On Jan. 23, FINRA reported on effective dates, end of regulatory relief.
FINRA issued Regulatory notice 24-02 to announce the effective dates of two new supplementary materials adopted under FINRA Rule 3110, entitled Supervision.
Announced end date of regulatory relief set forth in Regulatory notice 20-08, #73328.
Expects to publish additional guidance outlining in greater detail operational processes for compliance with data, information requirements of new Rules 3110.18, 3110.19.
Residential Supervisory Location Designation
New Rule 3110.19 will treat private residence at which associated person engages in supervisory activities, subject to safeguards, limitations, as a non-branch, #143648.
Newly defined Residential supervisory location (RSL) will be subject to inspections on a regular periodic schedule (presumed to be at least every 3 years) instead of annual.
FINRA developing technological process in FINRA Gateway through which firms will be able to identify their RSLs and meet the obligation to provide their quarterly RSL lists.
FINRA expects such technological process to be ready no later than May 31, 2024.
Remote Inspections Pilot Program
New Rule 3110.18 established voluntary, 3-year remote inspections pilot program.
To allow eligible member firms to fulfill inspection obligation of qualified branch offices, without an on-site visit to such offices/locations, subject to specified terms, #169332.
Must affirmatively elect to participate in pilot by providing FINRA with an opt-in notice.
For pilot year 1, which starts on Jul. 1, 2024, and ends on Dec. 31, 2024, the timeframe in which an eligible firm may elect to opt in to the pilot program is Jun. 1.
Currently developing a technological process in FINRA Gateway through which firms will be able to provide FINRA the requisite notices electronically, in an efficient manner.
End of Regulatory Relief
Reported end of regulatory relief with respect to obligation of firms to maintain current information for employment addresses and branch offices on specified uniform forms.
Firms are encouraged to consult with Membership application program (MAP) group as they consider materiality of any potential increase in number of offices or locations.
Any potential increase in the number of offices or locations may implicate FINRA Rule 1017, which requires firm to seek approval for material change in business operations.
FINRA Rule IM-1011-1 specifies thresholds and conditions for increases in the number of offices (registered or unregistered) that, if met, are presumed not to be material.
Effectiveness
End of Notice 20-08 relief on May 31, 2024; Rule 3110.19 effective on Jun. 1, 2024.
Firms previously relying on the Notice 20-08 relief must comply by Jun. 1, 2024, and must file supplementary amendments to Form U4 and BR with FINRA by Jul. 1, 2024.
In addition, firms are required to submit the first RSL list to FINRA by Oct. 15, 2024.
Period in which a firm may elect to participate in the pilot program for pilot year 1 by providing FINRA with an opt-in notice in manner prescribed, Jun. 1 - Jun. 26, 2024.
Can no longer rely on Rule 3110.17 to conduct remote inspections as of Jun. 30, 2024.
Rule 3110.18 effective on Jul. 1, 2024, first day a firm participant may conduct a remote inspection of eligible offices and locations under specified terms and conditions.
Participant’s first set of pilot year 1 data, information must be provided Oct. 15, 2024.
Deadline to withdraw from automatic participation in pilot year 2 is Dec. 27, 2024.
Firm participant in pilot year 1 must provide 2019 and 2024 data by Dec. 31, 2024.
In May 2024, MSRB proposed to adopt residential supervisory location, see #211719.
In May 2024, FINRA issued FAQ on remote inspections pilot program, see #211962.
