The FINRA Board of Governors last week authorized the FINRA staff to proceed with its proposals for new rules and rule amendments - beginning with Debt Research Conflicts of Interest. Here's what was approved and related next steps.

For a write-up on new Arbitration Rule proposals, go to:  [RULE 12/12/11 Posting - "Expungement, .."]

1.  Debt Research Conflicts of Interest. FINRA will seek comments on a revised debt research conflicts of interest proposal, that incorporates comments submitted to a concept proposal discussed in RegNote 11-11.  The modified proposal maintains a tiered approach based on whether debt research is distributed to retail and institutional investors.  Institutions would need to opt in to the institutional framework.

The proposal most notably: (i) excludes security-based swaps from the definition of debt security;  (ii) clarifies permissible communications between and among personnel in - debt research, sales, trading, principal trading;  (iii) allows for certain input by sales and trading personnel, but not principal trading personnel, into debt research budget and compensation determinations; and (iv) requires disclosure of firm debt or equity holdings in the subject company only where such positions present a material conflict of interest.

2.  Fee Adjustment Proposals. The staff will increase the Trading Activity Fee (TAF) rate structure for each sale of a covered equity security - from $0.000090 per share (with a cap of $4.50 per trade) to $0.000095 (with a cap of $4.50 per trade).  These fees, which fund FINRA's regulatory program, are being raised because of decreased trade volume. The staff also will increase qualification examination fees, which have not been increased since 2008.  The proposed fee increases average between $5 and $25 per examination. 3.  Optional TRACE Data Delivery Services and Related Fees. The staff will propose amendments to FINRA Rule 7730 to establish new fees in connection with 2 new optional TRACE data delivery services. 

Service #1: Firms that opt to subscribe to the first service - TRACE Data Delivery Plus service - would be able to request and download transaction data via the FINRA Automated Data Delivery System (FINRA ADDS) for dates prior to the last 30 days.

While FINRA ADDS data currently is limited to ABS (asset-backed securities) transaction data, as of 2/6/12. FINRA ADDS data will be expanded to include transaction data for all transactions reported to TRACE.

Service #2: Firms that opt for the second service - TRACE Data Delivery Secure File Transfer Protocol (SFTP) service - would have an automated interface to retrieve the firm's daily TRACE trade journal files from FINRA ADDS.  Fees would be payable per MPID subscriber.

For further details, go to:   [FINRA Board - December 2011 Meeting]