FINRA Adopts "Residential Supervisory Location" Requirements
FINRA adopted a rule to "treat a private residence at which an associated person engages in specified supervisory activities ... as a non-branch location."
In the Notice, FINRA said that Rule 3110.19 ("Residential Supervisory Location") allows member firms to designate private residences as non-branch locations ("RSLs") for conducting certain supervisory activities, subject to specified conditions and eligibility requirements. These conditions include conducting and documenting risk assessments and providing a periodic list of RSLs to FINRA. FINRA said that firms may start using the RSL designation on June 1, 2024 and that the first RSL list is due to FINRA on October 15, 2024 covering all locations firms designate as RSL's during the period June 1, 2024 through September 30, 2024.
FINRA also said it adopted Rule 3110.18 ("Remote Inspections Pilot Program") which establishes a voluntary three-year pilot program allowing eligible member firms to fulfill their inspection obligations of qualified branch offices, including OSJs and non-branch locations, remotely. FINRA stated that participating firms must provide FINRA with an opt-in notice, conduct risk assessments, provide quarterly data and maintain supplemental written supervisory procedures for remote inspections. FINRA Rule 3110.18 is effective July 1, 2024.
FINRA also announced that May 31, 2024 would be the end date for certain pandemic regulatory relief set forth in FINRA-Notice-20-08. That relief, among other things, "temporarily suspended the requirements that member firms: (1) maintain updated Form U4 (Uniform Application for Securities Industry Registration or Transfer) information regarding the office of employment address for registered persons who temporarily relocated due to the pandemic, and (2) submit branch office applications on Form BR (Uniform Branch Office Registration Form) to report any newly opened temporary office locations or space sharing arrangements established as a result of the pandemic." As a result, starting on June 1, 2024, member firms must resume their obligations to maintain updated Form U4 information and submit updated branch office applications on Form BR.