The FINRA Board of Governors met last week to discuss and authorize the staff to take action with regard to rulemaking in a number of key regulatory areas, including:  whether to continue using "the 5% policy" as a guide for markups, markdowns, and commissions. Continue reading for C-I's executive summary. 1.  FOCUS Report Supplementary Schedule. FINRA will issue a RegNote seeking comment on a proposed supplementary schedule for derivatives and other off-balance sheet items - applicable only to carrying and clearing firms.  The goal of the amendment to FINRA Rule 4524, Supplemental FOCUS Information, is to obtain more comprehensive and consistent information about the off-balance sheet assets, liabilities and other commitments of carrying and clearing firms. 2.  Markups, Commissions and Fees. FINRA will issue a RegNote seeking comment on a revised proposal to adopt consolidated FINRA rules governing markups, commissions and fees that reflects changes based on comments to a proposal discussed in RegNote 11-08.  Significant issues: retain the 5% policy as a guide; establish rebuttable presumption that a markup or commission >5% is unfair; delete the proposed requirement to provide equity commission schedules to retail customers 3.  OATS Reporting of Certain Market-Making and Customer Facilitation Orders. FINRA will propose amending the OATS rules, narrowing the scope of the market-making exemption and requiring that firms generally report to OATS market-making orders in NMS stocks if the firm has been registered as a Large Trader with the SEC under Rule 13h-1 for 90 days.  The proposed amendments also require firms to report to OATS certain prop orders used to facilitate customer orders. 4.  OCC Cleared OTC Options and Related Amendments. FINRA will propose amending FINRA rules that would accommodate a proposal by OCC to clear and guarantee certain OTC options for certain institutional customers.  Amend FINRA Rule 2360, Options, to treat OTC options cleared by OCC the same as all other OTC options under the options rule. Amend FINRA Rule 4210, Margin Requirements, to treat OTC options cleared by OCC the same as listed options for purposes of the margin rule. 5.  "Public" Arbitrator Definition. FINRA will propose amendments to FINRA Rules 12100 and 13100 of the Customer and Industry Codes of Arbitration Procedure, respectively, to revise the definition of "public" arbitrator.  FINRA would exclude persons associated with a mutual fund or hedge fund from serving as public arbitrators, in addition to those currently excluded:

• investment advisers.
• professionals whose firms derive substantial revenue from financial industry clients.
• employees, directors or officers of an affiliate of an organization engaged in the securities business.
• a person whose spouse or family member fits into one of the above capacities.

FINRA also would amend the rule to require all excluded individuals to wait 2 years after ending their affiliation before serving as public arbitrators. 6.  Stop Orders. FINRA will propose retaining the current definition of "stop order" and "stop limit order" that require stop orders be triggered by a transaction at the stop price. FINRA would also propose amendments to permit explicitly alternative order types that use a trigger other than a transaction for activating the order, if such other order types are not labeled as a "stop order" or "stop limit order" and are clearly distinguishable from a stop order or stop limit order - e.g., labeled a "stop quotation order."  Firms offering other such order types would be required to disclose to customers, in paper or electronic form, a description of the order type(s) and the specific triggering event. For further details, go to:  [FINRA Bd of Gov. Meeting Summary, 4/23/12].