Financial Industry Regulatory Authority

SEC Approves Arbitration Panelist Amendments

On October 31st, the Financial Industry Regulatory Authority advised that the SEC approved amendments to FINRA Rule 9231 (Appointment by the Chief Hearing Officer of Hearing Panel or Extended Hearing Panel or Replacement Hearing Officer) to establish an additional category of persons eligible to serve as panelists on a Hearing Panel or an Extended Hearing Panel in a disciplinary proceeding to include persons currently serving, or having served previously, on a committee appointed or approved by the FINRA Board. The rule change also makes a conforming amendment to Rule 9232 (Criteria for Selection of Panelists and Replacement Panelists), which establishes criteria for the appointment of eligible panelists to Hearing Panels and Extended Hearing Panels. The amendments were effective September 26, 2014. FINRA Regulatory Notice 14-45.

FINRA Renewal Program

On October 27th, the Financial Industry Regulatory Authority reminded members that the 2015 Renewal Program begins on November 10, 2014, when FINRA makes the online Preliminary Renewal Statements available to all firms on Web CRD/IARD. FINRA Regulatory Notice 14-44 includes a timeline of the key dates in the renewal process.

Municipal Securities Rulemaking Board

Accelerated Approval Granted to Supervisory Rule Proposal

On October 23rd, the SEC granted accelerated approval to the Municipal Securities Rulemaking Board’s proposed rule change that establishes supervisory and compliance obligations of municipal advisors when engaging in municipal advisory activities. Rule G-44 utilizes a primarily principles-based approach to supervision and compliance in order to, among other things, accommodate the diversity of the municipal advisor population, including small and single-person entities. Proposed Rule G-44 is accompanied by proposed amendments to Rules G-8 and G-9 to establish fundamental books-and-records requirements for municipal advisors, including those related to their supervisory and compliance obligations. Comments should be submitted on or before November 19, 2014. SEC Release No. 34-73415.


Longer Period Designated for Consideration of Data Feed Fee Proposal

On October 23rd, the SEC designated December 24, 2014 as the date by which it will approve, disapprove, or institute disapproval proceedings regarding The NASDAQ Stock Market’s proposed removal from the Exchange rules fee provisions with respect to third-party data feeds that Nasdaq receives from multiple sources and then re-transmits to clients in connection with the Exchange’s co-location services. SEC Release No. 34-73416.

The Options Clearing Corporation

Proposed Interpretation Aimed at Restricting Dividend Plays is Approved

On October 27th, the SEC approved The Options Clearing Corporation’s proposed amendment of its rules to add an interpretation and policy to Rule 801 and to Rule 805 to state that, with respect to Market-Maker Accounts, sell transactions will be processed before exercises. Under the amended interpretation, OCC will process all sell transactions prior to the exercise of long options in market-maker accounts to ensure that only net long positions may be exercised. OCC believes that the change would have the effect of significantly restricting dividend plays because large long positions that would otherwise be exercised would be offset by sale transactions. SEC Release No. 34-73438.


SEC Disapproves Non-Transparent ETF Proposal

On October 24th, the SEC disapproved NYSE Arca’s proposed adoption of new NYSE Arca Equities Rule 8.900, which would permit the listing and trading, or trading pursuant to unlisted trading privileges, of Managed Portfolio Shares, which are securities issued by an actively managed open-end investment management company. Under the proposal the portfolio for an issue of Managed Portfolio Shares would be disclosed once quarterly, instead of daily. SEC Release No. 34-73424.