FINRA to Consider Improvements Based on Membership Rule Review

FINRA conducted a retrospective review of the NASD Rule 1010 Series ("Membership Proceedings") which governs the FINRA Membership Application Program. The FINRA report found that the rules are meeting their intended investor protection objectives. The review was part of an initiative launched in April 2014 to periodically look back at significant groups of rules to ensure they remain relevant and are appropriately designed to achieve their objectives, particularly in light of industry and market changes.

The review consists involved gathering comments from a broad range of external and internal stakeholders and surveying FINRA firms and others experienced with the rules. FINRA now is embarking on a second "action phase" in which it will consider a combination of guidance, rule amendments and changes in process or technology that could help enhance the efficiency and effectiveness of the Membership Application Program. FINRA will consider recommendations (i) better aligning the application review process with the relative risk of the applicant and its business, (ii) clarifying the scope and nature of information to be reviewed and (iii) providing additional guidance on key areas.