FINRA Board OKs E-Signature, Custodian Proposals
July 25, 2018
By Melanie Waddell, ThinkAdvisor
The Financial Industry Regulatory Authority approved at its July board meeting rule proposals to expand the categories of persons allowed to act as custodians of the books and records of firms leaving the business, as well as the use of electronic signatures in authorizing the use of discretion in a customer’s account.
The planned use of electronic signatures is a long time coming.
Electronic signatures have “been around a long time, so this reflects just how behind the times FINRA is to the pulse of the industry when it relates to technology,” said Jon Henschen, president of broker-dealer recruiting firm Henschen & Associates.
The board met last week in Washington, and FINRA announced the board meeting results on Wednesday.
FINRA CEO Robert Cook said in a video update that the board also reviewed “some possible changes” to the broker-dealer self-regulator’s examination program structure.
Bari Havlik, FINRA’s exam chief, stated in the video message that the “main objectives” of the new exam structure “is really creating a structure that is fully coordinated, one that is further risk-based considering the risks to investors and the markets, and one that’s going to leverage the talents and resources that we have around the country and across the team.”
The rule proposals, which were filed with the Securities and Exchange Commission, also included Board approval of a Regulatory Notice seeking comment on a plan to expand the summary firm data that FINRA publishes on its website relating to over-the-counter (OTC) trading volume, along with a plan to provide firms more time to report to FINRA’s Trade Reporting and Compliance Engine (TRACE) their transactions in U.S. Treasury securities to hedge primary-market transactions and also adopt a new modifier to identify such transactions.
(Related: Cloud Storage Helps FINRA Process ‘Unprecedented’ Amount of Market Activity)
Expanding the categories of persons allowed to act as custodians of the books and records of firms leaving the business would also preserve FINRA’s ability to obtain such records, and “is designed to reduce the search costs that such firms incur in identifying a willing custodian,” FINRA states.
FINRA announced Monday that elections are underway and will conclude in late August for a new small-firm governor to fill the seat, and additional industry governors to fill one midsize and one large-firm seat.
