FINRA Board Authorizes Proposed Rulemaking to Amend "Borrowing and Lending Rule"

At its first meeting of the year, the FINRA Board of Governors (the "Board") approved the publication of a proposed rulemaking that would amend FINRA Rule 3240 ("Borrowing from or Lending to Customers"). The amendments follow from FINRA's retrospective rule review (see previous coverage).

The Board stated that the proposed amendments are intended to (i) bolster the rule's restrictions, (ii) modify certain exceptions and (iii) better conform the rule with the recently adopted FINRA Rule 3241 ("Registered Person Being Named a Customer's Beneficiary or Holding a Position of Trust for a Customer").

Additionally, the Board approved an "advanced analytics strategic initiative" intended to improve FINRA's tools and techniques for processing regulatory and publicly available data. The Board stated that the initiative will enable FINRA to more efficiently identify possible misconduct, thereby enhancing its ability to mitigate harm to customers. The Board also approved its annual allocation of 2020 fine monies to several ongoing capital initiatives.