The Securities and Exchange Commission has approved a proposal by the Financial Industry Regulatory Authority (FINRA) to expand the scope of Rules 2440 and IM-2440-1 to include transactions with customers on exchanges. Rule 2440 requires that (i) when acting for its own account in a transaction with a customer, a member firm has to buy or sell the security at a fair price to the customer, taking into consideration all relevant circumstances including market conditions with respect to such security at the time of the transaction, the expense involved, and the fact that the firm is entitled to a profit and (ii) when acting as agent the member shall not charge more than a fair commission, taking into consideration all relevant circumstances. Mark-up Policy NASD IM-2440-1 states that it is inconsistent with just and equitable principles of trade under NASD Rule 2110 for a member firm to enter into any transaction with a customer in any security at any price not reasonably related to the current market price of the security or to charge a commission that is not reasonable. Both rules now apply to all securities transactions, whether they occur in the OTC market or on an exchange.