FINRA to Provide Rulebook Guidance for Limited Broker-Dealers

June 26, 2013

On June 11, 2013, FINRA’s Chief Legal Officer, Bob Colby, discussed potential regulatory revisions for limited purpose broker-dealers during an interview series entitled “A Few Minutes with FINRA.”  Colby said that an internal review was underway to determine certain categories of broker dealers (i.e. broker-dealers that don’t touch funds or securities or that have limited roles) who may not be subject to all of FINRA’s rules.  The initial category with a revised rulebook will be broker-dealers that “help sell hedge fund interests to institutional clients; no funds, no securities, institutional client base.”  Colby estimated that FINRA may be able to publish a request for comment by this fall.

During the interview, Colby acknowledged that FINRA rules don’t apply evenly to all broker-dealers, which can result in uncertainty.  Some rules are tiered and apply less weight to smaller broker-dealers while other rules don’t apply at all.  FINRA will first categorize the limited broker-dealers and then provide a revised rulebook to each category that explicitly delineates which rules do or do not apply.  As noted above, broker-dealers that help sell hedge fund interests to institutional clients will likely be the first completed rulebook.

Please click here for the full interview posted on FINRA’s website.


Compliance, FINRA, Regulations/Rules