More rule updates are in the pipeline, according to Robert Cook, president and CEO of the Financial Industry Regulatory Authority.
The regulator has already sought public feedback on a number of rule changes this year, Cook said Wednesday at the Security Traders Association's Market Structure Conference in Washington.
"We've received a lot of good comments," he said.
Some of the rules have already been approved by FINRA's board and will be sent to the Securities and Exchange Commission for approval — including increasing the value limit on gifts by a registered person to $300 from $100 per recipient per year, as well as outside business activities and pattern day trading rules.
What's next? "We're looking at a wide range of areas, again based on feedback from our members," Cook said. "The challenge here, really, is prioritizing."
FINRA, Cook said, is looking at changes to rules in the areas of research, arbitration, opportunities to promote e-delivery, registration requirements, membership application, recordkeeping and business communications, among others.
New Exam Requirements
Cook also said that FINRA will be launching a program to require teams at FINRA that are engaged in "regulatory work" to take the qualification exams and continuing education "that many of you have to take."
"A lot of our folks have already taken those, because either they've come in with them or taken them while at FINRA," Cook said, "but we're going to make that more of a mandatory requirement."
CAT Cost Cuts
As to the Consolidated Audit Trail, Cook said that he's "more optimistic about where things are going for CAT than I have in a long time." The costs of CAT "have gotten large ... CAT needs a diet."
FINRA "is delighted that the new SEC leadership is engaged on this," Cook said, "and is really exercising strong leadership in pushing" to rein in the costs of CAT.
SEC Chairman Paul Atkins granted conditional exemptive relief on Sept. 30 intended to save tens of millions of dollars in the system's annual operating costs.
Atkins has instructed agency staff to undertake a comprehensive review of the CAT, which tracks orders and trades and was conceived by the SEC after the 2010 "flash crash."
"Over time, the costs of operating the CAT have ballooned beyond belief," Atkins said. "When the CAT was established, in November 2016, its ongoing annual costs were estimated to total, at the upper end, about $55 million. Unfortunately, even that estimate proved woefully unrealistic, and costs have regularly increased."
The conditional exemptive relief allows the self-regulatory organizations that participate in the CAT National Market System, or NMS Plan, "to expeditiously and meaningfully reduce the operating costs" of CAT while maintaining core regulatory functionality, the agency said.
"We’re very supportive of the comprehensive review and the recent exemptive order to take out the cost of CAT," Cook said Wednesday.
Another cost saving area "without reducing the value" of CAT, Cook said, is to "get the PII [personally identifiable information] out of CAT once and for all. There are still some in there."
FINRA CEO Robert Cook. Courtesy photo
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