FINRA Initiates "Broad Review" to "Modernize" Rules
Commentary by Steven Lofchie
FINRA initiated a "broad review of its regulatory requirements" to "modernize" its rules and potentially update its regulatory approach.
In a Regulatory Notice, FINRA stated that it will begin its review with a focus on "capital formation" and the "modern workplace."
On capital formation, FINRA requested comment on (i) current regulations on capital acquisition brokers and other "limited purpose" broker-dealer models designed to support capital formation; (ii) research analysts and research reports; and (iii) "other NASD or FINRA rules, guidance and processes impacting capital raising."
On the modern workplace, FINRA requested comment on current requirements regarding: (i) branch offices and remote work; (ii) credentialing and education; (iii) internal and customer communications; and (iv) recordkeeping.
Comments are due by May 12, 2025.
Commentary
Ordinarily, when a regulator states that it intends to "modernize" rules, that means it intends to adopt more (and more burdensome) rules. Under the new administration, it is reasonable to expect that FINRA will consider where burdens might be reduced without depriving investors of reasonable protections.