The custody rule is arguably the single most important regulation governing broker-dealers. Both the SEC and FINRA are rightfully focused upon it. Firms should review the various infractions cited in the enforcement action and determine that none of these is applicable to them. Beyond that, the regular audit of their custody functions is one that firms should take very seriously. The regulators will. And it is good public policy.

The protection of seniors is an issue of large and increasing social importance. However, it would be better if this issue were addressed by federal or state law, rather than by SRO regulation. The FINRA rule "permitting" broker-dealers to put a hold on disbursements is complicated in cases where such a hold would not be sanctioned by state law. Conversely, the failure of a firm to exercise its "authority," however questionable, may put the firm at risk from FINRA or an investor.

In…

Whatever the regulators eventually do with trade reporting and trade data, they should focus on getting data that is useful and not on getting data fast or in quantity. It has been too often the case that Congress or the regulators assume that "knowledge is good," and so mandate that the industry provide data without considering how it can be standardized, transmitted, stored and used. While Form PF for hedge funds is a prime example of collecting useless data (primarily because of the poor…

Query whether the new measure will be adopted by those who believe that there is political advantage in exaggerating the size of the swaps market? It sounds a lot more ominous to describe a swap as having a billion dollar notional than it does to describe it as having a four dollars and thirty-seven cents market value.