If these financial reporting requirements are adopted, how long will it be before the regulators impose actual capital requirements? Let us know what you think!

This proposed rule is consistent with two unfortunate trends: (i) regulators seem to be giving themselves the authority to impose criminal sanctions on a firm for undergoing a breakdown in business procedures (regulators have taken a similar approach to cybersecurity and trading technology), and (ii) regulators seem to be imposing standards on others that far exceed those that are imposed by the government on itself.

When it comes to securities regulation, whatever requirement applies to equities will apply to debt, eventually.

The notice implies that FINRA does not expect the system to be used for trading in the absence of problems elsewhere. Even so, firms should review the notice in order to determine whether the OTCBB's testing requirements will be burdensome.

FINRA's inclusion of non-SEC reporting issuers in its trading system has policy implications, since FINRA is acting on behalf of the SEC. For the past several years, FINRA and the SEC have made it more difficult for investors to trade non…