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FINRA Floats Third-Party Insurance Coverage Proposal

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The Financial Industry Regulatory Authority approved publishing for comment at its May 9 board meeting proposed amendments to require that broker-dealers and associated persons produce documents concerning third-party insurance coverage.

The Discovery of Insurance Information in Arbitration proposal to be put out for comment seeks to address broker-dealers’ concerns about “prejudice by limiting the circumstances under which insurance coverage information could be presented to arbitrators.”

The FINRA board also filed with the Securities and Exchange Commission proposed amendments to its Trade Reporting and Compliance Engine (TRACE) rules to expand the definition of Agency Debt Security to address a new issuance structure by government-sponsored enterprises.

Robert Cook, FINRA’s president and CEO, said in a statement released Thursday about the second board meeting of 2018, which was held May 9 and 10 in New York, that the board also previewed a draft of FINRA’s 2017 Annual Financial Report, which is to be published in June.

“Throughout the two-day meeting, FINRA staff provided the board with various operational updates, including progress reports on the ongoing FINRA360 organizational improvement initiative and the consolidation of FINRA’s Enforcement Department, and updates on FINRA’s high-risk registered representative examination program and cross-market surveillance program. In addition, the Board discussed the regulatory landscape, including the SEC’s proposed Regulation Best Interest,” Cook said.

The Nominating and Governance Committee of FINRA’s board also discussed potential nominees to fill upcoming board vacancies, with an announcement planned in the coming weeks via an Election Notice.

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