Here are a few areas that the regulators are focused on, and so should you.
First, FINRA has reminded members to start their engines and begin the process of the Regulatory Continued Education (Reg CE) plan. Reg CE Rule 1240 was amended recently to require all registered representatives to complete the regulatory requirements on an ANNUAL basis- not every three years as was previously required. The program must be completed by December 31 of each year.
Firms should note that Reg CE is now provided by FINRA through the FINPRO system, and all registered representatives will have to create a FINPRO account in order to complete their Reg CE requirements. Firms would be wise to get started NOW on the process of ensuring that all their reps have a FINPRO account so as not to be running around in the last few days of the year, trying to herd the cats.
The SEC made it clear on August 8 that they still have “off channel” communications high on their priority their list of “things to examine”, with the release of a press statement related to 11 firms that have been fined for not properly supervising or documenting texts.
Firms must write policies and procedures that address these texts and come to grips with how to capture them.
The MSRB has gotten on board with a recent change related to fixed income reporting and how quickly firms must report trades to the MSRB’s Real Time Transaction Reporting System (RTRS). Municipal trades currently must be reported to RTRS within 15 minutes of the time of the trade’s execution; that reporting time will be slashed to 1 minute due to the SEC’s belief that it will help provide transparency in the market. Details are still being worked out ( there may be carve-outs for firms that trade small numbers of municipal trades, or for firms that process their trades manually) but the handwriting is on the wall. Or perhaps we should say the Rule is in the queue.
Back to the SEC, where new rules have been proposed that would require broker dealers and investment advisers to take steps that address conflicts of interest associated with their use of “predictive data analytics and similar technologies” and to prevent firms from placing their own interests over those of their investors. That release is here. There’s a link to the proposed Rule, which is more than 200 pages long. The good news is that you really only need to read the first 141 or so pages in order to get the gist of the Rule. I will leave you to deal with terms like “chatbot”, “robo-advisory”, and “algorithm” on your own, as I can barely do a Google search.
That’s all for now- have a compliant day!