Amended FINRA Customer Confirmations Rule Kicks In Monday
Amended rule requires BDs to disclose more transaction-related information to retail customers for trades in fixed income securities; MSRB gets SEC OK to establish a new advertising rule
Amendments to the Financial Industry Regulatory Authority’s Customer Confirmations Rule 2232 requiring broker-dealers to disclose additional transaction-related information to retail customers for trades in certain fixed income securities take effect on Monday.
The amended rule, approved by the Securities and Exchange Commission, requires broker-dealers to disclose the amount of markup or markdown it applies to trades with retail customers in corporate or agency debt securities if the member also executes an offsetting principal trade in the same security on the same trading day.
The Municipal Securities Rulemaking Board adopted substantially similar requirements.
Amendments to FINRA Rule 2232 specifically requires a member to disclose the amount of mark-up or mark-down it applies to trades with retail customers in corporate or agency debt securities if the member also executes an offsetting principal trade in the same security on the same trading day.
The new rule also requires members to disclose two additional items on all retail customer confirmations for corporate and agency debt security trades: a reference, and a hyperlink if the confirmation is electronic, to a web page hosted by FINRA that contains publicly available trading data for the specific security that was traded, and the execution time of the transaction, expressed to the second.
FINRA collaborated with MSRB to produce a FAQ and consulted with SEC staff.
MSRB also received approval from the SEC on Tuesday to establish a new advertising rule for municipal advisors and to enhance the MSRB’s existing advertising rule for municipal securities dealers.
To assist municipal advisors in complying with MSRB Rule G-40, MSRB says that it will provide guidance in advance of the effective date of Feb. 7, 2019.
“Preventing misleading advertisements is an important component of a comprehensive regulatory framework for financial services professionals,” said MSRB President and CEO Lynnette Kelly, in a statement. “The implementation of the new advertising rule is an important piece of the MSRB’s foundational work to create standards of fair practice for municipal advisors. We took this opportunity to revisit and enhance our long-standing dealer advertising rules to build on our fair practice provisions and to align more closely our advertising rules with rules of other financial regulators.”
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