FINRA Advises Member Firms on Branch Office Registration Procedures
Commentary by Glen Barrentine
FINRA advised member firms not to "close or withdraw" any existing branch office registration form ("Form BR") for those locations that are or will be designated as a "residential supervisory location" ("RSL").
In an alert, FINRA acknowledged that "certain jurisdictions and SROs that require a branch office to be either 'registered' or 'notice filed,' using Form BR may not currently be able to recognize FINRA Rule 3110.19 (Residential Supervisory Location ("RSL"))" because the Form "does not generally allow a member firm to select or deselect individual jurisdictions or FINRA or other SROs."
In the guidance, FINRA instructed member firms to maintain existing Form BR registrations for locations designated as RSLs. If a location is reported as a FINRA registered branch office on Form BR, but is listed by the member firm as an RSL in internal records, and the firm complies with FINRA Rule 3110.19 requirements, FINRA said it will "recognize the ... location as an RSL nonbranch location, [rather than] a ... registered branch office."
FINRA said it is working (i) on amending Form U4 to include an "RSL Checkbox," and (ii) on collaborating with states and SROs to enhance the Central Registration Depository system. FINRA said that the enhancements will "allow member firms to select or deselect [specific regulators] for an office [or] location without [affecting its] registration status with other jurisdictions or SROs." FINRA said that "until such functionality is available, member firms [are advised to keep] an internal list of all RSL locations."
Commentary
It is difficult to know what to make of the lack of coordination between FINRA and state regulators with respect to Residential Supervisory Locations and FINRA Rule 3110.19 as well as why FINRA is publishing this notice now rather than at the time FINRA Rule 3110.19 was approved. In any event, the notice highlights the difficulty of coordinating regulatory changes in areas where FINRA rules and state regulations overlap.