[by Howard Haykin ] The FINRA Board of Governors authorized FINRA staffers to proceed now with several rule changes - for filing with the SEC or release to the public for comments.  This week's rulemaking deals with the following subjects:

• Markups to Government Securities.
• Mediator Classifications.
• Debt Research.
• Minor Rule Violations.
• Record-keeping.
• Disciplinary Complaints, Decisions and Other Information.
• Reporting Requirements.
• TRACE.

1.  Application of Proposed Markup Rules to Government Securities. Amend FINRA Rule 0150 to apply proposed FINRA Rules 2121 and 2122 governing markups, markdowns and commissions (proposed markup rules) to transactions in government securities - except U.S. Treasury securities. FINRA will issue a RegNote to solicit comments on proposed markup rules and proposed FINRA Rule 2123 that governs fees. 2.  Classification of Mediators Under Dispute Resolution By-Laws. Amend the definitions of industry and public members under the By-Laws of FINRA Dispute Resolution, Inc. (By-Laws) so that revenue mediators earn while acting as a mediator, and not representing parties in mediation, would not result in their classification as industry members. Amend the definition of "public member" to clarify that a mediator's service in the capacity as a mediator of disputes involving a broker or dealer and not representing any party in such mediations is not considered a material business relationship with a broker or dealer.  Also amend 2 subsections of the definition of "industry member" that address providing professional services to a broker or dealer or to a director, officer or employee of a broker or dealer. The amendments would ensure that mediators are not improperly classified as industry members under the By-Laws because of the revenue they earn as mediators, and thus, make them eligible to serve as public members of the National Arbitration and Mediation Committee. 3.  Debt Research Conflicts of Interest. Pass on filing any rule amendment. Instead, amend the debt research conflicts of interest proposal and reconsider it at a future meeting. 4.  Minor Rule Violation Plan. Amend FINRA's Minor Rule Violation Plan (MRVP) to increase the number of eligible rules.  The MRVP allows—but does not require—FINRA to impose a fine of up to $2,500 on any member firm or person associated with a member firm for a minor violation of an eligible rule and provides a mechanism to resolve matters where the conduct at issue does not warrant initiation of a formal disciplinary proceeding. The proposed additional rules generally involve non-willful technical violations that do not involve direct customer harm. 5.  Records To Be Kept at Specially Designated Locations. A proposed new rule would require large carrying member firms to maintain and keep current certain records in specially designated locations so as to be ready accessible by regulatory staff in the event of the firm's financial difficulty.  The proposal modifies an proposed rule discussed in RegNote 11-48 and makes certain changes based on submitted comments.  Among other things, FINRA would modify the earlier rule proposal for the following:

• tier the rule so that it will only apply to member firms having total customer reserve formula credits exceeding $100 million as determined pursuant to SEA Rule 15c3-3 Exhibit A.
• firms subject to the rule would be permitted to keep the records in physical or electronic form in multiple locations, rather than in a single location.
• firms subject to the rule would only be required to obtain access agreements - providing generally for continued access to certain position and activity records and data in the event of the firm's financial difficulty - from custodian firms that are not FINRA member firms.
• FINRA staff would have authority to grant exceptions from the access agreement requirement.

6.  Release of Disciplinary Complaints, Decisions and Other Information. Amend FINRA Rule 8313, governing the release of disciplinary information by FINRA to the public, to adopt general standards for the release of disciplinary information, thereby promoting increased transparency of FINRA's disciplinary process.  Also, eliminate the existing publicity thresholds for the release of disciplinary information and provide for the release of all disciplinary complaints and disciplinary decisions to the public. As proposed, FINRA would be allowed to release to the public certain disciplinary information that's already publicly available in BrokerCheck.  Other rule changes would include:  (i) define scope of information subject to Rule 8313; (ii) update and streamline disclosure statements that accompany disciplinary information released to the public; and (iii) eliminate provisions that don't relate to the release of information to the public or are matters better addressed by the SEC.  All such changes would apply prospectively, beginning on the effective date. 7.  Reporting Requirements. Amend FINRA Rule 4530 to provide an exception for certain information disclosed on Form U4, consistent with the requirements of that form.  Member firms also would be able to affirmatively request, through functionality on the CRD, that the data reported on certain Form U4 disclosure reporting pages also be applied to satisfy a corresponding FINRA Rule 4530 reporting obligation. Rule amendments also would accomplish the changes: (i) allow firms to file required documents with FINRA online, through the Firm Gateway; (ii) provide that firms are not required to report findings and actions by FINRA for purposes of certain provisions of the rule. 8.  TRACE Factor Reporting. Amend FINRA Rule 6730(d)(2) to require a member firm to report to TRACE the factor used to determine size (volume) of transactions in an asset-backed security (except an ABS traded 'To Be Announced') the firm executes as agent and for which it charges a commission. For further details, go to:  [FINRA Communications to Firms - Board Update, 7/13/12].