subject to CFTC oversight but that may act as counterparties in retail forex transactions.
As a result, FINRA has seen an increase in membership applications from firms interested in conducting retail forex business. NASD Rule , which applies to every FINRA member, requires that firms, in the conduct of their business, observe high standards of commercial honor and just and equitable principles of trade. Rule applies to all of the business of a broker-dealer, not only to its securities and investment banking business. In determining appropriate standards and principles in the context of retail forex activity, FINRA will look to the forex-related rules and interpretations adopted by the NFA to govern the retail forex activities of its members.
Therefore, in order to ensure compliance with Rule , we expect broker-dealers to conduct their retail forex activities in a manner consistent with the regulatory requirements applicable to NFA members that are engaged in the same activities.
Under this standard, forex-related conduct that would constitute a violation of Rule includes, but is not limited to:. NASD Rule , applicable to all FINRA members, prohibits firms from making any false, exaggerated, unwarranted or misleading statement or claim in any communication with the public. Rule is not limited to a broker-dealer's securities and investment banking business. A firm's forex-related communications—whether the firm is acting as a dealer or is soliciting forex business for a dealer—must be fair and balanced and based on principles of fair dealing and good faith, and firms must provide a sound basis for evaluating the facts regarding both the forex market generally, as well as the customers' specific transactions.
These obligations may not be waived or met by disclaimer. Rule requires any firm that has not previously filed advertisements with FINRA to file all of its advertisements at least 10 days prior to first use; this filing requirement continues for one year from the first submission. Rule 's internal approval, filing requirements and recording-keeping provisions also apply to forex-related communications. The rule requires that a registered principal give written approval of all advertisements and sales literature prior to use.
Rule prohibits predictions or projections of performance, or the implication that past performance will recur. Communications used by firms in connection with retail forex activities may not tout future returns. The rule prohibits the omission of material facts or qualifications that would cause a communication to be misleading.
Accordingly, firms' communications must adequately disclose the risks associated with forex trading, including the risks of highly leveraged trading.
Firms must also make sure that their communications with the public are not misleading regarding, among other things:. In accordance with FINRA's membership application process, applicants must include a detailed description of their business plan that adequately and comprehensively describes all material aspects of their business activities, as well as the nature and source of the firm's capital.
Applicants must be able to demonstrate their capacity to comport with the federal securities laws and FINRA's rules, and to observe high standards of commercial honor and just and equitable principles of trade.
Applicants formerly registered with the CFTC should be aware that NASD Rule a 3 lists a range of events, including disciplinary actions and customer claims, or any pending adjudicated or settled regulatory action or investigation by the CFTC, that FINRA considers when weighing whether an applicant can meet these standards. Therefore, before engaging in over-the-counter forex business, a firm must first file for and receive approval of change in business operations under NASD Rule Any such filing will be closely reviewed under the guidelines and standards set forth in this Notice.
If a firm that must present its financials in U. Further, in computing its net capital, the firm must take a currency charge, the amount of which depends on the currency involved. The charge is not applied for firms with an off-setting liability payable in the same currency. In addition, other off-sets with respect to hedged transactions may be available.
Firms engaged in retail forex should review the requirements of Appendix B of Securities Exchange Act SEA Rule 15c, governing net capital calculations for broker-dealers, to ensure the accuracy of their net capital computations.
In general, when a customer or counterparty owes the broker-dealer money with respect to a forex transaction, the firm must treat the unsecured portion of the receivable as a non-allowable asset.
Appendix B a 3 xviii of Rule 15c contains the conditions that must be met in order to consider the receivable secured, and therefore an allowable asset. In accordance with SEC Release , firms are required to include the net balance due to customers in non-regulated commodity accounts, reduced by any deposits of cash or securities with any clearing organization or clearing broker in connection with the open contracts in such accounts.
This requirement would also apply to forex transactions. NASD Rule a requires FINRA member firms to establish and implement policies and procedures that can be reasonably expected to detect and cause the reporting of suspicious transactions. Further, 31 CFR FINRA member firms engaging in retail forex activities should ensure their Anti-Money Laundering Program addresses the risks associated with the business and includes procedures for monitoring, detecting, and reporting suspicious transactions associated with their retail forex activities.
FINRA is concerned about the rapid growth of the retail forex market generally, and about the retail forex activities of broker-dealers in particular. We expect firms to review and monitor their forex activities to ensure compliance with all applicable rules, and FINRA will look to the rules and interpretations issued by the NFA to govern its members' retail forex business as a basis for determining whether the same activities, when conducted by a broker-dealer, meet the high standards of commercial honor and principles of just and equitable trade required under FINRA's rules.
November 4, View PDF. In March , FINRA issued Regulatory Notice , which increased the margin requirements on auction rate securities ARS , due to concerns about reduced liquidity in the market resulting from failed auctions in such securities.
As a result, broker-dealers wanted to provide immediate liquidity to customers. Any liquidity loans extended to such customers who ultimately do not agree to participate in the buyback offer for fixed income, non-equity ARS, will remain subject to the conditions outlined in FINRA Notice upon expiration of the buyback offer period.
Any liquidity loans extended to retail customers who ultimately do not agree to participate in the buyback offer for ARPS will be subject to the conditions outlined in the April 11, , and April 24, , letters upon expiration of the buyback offer period. Broker-dealers are reminded that they must report to FINRA, on a monthly basis, the aggregate dollar amount of credit extended to customers on all loans collateralized by ARPS. In March , FINRA issued Regulatory Notice , which increased the margin requirements on ARS, due to concerns about reduced liquidity in the market resulting from failed auctions in such securities.
In response to the Notice , the Securities Industry Financial Markets Association and representatives from broker-dealers expressed a need to provide liquidity to customers who owned ARPS, and as outlined in a letter to you dated April 11, , 2 regulatory relief from the maintenance margin, net capital and reserve formula requirements was provided. The letter stated that, based on discussions with you, the SEC staff agreed that member firms would not be required to apply a charge to their net capital for any margin deficiencies resulting from non-purpose credit extended on ARPS, nor to exclude from the customer reserve formula computation such non-purpose loans to customers, provided that the firms met certain conditions specified in the letter.
One of the conditions stipulated in the April 11 letter was that broker-dealers needed to obtain a bank loan equal to the aggregate amount of non-purpose loans made to customers. The bank loans can only be collateralized by the ARPS pledged by the customers, and the bank loans must have a remaining maturity term of no less than six months at the time such credit is extended.
Subsequent to the April 11 letter, broker-dealers found it difficult to secure bank loans collateralized by ARPS, and therefore were not able to avail themselves of the relief that was provided in the letter. As a result, the terms stipulated in the April 11 letter were revised for those broker-dealers that could not obtain bank loans for the amount of credit extended to customers collateralized by ARPS, and such agreed upon terms were communicated to you in a letter dated April 24, In recent weeks, many broker-dealers have reached agreements with the SEC and various state securities regulators that will require the broker-dealers to repurchase the ARS from their customers.
In some cases, these settlement agreements require that the broker-dealers provide immediate liquidity to such customers, in the form of unconditional, non-recourse loans against ARS holdings, prior to the actual buyback of such holdings. As a result, several broker-dealers have requested additional net capital and maintenance margin relief from the conditions stipulated in the April 24 letter.
Member firms have represented that the buyback offer period for retail customers and charitable organizations may extend through January or February , while the buyback offer periods for other customers may extend well into Based upon these recent developments and discussions with you and your staff and staff of the FRB, it has been agreed that additional relief may be granted to those broker-dealers that have agreed to implement buyback programs for ARS.