2015 Small Firm Compliance, December Reminders & Information
SMALL FIRM COMPLIANCE CORNER
REMINDERS & INFORMATION
Here are a few noteworthy items this week:
ACTION ITEM: STATEMENT ON INDEPENDENT PUBLIC ACCOUNTANT DUE DEC.10th
Remember to assess your existing relationship with your current auditor and determine whether a new Statement Regarding Independent Public Accountant is required to be filed with the SEC and with FINRA through the Firm Gateway. Firms are required to file the statement regarding its independent public accountant no later than December 10 each year. For more information, See Frequently Asked Questions Concerning the July 30, 2013 Amendments to the Broker-Dealer Financial Reporting Rule.
ACTION ITEM (REMINDER): 2016 BRANCH OFFICE & REP RENEWALS DUE DEC.18th
As a reminder, December 18, 2015, is the payment deadline for Preliminary Renewal Statements. This annual program simplifies firms' registration renewal process with FINRA and participating regulators by requiring just one payment to FINRA. See Regulatory Notice 15-40 and visit the 2016 Renewal Program page for details.
ACTION ITEM: NEW MSRB RULE G-18 EFFECTIVE DATE: MARCH 21, 2016
MSRB ISSUES GUIDANCE ON NEW BEST EXECUTION (RULE G-18)
MSRB Rule G-18, establishing the first best-execution rule for transactions in municipal securities, will be effective is March 21, 2016. The best-execution rule requires brokers, dealers and municipal securities dealers to use reasonable diligence to ascertain the best market for the subject security and buy or sell in that market so that the resultant price to the customer is as favorable as possible under prevailing market conditions. Related amendments to MSRB Rule G-48, on transactions with sophisticated municipal market professionals (SMMPs), and to MSRB Rule D-15, on the definition of an SMMP, exempt transactions with SMMPs from the best-execution rule. ***BUT, be sure you have the SMMP Affirmation on file and that you renew that affirmation annually for your files.***
Here is a link to the MSRB's guidance on Rules G-18, G-48, and D-15 http://www.msrb.org/~/media/Files/MISC/Best-Ex-Implementation-Guidance.ashx?la=en
Here is a link to the Reg Notice 2014-22 relating to the new G-18 Best Ex Rule http://www.msrb.org/~/media/Files/Regulatory-Notices/Announcements/2014-22.ashx?la=en.
*NOTEWORTHY*
REQUEST FOR COMMENT FROM FINRA (REG NOTICE 14-52) DUE DEC.11th
FINRA is requesting comment on a proposed rule that would require member firms to disclose additional information on RETAIL customer confirmations for transactions in corporate and agency debt securities. In response to earlier comments received, FINRA is proposing several changes to the proposed rule. These changes include replacing the size-based disclosure threshold with a retail customer standard; permitting firms to use alternate methodologies for calculating the reference price for more complex trade scenarios; and requiring firms to add a link to TRACE on confirmations.
***If possible, please take the time to write a comment letter on this. This rule is deeply flawed, will cost the industry millions, and will not assist retail clients in understanding market pricing; just the opposite, it will certainly confuse retail clients. The comment period expires December 11, 2015. See Regulatory Notice 15-36. (Please note the MSRB has a RFC on their own version of this proposed rule, please comment there, too.)
REGULATORY REVIEW: FINRA REG NOTICE 15-46 GUIDANCE ON BEST EXECUTION
In light of the increasingly automated market for equity securities and standardized options, and recent advances in trading technology and communications in the fixed income markets, FINRA issued its best execution guidance to reiterate the best execution obligations that apply when firms receive, handle, route or execute customer orders in equities, options and fixed income securities (everything except munis). FINRA's Notice reminds firms of their obligations to regularly and rigorously examine execution quality likely to be obtained from the different markets trading a security. FINRA's guidance can be found here: http://www.finra.org/sites/default/files/notice_doc_file_ref/Notice_Regulatory_15-46.pdf.
Some Webinars, if you have time they are worth a look, in my opinion.
FINRA's free on-demand video webinars include panel discussions with FINRA staff and/or industry experts, and feature online resource materials. The following webinars are available on-demand:
• Cybersecurity Considerations for Small Firms
• Independent Contractor Common Regulatory Issues and Effective Practices
• Senior Investor Initiative
FOR MUNI ADVISOR FIRMS
MSRB PUBLISHES "2016 COMPLIANCE ADVISORY FOR MUNICIPAL ADVISORS"
This publication is intended to assist muni advisors in understanding and implementing new regs. The advisory highlights compliance risks and provides and overview of currently effective rules, examples of conduct violations, etc. Use this link to view the doc: Read the 2016 Compliance Advisory for Municipal Advisors
All the best,
PAIGE W. PIERCE