Comment Deadline Set for SEC Proposal to Narrow Exemption from FINRA Membership

Comments on an SEC re-proposal to narrow the scope of a broker-dealer exemption from FINRA membership are due by September 27, 2022. The Notice was published in the Federal Register.

As previously covered, the re-proposal would amend SEA Rule 15b9-1 ("Exemption for certain exchange members") to shrink the scope of the broker-dealer exemption from FINRA membership for entities that only trade on exchanges by eliminating the "de minimis allowance" and "proprietary trading exclusions." The proposal would only allow an exemption from FINRA membership for an SEC-registered broker or dealer that: (i) is an exchange member; (ii) carries no customer accounts; and (iii) effects securities transactions only on a national securities exchange of which it is a member, with the exception of orders that are routed by an exchange of which it is a member or transactions for the purpose of executing the stock leg of a stock-option order. The application of the proposed amendments would only be applicable to a dealer's physical floor-based trading on a national securities exchange.