The Securities and Exchange Commission has approved Financial Industry Regulatory Authority amendments relating to the recordkeeping requirements for firms claiming the unsolicited customer order exception to Rule 15c2-11 of the Securities Exchange Act of 1934, as amended. The amendments become effective September 21.
Rule 15c2-11 prohibits a broker-dealer from publishing or submitting for publication a quotation for a covered over-the-counter equity security unless the broker-dealer has obtained and reviewed accurate and reliable current information about the issuer of the security. Rule 15c2-11(f)(2) excepts from this requirement quotations that represent a customer’s unsolicited order or indication of interest (the unsolicited customer order exception). In light of FINRA’s findings that some firms relying on the unsolicited customer order exception have been unable to produce any proof that a quote in fact represented a customer’s unsolicited order or indication of interest, Rule 15c2-11(f)(2) has been amended to promote more uniform recordkeeping and compliance with the exception. Among other things, the amendments require that firms record certain customer and order information contemporaneously with the receipt of any unsolicited customer order or indication of interest, including the identity of the associated person (if applicable) at the receiving firm, the identity of the customer and the date, time and terms of the unsolicited customer order or indication of interest. In addition, FINRA has amended FINRA Rule 6540 (requirements applicable to market makers), which will require FINRA members to demonstrate compliance with, or qualify for an exception or exemption from, Rule 15c2-11.
Click here to read FINRA Regulatory Notice 09-51.