BackText onlyPrint

You need the Flash plugin.

Download Macromedia Flash Player



  • Recently Approved Rule Changes Pending Determination of Effective Date

    • SR-FINRA-2017-025

      • 12100. Definitions

        Unless otherwise defined in the Code, terms used in the Rules and interpretive material, if defined in the FINRA By-Laws, shall have the meaning as defined in the FINRA By-Laws.
        (a) Arbitrator and Mediator Portal
        The term "Arbitrator and Mediator Portal" means the web-based system that allows invited arbitrators and mediators to access a secure section of FINRA's website to submit documents and information and view their arbitration and mediation case information and documents.
        (b) Associated Person
        The term "associated person" or "associated person of a member" means a person associated with a member, as that term is defined in paragraph (u).
        (c) Award
        An award is a document stating the disposition of a case.
        (d) Board
        The term "Board" means the Board of Directors of FINRA Regulation.
        (e) Claim
        The term "claim" means an allegation or request for relief.
        (f) Claim Notification Letter
        The term "Claim Notification Letter" means the notice provided by the Director to respondent(s) that they have been named as a party in a statement of claim. The notice will provide information about accessing the Party Portal to obtain a copy of the statement of claim filed by the claimant(s) and information about the arbitration, including the hearing location selected by the Director and the deadline for filing a statement of answer.
        (g) Claimant
        The term "claimant" means a party that files the statement of claim that initiates an arbitration under Rule 12302.
        (h) Code
        The term "Code" means the Code of Arbitration Procedure for Customer Disputes. For disputes involving only industry parties, see the Code of Arbitration Procedure for Industry Disputes.
        (i) Counterclaim
        The term "counterclaim" means a claim asserted against a claimant by a respondent.
        (j) Cross Claim
        The term "cross claim" means a claim asserted by a respondent against another already-named respondent.
        (k) Customer
        A customer shall not include a broker or dealer.
        (l) Day
        Except as otherwise provided, the term "day" means calendar day. If a deadline specified in the Code falls on a Saturday, Sunday or any FINRA holiday, the deadline is extended until the next business day. If a party receives pleadings or other documents on a Saturday, Sunday or any FINRA holiday, the date of receipt shall be the next business day.
        (m) Director
        The term "Director" means the Director of the Office of Dispute Resolution. Unless the Code provides that the Director may not delegate a specific function, the term includes FINRA staff to whom the Director has delegated authority.
        (n) Dispute
        The term "dispute" means a dispute, claim or controversy. A dispute may consist of one or more claims.
        (o) Hearing
        The term "hearing" means the hearing on the merits of an arbitration under Rule 12600.
        (p) Hearing Session
        The term "hearing session" means any meeting between the parties and arbitrator(s) of four hours or less, including a hearing or a prehearing conference.
        (q) Member
        For purposes of the Code, the term "member" means any broker or dealer admitted to membership in FINRA, whether or not the membership has been terminated or cancelled; and any broker or dealer admitted to membership in a self-regulatory organization that, with FINRA consent, has required its members to arbitrate pursuant to the Code and/or to be treated as members of FINRA for purposes of the Code, whether or not the membership has been terminated or cancelled.
        (r) Non-Public Arbitrator
        The term "non-public arbitrator" means a person who is otherwise qualified to serve as an arbitrator, and is disqualified from service as a public arbitrator under paragraph (y).
        (s) Panel
        The term "panel" means the arbitration panel, whether it consists of one or more arbitrators.
        (t) Party Portal
        The term "Party Portal" means the web-based system that is accessible by arbitration and mediation parties and their representatives. The Party Portal allows invited participants to access a secure section of FINRA's website to submit documents and view their arbitration and mediation case information and documents.
        (u) Person Associated with a Member
        The term "person associated with a member" means:
        (1) A natural person who is registered or has applied for registration under the Rules of FINRA; or
        (2) A sole proprietor, partner, officer, director, or branch manager of a member, or other natural person occupying a similar status or performing similar functions, or a natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a member, whether or not any such person is registered or exempt from registration with FINRA under the By-Laws or the Rules of FINRA.
        For purposes of the Code, a person formerly associated with a member is a person associated with a member.
        (v) Pleadings
        A pleading is a statement describing a party's causes of action or defenses. Documents that are considered pleadings are: a statement of claim, an answer, a counterclaim, a cross claim, a third party claim, and any replies.
        (w) Prehearing Conference
        The term "prehearing conference" means any hearing session, including an Initial Prehearing Conference, that takes place before the hearing on the merits begins.
        (x) Pro Se
        For purposes of the Code, the term "pro se" refers to a party that is not represented by an attorney or others during an arbitration or mediation.
        (y) Public Arbitrator
        The term "public arbitrator" means a person who is otherwise qualified to serve as an arbitrator, and is not disqualified from service as an arbitrator, as enumerated by any of the criteria below.
        Permanent Disqualifications Based on a Person's Own Activities
        (1) A person shall not be designated as a public arbitrator who is, or was, associated with, including registered through, under, or with (as applicable):
        (A) a broker or a dealer (including a government securities broker or dealer or a municipal securities broker or dealer); or
        (B) the Commodity Exchange Act or the Commodities Future Trading Commission, or a member of the National Futures Association or the Municipal Securities Rulemaking Board; or
        (C) an entity that is organized under or registered pursuant to the Securities Exchange Act of 1934, Investment Company Act of 1940, or the Investment Advisers Act of 1940; or
        (D) a mutual fund or a hedge fund; or
        (E) an investment adviser.
        (2) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional time annually, to any entities listed in paragraph (y)(1) and/or to any persons or entities associated with any of the entities listed in paragraph (y)(1).
        (3) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an attorney, accountant, expert witness or other professional who has devoted 20 percent or more of his or her professional time annually to representing or providing services to parties in disputes concerning investment accounts or transactions, or employment relationships within the financial industry.
        (4) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an employee of a bank or other financial institution who effects transactions in securities, including government or municipal securities, commodities, futures, or options or supervises or monitors the compliance with the securities and commodities laws of employees who engage in such activities.
        Temporary Disqualifications Based on a Person's Own Activities
        (5) A person shall not be designated as a public arbitrator who is employed by, or is a director or officer of, an entity that directly or indirectly controls, is controlled by, or is under common control with, any partnership, corporation, or other organization that is engaged in the financial industry unless the affiliation ended more than five calendar years ago.
        (6) A person shall not be designated as a public arbitrator who is an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional time, in any single calendar year, to any entities listed in paragraph (y)(1) and/or to any persons or entities associated with any of the entities listed in paragraph (y)(1) unless the calendar year ended more than five calendar years ago.
        (7) A person shall not be designated as a public arbitrator who is an attorney, accountant, expert witness or other professional who has devoted 20 percent or more of his or her professional time, in any single calendar year, to representing or providing services to parties in disputes concerning investment accounts or transactions, or employment relationships within the financial industry unless the calendar year ended more than five calendar years ago.
        (8) A person shall not be designated as a public arbitrator if the person is an employee of a bank or other financial institution and the person effects transactions in securities, including government or municipal securities, commodities, futures, or options or supervises or monitors the compliance with the securities and commodities laws of employees who engage in such activities unless the affiliation ended more than five calendar years ago.
        Temporary Disqualifications Based on the Activities of Others at a Person's Employer
        (9) A person shall not be designated as a public arbitrator who is an attorney, accountant, or other professional whose firm derived $50,000 or more, or at least 10 percent of its annual revenue, in any single calendar year during the course of the past two calendar years, from any entities listed in paragraph (y)(1) and/or to any persons or entities associated with any of the entities listed in paragraph (y)(1), or from a bank or other financial institution where persons effect transactions in securities including government or municipal securities, commodities, futures, or options. A person whom FINRA would not designate as a public arbitrator under this subparagraph shall also not be designated as a public arbitrator for two calendar years after ending employment at the firm.
        (10) A person shall not be designated as a public arbitrator, who is an attorney, accountant, or other professional whose firm derived $50,000 or more, or at least 10 percent of its annual revenue, in any single calendar year during the course of the past two calendar years, from individual and/or institutional investors relating to securities matters. A person whom FINRA would not designate as a public arbitrator under this subparagraph shall also not be designated as a public arbitrator for two calendar years after ending employment at the firm.
        Temporary Disqualification Based on the Financial Industry Affiliation of an Immediate Family Member
        (11) A person shall not be designated as a public arbitrator if his or her immediate family member is an individual whom FINRA would disqualify from serving on the public arbitrator roster. If the person's immediate family member ends the disqualifying affiliation, or the person ends the relationship with the individual so that the individual is no longer the person's immediate family member, the person may, after two calendar years have passed from the end of the affiliation or relationship, be designated as a public arbitrator.
        For purposes of this rule, the term immediate family member means:
        (A) a person's spouse, partner in a civil union, domestic partner, parent, stepparent, child, or stepchild;
        (B) a member of a person's household;
        (C) an individual to whom a person provides financial support of more than 50 percent of his or her annual income; or
        (D) a person who is claimed as a dependent for federal income tax purposes.
        For purposes of the public arbitrator definition, the term "revenue" shall not include mediation fees received by mediators who are also arbitrators, provided that the mediator acts in the capacity of a mediator and does not represent a party in the mediation.
        (z) Respondent
        The term "respondent" means a party against whom a statement of claim or third party claim has been filed. A claimant against whom a counterclaim has been filed is not a respondent for purposes of the Code.
        (aa) Statement of Claim
        The term "statement of claim" means the initial or amended claim filed by the party or parties initiating the arbitration.
        (bb) Submission Agreement
        The term "Submission Agreement" means the FINRA Submission Agreement. The FINRA Submission Agreement is a document that parties must sign at the outset of an arbitration in which they agree to submit to arbitration under the Code.
        (cc) Third Party Claim
        The term "third party claim" means a claim asserted against a party not already named in the statement of claim or any other previous pleading.
        Amended by SR-FINRA-2017-025.
        Amended by SR-FINRA-2016-029 eff. April 3, 2017.
        Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
        Amended by SR-FINRA-2014-028 eff. June 26, 2015.
        Amended by SR-FINRA-2013-003 eff. July 1, 2013.
        Amended by SR-FINRA-2009-041 eff. Jan. 18, 2010.
        Amended by SR-FINRA-2008-031 eff. Feb. 9, 2009.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2007-021 eff. June 9, 2008.
        Amended by SR-NASD-2007-038 eff. June 14, 2007.
        Adopted by SR-NASD-2003-158 eff. April 16, 2007.

        Selected Notices to Members: 07-07, 08-22, 08-57, 09-04, 09-74, 13-21, 15-18, 16-04, 17-03.

      • 13100. Definitions

        Unless otherwise defined in the Code, terms used in the Code and interpretive material, if defined in the FINRA By-Laws, shall have the meaning as defined in the FINRA By-Laws.
        (a) Arbitrator and Mediator Portal
        The term "Arbitrator and Mediator Portal" means the web-based system that allows invited arbitrators and mediators to access a secure section of FINRA's website to submit documents and information and view their arbitration and mediation case information and documents.
        (b) Associated Person
        The term "associated person" or "associated person of a member" means a person associated with a member, as that term is defined in paragraph (u).
        (c) Award
        An award is a document stating the disposition of a case.
        (d) Board
        The term "Board" means the Board of Directors of FINRA Regulation.
        (e) Claim
        The term "claim" means an allegation or request for relief.
        (f) Claim Notification Letter
        The term “Claim Notification Letter” means notice provided by the Director to respondent(s) that they have been named as a party in a statement of claim. The notice will provide information about accessing the Party Portal to obtain a copy of the statement of claim filed by the claimant(s) and information about the arbitration, including the hearing location selected by the Director and the deadline for filing a statement of answer.
        (g) Claimant
        The term "claimant" means a party that files the statement of claim that initiates an arbitration under Rule 13302.
        (h) Code
        The term "Code" means the Code of Arbitration Procedure for Industry Disputes. For disputes involving customers, see the FINRA Code of Arbitration Procedure for Customer Disputes.
        (i) Counterclaim
        The term "counterclaim" means a claim asserted against a claimant by a respondent.
        (j) Cross Claim
        The term "cross claim" means a claim asserted by a respondent against another already-named respondent.
        (k) Customer
        A customer shall not include a broker or dealer.
        (l) Day
        Except as otherwise provided, the term "day" means calendar day. If a deadline specified in the Code falls on a Saturday, Sunday or any FINRA holiday, the deadline is extended until the next business day. If a party receives pleadings or other documents on a Saturday, Sunday or any FINRA holiday, the date of receipt shall be the next business day.
        (m) Director
        The term "Director" means the Director of the Office of Dispute Resolution. Unless the Code provides that the Director may not delegate a specific function, the term includes FINRA staff to whom the Director has delegated authority.
        (n) Dispute
        The term "dispute" means a dispute, claim or controversy. A dispute may consist of one or more claims.
        (o) Hearing
        The term "hearing" means the hearing on the merits of an arbitration under Rule 13600.
        (p) Hearing Session
        The term "hearing session" means any meeting between the parties and arbitrator(s) of four hours or less, including a hearing or a prehearing conference.
        (q) Member
        For purposes of the Code, the term "member" means any broker or dealer admitted to membership in FINRA, whether or not the membership has been terminated or cancelled; and any broker or dealer admitted to membership in a self-regulatory organization that, with FINRA consent, has required its members to arbitrate pursuant to the Code and/or to be treated as members of FINRA for purposes of the Code, whether or not the membership has been terminated or cancelled.
        (r) Non-Public Arbitrator
        The term "non-public arbitrator" means a person who is otherwise qualified to serve as an arbitrator, and is disqualified from service as a public arbitrator under paragraph (x).
        (s) Panel
        The term "panel" means the arbitration panel, whether it consists of one or more arbitrators.
        (t) Party Portal
        The term “Party Portal” means the web-based system that is accessible by arbitration and mediation parties and their representatives. The Party Portal allows invited participants to access a secure section of FINRA's website to submit documents and view their arbitration and mediation case information and documents.
        (u) Person Associated with a Member
        The term "person associated with a member" means:
        (1) A natural person who is registered or has applied for registration under the Rules of FINRA; or
        (2) A sole proprietor, partner, officer, director, or branch manager of a member, or other natural person occupying a similar status or performing similar functions, or a natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a member, whether or not any such person is registered or exempt from registration with FINRA under the By-Laws or the Rules of FINRA.
        For purposes of the Code, a person formerly associated with a member is a person associated with a member.
        (v) Pleadings
        A pleading is a statement describing a party's causes of action or defenses. Documents that are considered pleadings are: a statement of claim, an answer, a counterclaim, a cross claim, a third party claim, and any replies.
        (w) Prehearing Conference
        The term "prehearing conference" means any hearing session, including an Initial Prehearing Conference, that takes place before the hearing on the merits begins.
        (x) Public Arbitrator
        The term "public arbitrator" means a person who is otherwise qualified to serve as an arbitrator, and is not disqualified from service as an arbitrator, as enumerated by any of the criteria below.
        Permanent Disqualifications Based on a Person's Own Activities
        (1) A person shall not be designated as a public arbitrator who is, or was, associated with, including registered through, under, or with (as applicable):
        (A) a broker or a dealer (including a government securities broker or dealer or a municipal securities broker or dealer); or
        (B) the Commodity Exchange Act or the Commodities Future Trading Commission, or a member of the National Futures Association or the Municipal Securities Rulemaking Board; or
        (C) an entity that is organized under or registered pursuant to the Securities Exchange Act of 1934, Investment Company Act of 1940, or the Investment Advisers Act of 1940; or
        (D) a mutual fund or a hedge fund; or
        (E) an investment adviser.
        (2) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional time annually, to any entities listed in paragraph (x)(1) and/or to any persons or entities associated with any of the entities listed in paragraph (x)(1).
        (3) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an attorney, accountant, expert witness or other professional who has devoted 20 percent or more of his or her professional time annually to representing or providing services to parties in disputes concerning investment accounts or transactions, or employment relationships within the financial industry.
        (4) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an employee of a bank or other financial institution who effects transactions in securities, including government or municipal securities, commodities, futures, or options or supervises or monitors the compliance with the securities and commodities laws of employees who engage in such activities.
        Temporary Disqualifications Based on a Person's Own Activities
        (5) A person shall not be designated as a public arbitrator who is employed by, or is a director or officer of, an entity that directly or indirectly controls, is controlled by, or is under common control with, any partnership, corporation, or other organization that is engaged in the financial industry unless the affiliation ended more than five calendar years ago.
        (6) A person shall not be designated as a public arbitrator who is an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional time, in any single calendar year, to any entities listed in paragraph (x)(1) and/or to any persons or entities associated with any of the entities listed in paragraph (x)(1) unless the calendar year ended more than five calendar years ago.
        (7) A person shall not be designated as a public arbitrator who is an attorney, accountant, expert witness or other professional who has devoted 20 percent or more of his or her professional time, in any single calendar year, to representing or providing services to parties in disputes concerning investment accounts or transactions, or employment relationships within the financial industry unless the calendar year ended more than five calendar years ago.
        (8) A person shall not be designated as a public arbitrator if the person is an employee of a bank or other financial institution and the person effects transactions in securities, including government or municipal securities, commodities, futures, or options or supervises or monitors the compliance with the securities and commodities laws of employees who engage in such activities unless the affiliation ended more than five calendar years ago.
        Temporary Disqualifications Based on the Activities of Others at a Person's Employer
        (9) A person shall not be designated as a public arbitrator who is an attorney, accountant, or other professional whose firm derived $50,000 or more, or at least 10 percent of its annual revenue, in any single calendar year during the course of the past two calendar years, from any entities listed in paragraph (x)(1) and/or to any persons or entities associated with any of the entities listed in paragraph (x)(1), or from a bank or other financial institution where persons effect transactions in securities including government or municipal securities, commodities, futures, or options. A person whom FINRA would not designate as a public arbitrator under this subparagraph shall also not be designated as a public arbitrator for two calendar years after ending employment at the firm.
        (10) A person shall not be designated as a public arbitrator, who is an attorney, accountant, or other professional whose firm derived $50,000 or more, or at least 10 percent of its annual revenue, in any single calendar year during the course of the past two calendar years, from individual and/or institutional investors relating to securities matters. A person whom FINRA would not designate as a public arbitrator under this subparagraph shall also not be designated as a public arbitrator for two calendar years after ending employment at the firm.
        Temporary Disqualification Based on the Financial Industry Affiliation of an Immediate Family Member
        (11) A person shall not be designated as a public arbitrator if his or her immediate family member is an individual whom FINRA would disqualify from serving on the public arbitrator roster. If the person's immediate family member ends the disqualifying affiliation, or the person ends the relationship with the individual so that the individual is no longer the person's immediate family member, the person may, after two calendar years have passed from the end of the affiliation or relationship, be designated as a public arbitrator.
        For purposes of this rule, the term immediate family member means:
        (A) a person's spouse, partner in a civil union, domestic partner, parent, stepparent, child, or stepchild;
        (B) a member of a person's household;
        (C) an individual to whom a person provides financial support of more than 50 percent of his or her annual income; or
        (D) a person who is claimed as a dependent for federal income tax purposes.
        For purposes of the public arbitrator definition, the term "revenue" shall not include mediation fees received by mediators who are also arbitrators, provided that the mediator acts in the capacity of a mediator and does not represent a party in the mediation.
        (y) Related Claim
        For purposes of Rule 13803, the term "related claim" means any claim that arises out of the employment or termination of employment of an associated person.
        (z) Respondent
        The term "respondent" means a party against whom a statement of claim or third party claim has been filed. A claimant against whom a counterclaim has been filed is not a respondent for purposes of the Code.
        (aa) Statement of Claim
        The term "statement of claim" means the initial or amended claim filed by the party or parties initiating the arbitration.
        (bb) Statutory Employment Discrimination Claim
        The term "statutory employment discrimination claim" means a claim alleging employment discrimination, including a sexual harassment claim, in violation of a statute.
        (cc) Submission Agreement
        The term "Submission Agreement" means the FINRA Submission Agreement. The FINRA Submission Agreement is a document that parties must sign at the outset of an arbitration in which they agree to submit to arbitration under the Code.
        (dd) Temporary Injunctive Order
        The term "temporary injunctive order" means a temporary restraining order, preliminary injunction or other form of initial, temporary injunctive relief.
        (ee) Third Party Claim
        The term "third party claim" means a claim asserted against a party not already named in the statement of claim or any other previous pleading.
        Amended by SR-FINRA-2017-025.
        Amended by SR-FINRA-2016-029 eff. April 3, 2017.
        Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
        Amended by SR-FINRA-2014-028 eff. June 26, 2015.
        Amended by SR-FINRA-2013-003 eff. July 1, 2013.
        Amended by SR-FINRA-2009-041 eff. Jan. 18, 2010.
        Amended by SR-FINRA-2008-031 eff. Feb. 9, 2009.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2007-021 eff. June 9, 2008.
        Adopted by SR-NASD-2004-011 eff. April 16, 2007.

        Selected Notices to Member: 07-07, 08-22, 08-57, 09-04, 09-74, 13-21, 15-18, 16-04, 17-03.

    • SR-FINRA-2017-021

      • 7730. Trade Reporting and Compliance Engine (TRACE)

        The following charges shall be paid by participants for the use of the Trade Reporting and Compliance Engine ("TRACE"):
        System Fees Transaction Reporting Fees Data Fees
        Level I Trade Report Only Web Browser Access — $20/month per user ID

        Level II Full Service Web Browser Access — Subscription for a single user ID or the first user ID — $50/month (includes one Data Set); $80/month (includes two Data Sets); $110/month (includes three Data Sets); $140/month includes four Data Sets)

        Subscription for additional user IDs — $80/month per user ID (includes one Data Set); $140/month per user ID (includes two Data Sets); $200/month (includes three Data Sets); $260/month (includes four Data Sets)
        Trades up to and including $200,000 par value — $0.475/trade. (For Securitized Products where par value is not used to determine the size (volume) of a transaction, for purposes of trade reporting fees, size (volume) is the lesser of original face value or Remaining Principal Balance (or the equivalent) at the Time of Execution of the transaction.)

        Trades over $200,000 and up to and including $999,999.99 par value — $0.000002375 times the par value of the transaction (i.e., $0.002375/$1000). (See note above regarding certain Securitized Products.)

        Trades of $1,000,000 par value or more — $2.375/trade. (See note above regarding certain Securitized Products.) All transactions in Securitized Products that are Agency Pass-Through Mortgage-Backed Securities traded to be announced ("TBA") or SBA-Backed ABS traded TBA (each a "TBA transaction") — $1.50/trade.
        Market Data: Professional Real-Time Data Display — $60/month per display application per Data Set of Real-Time TRACE transaction data, except as may be subject to a waiver set forth below, or a flat fee of $7,500/month per Data Set of Real-Time TRACE transaction data, entitling Professionals to make unlimited internal use of such Data Set(s) through any number of display applications.
        CTCI/FIX/Third Party — $25/month/per firm Cancel/Correct — $1.50/trade Market Data: Vendor Real-Time Data Feed — $1,500/month per Data Set of Real-Time TRACE transaction data for receipt of continuous Real-Time TRACE transaction data, except for qualifying Tax-Exempt Organizations, or $250/month per Data Set of Snapshot Real-Time TRACE transaction data for daily receipt of such Data Set(s).
           "As/of" Trade Late — $3/trade Market Data: Vendor Real-Time Data Feed — $400/month per Data Set of Real-Time TRACE transaction data for qualifying Tax-Exempt Organizations.
              Market Data: Non-Professional Real-Time Data Display — No charge.
              Historic TRACE Data: Set-Up Fee — a single fee of $2,000 for development and set-up to receive Historic TRACE Data, except for qualifying Tax-Exempt Organizations.
              Historic TRACE Data: Set-Up Fee — a single fee of $1,000 for development and set-up to receive Historic TRACE Data for qualifying Tax-Exempt Organizations.
              Historic TRACE Data: Fee — $2,000/calendar year per Data Set for receipt of Historic TRACE Data, except for qualifying Tax-Exempt Organizations. The data is enabled for internal use and internal and/or external display application. Bulk re-distribution of data is not permitted.
              Historic TRACE Data: Bulk Re-Distribution Fee — except for qualifying Tax-Exempt Organizations, $1/CUSIP per calendar year (or part thereof) within a single Data Set of Historic TRACE Data per each recipient of re-distributed data; maximum fee per Data Set of $1,000/calendar year (or part thereof) per each recipient of re-distributed data.
              Historic TRACE Data: Bulk Re-Distribution Fee — for qualifying Tax-Exempt Organizations, $500/calendar year per Data Set for receipt of Historic TRACE Data. The data is enabled for internal use and internal and/or external display application. Bulk re-distribution of data is permitted with certain restrictions.
              FINRA ADDS: TRACE Data Delivery Plus

        A variable monthly fee charged per MPID subscriber, based upon the average number of transactions per month to which the MPID subscriber was a party in the prior calendar year, and the number of Plus reports received by the MPID subscriber per month (see paragraph (g))
              FINRA ADDS: TRACE Data Delivery SFTP

        $250 per MPID — one time set-up fee; and $200 per MPID per month
              Academic Corporate Bond TRACE Data: Set-Up Fee — a single fee of $500 for development and set-up to receive Academic Corporate Bond TRACE Data.
              Academic Corporate Bond TRACE Data: Fee — $500/calendar year for receipt of Academic Corporate Bond TRACE Data. Redistribution of data is not permitted.
        (a) System Related Fees
        A member may choose among the following options to report transactions in TRACE-Eligible Securities to FINRA pursuant to the Rule 6700 Series: (1) a TRACE web browser; (2) a Computer-to-Computer Interface ("CTCI") or a Financial Information eXchange ("FIX") line (either a line dedicated solely to TRACE or a multi-purpose line); or (3) a third-party reporting intermediary. Fees will be charged based on the reporting method selected by the member.
        (1) Web Browser Access
        A member that elects to report TRACE data to FINRA via a TRACE web browser shall be charged:
        (A) for Level I Trade Report Only Web Browser Access, $20 per month per user ID;
        (B) for Level II Full Service Web Browser Access, which includes access to Real-Time TRACE transaction data:
        (i) for a subscription for a single user ID or the first user ID, $50 per month (including one Data Set), $80 per month (including two Data Sets), $110 per month (including three Data Sets), or $140 per month (including four Data Sets); and
        (ii) for subscriptions for additional user IDs, $80 per month per user ID, (including one Data Set), or $140 per month per user ID (including two Data Sets), $200 per month per user ID (including three Data Sets), or $260 per month per user ID (including four Data Sets).
        (2) CTCI or FIX Access
        The charge to be paid by a member that elects to report TRACE data to FINRA via a CTCI or a FIX line shall be $25 per month, per firm, regardless of whether the line is or is not dedicated exclusively for TRACE.1
        (3) Third Party Access — Indirect Reporting
        A member may elect to report TRACE data indirectly to FINRA via third-party reporting intermediaries, such as vendors, service bureaus, clearing firms, or the National Securities Clearing Corporation ("NSCC"). The charge to be paid by a member shall be $25 per month, per firm. Nothing in this Rule shall prevent such third-party intermediaries from charging additional fees for their services.
        (b) Transaction Reporting Fees
        Each transaction in a TRACE-Eligible Security that is reportable to FINRA pursuant to the Rule 6700 Series is subject to the charges in this paragraph (b), and these charges shall be assessed against each member responsible for reporting the transaction. Transactions in U.S. Treasury Securities that are reportable to FINRA pursuant to the Rule 6700 Series are not subject to transaction reporting fees under this paragraph (b).
        (1) Trade Reporting Fee
        (A) Except for a transaction in a Securitized Product, as defined in Rule 6710(m), that is an Agency Pass-Through Mortgage-Backed Security, as defined in Rule 6710(v), traded to be announced ("TBA"), as defined in Rule 6710(u) or that is an SBA-Backed ABS, as defined in Rule 6710(bb), traded TBA (each a "TBA transaction"), a member shall be charged a trade reporting fee based upon a sliding scale ranging from $0.475 to $2.375 per transaction based on the size of the reported transaction. For Securitized Products where par value is not used to determine the size (volume) of a transaction, for purposes of trade reporting fees, the size (volume) of a transaction is the lesser of the original face value or the Remaining Principal Balance, as defined in Rule 6710(aa).
        (B) Except for TBA transactions, transactions up to and including $200,000 par value will be charged a $0.475 fee per transaction; transactions over $200,000 and up to and including $999,999.99 par value will be charged a fee of $0.000002375 times the par value of the transaction (i.e., $0.002375 per $1,000) per transaction; and transactions of $1,000,000 par value or more will be charged a fee of $2.375 per transaction. TBA transactions will be charged a trade reporting fee of $1.50 per transaction.
        (C) A member that is required to report a List or Fixed Offering Price Transaction or a Takedown Transaction shall not be charged the fees in paragraphs (b)(1)(A) and (B) for such transactions.
        (2) Cancel or Correct Trade Fee
        A member shall be charged a Cancel or Correct Trade Fee of $1.50 per canceled or corrected transaction.
        (3) "As/of" Trade Late Fee
        A member shall be charged an "As/of" Trade Late Fee of $3.00 per transaction for those transactions that are not timely reported "As/of" as required by these rules.
        (c) Market Data Fees
        Real-Time TRACE transaction data disseminated by FINRA comprises the following databases ("Data Set(s)"): corporate bonds ("Corporate Bond Data Set"), Agency Debt Securities ("Agency Data Set"), Securitized Products ("SP Data Set"), and transactions in TRACE-Eligible Securities effected pursuant to Securities Act Rule 144A ("Rule 144A transactions") ("Rule 144A Data Set"). The “SP Data Set” includes TRACE transaction data for CMOs that is disseminated upon receipt, pursuant to Rule 6750(a), and in periodic aggregated reports pursuant to Rule 6750(b). Market data fees are charged for each Data Set. Professionals and Non-Professionals may subscribe to receive one or more Data Sets of Real-Time TRACE transaction data disseminated by FINRA in one or more of the following ways for the charges specified, as applicable. Members, vendors and other redistributors shall be required to execute appropriate agreements with FINRA.
        (1) Professional Fees
        Professionals may subscribe for the following:
        (A) Professional Real-Time Data Display Fee
        (i) Professional Real-Time Data Display Fee of $60 per month, per display application per Data Set of Real-Time TRACE transaction data, except as may be subject to a waiver set forth below, or a flat fee of $7,500 per month per Data Set entitling Professionals to make unlimited internal use of such Data Set(s) of Real-Time TRACE transaction data on any number of display applications.
        (ii) If a member, vendor or other redistributor offers a Professional a free trial of a data product that includes Real-Time TRACE transaction data, FINRA will waive the Professional Real-Time Data Display Fee of $60 per month, per display application per Data Set, for not longer than one month (i.e., a period not longer than 31 days), concurrently with the free trial. Not more than four Professionals associated with, employed by, or otherwise affiliated with a member, employer or other person may receive the FINRA fee waiver during the free trial. After FINRA has waived the fee in connection with a free trial offered by a member, vendor or other redistributor, a Professional and the member, employer, or other person whom the Professional is associated with, employed by or otherwise affiliated with may not use the waiver again for that member, vendor or other distributor until 12 months has lapsed from the last day of the prior waiver.
        (B) Vendor Real-Time Data Feed Fee of $1,500 per month per Data Set for receipt of continuous Real-Time TRACE transaction data for any person or organization (other than a Tax-Exempt Organization) that receives a feed of such Data Set(s) of Real-Time TRACE transaction data, or $250 per month per Data Set for daily receipt of Snapshot Real-Time TRACE transaction data, which shall consist of one TRACE price per security per day. These fees entitle use of such Data Set(s) in one or more of the following ways: internal operational and processing systems, internal monitoring and surveillance systems, internal price validation, internal portfolio valuation services, internal analytical programs leading to purchase/sale or other trading decisions, and other related activities, and the repackaging of market data in such Data Set(s) for delivery and dissemination outside the organization, such as indices or other derivative products. (These fees do not include per display application charges noted in paragraph (c)(1)(A) per Data Set(s) of Real-Time TRACE transaction data.)2
        (C) Vendor Real-Time Data Feed Fee of $400 per month per Data Set for Real-Time TRACE transaction data received by a Tax-Exempt Organization as defined in Rule 7730. A Tax-Exempt Organization qualifies to receive Real-Time TRACE transaction data under this paragraph if it does not redistribute such data in bulk, or it re-distributes such data in bulk or otherwise at no charge solely to Non-Professionals or other Tax-Exempt Organizations that agree to be subject to the same restrictions.
        (D) A natural person otherwise subject to market data fees under Rule 7730 is not subject to such fees when he or she accesses and uses TRACE transaction data solely for his or her personal, non-commercial use.
        (2) Non-Professional Fees
        There shall be no charge paid by a Non-Professional for receiving all or any portion of one or more Data Sets of Real-Time TRACE transaction data disseminated through TRACE.
        (d) Historic TRACE Data
        Historic TRACE Data comprises the following Data Set(s): corporate bonds ("Historic Corporate Bond Data Set"), Agency Debt Securities ("Historic Agency Data Set"), Securitized Products ("Historic SP Data Set"), and Rule 144A transactions ("Historic Rule 144A Data Set"). Historic TRACE Data fees, except the Set-Up Fee, are charged for each Data Set. Professionals and Non-Professionals may receive Historic TRACE Data provided by FINRA in one or more of the following ways for the charges specified, as applicable. Recipients of Historic TRACE Data shall be required to execute appropriate agreements with FINRA.
        (1) Professional Fees
        Professionals may subscribe for the following:
        (A) Persons or Organizations Other Than Qualifying Tax-Exempt Organizations
        (i) Set-Up Fee — a single fee of $2,000 for development and set-up to begin receiving Historic TRACE Data.
        (ii) Data Fee — $2,000 per calendar year per Data Set for receipt of Historic TRACE Data. (The 2003 Historic Corporate Bond Data Set also includes the 2002 Historic Corporate Bond Data Set. The 2011 Historic Agency Data Set also includes the 2010 Historic Agency Data Set. The 2012 Historic SP Data Set also includes the 2011 Historic SP Data Set. The 2003 Historic Rule 144A Data Set also includes the 2002 Historic Rule 144A Data Set.) Historic TRACE Data is enabled for internal use and internal and/or external display application. Bulk re-distribution of such data is not permitted.
        (iii) Bulk Re-Distribution Fee — $1 per CUSIP per calendar year (or part thereof) within a single Data Set of Historic TRACE Data per each recipient of re-distributed data, with a maximum fee per Data Set of $1,000 per calendar year (or part thereof) per each recipient of re-distributed data.
        (B) Qualifying Tax-Exempt Organizations
        A Tax-Exempt Organization qualifies for development and set-up and to receive Historic TRACE Data under this paragraph (d)(1)(B) if it does not re-distribute such data in bulk, or it re-distributes such data in bulk or otherwise at no charge solely to Non-Professionals or other Tax-Exempt Organizations that agree to be subject to the same restrictions.
        (i) Set-Up Fee — $1,000 for development and set-up to begin receiving Historic TRACE Data.
        (ii) Data and Bulk Re-Distribution Fee — $500 per calendar year per Data Set for receipt of Historic TRACE Data. (The 2003 Historic Corporate Bond Data Set also includes the 2002 Historic Corporate Bond Data Set. The 2011 Historic Agency Data Set also includes the 2010 Historic Agency Data Set. The 2012 Historic SP Data Set also includes the 2011 Historic SP Data Set. The 2003 Historic Rule 144A Data Set also includes the 2002 Historic Rule 144A Data Set.) Historic TRACE Data is enabled for internal use and internal and/or external display application, and bulk redistribution, and may be re-distributed subject to the restrictions in paragraph (d)(1)(B).
        (2) Non-Professional Fees
        If FINRA provides all or any portion of one or more Data Sets of Historic TRACE Data to a Non-Professional, FINRA will charge a cost-neutral fee under Rule 7730(e) comprised solely of the cost of the media and the cost of delivery (e.g., U.S. Postal Service or other requested delivery service).
        (e) Academic Corporate Bond TRACE Data
        Academic Corporate Bond TRACE Data comprises historic transaction-level data on transactions in corporate bonds. Academic Corporate Bond TRACE Data is available only to institutions of higher education. Recipients of Academic Corporate Bond TRACE Data shall be required to execute appropriate agreements with FINRA.
        (f) Other Requests for Data
        FINRA may impose and collect charges for data FINRA supplied upon request, where there is no provision elsewhere in this Rule 7730 for charges for such service or sale.
        (g) Definitions
        (1) "Non-Professional" — As used in Rule 7730, a "Non-Professional" is a natural person who uses TRACE transaction data solely for his or her personal, non-commercial use. A Non-Professional subscriber must agree to certain terms of use of the TRACE data, including that he or she receive and use the TRACE transaction data solely for his or her personal, non-commercial use. As used in Rule 7730, a "Non-Professional" is not:
        (A) registered nor qualified in any capacity with the SEC, the Commodity Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association, nor an employee of the above and, with respect to any person identified in this subparagraph (A), uses TRACE transaction data for other than personal, non-commercial use;
        (B) engaged as an "investment adviser" as that term is defined in Section 202(a)(11) of the Investment Advisers Act (whether or not registered or qualified under that Act), nor an employee of the above and, with respect to any person identified in this subparagraph (B), uses TRACE transaction data for other than personal, non-commercial use;
        (C) employed by a bank, insurance company or other organization exempt from registration under federal or state securities laws to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt, nor any other employee of a bank, insurance company or such other organization referenced above and, with respect to any person identified in this subparagraph (C), uses TRACE transaction data for other than personal, non-commercial use; nor
        (D) engaged in, nor has the intention to engage in, any redistribution of all or any portion of the TRACE transaction data.
        (2) "Tax-Exempt Organization" as used in Rule 7730 means an organization that is described in Section 501(c) of the Internal Revenue Code (26 U.S.C. §501(c)) and has received recognition of the exemption from federal income taxes from the Internal Revenue Service.
        (3) "Real-Time" as used in Rule 7730 means that period of time starting from the time of dissemination by FINRA of transaction data on a TRACE-Eligible Security, and ending no more than four hours thereafter.
        (4) "Historic TRACE Data" as used in Rule 7730 means historic transaction-level data with elements to be determined from time to time by FINRA in its discretion and as stated in a Regulatory Notice or other equivalent publication. Historic TRACE Data will not include MPIDs. Historic Corporate Bond and Historic Agency Data will be delayed a minimum of six months. Historic SP Data will be delayed a minimum of 18 months. Historic Rule 144A Data will carry a delay consistent with the delay period applicable to the component security type (i.e., Rule 144A transactions in corporate bonds will be delayed a minimum of six months and Rule 144A transactions in Securitized Products will be delayed a minimum of 18 months). Historic TRACE Data includes the following Data Sets:
        (A) Historic Corporate Bond Data Set — includes all historic transactions in corporate bonds reported to TRACE, except Rule 144A transactions in corporate bonds;
        (B) Historic Agency Data Set — includes all historic transactions in Agency Debt Securities as defined in Rule 6710(l) reported to TRACE;
        (C) Historic SP Data Set — includes all historic transactions in Securitized Products as defined in Rule 6710(m) reported to TRACE, if transactions in that type of Securitized Product are subject to dissemination under Rule 6750, but excludes historic Rule 144A transactions in Securitized Products; and
        (D) Historic Rule 144A Data Set — includes all historic Rule 144A transactions reported to TRACE, except transactions involving a type of TRACE-Eligible Security that is not subject to dissemination under Rule 6750.
        (5) Academic Corporate Bond TRACE Data as used in Rule 7730 means historic transaction-level data on all transactions in corporate bonds reported to TRACE (except a transaction that is a List or Fixed Offering Price Transaction, as defined in Rule 6710(q), or a Takedown Transaction, as defined in Rule 6710(r)), including Rule 144A transactions in corporate bonds, with elements to be determined from time to time by FINRA in its discretion and as stated in a Regulatory Notice or other equivalent publication. Academic Corporate Bond TRACE Data will be delayed a minimum of 36 months and will not include MPIDs, but will substitute a masked dealer identifier for each MPID included in the data.
        (6) "End-of-Day TRACE Transaction File" as used in Rule 7730 means a daily file that includes all transaction data disseminated as part of Real-Time TRACE transaction data on that day and is separately available for each data set for which Real-Time TRACE transaction data is available (i.e., the Corporate Bond Data Set, Agency Data Set, SP Data Set, and Rule 144A Data Set). The End-of-Day TRACE Transaction File is made available daily after the TRACE system closes.
        (7) TRACE Security Activity Report
        The "TRACE Security Activity Report" is a monthly report containing basic descriptive security elements, aggregate par value volume information, number of transactions, number of unique market participant identifiers ("MPIDs"), and top 5 statistics for disseminated transactions in Corporate and Agency Bonds. The TRACE Security Activity Report will be delayed a minimum of 90 days.
        (A) Par Value Volume Information
        The aggregate par value volume information provided in the TRACE Security Activity Report will include the total par value traded, par value traded of customer buys, par value traded of customer sells, and par value traded of interdealer transactions. For uncapped transactions, the aggregate par value volume information will reflect the actual trade size of each transaction. If there are six or more capped transactions disseminated during the calendar month, the aggregate par value volume information will reflect the actual trade size of each transaction, as well as the par value traded within specified size categories. If there are fewer than six disseminated capped transactions during the calendar month, the aggregate par value volume information will reflect the capped volumes disseminated by TRACE.
        (B) Number of Transactions
        The transaction totals provided in the TRACE Security Activity Report will include the total number of transactions, the number of customer buys, the number of customer sells, and the number of interdealer transactions. If there are six or more capped transactions disseminated during the calendar month, the report will provide the total number of transactions and an estimate (provided as incremental ranges) of the number of transactions with a par value volume within specified size categories.
        (C) Number of Unique Market Participant Identifiers and Top 5 Statistics
        The TRACE Security Activity Report will provide the number of unique reporting MPIDs (displaying the actual number of unique MPIDs where there are six or more unique MPIDs or "1 to 5," as applicable) and the number of unique reporting MPIDs for disseminated capped transactions (displaying the actual number of unique MPIDs where there are six or more unique MPIDs, or "0" or "1 to 5," as applicable); the percentage of the total number of transactions traded by the top five MPIDs for each CUSIP; and the percentage of total par value traded by the top five MPIDs for each CUSIP.
        (h) FINRA ADDS Fees
        The FINRA Automated Data Delivery System ("FINRA ADDS") provides a member access to TRACE trade journal files. FINRA offers two optional FINRA ADDS services: TRACE Data Delivery and TRACE Data Delivery Secure File Transfer Protocol.
        (1) TRACE Data Delivery
        There is no charge to a market participant identifier ("MPID") that is a subscriber for TRACE Data Delivery reports provided to the MPID in response to requests by the MPID via the FINRA ADDS website.
        (2) TRACE Data Delivery Secure File Transfer Protocol Fee
        The TRACE Data Delivery Secure File Transfer Protocol ("TRACE Data Delivery SFTP") fees are charged to a market participant identifier ("MPID") that is a subscriber and are:
        (A) Set-Up Fee — a one-time fee of $250 per MPID that subscribes to the service.
        (B) Monthly Fee — a monthly fee of $200 per MPID that subscribes to the service.

        1 Charges that may be imposed by third parties, such as CTCI or FIX line providers, are not included in these fees.
        2 Under the Vendor Real-Time Data Feed Fee and service, Real-Time TRACE transaction data (or Data Set(s) of such data) may not be used in any display application that permits end users to determine individual transaction pricing.
        Amended by SR-FINRA-2017-021.
        Amended by SR-FINRA-2017-015.
        Amended by SR-FINRA-2017-012 eff. Oct. 2, 2017.
        Amended by SR-FINRA-2016-027 eff. July 10, 2017.
        Amended by SR-FINRA-2016-023 eff. March 20, 2017.
        Amended by SR-FINRA-2016-040 eff. Feb. 27, 2017.
        Amended by SR-FINRA-2016-024 eff. Feb. 27, 2017.
        Amended by SR-FINRA-2016-048 eff. Jan. 3, 2017.
        Amended by SR-FINRA-2013-046 eff. June 1, 2015.
        Amended by SR-FINRA-2014-043 eff. Oct. 3, 2014.
        Amended by SR-FINRA-2013-029 and SR-FINRA-2013-043 eff. June 30, 2014.
        Amended by SR-FINRA-2013-040 eff. Sept. 17, 2013.
        Amended by SR-FINRA-2012-053 eff. June 10, 2013.
        Amended by SR-FINRA-2012-020 eff. Nov. 12, 2012.
        Amended by SR-FINRA-2012-049 eff. Nov. 7, 2012.
        Amended by SR-FINRA-2011-056 eff. Nov. 1, 2011.
        Amended by SR-FINRA-2011-012 eff. May 16, 2011.
        Amended by SR-FINRA-2009-065 eff. May 16, 2011.
        Amended by SR-FINRA-2011-001 eff. Jan. 4, 2011.
        Amended by SR-FINRA-2007-006 eff. March 31, 2010.
        Amended by SR-FINRA-2009-010 eff. March 1, 2010.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2007-004 eff. May 1, 2007.
        Amended and renumbered as Rule 7030 by SR-NASD-2007-018 eff. March 5, 2007.
        Amended by SR-NASD-2005-063 eff. Oct. 1, 2005.
        Amended by SR-NASD-2005-083 eff. June 23, 2005.
        Amended by SR-NASD-2005-026 eff. June 1, 2005.
        Amended by SR-NASD-2004-189 eff. Feb 7 and June 1, 2005.
        Amended by SR-NASD-2004-163 eff. Oct. 29, 2004.
        Amended by SR-NASD-2003-157 eff. Feb. 1, 2004.
        Amended by SR-NASD-2003-097 eff. June 27, 2003.
        Amended by SR-NASD-2003-025 eff. Feb. 27, 2003.
        Amended by SR-NASD-2002-176 eff. Dec. 13, 2002.
        Amended by SR-NASD-2002-167 eff. Oct. 1, 2002.
        Adopted as Rule 7010(k) by SR-NASD-2002-063 eff. July 1, 2002.

        Selected Notices: 02-81, 04-06, 05-05, 05-37 05-52, 07-15, 08-57, 09-57, 10-23, 10-55, 11-20, 12-26, 12-48, 13-09, 13-35, 14-34, 16-38, 16-39, 16-43, 17-23.

    • SR-FINRA-2017-020

      • 6898. Consolidated Audit Trail—Fee Dispute Resolution

        (a) Definitions
        (1) For purposes of this Rule, the terms "CAT NMS Plan", "Industry Member", "Operating Committee", and "Participant" are defined as set forth in Rule 6810 (Consolidated Audit Trail—Definitions).
        (2) "Subcommittee" means a subcommittee designated by the Operating Committee pursuant to the CAT NMS Plan.
        (3) "CAT Fee" means any fees contemplated by the CAT NMS Plan and imposed on Industry Members pursuant to FINRA Rules.
        (b) Fee Dispute Resolution
        Disputes initiated by an Industry Member with respect to CAT Fees charged to such Industry Member, including disputes related to the designated tier and the fee calculated pursuant to such tier, shall be resolved by the Operating Committee, or a Subcommittee designated by the Operating Committee, of the CAT NMS Plan, pursuant to the Fee Dispute Resolution Procedures adopted pursuant to the CAT NMS Plan and set forth in paragraph (c) of this Rule. Decisions on such matters shall be binding on Industry Members, without prejudice to the rights of any such Industry Member to seek redress from the SEC or in any other appropriate forum.
        (c) Fee Dispute Resolution Procedures under the CAT NMS Plan
        (1) Scope of Procedures
        These Fee Dispute Resolution Procedures provide the procedure for Industry Members that dispute CAT Fees charged to such Industry Member, including disputes related to the designated tier and the fee calculated pursuant to such tier, to apply for an opportunity to be heard and to have the CAT Fees charged to such Industry Member reviewed.
        (2) Submission and Time Limitation on Application to CAT NMS, LLC ("Company")
        An Industry Member that disputes CAT Fees charged to such Industry Member and that desires to have an opportunity to be heard with respect to such disputed CAT Fees shall file a written application with the Company within 15 business days after being notified of such disputed CAT Fees. The application shall identify the disputed CAT Fees, state the specific reasons why the applicant takes exception to such CAT Fees, and set forth the relief sought. In addition, if the applicant intends to submit any additional documents, statements, arguments or other material in support of the application, the same should be so stated and identified.
        (3) Procedure Following Applications for Hearing
        (A) Fee Review Subcommittee
        The Company will refer applications for hearing and review promptly to the Subcommittee designated by the Operating Committee pursuant to Section 4.12 of the CAT NMS Plan with responsibility for conducting the reviews of CAT Fee disputes pursuant to these Fee Dispute Resolution Procedures. This Subcommittee will be referred to as the Fee Review Subcommittee. The members of the Fee Review Subcommittee will be subject to the provisions of Section 4.3(d) of the CAT NMS Plan regarding recusal and Conflicts of Interest.
        (B) Record
        The Fee Review Subcommittee will keep a record of the proceedings.
        (C) Hearings and Documents
        The Fee Review Subcommittee will hold hearings promptly. The Fee Review Subcommittee will set a hearing date. The parties to the hearing (as described in paragraph (c)(4)(A) below) shall furnish the Fee Review Subcommittee with all materials relevant to the proceedings at least 72 hours prior to the date of the hearing. Each party shall have the right to inspect and copy the other party's materials prior to the hearing.
        (4) Hearing and Decision
        (A) Parties
        The parties to the hearing shall consist of the applicant and a representative of the Company who shall present the reasons for the action taken by the Company that allegedly aggrieved the applicant.
        (B) Counsel
        The applicant is entitled to be accompanied, represented and advised by counsel at all stages of the proceedings.
        (C) Conduct of Hearing
        The Fee Review Subcommittee shall determine all questions concerning the admissibility of evidence and shall otherwise regulate the conduct of the hearing. Each of the parties shall be permitted to make an opening statement, present witnesses and documentary evidence, cross examine opposing witnesses and present closing arguments orally or in writing as determined by the Fee Review Subcommittee. The Fee Review Subcommittee also shall have the right to question all parties and witnesses to the proceeding. The Fee Review Subcommittee shall keep a record of the hearing. The formal rules of evidence shall not apply.
        (D) Decision
        The Fee Review Subcommittee shall set forth its decision in writing and send the written decision to the parties to the proceeding. Such decisions shall contain the reasons supporting the conclusions of the Fee Review Subcommittee.
        (5) Review
        (A) Petition
        The decision of the Fee Review Subcommittee shall be subject to review by the Operating Committee either on its own motion within 20 business days after issuance of the decision or upon written request submitted by the applicant within 15 business days after issuance of the decision. The applicant's petition shall be in writing and specify the findings and conclusions to which the applicant objects, together with the reasons for such objections. Any objection to a decision not specified in writing shall be considered to have been abandoned and may be disregarded. Parties may petition to submit a written argument to the Operating Committee and may request an opportunity to make an oral argument before the Operating Committee. The Operating Committee shall have sole discretion to grant or deny either request.
        (B) Conduct of Review
        The Operating Committee shall conduct the review. The review shall be made upon the record and shall be made after such further proceedings, if any, as the Operating Committee may order. Based upon such record, the Operating Committee may affirm, reverse or modify, in whole or in part, the decision of the Fee Review Subcommittee. The decision of the Operating Committee shall be in writing, shall be sent to the parties to the proceeding and shall be final.
        (6) Time Limit for Review
        A final decision regarding the disputed CAT Fees by the Operating Committee, or the Fee Review Subcommittee (if there is no review by the Operating Committee), must be provided within 90 days of the date on which the Industry Member filed a written application regarding disputed CAT Fees with the Company pursuant to paragraph (c)(2) of these Fee Dispute Resolution Procedures. The Operating Committee may extend the 90-day time limit under this paragraph (c)(6) at its discretion.
        (7) Miscellaneous Provisions
        (A) Service of Notice
        Any notices or other documents may be served upon the applicant either personally or by leaving the same at its, his or her place of business or by deposit in the United States post office, postage prepaid, by registered or certified mail, addressed to the applicant at its, his or her last known business or residence address.
        (B) Extension of Certain Time Limits
        Any time limits imposed under these Fee Dispute Resolution Procedures for the submission of answers, petitions or other materials may be extended by permission of the Operating Committee. All papers and documents relating to review by the Fee Review Subcommittee or the Operating Committee must be submitted to the Fee Review Subcommittee or Operating Committee, as applicable.
        (8) Agency Review
        Decisions on such CAT Fee disputes made pursuant to these Fee Dispute Resolution Procedures shall be binding on Industry Members, without prejudice to the rights of any such Industry Member to seek redress from the SEC or in any other appropriate forum.
        (9) Payment of Disputed CAT Fees
        (A) Timing of Fee Payment
        An Industry Member that files a written application with the Company regarding disputed CAT Fees in accordance with these Fee Dispute Resolution Procedures is not required to pay such disputed CAT Fees until the dispute is resolved in accordance with these Fee Dispute Resolution Procedures, including any review pursuant to paragraph (c)(8). For the purposes of this paragraph (c)(9), the disputed CAT Fees means the amount of the invoiced CAT Fees that the Industry Member has asserted pursuant to these Fee Dispute Resolution Procedures that such Industry Member does not owe to the Company. The Industry Member must pay any invoiced CAT Fees that are not disputed CAT Fees when due as set forth in the original invoice.
        (B) Interest on Unpaid CAT Fees
        Once the dispute regarding CAT Fees is resolved pursuant to these Fee Dispute Resolution Procedures, if it is determined that the Industry Member owes any of the disputed CAT Fees, then the Industry Member must pay such disputed CAT Fees that are owed as well as interest on such disputed CAT Fees from the original due date (that is, 30 days after receipt of the original invoice of such CAT Fees) until such disputed CAT Fees are paid at a per annum rate equal to the lesser of (i) the Prime Rate plus 300 basis points, or (ii) the maximum rate permitted by applicable law.
        Adopted by SR-FINRA-2017-020.

    • SR-FINRA-2017-015

      • 7730. Trade Reporting and Compliance Engine (TRACE)

        The following charges shall be paid by participants for the use of the Trade Reporting and Compliance Engine ("TRACE"):
        System Fees Transaction Reporting Fees Data Fees
        Level I Trade Report Only Web Browser Access — $20/month per user ID

        Level II Full Service Web Browser Access — Subscription for a single user ID or the first user ID — $50/month (includes one Data Set); $80/month (includes two Data Sets); $110/month (includes three Data Sets); $140/month includes four Data Sets)

        Subscription for additional user IDs — $80/month per user ID (includes one Data Set); $140/month per user ID (includes two Data Sets); $200/month (includes three Data Sets); $260/month (includes four Data Sets)
        Trades up to and including $200,000 par value — $0.475/trade. (For Securitized Products where par value is not used to determine the size (volume) of a transaction, for purposes of trade reporting fees, size (volume) is the lesser of original face value or Remaining Principal Balance (or the equivalent) at the Time of Execution of the transaction.)

        Trades over $200,000 and up to and including $999,999.99 par value — $0.000002375 times the par value of the transaction (i.e., $0.002375/$1000). (See note above regarding certain Securitized Products.)

        Trades of $1,000,000 par value or more — $2.375/trade. (See note above regarding certain Securitized Products.) All transactions in Securitized Products that are Agency Pass-Through Mortgage-Backed Securities traded to be announced ("TBA") or SBA-Backed ABS traded TBA (each a "TBA transaction") — $1.50/trade.
        Market Data: Professional Real-Time Data Display — $60/month per display application per Data Set of Real-Time TRACE transaction data, except as may be subject to a waiver set forth below, or a flat fee of $7,500/month per Data Set of Real-Time TRACE transaction data, entitling Professionals to make unlimited internal use of such Data Set(s) through any number of display applications.
        CTCI/FIX/Third Party — $25/month/per firm Cancel/Correct — $1.50/trade Market Data: Vendor Real-Time Data Feed — $1,500/month per Data Set of Real-Time TRACE transaction data for receipt of continuous Real-Time TRACE transaction data, except for qualifying Tax-Exempt Organizations, or $250/month per Data Set of Snapshot Real-Time TRACE transaction data for daily receipt of such Data Set(s).
           "As/of" Trade Late — $3/trade Market Data: Vendor Real-Time Data Feed — $400/month per Data Set of Real-Time TRACE transaction data for qualifying Tax-Exempt Organizations.
              Market Data: Non-Professional Real-Time Data Display — No charge.
              Historic TRACE Data: Set-Up Fee — a single fee of $2,000 for development and set-up to receive Historic TRACE Data, except for qualifying Tax-Exempt Organizations.
              Historic TRACE Data: Set-Up Fee — a single fee of $1,000 for development and set-up to receive Historic TRACE Data for qualifying Tax-Exempt Organizations.
              Historic TRACE Data: Fee — $2,000/calendar year per Data Set for receipt of Historic TRACE Data, except for qualifying Tax-Exempt Organizations. The data is enabled for internal use and internal and/or external display application. Bulk re-distribution of data is not permitted.
              Historic TRACE Data: Bulk Re-Distribution Fee — except for qualifying Tax-Exempt Organizations, $1/CUSIP per calendar year (or part thereof) within a single Data Set of Historic TRACE Data per each recipient of re-distributed data; maximum fee per Data Set of $1,000/calendar year (or part thereof) per each recipient of re-distributed data.
              Historic TRACE Data: Bulk Re-Distribution Fee — for qualifying Tax-Exempt Organizations, $500/calendar year per Data Set for receipt of Historic TRACE Data. The data is enabled for internal use and internal and/or external display application. Bulk re-distribution of data is permitted with certain restrictions.
              FINRA ADDS: TRACE Data Delivery Plus

        A variable monthly fee charged per MPID subscriber, based upon the average number of transactions per month to which the MPID subscriber was a party in the prior calendar year, and the number of Plus reports received by the MPID subscriber per month (see paragraph (g))
              FINRA ADDS: TRACE Data Delivery SFTP

        $250 per MPID — one time set-up fee; and $200 per MPID per month
              Academic Corporate Bond TRACE Data: Set-Up Fee — a single fee of $500 for development and set-up to receive Academic Corporate Bond TRACE Data.
              Academic Corporate Bond TRACE Data: Fee — $500/calendar year for receipt of Academic Corporate Bond TRACE Data. Redistribution of data is not permitted.
        (a) System Related Fees
        A member may choose among the following options to report transactions in TRACE-Eligible Securities to FINRA pursuant to the Rule 6700 Series: (1) a TRACE web browser; (2) a Computer-to-Computer Interface ("CTCI") or a Financial Information eXchange ("FIX") line (either a line dedicated solely to TRACE or a multi-purpose line); or (3) a third-party reporting intermediary. Fees will be charged based on the reporting method selected by the member.
        (1) Web Browser Access
        A member that elects to report TRACE data to FINRA via a TRACE web browser shall be charged:
        (A) for Level I Trade Report Only Web Browser Access, $20 per month per user ID;
        (B) for Level II Full Service Web Browser Access, which includes access to Real-Time TRACE transaction data:
        (i) for a subscription for a single user ID or the first user ID, $50 per month (including one Data Set), $80 per month (including two Data Sets), $110 per month (including three Data Sets), or $140 per month (including four Data Sets); and
        (ii) for subscriptions for additional user IDs, $80 per month per user ID, (including one Data Set), or $140 per month per user ID (including two Data Sets), $200 per month per user ID (including three Data Sets), or $260 per month per user ID (including four Data Sets).
        (2) CTCI or FIX Access
        The charge to be paid by a member that elects to report TRACE data to FINRA via a CTCI or a FIX line shall be $25 per month, per firm, regardless of whether the line is or is not dedicated exclusively for TRACE.1
        (3) Third Party Access — Indirect Reporting
        A member may elect to report TRACE data indirectly to FINRA via third-party reporting intermediaries, such as vendors, service bureaus, clearing firms, or the National Securities Clearing Corporation ("NSCC"). The charge to be paid by a member shall be $25 per month, per firm. Nothing in this Rule shall prevent such third-party intermediaries from charging additional fees for their services.
        (b) Transaction Reporting Fees
        Each transaction in a TRACE-Eligible Security that is reportable to FINRA pursuant to the Rule 6700 Series is subject to the charges in this paragraph (b), and these charges shall be assessed against each member responsible for reporting the transaction. Transactions in U.S. Treasury Securities that are reportable to FINRA pursuant to the Rule 6700 Series are not subject to transaction reporting fees under this paragraph (b).
        (1) Trade Reporting Fee
        (A) Except for a transaction in a Securitized Product, as defined in Rule 6710(m), that is an Agency Pass-Through Mortgage-Backed Security, as defined in Rule 6710(v), traded to be announced ("TBA"), as defined in Rule 6710(u) or that is an SBA-Backed ABS, as defined in Rule 6710(bb), traded TBA (each a "TBA transaction"), a member shall be charged a trade reporting fee based upon a sliding scale ranging from $0.475 to $2.375 per transaction based on the size of the reported transaction. For Securitized Products where par value is not used to determine the size (volume) of a transaction, for purposes of trade reporting fees, the size (volume) of a transaction is the lesser of the original face value or the Remaining Principal Balance, as defined in Rule 6710(aa).
        (B) Except for TBA transactions, transactions up to and including $200,000 par value will be charged a $0.475 fee per transaction; transactions over $200,000 and up to and including $999,999.99 par value will be charged a fee of $0.000002375 times the par value of the transaction (i.e., $0.002375 per $1,000) per transaction; and transactions of $1,000,000 par value or more will be charged a fee of $2.375 per transaction. TBA transactions will be charged a trade reporting fee of $1.50 per transaction.
        (C) A member that is required to report a List or Fixed Offering Price Transaction or a Takedown Transaction shall not be charged the fees in paragraphs (b)(1)(A) and (B) for such transactions.
        (2) Cancel or Correct Trade Fee
        A member shall be charged a Cancel or Correct Trade Fee of $1.50 per canceled or corrected transaction.
        (3) "As/of" Trade Late Fee
        A member shall be charged an "As/of" Trade Late Fee of $3.00 per transaction for those transactions that are not timely reported "As/of" as required by these rules.
        (c) Market Data Fees
        Real-Time TRACE transaction data disseminated by FINRA comprises the following databases ("Data Set(s)"): corporate bonds ("Corporate Bond Data Set"), Agency Debt Securities ("Agency Data Set"), Securitized Products ("SP Data Set"), and transactions in TRACE-Eligible Securities effected pursuant to Securities Act Rule 144A ("Rule 144A transactions") ("Rule 144A Data Set"). The “SP Data Set” includes TRACE transaction data for CMOs that is disseminated upon receipt, pursuant to Rule 6750(a), and in periodic aggregated reports pursuant to Rule 6750(b). Market data fees are charged for each Data Set. Professionals and Non-Professionals may subscribe to receive one or more Data Sets of Real-Time TRACE transaction data disseminated by FINRA in one or more of the following ways for the charges specified, as applicable. Members, vendors and other redistributors shall be required to execute appropriate agreements with FINRA.
        (1) Professional Fees
        Professionals may subscribe for the following:
        (A) Professional Real-Time Data Display Fee
        (i) Professional Real-Time Data Display Fee of $60 per month, per display application per Data Set of Real-Time TRACE transaction data, except as may be subject to a waiver set forth below, or a flat fee of $7,500 per month per Data Set entitling Professionals to make unlimited internal use of such Data Set(s) of Real-Time TRACE transaction data on any number of display applications.
        (ii) If a member, vendor or other redistributor offers a Professional a free trial of a data product that includes Real-Time TRACE transaction data, FINRA will waive the Professional Real-Time Data Display Fee of $60 per month, per display application per Data Set, for not longer than one month (i.e., a period not longer than 31 days), concurrently with the free trial. Not more than four Professionals associated with, employed by, or otherwise affiliated with a member, employer or other person may receive the FINRA fee waiver during the free trial. After FINRA has waived the fee in connection with a free trial offered by a member, vendor or other redistributor, a Professional and the member, employer, or other person whom the Professional is associated with, employed by or otherwise affiliated with may not use the waiver again for that member, vendor or other distributor until 12 months has lapsed from the last day of the prior waiver.
        (B) Vendor Real-Time Data Feed Fee of $1,500 per month per Data Set for receipt of continuous Real-Time TRACE transaction data for any person or organization (other than a Tax-Exempt Organization) that receives a feed of such Data Set(s) of Real-Time TRACE transaction data, or $250 per month per Data Set for daily receipt of Snapshot Real-Time TRACE transaction data, which shall consist of one TRACE price per security per day. These fees entitle use of such Data Set(s) in one or more of the following ways: internal operational and processing systems, internal monitoring and surveillance systems, internal price validation, internal portfolio valuation services, internal analytical programs leading to purchase/sale or other trading decisions, and other related activities, and the repackaging of market data in such Data Set(s) for delivery and dissemination outside the organization, such as indices or other derivative products. (These fees do not include per display application charges noted in paragraph (c)(1)(A) per Data Set(s) of Real-Time TRACE transaction data.)2
        (C) Vendor Real-Time Data Feed Fee of $400 per month per Data Set for Real-Time TRACE transaction data received by a Tax-Exempt Organization as defined in Rule 7730. A Tax-Exempt Organization qualifies to receive Real-Time TRACE transaction data under this paragraph if it does not redistribute such data in bulk, or it re-distributes such data in bulk or otherwise at no charge solely to Non-Professionals or other Tax-Exempt Organizations that agree to be subject to the same restrictions.
        (D) A natural person otherwise subject to market data fees under Rule 7730 is not subject to such fees when he or she accesses and uses TRACE transaction data solely for his or her personal, non-commercial use.
        (2) Non-Professional Fees
        There shall be no charge paid by a Non-Professional for receiving all or any portion of one or more Data Sets of Real-Time TRACE transaction data disseminated through TRACE.
        (d) Historic TRACE Data
        Historic TRACE Data comprises the following Data Set(s): corporate bonds ("Historic Corporate Bond Data Set"), Agency Debt Securities ("Historic Agency Data Set"), Securitized Products ("Historic SP Data Set"), and Rule 144A transactions ("Historic Rule 144A Data Set"). Historic TRACE Data fees, except the Set-Up Fee, are charged for each Data Set. Professionals and Non-Professionals may receive Historic TRACE Data provided by FINRA in one or more of the following ways for the charges specified, as applicable. Recipients of Historic TRACE Data shall be required to execute appropriate agreements with FINRA.
        (1) Professional Fees
        Professionals may subscribe for the following:
        (A) Persons or Organizations Other Than Qualifying Tax-Exempt Organizations
        (i) Set-Up Fee — a single fee of $2,000 for development and set-up to begin receiving Historic TRACE Data.
        (ii) Data Fee — $2,000 per calendar year per Data Set for receipt of Historic TRACE Data. (The 2003 Historic Corporate Bond Data Set also includes the 2002 Historic Corporate Bond Data Set. The 2011 Historic Agency Data Set also includes the 2010 Historic Agency Data Set. The 2012 Historic SP Data Set also includes the 2011 Historic SP Data Set. The 2003 Historic Rule 144A Data Set also includes the 2002 Historic Rule 144A Data Set.) Historic TRACE Data is enabled for internal use and internal and/or external display application. Bulk re-distribution of such data is not permitted.
        (iii) Bulk Re-Distribution Fee — $1 per CUSIP per calendar year (or part thereof) within a single Data Set of Historic TRACE Data per each recipient of re-distributed data, with a maximum fee per Data Set of $1,000 per calendar year (or part thereof) per each recipient of re-distributed data.
        (B) Qualifying Tax-Exempt Organizations
        A Tax-Exempt Organization qualifies for development and set-up and to receive Historic TRACE Data under this paragraph (d)(1)(B) if it does not re-distribute such data in bulk, or it re-distributes such data in bulk or otherwise at no charge solely to Non-Professionals or other Tax-Exempt Organizations that agree to be subject to the same restrictions.
        (i) Set-Up Fee — $1,000 for development and set-up to begin receiving Historic TRACE Data.
        (ii) Data and Bulk Re-Distribution Fee — $500 per calendar year per Data Set for receipt of Historic TRACE Data. (The 2003 Historic Corporate Bond Data Set also includes the 2002 Historic Corporate Bond Data Set. The 2011 Historic Agency Data Set also includes the 2010 Historic Agency Data Set. The 2012 Historic SP Data Set also includes the 2011 Historic SP Data Set. The 2003 Historic Rule 144A Data Set also includes the 2002 Historic Rule 144A Data Set.) Historic TRACE Data is enabled for internal use and internal and/or external display application, and bulk redistribution, and may be re-distributed subject to the restrictions in paragraph (d)(1)(B).
        (2) Non-Professional Fees
        If FINRA provides all or any portion of one or more Data Sets of Historic TRACE Data to a Non-Professional, FINRA will charge a cost-neutral fee under Rule 7730(e) comprised solely of the cost of the media and the cost of delivery (e.g., U.S. Postal Service or other requested delivery service).
        (e) Academic Corporate Bond TRACE Data
        Academic Corporate Bond TRACE Data comprises historic transaction-level data on transactions in corporate bonds. Academic Corporate Bond TRACE Data is available only to institutions of higher education. Recipients of Academic Corporate Bond TRACE Data shall be required to execute appropriate agreements with FINRA.
        (f) Other Requests for Data
        FINRA may impose and collect charges for data FINRA supplied upon request, where there is no provision elsewhere in this Rule 7730 for charges for such service or sale.
        (g) Definitions
        (1) "Non-Professional" — As used in Rule 7730, a "Non-Professional" is a natural person who uses TRACE transaction data solely for his or her personal, non-commercial use. A Non-Professional subscriber must agree to certain terms of use of the TRACE data, including that he or she receive and use the TRACE transaction data solely for his or her personal, non-commercial use. As used in Rule 7730, a "Non-Professional" is not:
        (A) registered nor qualified in any capacity with the SEC, the Commodity Futures Trading Commission, any state securities agency, any securities exchange or association, or any commodities or futures contract market or association, nor an employee of the above and, with respect to any person identified in this subparagraph (A), uses TRACE transaction data for other than personal, non-commercial use;
        (B) engaged as an "investment adviser" as that term is defined in Section 202(a)(11) of the Investment Advisers Act (whether or not registered or qualified under that Act), nor an employee of the above and, with respect to any person identified in this subparagraph (B), uses TRACE transaction data for other than personal, non-commercial use;
        (C) employed by a bank, insurance company or other organization exempt from registration under federal or state securities laws to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt, nor any other employee of a bank, insurance company or such other organization referenced above and, with respect to any person identified in this subparagraph (C), uses TRACE transaction data for other than personal, non-commercial use; nor
        (D) engaged in, nor has the intention to engage in, any redistribution of all or any portion of the TRACE transaction data.
        (2) "Tax-Exempt Organization" as used in Rule 7730 means an organization that is described in Section 501(c) of the Internal Revenue Code (26 U.S.C. §501(c)) and has received recognition of the exemption from federal income taxes from the Internal Revenue Service.
        (3) "Real-Time" as used in Rule 7730 means that period of time starting from the time of dissemination by FINRA of transaction data on a TRACE-Eligible Security, and ending no more than four hours thereafter.
        (4) "Historic TRACE Data" as used in Rule 7730 means historic transaction-level data with elements to be determined from time to time by FINRA in its discretion and as stated in a Regulatory Notice or other equivalent publication. Historic TRACE Data will not include MPIDs. Historic Corporate Bond and Historic Agency Data will be delayed a minimum of six months. Historic SP Data will be delayed a minimum of 18 months. Historic Rule 144A Data will carry a delay consistent with the delay period applicable to the component security type (i.e., Rule 144A transactions in corporate bonds will be delayed a minimum of six months and Rule 144A transactions in Securitized Products will be delayed a minimum of 18 months). Historic TRACE Data includes the following Data Sets:
        (A) Historic Corporate Bond Data Set — includes all historic transactions in corporate bonds reported to TRACE, except Rule 144A transactions in corporate bonds;
        (B) Historic Agency Data Set — includes all historic transactions in Agency Debt Securities as defined in Rule 6710(l) reported to TRACE;
        (C) Historic SP Data Set — includes all historic transactions in Securitized Products as defined in Rule 6710(m) reported to TRACE, if transactions in that type of Securitized Product are subject to dissemination under Rule 6750, but excludes historic Rule 144A transactions in Securitized Products; and
        (D) Historic Rule 144A Data Set — includes all historic Rule 144A transactions reported to TRACE, except transactions involving a type of TRACE-Eligible Security that is not subject to dissemination under Rule 6750.
        (5) Academic Corporate Bond TRACE Data as used in Rule 7730 means historic transaction-level data on all transactions in corporate bonds reported to TRACE (except a transaction that is a List or Fixed Offering Price Transaction, as defined in Rule 6710(q), or a Takedown Transaction, as defined in Rule 6710(r)), including Rule 144A transactions in corporate bonds, with elements to be determined from time to time by FINRA in its discretion and as stated in a Regulatory Notice or other equivalent publication. Academic Corporate Bond TRACE Data will be delayed a minimum of 36 months and will not include MPIDs, but will substitute a masked dealer identifier for each MPID included in the data.
        (6) "End-of-Day TRACE Transaction File" as used in Rule 7730 means a daily file that includes all transaction data disseminated as part of Real-Time TRACE transaction data on that day and is separately available for each data set for which Real-Time TRACE transaction data is available (i.e., the Corporate Bond Data Set, Agency Data Set, SP Data Set, and Rule 144A Data Set). The End-of-Day TRACE Transaction File is made available daily after the TRACE system closes.
        (h) FINRA ADDS Fees
        The FINRA Automated Data Delivery System ("FINRA ADDS") provides a member access to TRACE trade journal files. FINRA offers two optional FINRA ADDS services: TRACE Data Delivery and TRACE Data Delivery Secure File Transfer Protocol.
        (1) TRACE Data Delivery
        There is no charge to a market participant identifier ("MPID") that is a subscriber for TRACE Data Delivery reports provided to the MPID in response to requests by the MPID via the FINRA ADDS website.
        (2) TRACE Data Delivery Secure File Transfer Protocol Fee
        The TRACE Data Delivery Secure File Transfer Protocol ("TRACE Data Delivery SFTP") fees are charged to a market participant identifier ("MPID") that is a subscriber and are:
        (A) Set-Up Fee — a one-time fee of $250 per MPID that subscribes to the service.
        (B) Monthly Fee — a monthly fee of $200 per MPID that subscribes to the service.

        1 Charges that may be imposed by third parties, such as CTCI or FIX line providers, are not included in these fees.
        2 Under the Vendor Real-Time Data Feed Fee and service, Real-Time TRACE transaction data (or Data Set(s) of such data) may not be used in any display application that permits end users to determine individual transaction pricing.
        Amended by SR-FINRA-2017-015.
        Amended by SR-FINRA-2017-012 eff. Oct. 2, 2017.
        Amended by SR-FINRA-2016-027 eff. July 10, 2017.
        Amended by SR-FINRA-2016-023 eff. March 20, 2017.
        Amended by SR-FINRA-2016-040 eff. Feb. 27, 2017.
        Amended by SR-FINRA-2016-024 eff. Feb. 27, 2017.
        Amended by SR-FINRA-2016-048 eff. Jan. 3, 2017.
        Amended by SR-FINRA-2013-046 eff. June 1, 2015.
        Amended by SR-FINRA-2014-043 eff. Oct. 3, 2014.
        Amended by SR-FINRA-2013-029 and SR-FINRA-2013-043 eff. June 30, 2014.
        Amended by SR-FINRA-2013-040 eff. Sept. 17, 2013.
        Amended by SR-FINRA-2012-053 eff. June 10, 2013.
        Amended by SR-FINRA-2012-020 eff. Nov. 12, 2012.
        Amended by SR-FINRA-2012-049 eff. Nov. 7, 2012.
        Amended by SR-FINRA-2011-056 eff. Nov. 1, 2011.
        Amended by SR-FINRA-2011-012 eff. May 16, 2011.
        Amended by SR-FINRA-2009-065 eff. May 16, 2011.
        Amended by SR-FINRA-2011-001 eff. Jan. 4, 2011.
        Amended by SR-FINRA-2007-006 eff. March 31, 2010.
        Amended by SR-FINRA-2009-010 eff. March 1, 2010.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2007-004 eff. May 1, 2007.
        Amended and renumbered as Rule 7030 by SR-NASD-2007-018 eff. March 5, 2007.
        Amended by SR-NASD-2005-063 eff. Oct. 1, 2005.
        Amended by SR-NASD-2005-083 eff. June 23, 2005.
        Amended by SR-NASD-2005-026 eff. June 1, 2005.
        Amended by SR-NASD-2004-189 eff. Feb 7 and June 1, 2005.
        Amended by SR-NASD-2004-163 eff. Oct. 29, 2004.
        Amended by SR-NASD-2003-157 eff. Feb. 1, 2004.
        Amended by SR-NASD-2003-097 eff. June 27, 2003.
        Amended by SR-NASD-2003-025 eff. Feb. 27, 2003.
        Amended by SR-NASD-2002-176 eff. Dec. 13, 2002.
        Amended by SR-NASD-2002-167 eff. Oct. 1, 2002.
        Adopted as Rule 7010(k) by SR-NASD-2002-063 eff. July 1, 2002.

        Selected Notices: 02-81, 04-06, 05-05, 05-37 05-52, 07-15, 08-57, 09-57, 10-23, 10-55, 11-20, 12-26, 12-48, 13-09, 13-35, 14-34, 16-38, 16-39, 16-43, 17-23.

    • SR-FINRA-2017-007

      • 1210. Registration Requirements

        This rule was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this rule has not yet been determined.

        Each person engaged in the investment banking or securities business of a member shall be registered with FINRA as a representative or principal in each category of registration appropriate to his or her functions and responsibilities as specified in Rule 1220, unless exempt from registration pursuant to Rule 1230. Such person shall not be qualified to function in any registered capacity other than that for which the person is registered, unless otherwise stated in the rules.

        • • • Supplementary Material: --------------

        .01 Minimum Number of Registered Principals. Each member, except a member with only one associated person, shall have at least two officers or partners who are registered as General Securities Principals pursuant to Rule 1220(a)(2), provided that a member that is limited in the scope of its activities may instead have two officers or partners who are registered in a principal category under Rule 1220(a) that corresponds to the scope of the member's activities. The requirement that a member have a minimum of two principals shall apply to persons seeking admission as members and existing members.

        Pursuant to the Rule 9600 Series, FINRA may waive the requirement that a member have a minimum of two principals in situations that indicate conclusively that only one person associated with an applicant for membership or existing member should be required to register as a principal.

        In addition to the requirement that a member have a minimum of two principals, an applicant for membership or existing member shall have at least one person: (1) registered as a Financial and Operations Principal or an Introducing Broker-Dealer Financial and Operations Principal, as applicable, pursuant to Rule 1220(a)(4)(A); (2) designated as a Principal Financial Officer pursuant to Rule 1220(a)(4)(B); and (3) designated as a Principal Operations Officer pursuant to Rule 1220(a)(4)(B). An applicant for membership or existing member, if the nature of its business so requires, shall also have at least one person registered as: (1) an Investment Banking Principal pursuant to Rule 1220(a)(5); (2) a Research Principal pursuant to Rule 1220(a)(6); (3) a Securities Trader Principal pursuant to Rule 1220(a)(7); and (4) a Registered Options Principal pursuant to Rule 1220(a)(8).

        .02 Permissive Registrations. A member may make application for or maintain the registration as a representative or principal, pursuant to Rule 1220, of any associated person of the member and any individual engaged in the investment banking or securities business of a foreign securities affiliate or subsidiary of the member. Individuals maintaining such permissive registrations shall be considered registered persons and subject to all FINRA rules, to the extent relevant to their activities.

        Consistent with the requirements of Rule 3110, members shall have adequate supervisory systems and procedures reasonably designed to ensure that individuals with permissive registrations do not act outside the scope of their assigned functions. With respect to an individual who solely maintains a permissive registration(s), the individual's direct supervisor shall not be required to be a registered person. However, for purposes of compliance with Rule 3110(a)(5), a member shall assign a registered supervisor who shall be responsible for periodically contacting such individual's direct supervisor to verify that the individual is not acting outside the scope of his or her assigned functions. If such individual is permissively registered as a representative, the registered supervisor shall be registered as a representative or principal. If the individual is permissively registered as a principal, the registered supervisor shall be registered as a principal. Moreover, the registered supervisor of an individual who solely maintains a permissive registration(s) shall not be required to be registered in the same representative or principal registration category as the permissively-registered individual.

        .03 Qualification Examinations and Waivers of Examinations. Before the registration of a person as a representative can become effective under Rule 1210, such person shall pass the Securities Industry Essentials ("SIE") and an appropriate representative qualification examination as specified in Rule 1220(b). Before the registration of a person as a principal can become effective under Rule 1210, such person shall pass an appropriate principal qualification examination as specified in Rule 1220(a).

        If the job functions of a registered representative, other than an individual registered as an Order Processing Assistant Representative or a Foreign Associate, change so as to require the person to register in another representative category, the person shall not be required to pass the SIE. Rather, the registered person would need to pass only an appropriate representative qualification examination as specified in Rule 1220(b). All associated persons shall be eligible to take the SIE. In addition, individuals who are not associated persons shall be eligible to take the SIE. However, passing the SIE alone shall not qualify an individual for registration with FINRA. To be eligible for registration with FINRA, an individual shall pass an applicable representative or principal qualification examination as specified in Rule 1220 and satisfy all other applicable prerequisite registration requirements.

        Pursuant to the Rule 9600 Series, FINRA may, in exceptional cases and where good cause is shown, waive the applicable qualification examination(s) and accept other standards as evidence of an applicant's qualifications for registration. Age or disability will not individually of themselves constitute sufficient grounds to waive a qualification examination. Experience in fields ancillary to the investment banking or securities business may constitute sufficient grounds to waive a qualification examination. FINRA shall only consider waiver requests submitted by a member for individuals associated with the member who are seeking registration in a representative or principal registration category. Moreover, FINRA shall consider waivers of the SIE alone or the SIE and the applicable representative and principal examination(s) for such individuals. FINRA shall not consider a waiver of the SIE for individuals who are not associated persons or for associated persons who are not registering as representatives or principals.

        .04 Requirements for Registered Persons Functioning as Principals for a Limited Period. Subject to the requirements of Rule 1220.03, a member may designate any person currently registered, or who becomes registered, with the member as a representative to function as a principal for a period of 120 calendar days prior to passing an appropriate principal qualification examination as specified under Rule 1220(a), provided that such person has at least 18 months of experience functioning as a registered representative within the five-year period immediately preceding the designation and has fulfilled all applicable prerequisite registration, fee and examination requirements prior to designation as a principal. However, in no event may such person function as a principal beyond the initial 120 calendar day period without having successfully passed an appropriate principal qualification examination as specified under Rule 1220(a). The requirements above apply to designations to any principal category, including those categories that are not subject to a prerequisite representative registration requirement. Further, a person registered as an Order Processing Assistant Representative or a Foreign Associate shall not be eligible to be designated as a principal under Supplementary Material .04 of this Rule.

        Subject to the requirements of Rule 1220.03, a member may designate any person currently registered, or who becomes registered, with the member as a principal to function in another principal category for a period of 120 calendar days prior to passing an appropriate qualification examination as specified under Rule 1220. However, in no event may such person function in such other principal category beyond the initial 120 calendar day period without having successfully passed an appropriate qualification examination as specified under Rule 1220.

        .05 Rules of Conduct for Taking Examinations and Confidentiality of Examinations. Associated persons taking the SIE shall be subject to the SIE Rules of Conduct. Associated persons taking any representative or principal examination shall be subject to the Rules of Conduct for representative and principal examinations. A violation of the SIE Rules of Conduct or the Rules of Conduct for representative and principal examinations by an associated person shall be deemed to be a violation of Rule 2010. If FINRA determines that an associated person has violated the SIE Rules of Conduct or the Rules of Conduct for representative and principal examinations, the associated person may forfeit the results of the examination and may be subject to disciplinary action by FINRA.

        Individuals taking the SIE who are not associated persons shall agree to be subject to the SIE Rules of Conduct. If FINRA determines that such individuals cheated on the SIE or that they misrepresented their qualifications to the public subsequent to passing the SIE, they may forfeit the results of the examination and may be prohibited from retaking the SIE.

        FINRA considers all of its qualification examinations content to be highly confidential. The removal of examination content from an examination center, reproduction, disclosure, receipt from or passing to any person, or use for study purposes of any portion of such qualification examination or any other use that would compromise the effectiveness of the examinations and the use in any manner and at any time of the questions or answers to the examinations shall be prohibited and shall be deemed to be a violation of Rule 2010. An applicant cannot receive assistance while taking the examination and shall certify that no assistance was given to or received by him or her during the examination.

        .06 Waiting Periods for Retaking a Failed Examination. Any person who fails to pass a qualification examination prescribed by FINRA shall be permitted to take that examination again after a period of 30 calendar days has elapsed from the date of such person's last attempt to pass that examination, except that any person who fails to pass an examination three or more times in succession within a two-year period shall be prohibited from again taking that examination until a period of 180 calendar days has elapsed from the date of such person's last attempt to pass that examination.

        The waiting periods for retaking a failed examination shall apply to the SIE and the representative and principal examinations specified under Rule 1220. Individuals taking the SIE who are not associated persons shall agree to be subject to the same waiting periods for retaking the SIE.

        .07 All Registered Persons Must Satisfy the Regulatory Element of Continuing Education. All registered persons, including those individuals who solely maintain permissive registrations pursuant to Rule 1210.02, shall satisfy the Regulatory Element of continuing education as specified in Rule 1240(a).

        If a person registered with a member has a continuing education deficiency with respect to that registration as provided under Rule 1240(a), such person shall not be permitted to be registered in another registration category under Rule 1220 with that member or to be registered in any registration category under Rule 1220 with another member, until the person has satisfied the deficiency.

        .08 Lapse of Registration and Expiration of SIE. Any person who was last registered as a representative two or more years immediately preceding the date of receipt by FINRA of a new application for registration as a representative shall be required to pass a representative qualification examination appropriate to his or her category of registration as specified in Rule 1220(b). Any person who last passed the SIE or who was last registered as a representative, whichever occurred last, four or more years immediately preceding the date of receipt by FINRA of a new application for registration as a representative shall be required to pass the SIE in addition to a representative qualification examination appropriate to his or her category of registration as specified in Rule 1220(b).

        Any person who was last registered as a principal two or more years immediately preceding the date of receipt by FINRA of a new application for registration as a principal shall be required to pass a principal qualification examination appropriate to his or her category of registration as specified in Rule 1220(a).

        Any person whose registration has been revoked pursuant to Rule 8310 shall be required to pass a principal or representative qualification examination appropriate to his or her category of registration as specified in Rule 1220(a) or Rule 1220(b), respectively, to be eligible for registration with FINRA.

        For purposes of Supplementary Material .08 of this Rule, an application shall not be considered to have been received by FINRA if that application does not result in a registration.

        .09 Waiver of Examinations for Individuals Working for a Financial Services Industry Affiliate of a Member. Upon request by a member, FINRA shall waive the applicable qualification examination(s) for an individual designated with FINRA as working for a financial services industry affiliate of a member if the following conditions are met:

        (a) Prior to the individual's initial designation, the individual was registered as a representative or principal with FINRA for a total of five years within the most recent 10- year period, including for the most recent year with the member that initially designated the individual;
        (b) The waiver request is made within seven years of the individual's initial designation;
        (c) The initial designation and any subsequent designation(s) were made concurrently with the filing of the individual's related Form U5;
        (d) The individual continuously worked for the financial services industry affiliate(s) of a member since the individual's last Form U5 filing;
        (e) The individual has complied with the Regulatory Element of continuing education as specified in Rule 1240(a); and
        (f) The individual does not have any pending or adverse regulatory matters, or terminations, that are reportable on the Form U4, and has not otherwise been subject to a statutory disqualification as defined in Section 3(a)(39) of the Exchange Act while the individual was designated as eligible for a waiver.
        As used in Supplementary Material .09 of this Rule, a "financial services industry affiliate of a member" is a legal entity that controls, is controlled by or is under common control with a member and is regulated by the SEC, CFTC, state securities authorities, federal or state banking authorities, state insurance authorities, or substantially equivalent foreign regulatory authorities.

        .10 Status of Persons Serving in the Armed Forces of the United States. The following provisions address the status of current and former registered persons serving in active duty in the Armed Forces of the United States:

        (a) Inactive Status of Currently Registered Persons
        A registered person of a member who volunteers for or is called into active duty in the Armed Forces of the United States shall be placed, after proper notification to FINRA, on inactive status and need not be re-registered by such member upon his or her return to active employment with the member. Such person shall remain eligible to receive transaction-related compensation, including continuing commissions. The employing member also may allow such person to enter into an arrangement with another registered person of the member to take over and service the person's accounts and to share transaction-related compensation based upon the business generated by such accounts. However, because such persons are inactive, they may not perform any of the functions and responsibilities performed by a registered person.
        A registered person who is placed on inactive status pursuant to this paragraph (a) shall not be included within the definition of “Personnel” for purposes of the dues or assessments as provided in Article VI of the FINRA By-Laws. In addition, a registered person who is placed on inactive status pursuant to this paragraph (a) shall not be required to complete either the Regulatory Element or Firm Element set forth in Rule 1240 during the pendency of such inactive status.
        The relief provided in this paragraph (a) shall be available to a registered person who is placed on inactive status pursuant to this paragraph (a) during the period that such person remains registered with the member with which he or she was registered at the beginning of active duty in the Armed Forces of the United States, regardless of whether the person returns to active employment with another member upon completion of his or her active duty in the Armed Forces of the United States.
        The relief described in this paragraph (a) shall be provided only to a person registered with a member and only while the person remains on active military duty. Further, the member with which such person is registered shall promptly notify FINRA in such manner as FINRA may specify of such person's return to active employment with the member.
        (b) Inactive Status of Sole Proprietorships
        A member that is a sole proprietor who temporarily closes his or her business by reason of volunteering for or being called into active duty in the Armed Forces of the United States, shall be placed, after proper notification to FINRA, on inactive status while the member remains on active military duty.
        A sole proprietor member placed on inactive status as set forth in this paragraph (b) shall not be required to pay dues or assessments during the pendency of such inactive status and shall not be required to pay an admission fee upon return to active participation in the investment banking or securities business.
        The relief described in this paragraph (b) shall be provided only to a sole proprietor member and only while the person remains on active military duty. Further, the sole proprietor shall promptly notify FINRA in such manner as FINRA may specify of his or her return to active participation in the investment banking or securities business.
        (c) Status of Formerly Registered Persons
        If a person who was formerly registered with a member volunteers for or is called into active duty in the Armed Forces of the United States at any time within two years after the date the person ceased to be registered with a member, FINRA shall defer the lapse of registration requirements set forth in Rule 1210.08 (i.e., toll the two-year expiration period for representative and principal qualification examinations) and the lapse of the SIE (i.e., toll the four-year expiration period for the SIE). FINRA shall defer the lapse of registration requirements and the SIE commencing on the date the person begins actively serving in the Armed Forces of the United States, provided that FINRA is properly notified of the person's period of active military service within 90 days following his or her completion of active service or upon his or her re-registration with a member, whichever occurs first. The deferral will terminate 90 days following the person's completion of active service in the Armed Forces of the United States. Accordingly, if such person does not re-register with a member within 90 days following his or her completion of active service in the Armed Forces of the United States, the amount of time in which the person must become re-registered with a member without being subject to a representative or principal qualification examination or the SIE shall consist of the standard two-year period for representative and principal qualification examinations or the standard four-year period for the SIE, whichever is applicable, as provided in Rule 1210.08 reduced by the period of time between the person's termination of registration and beginning of active service in the Armed Forces of the United States.
        If a person placed on inactive status while serving in the Armed Forces of the United States ceases to be registered with a member, FINRA shall defer the lapse of registration requirements set forth in Rule 1210.08 (i.e., toll the two-year expiration period for representative and principal qualification examinations) and the lapse of the SIE (i.e., toll the four-year expiration period for the SIE) during the pendency of his or her active service in the Armed Forces of the United States. FINRA shall defer the lapse of registration requirements based on existing information in the CRD system, provided that FINRA is properly notified of the person's period of active military service within two years following his or her completion of active service or upon his or her re-registration with a member, whichever occurs first. The deferral shall terminate 90 days following the person's completion of active service in the Armed Forces of the United States. Accordingly, if such person does not re-register with a member within 90 days following his or her completion of active service in the Armed Forces of the United States, the amount of time in which the person must become re-registered with a member without being subject to a representative or principal qualification examination or the SIE shall consist of the standard two-year period for representative and principal qualification examinations or the standard four-year period for the SIE, whichever is applicable, as provided in Rule 1210.08.

        .11 Impermissible Registrations. Members shall not register or maintain the registration of any person unless consistent with the requirements of Rule 1210.

        Adopted by SR-FINRA-2017-007.

      • 1220. Registration Categories

        This rule was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this rule has not yet been determined.

        (a) Definition of Principal and Principal Registration Categories
        (1) Definition of Principal
        A "principal" is any person associated with a member, including, but not limited to, sole proprietor, officer, partner, manager of office of supervisory jurisdiction, director or other person occupying a similar status or performing similar functions, who is actively engaged in the management of the member's investment banking or securities business, such as supervision, solicitation, conduct of business in securities or the training of persons associated with a member for any of these functions. Such persons shall include, among other persons, a member's chief executive officer and chief financial officer (or equivalent officers).
        A "principal" also includes any other person associated with a member who is performing functions or carrying out responsibilities that are required to be performed or carried out by a principal under the FINRA rules.
        The term "actively engaged in the management of the member's investment banking or securities business" includes the management of, and the implementation of corporate policies related to, such business. The term also includes managerial decision-making authority with respect to the member's investment banking or securities business and management-level responsibilities for supervising any aspect of such business, such as serving as a voting member of the member's executive, management or operations committees.
        (2) General Securities Principal
        (A) Requirement
        Each principal as defined in paragraph (a)(1) of this Rule shall be required to register with FINRA as a General Securities Principal, subject to the following exceptions:
        (i) if a principal's activities include the functions of a Compliance Officer, a Financial and Operations Principal (or an Introducing Broker-Dealer Financial and Operations Principal, as applicable), a Principal Financial Officer, a Principal Operations Officer, an Investment Banking Principal, a Research Principal, a Securities Trader Principal or a Registered Options Principal as specified in paragraphs (a)(3) through (a)(8) of this Rule, then such person shall appropriately register in one or more of those categories;
        (ii) if a principal's activities are limited solely to the functions of a Government Securities Principal, an Investment Company and Variable Contracts Products Principal, a Direct Participation Programs Principal or a Private Securities Offerings Principal as specified in paragraphs (a)(9), (a)(11), (a)(12) or (a)(13) of this Rule, then such person may appropriately register in one or more of those categories in lieu of registering as a General Securities Principal;
        (iii) if a principal's activities are limited solely to the functions of a General Securities Sales Supervisor as specified in paragraph (a)(10) of this Rule, then such person may appropriately register in that category in lieu of registering as a General Securities Principal, provided, however, that if such person is engaged in options sales activities, such person shall be required to register with FINRA as a Registered Options Principal as specified in paragraph (a)(8) of this Rule or as a General Securities Sales Supervisor as specified in paragraph (a)(10) of this Rule; and
        (iv) if a principal's activities are limited solely to the functions of a Supervisory Analyst as specified in paragraph (a)(14) of this Rule, then such person may appropriately register in that category in lieu of registering as a General Securities Principal, provided, however, that if such person is responsible for approving the content of a member's research report on equity securities, such person shall be required to register with FINRA as a Research Principal as specified in paragraph (a)(6) of this Rule or as a Supervisory Analyst as specified in paragraph (a)(14) of this Rule.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Corporate Securities Representative and a General Securities Principal on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Corporate Securities Representative and a General Securities Principal within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a General Securities Principal without passing any additional qualification examinations, provided that his or her supervisory responsibilities in the investment banking or securities business of a member are limited to corporate securities activities of the member.
        All other individuals registering as General Securities Principals after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, become registered pursuant to paragraph (b)(2) of this Rule as a General Securities Representative and either (i) pass the General Securities Principal qualification examination or (ii) register as a General Securities Sales Supervisor and pass the General Securities Principal Sales Supervisor Module qualification examination.
        (3) Compliance Officer
        (A) Requirement
        Subject to the exception in paragraph (a)(3)(C) of this Rule, each person designated as a Chief Compliance Officer on Schedule A of Form BD as specified in Rule 3130(a) shall be required to register with FINRA as a Compliance Officer.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a General Securities Representative and a General Securities Principal on [the effective date of the proposed rule change] and each person who was registered with FINRA as a General Securities Representative and a General Securities Principal within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Compliance Officer without passing any additional qualification examinations. In addition, subject to the lapse of registration provisions in Rule 1210.08, each person registered as a Compliance Official in the CRD system on [the effective date of the proposed rule change] and each person who was registered as a Compliance Official in the CRD system within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Compliance Officer without passing any additional qualification examinations.
        All other individuals registering as Compliance Officers after [the effective date of the proposed rule change], shall, prior to or concurrent with such registration: (i) become registered pursuant to paragraph (b)(2) of this Rule as a General Securities Representative and pass the General Securities Principal qualification examination; or (ii) pass the Compliance Official qualification examination.
        (C) Exception
        An individual designated as a Chief Compliance Officer on Schedule A of Form BD of a member that is engaged in limited investment banking or securities business may be registered in a principal category under Rule 1220(a) that corresponds to the limited scope of the member's business.
        (4) Financial and Operations Principal and Introducing Broker-Dealer Financial and Operations Principal
        (A) Requirement
        Each member that is operating pursuant to the provisions of SEA Rules 15c3-1(a)(1)(ii), (a)(2)(i) or (a)(8), shall designate a Financial and Operations Principal. Each member subject to the requirements of SEA Rule 15c3-1, other than a member operating pursuant to SEA Rules 15c3-1(a)(1)(ii), (a)(2)(i) or (a)(8), shall designate either a Financial and Operations Principal or an Introducing Broker-Dealer Financial and Operations Principal.
        A Financial and Operations Principal and an Introducing Broker-Dealer Financial and Operations Principal shall be responsible for performing the following duties:
        (i) final approval and responsibility for the accuracy of financial reports submitted to any duly established securities industry regulatory body;
        (ii) final preparation of such reports;
        (iii) supervision of individuals who assist in the preparation of such reports;
        (iv) supervision of and responsibility for individuals who are involved in the actual maintenance of the member's books and records from which such reports are derived;
        (v) supervision and performance of the member's responsibilities under all financial responsibility rules promulgated pursuant to the provisions of the Exchange Act;
        (vi) overall supervision of and responsibility for the individuals who are involved in the administration and maintenance of the member's back office operations; and
        (vii) any other matter involving the financial and operational management of the member.
        (B) Designation of Principal Financial Officer and Principal Operations Officer
        Each member shall designate a:
        (i) Principal Financial Officer with primary responsibility for financial filings and those books and records related to such filings; and
        (ii) Principal Operations Officer with primary responsibility for the day-to-day operations of the member's business, including overseeing the receipt and delivery of securities and funds, safeguarding customer and member assets, calculation and collection of margin from customers and processing dividend receivables and payables and reorganization redemptions and those books and records related to such activities.
        Each member that self-clears, or that clears for other members, shall be required to designate separate persons to function as Principal Financial Officer and Principal Operations Officer. Such persons may also carry out the other responsibilities of a Financial and Operations Principal and an Introducing Broker-Dealer Financial and Operations Principal as specified in paragraph (a)(4)(A) of this Rule. If such member is limited in size and resources, it may, pursuant to the Rule 9600 Series, request a waiver of the requirement to designate separate persons to function as Principal Financial Officer and Principal Operations Officer.
        Each member that is an introducing member may designate the same person to function as Financial and Operations Principal (or Introducing Broker-Dealer Financial and Operations Principal), Principal Financial Officer and Principal Operations Officer.
        Each person designated as a Principal Financial Officer or Principal Operations Officer shall be required to register as a Financial and Operations Principal or an Introducing Broker-Dealer Financial and Operations Principal pursuant to paragraph (a)(4)(A) of this Rule.
        (C) Qualifications
        Each person seeking to register as a Financial and Operations Principal shall, prior to or concurrent with such registration, pass the Financial and Operations Principal qualification examination. Each person seeking to register as an Introducing Broker-Dealer Financial and Operations Principal shall, prior to or concurrent with such registration, pass the Financial and Operations Principal qualification examination or the Introducing Broker-Dealer Financial and Operations Principal qualification examination.
        (5) Investment Banking Principal
        (A) Requirement
        Each principal as defined in paragraph (a)(1) of this Rule who is responsible for supervising the investment banking activities specified in paragraph (b)(5) of this Rule shall be required to register with FINRA as an Investment Banking Principal.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as an Investment Banking Representative and a General Securities Principal on [the effective date of the proposed rule change] and each person who was registered with FINRA as an Investment Banking Representative and a General Securities Principal within two years prior to [the effective date of the proposed rule change] shall be qualified to register as an Investment Banking Principal without passing any additional qualification examinations.
        All other individuals registering as Investment Banking Principals after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, become registered pursuant to paragraph (b)(5) of this Rule as an Investment Banking Representative and pass the General Securities Principal qualification examination.
        (6) Research Principal
        (A) Requirement
        Each principal as defined in paragraph (a)(1) of this Rule who is responsible for approving the content of a member's research reports on equity securities, or who, with respect to equity research, is responsible for supervising the overall conduct of a Research Analyst registered pursuant to paragraph (b)(6) of this Rule or a Supervisory Analyst registered pursuant to paragraph (a)(14) of this Rule shall be required to register with FINRA as a Research Principal, subject to the following exceptions:
        (i) if a principal's activities are limited solely to approving the content of a member's research reports on equity securities, then such person may register as a Supervisory Analyst pursuant to paragraph (a)(14) of this Rule in lieu of registering as a Research Principal;
        (ii) if a principal's activities are limited solely to reviewing a member's research reports on equity securities only for compliance with the disclosure provisions of Rule 2241, then such person may register as a General Securities Principal pursuant to paragraph (a)(2) of this Rule in lieu of registering as a Research Principal; and
        (iii) if a principal's activities are limited solely to approving the content of a member's research reports on debt securities or the content of third-party research reports, then such person may register as a General Securities Principal pursuant to paragraph (a)(2) of this Rule or as a Supervisory Analyst pursuant to paragraph (a)(14) of this Rule in lieu of registering as a Research Principal.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Research Principal on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Research Principal within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Research Principal without passing any additional qualification examinations.
        All other individuals registering as Research Principals after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration: (i) become registered pursuant to paragraph (b)(6) of this Rule as a Research Analyst and pass the General Securities Principal qualification examination; or (ii) become registered pursuant to paragraph (a)(14) of this Rule as a Supervisory Analyst and pass the General Securities Principal qualification examination.
        (7) Securities Trader Principal
        (A) Requirement
        Each principal as defined in paragraph (a)(1) of this Rule who is responsible for supervising the securities trading activities specified in paragraph (b)(4) of this Rule shall be required to register with FINRA as a Securities Trader Principal.
        (B) Qualifications
        Each person seeking to register as a Securities Trader Principal shall, prior to or concurrent with such registration, become registered pursuant to paragraph (b)(4) of this Rule as a Securities Trader and pass the General Securities Principal qualification examination.
        (8) Registered Options Principal
        (A) Requirement
        Each member that is engaged in transactions in options with the public shall have at least one Registered Options Principal.
        In addition, each principal as defined in paragraph (a)(1) of this Rule who is responsible for supervising a member's options sales practices with the public, including a person designated pursuant to Rule 3110(a)(2), shall be required to register with FINRA as a Registered Options Principal, subject to the following exception. If a principal's options activities are limited solely to those activities that may be supervised by a General Securities Sales Supervisor as specified in Rule 2360, then such person may register as a General Securities Sales Supervisor pursuant to paragraph (a)(10) of this Rule in lieu of registering as a Registered Options Principal.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Registered Options Principal on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Registered Options Principal within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Registered Options Principal without passing any additional qualification examinations.
        All other individuals registering as Registered Options Principals after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, become registered pursuant to paragraph (b)(2) of this Rule as a General Securities Representative and pass the Registered Options Principal qualification examination.
        (9) Government Securities Principal
        (A) Requirement
        Each principal as defined in paragraph (a)(1) of this Rule shall be required to register with FINRA as a Government Securities Principal if his or her activities include:
        (i) the management or supervision of the member's government securities business, including:
        a. underwriting, trading or sales of government securities;
        b. financial advisory or consultant services for issuers in connection with the issuance of government securities;
        c. research or investment advice, other than general economic information or advice, with respect to government securities in connection with the activities described in subparagraphs a. and b. above;
        d. activities other than those specifically described above that involve communication, directly or indirectly, with public investors in government securities in connection with the activities described in subparagraphs a. and b. above; or
        (ii) the supervision of:
        a. the processing and clearance activities with respect to government securities; or
        b. the maintenance of records involving any of the activities described in paragraph (a)(9)(A)(i) of this Rule.
        If a principal's functions include the activities specified in paragraph (a)(9)(A) of this Rule, then such person may register as a General Securities Principal pursuant to paragraph (a)(2) of this Rule in lieu of registering as a Government Securities Principal.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Government Securities Principal on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Government Securities Principal within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Government Securities Principal without passing any additional qualification examinations.
        All other individuals registering as Government Securities Principals after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, become registered pursuant to paragraph (b)(2) of this Rule as a General Securities Representative.
        (10) General Securities Sales Supervisor
        (A) Principals Engaged in Limited Activities
        Each principal as defined in paragraph (a)(1) of this Rule may register with FINRA as a General Securities Sales Supervisor if his or her supervisory responsibilities in the investment banking or securities business of a member are limited to the securities sales activities of the member, including the approval of customer accounts, training of sales and sales supervisory personnel and the maintenance of records of original entry or ledger accounts of the member required to be maintained in branch offices by Exchange Act record-keeping rules.
        A person registered solely as a General Securities Sales Supervisor shall not be qualified to perform any of the following activities:
        (i) supervision of the origination and structuring of underwritings;
        (ii) supervision of market making commitments;
        (iii) supervision of the custody of broker-dealer or customer funds or securities for purposes of SEA Rule 15c3-3; or
        (iv) supervision of overall compliance with financial responsibility rules for broker-dealers promulgated pursuant to the provisions of the Exchange Act.
        (B) Qualifications
        Each person seeking to register as a General Securities Sales Supervisor shall, prior to or concurrent with such registration become registered pursuant to paragraph (b)(2) of this Rule as a General Securities Representative and pass the General Securities Sales Supervisor qualification examinations
        (11) Investment Company and Variable Contracts Products Principal
        (A) Principals Engaged in Limited Activities
        Each principal as defined in paragraph (a)(1) of this Rule may register with FINRA as an Investment Company and Variable Contracts Products Principal if his or her activities in the investment banking or securities business of a member are limited to the activities specified in paragraph (b)(7) of this Rule.
        (B) Qualifications
        Each person seeking to register as an Investment Company and Variable Contracts Products Principal shall, prior to or concurrent with such registration: (i) become registered pursuant to paragraph (b)(2) of this Rule as a General Securities Representative and pass the Investment Company and Variable Contracts Products Principal qualification examination; or (ii) become registered pursuant to paragraph (b)(7) of this Rule as an Investment Company and Variable Contracts Products Representative and pass the Investment Company and Variable Contracts Products Principal qualification examination.
        (12) Direct Participation Programs Principal
        (A) Principals Engaged in Limited Activities
        Each principal as defined in paragraph (a)(1) of this Rule may register with FINRA as a Direct Participation Program Principal if his or her activities in the investment banking or securities business of a member are limited to the activities specified in paragraph (b)(8) of this Rule.
        (B) Qualifications
        Each person seeking to register as a Direct Participation Program Principal shall, prior to or concurrent with such registration: (i) become registered pursuant to paragraph (b)(2) of this Rule as a General Securities Representative and pass the Direct Participation Program Principal qualification examination; or (ii) become registered pursuant to paragraph (b)(8) of this Rule as a Direct Participation Programs Representative and pass the Direct Participation Program Principal qualification examination.
        (13) Private Securities Offerings Principal
        (A) Principals Engaged in Limited Activities
        Each principal as defined in paragraph (a)(1) of this Rule may register with FINRA as a Private Securities Offerings Principal if his or her activities in the investment banking or securities business of a member are limited to the activities specified in paragraph (b)(9) of this Rule.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Private Securities Offerings Representative and a General Securities Principal on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Private Securities Offerings Representative and a General Securities Principal within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Private Securities Offerings Principal without passing any additional qualification examinations.
        All other individuals registering as Private Securities Offerings Principals after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, become registered pursuant to paragraph (b)(9) of this Rule as a Private Securities Offerings Representative and pass the General Securities Principal qualification examination.
        (14) Supervisory Analyst
        (A) Principals Engaged in Limited Activities
        Each principal as defined in paragraph (a)(1) of this Rule may register with FINRA as a Supervisory Analyst if his or her activities are limited to approving the following: (i) the content of a member's research reports on equity securities; (ii) the content of a member's research reports on debt securities; (iii) the content of third-party research reports; (iv) retail communications as described in Rule 2241(a)(11)(A); or (v) other research communications that do not meet the definition of "research report" under Rule 2241, provided that the Supervisory Analyst has technical expertise in the particular product area.
        The activities of a Supervisory Analyst engaged in equity research shall be supervised by a Research Principal registered pursuant to paragraph (a)(6) of this Rule.
        (B) Qualifications
        Each person seeking to register as a Supervisory Analyst shall, prior to or concurrent with such registration pass the Supervisory Analyst qualification examination.
        Upon written request pursuant to the Rule 9600 Series, FINRA shall grant a waiver from the securities analysis portion (Part II) of the Supervisory Analyst qualification examination upon verification that the applicant has passed Level I of the Chartered Financial Analyst ("CFA") Examination.
        (b) Definition of Representative and Representative Registration Categories
        (1) Definition of Representative
        A "representative" is any person associated with a member, including assistant officers other than principals, who is engaged in the member's investment banking or securities business, such as supervision, solicitation, conduct of business in securities or the training of persons associated with a member for any of these functions.
        (2) General Securities Representative
        (A) Requirement
        Each representative as defined in paragraph (b)(1) of this Rule shall be required to register with FINRA as a General Securities Representative, subject to the following exceptions:
        (i) if a representative's activities include the functions of an Operations Professional, a Securities Trader, an Investment Banking Representative or a Research Analyst as specified in paragraphs (b)(3) through (b)(6) of this Rule, then such person shall appropriately register in one or more of those categories; and
        (ii) if a representative's activities are limited solely to the functions of an Investment Company and Variable Contracts Products Representative, a Direct Participation Programs Representative or a Private Securities Offerings Representative as specified in paragraphs (b)(7) through (b)(9) of this Rule, then such person may appropriately register in one or more of those categories in lieu of registering as a General Securities Representative.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a General Securities Representative on [the effective date of the proposed rule change] and each person who was registered with FINRA as a General Securities Representative within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a General Securities Representative without passing any additional qualification examinations.
        All other individuals registering as General Securities Representatives after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, pass the SIE and the General Securities Representative qualification examination.
        (3) Operations Professional
        (A) Requirement
        (i) Covered Persons
        Each of the following persons shall be required to register with FINRA as an Operations Professional:
        a. senior management with direct responsibility over the covered functions specified in paragraph (b)(3)(A)(ii) of this Rule;
        b. any person designated by senior management specified in paragraph (b)(3)(A)(i)a. of this Rule as a supervisor, manager or other person responsible for approving or authorizing work, including work of other persons, in direct furtherance of each of the covered functions specified in paragraph (b)(3)(A)(ii) of this Rule, as applicable, provided that there is sufficient designation of such persons by senior management to address each of the applicable covered functions; and
        c. persons with the authority or discretion materially to commit a member's capital in direct furtherance of the covered functions specified in paragraph (b)(3)(A)(ii) of this Rule or to commit a member to any material contract or agreement (written or oral) in direct furtherance of the covered functions specified in paragraph (b)(3)(A)(ii) of this Rule.
        (ii) Covered Functions
        For purposes of paragraph (b)(3) of this Rule, the following are the covered functions:
        a. client on-boarding (customer account data and document maintenance);
        b. collection, maintenance, re-investment (i.e., sweeps) and disbursement of funds;
        c. receipt and delivery of securities and funds, account transfers;
        d. bank, custody, depository and firm account management and reconciliation;
        e. settlement, fail control, buy ins, segregation, possession and control;
        f. trade confirmation and account statements;
        g. margin;
        h. stock loan or securities lending;
        i. prime brokerage (services to other broker-dealers and financial institutions);
        j. approval of pricing models used for valuations;
        k. financial control, including general ledger and treasury;
        l. contributing to the process of preparing and filing financial regulatory reports;
        m. defining and approving business requirements for sales and trading systems and any other systems related to the covered functions, and validation that these systems meet such business requirements;
        n. defining and approving business security requirements and policies for information technology, including, but not limited to, systems and data, in connection with the covered functions;
        o. defining and approving information entitlement policies in connection with the covered functions; and
        p. posting entries to a member's books and records in connection with the covered functions to ensure integrity and compliance with the federal securities laws and regulations and FINRA rules.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as an Investment Company Products and Variable Contracts Representative, a General Securities Representative, a United Kingdom Securities Representative, a Canada Securities Representative, an Operations Professional, a Registered Options Principal, a General Securities Sales Supervisor, a Supervisory Analyst, a General Securities Principal, an Investment Company Products and Variable Products Principal, a Financial and Operations Principal, an Introducing Broker-Dealer Financial and Operations Principal, a Municipal Fund Securities Limited Principal or a Municipal Securities Principal on [the effective date of the proposed rule change] and each person who was registered with FINRA in such registration categories within two years prior to [the effective date of the proposed rule change] shall be qualified to register as an Operations Professional without passing any additional qualification examinations.
        Each person who registers with FINRA as an Investment Company Products and Variable Contracts Representative, a General Securities Representative, a Registered Options Principal, a General Securities Sales Supervisor, a Supervisory Analyst, a General Securities Principal, an Investment Company Products and Variable Products Principal, a Financial and Operations Principal, an Introducing Broker-Dealer Financial and Operations Principal, a Municipal Fund Securities Limited Principal or a Municipal Securities Principal after [the effective date of the proposed rule change] shall also be qualified to register as an Operations Professional without passing any additional qualification examinations.
        All other individuals registering as Operations Professionals after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, pass the SIE and the Operations Professional qualification examination.
        FINRA may accept as an alternative to the qualification examination requirement in paragraph (b)(3)(B) of this Rule any domestic or foreign qualification if it determines that acceptance of such alternative qualification is consistent with the purposes of paragraph (b)(3) this Rule, the protection of investors, and the public interest.
        A person registering as an Operations Professional shall be allowed a period of 120 days beginning on the date such person requests Operations Professional registration to pass any applicable qualification examination, during which time such person may function as an Operations Professional.
        (4) Securities Trader
        (A) Requirement
        Each representative as defined in paragraph (b)(1) of this Rule shall be required to register with FINRA as a Securities Trader if, with respect to transactions in equity, preferred or convertible debt securities effected otherwise than on a securities exchange, such person is engaged in proprietary trading, the execution of transactions on an agency basis, or the direct supervision of such activities, other than any person associated with a member whose trading activities are conducted principally on behalf of an investment company that is registered with the SEC pursuant to the Investment Company Act and that controls, is controlled by or is under common control, with the member.
        In addition, each person associated with a member who is: (i) primarily responsible for the design, development or significant modification of an algorithmic trading strategy relating to equity, preferred or convertible debt securities; or (ii) responsible for the day-to-day supervision or direction of such activities shall be required to register with FINRA as a Securities Trader.
        For purposes of paragraph (b)(4) of this Rule, an “algorithmic trading strategy” is an automated system that generates or routes orders (or order-related messages) but shall not include an automated system that solely routes orders received in their entirety to a market center.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Securities Trader on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Securities Trader within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Securities Trader without passing any additional qualification examinations.
        All other individuals registering as Securities Traders after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, pass the SIE and the Securities Trader qualification examination.
        (5) Investment Banking Representative
        (A) Requirement
        Each representative as defined in paragraph (b)(1) of this Rule shall be required to register with FINRA as an Investment Banking Representative if his or her activities in the investment banking or securities business of a member involve:
        (i) advising on or facilitating debt or equity securities offerings through a private placement or a public offering, including but not limited to origination, underwriting, marketing, structuring, syndication, and pricing of such securities and managing the allocation and stabilization activities of such offerings, or
        (ii) advising on or facilitating mergers and acquisitions, tender offers, financial restructurings, asset sales, divestitures or other corporate reorganizations or business combination transactions, including but not limited to rendering a fairness, solvency or similar opinion.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as an Investment Banking Representative on [the effective date of the proposed rule change] and each person who was registered with FINRA as an Investment Banking Representative within two years prior to [the effective date of the proposed rule change] shall be qualified to register as an Investment Banking Representative without passing any additional qualification examinations.
        All other individuals registering as Investment Banking Representatives after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, pass the SIE and the Investment Banking Representative qualification examination.
        (C) Exceptions
        (i) Associated Persons Participating in New Employee Training Program
        An associated person who participates in a new employee training program conducted by a member shall not be required to register as an Investment Banking Representative for a period of up to six months from the time the associated person first engages within the program in activities described in paragraph (b)(5) of this Rule, but in no event more than two years after commencing participation in the training program. This exception is conditioned upon the member maintaining records that:
        a. evidence the existence and details of the training program, including but not limited to its scope, length, eligible participants and administrator; and
        b. identify those participants whose activities otherwise would require registration as an Investment Banking Representative and the date on which each participant commenced such activities.
        (ii) Associated Persons Engaged in Limited Activities
        An associated person shall not be required to register as an Investment Banking Representative if his or her activities in the investment banking or securities business of a member are limited solely to:
        a. advising on or facilitating the placement of direct participation program securities as defined in paragraph (b)(8)(A) of this Rule;
        b. effecting private securities offerings as specified in paragraph (b)(9) of this Rule; or c. retail or institutional sales and trading activities.
        c. retail or institutional sales and trading activities.
        (6) Research Analyst
        (A) Requirement
        Each person associated with a member who is to function as a research analyst shall be required to register with FINRA as a Research Analyst.
        For purposes of paragraph (b)(6) of this Rule, “research analyst” shall mean an associated person whose primary job function is to provide investment research and who is primarily responsible for the preparation of the substance of an equity research report or whose name appears on an equity research report, and “research report” shall have the same meaning as in Rule 2241.
        The requirements of paragraph (b)(6) of this Rule shall not apply to an associated person who:
        (i) is an employee of a non-member foreign affiliate of a member ("foreign research analyst");
        (ii) resides outside the United States; and
        (iii) contributes, partially or entirely, to the preparation of globally branded or foreign affiliate research reports but does not contribute to the preparation of a member's research, including a mixed-team report, that is not globally branded.
        Provided that the following conditions are satisfied:
        a. a member that publishes or otherwise distributes globally branded research reports partially or entirely prepared by a foreign research analyst must subject such research to pre-use review and approval by a Research Principal registered pursuant to paragraph (a)(6) of this Rule or a Supervisory Analyst registered pursuant to paragraph (a)(14) of this Rule. In addition, the member must ensure that such research reports comply with Rule 2241, as applicable;
        b. in publishing or otherwise distributing globally branded research reports partially or entirely prepared by a foreign research analyst, a member must prominently disclose:
        1. each affiliate contributing to the research report;
        2. the names of the foreign research analysts employed by each contributing affiliate;
        3. that such research analysts are not registered as Research Analysts with FINRA; and
        4. that such research analysts may not be associated persons of the member and therefore may not be subject to Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account;
        c. the disclosures required by paragraph (b)(6)(A)(iii)b. of this Rule shall be presented on the front page of the research report or the front page shall refer to the page on which the disclosures can be found. In electronic research reports, a member may hyperlink to the disclosures. References and disclosures shall be clear, comprehensive and prominent;
        d. members shall establish and maintain records that identify those individuals who have availed themselves of this exemption, the basis for such exemption, and evidence of compliance with the conditions of the exemption. Failure to establish and maintain such records shall create an inference of a violation of paragraph (b)(6) of this Rule. Members shall also establish and maintain records that evidence compliance with the applicable content, disclosure and supervision provisions of Rule 2241. Members shall maintain these records in accordance with the supervisory requirements of Rule 3110, and in addition to such requirement, the failure to establish and maintain such records shall create an inference of a violation of the applicable content, disclosure and supervision provisions of Rule 2241;
        e. nothing in paragraph (b)(6) of this Rule shall affect the obligation of any person or broker-dealer, including a foreign broker-dealer, to comply with the applicable provisions of the federal securities laws, rules and regulations and any self-regulatory organization rules;
        f. the fact that a foreign research analyst avails himself or herself of the exemption in paragraph (b)(6) of this Rule shall not be probative of whether that individual is an associated person of the member for other purposes, including whether the foreign research analyst is subject to the Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account;
        g. a member that distributes non-member foreign affiliate research reports that are clearly and prominently labeled as such must comply with the third-party research report requirements in Rule 2241; and
        h. for purposes of the exemption in paragraph (b)(6) of this Rule, the terms "affiliate," "globally branded research report" and "mixed-team research report" shall have the following meanings:
        1. "affiliate" shall mean a person that directly or indirectly controls, is controlled by, or is under common control with, a member;
        2. "globally branded research report" refers to the use of a single marketing identity that encompasses the member and one or more of its affiliates; and
        3. "mixed-team research report" refers to any member research report that is not globally branded and includes a contribution by a research analyst who is not an associated person of the member.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Research Analyst on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Research Analyst within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Research Analyst without passing any additional qualification examinations.
        All other individuals registering as Research Analysts after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, pass the SIE and the Research Analyst qualification examinations.
        Upon written request pursuant to the Rule 9600 Series, FINRA shall grant a waiver from the analytical portion of the Research Analyst qualification examinations (Series 86) upon verification that the applicant has passed:
        (i) Levels I and II of the CFA Examination; or
        (ii) if the applicant functions as a research analyst who prepares only technical research reports as defined in paragraph (b)(6) of this Rule, Levels I and II of the Chartered Market Technician ("CMT") Examination; and
        (iii) has either functioned as a research analyst continuously since having passed the Level II CFA or CMT Examination or applied for registration as a Research Analyst within two years of having passed the Level II CFA or CMT Examination.
        For purposes of paragraph (b)(6) of this Rule, a "technical research report" shall mean a research report, as that term is defined in Rule 2241, that is based solely on stock price movement and trading volume and not on the subject company's financial information, business prospects, contact with subject company's management, or the valuation of a subject company's securities.
        An applicant who has been granted an exemption pursuant to paragraph (b)(6)(B) of this Rule still must pass the regulatory portion of the Research Analyst qualification examinations (Series 87) before that applicant can be registered as a Research Analyst.
        (7) Investment Company and Variable Contracts Products Representative
        A. Representatives Engaged in Limited Activities
        Each representative as defined in paragraph (b)(1) of this Rule may register with FINRA as an Investment Company and Variable Contracts Products Representative if his or her activities in the investment banking or securities business of a member are limited to the solicitation, purchase or sale of:
        (i) redeemable securities of companies registered pursuant to the Investment Company Act;
        (ii) securities of closed-end companies registered pursuant to the Investment Company Act during the period of original distribution only;
        (iii) variable contracts and insurance premium funding programs and other contracts issued by an insurance company except contracts that are exempt securities pursuant to Section 3(a)(8) of the Securities Act; or
        (iv) municipal fund securities as defined under MSRB Rule D-12.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as an Investment Company and Variable Contracts Products Representative on [the effective date of the proposed rule change] and each person who was registered with FINRA as an Investment Company and Variable Contracts Products Representative within two years prior to [the effective date of the proposed rule change] shall be qualified to register as an Investment Company and Variable Contracts Products Representative without passing any additional qualification examinations.
        All other individuals registering as Investment Company and Variable Contracts Products Representatives after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, pass the SIE and the Investment Company and Variable Contracts Products Representative qualification examination.
        (8) Direct Participation Programs Representative
        A. Representatives Engaged in Limited Activities
        Each representative as defined in paragraph (b)(1) of this Rule may register with FINRA as a Direct Participation Programs Representative if his or her activities in the investment banking or securities business of a member are limited to the solicitation, purchase or sale of equity interests in or the debt of direct participation programs as defined in paragraph (b)(8)(A) of this Rule.
        "Direct participation programs" shall mean programs that provide for flow-through tax consequences regardless of the structure of the legal entity or vehicle for distribution including, but not limited to, oil and gas programs, cattle programs, condominium securities, Subchapter S corporate offerings and all other programs of a similar nature, regardless of the industry represented by the program, or any combination thereof. Excluded from this definition are real estate investment trusts, tax qualified pension and profit sharing plans pursuant to Sections 401 and 403(a) of the Internal Revenue Code (“Code”) and individual retirement plans under Section 408 of the Code, tax sheltered annuities pursuant to the provisions of Section 403(b) of the Code and any company including separate accounts registered pursuant to the Investment Company Act. Also excluded from this definition is any program that is listed on a national securities exchange or any program for which an application for listing on a national securities exchange has been made.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Direct Participation Programs Representative on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Direct Participation Programs Representative within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Direct Participation Programs Representative without passing any additional qualification examinations.
        All other individuals registering as Direct Participation Programs Representatives after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, pass the SIE and the Direct Participation Programs Representative qualification examination.
        (9) Private Securities Offerings Representative
        (A) Representatives Engaged in Limited Activities
        Each representative as defined in paragraph (b)(1) of this Rule may register with FINRA as a Private Securities Offerings Representative if his or her activities in the investment banking or securities business of a member are limited to effecting sales as part of a primary offering of securities not involving a public offering, pursuant to Sections 3(b), 4(2) or 4(6) of the Securities Act and the Securities Act rules and regulations, provided, however, that such person shall not effect sales of municipal or government securities, or equity interests in or the debt of direct participation programs as defined in paragraph (b)(8)(A) of this Rule.
        (B) Qualifications
        Subject to the lapse of registration provisions in Rule 1210.08, each person registered with FINRA as a Private Securities Offerings Representative on [the effective date of the proposed rule change] and each person who was registered with FINRA as a Private Securities Offerings Representative within two years prior to [the effective date of the proposed rule change] shall be qualified to register as a Private Securities Offerings Representative without passing any additional qualification examinations.
        All other individuals registering as Private Securities Offerings Representatives after [the effective date of the proposed rule change] shall, prior to or concurrent with such registration, pass the SIE and the Private Securities Offerings Representative qualification examination. However, FINRA shall, upon such evidence as it determines to be appropriate, deem any person who while employed by a bank, engaged in effecting sales of private securities offerings as described in paragraph (b)(9) of this Rule, during the period from May 12, 1999 to November 12, 1999, as qualified to register as a Private Securities Offerings Representative without the need to pass the SIE and the Private Securities Offerings Representative qualification examination.

        • • • Supplementary Material: --------------

        .01 Foreign Registrations. Persons who are in good standing as a representative with the Financial Conduct Authority in the United Kingdom or with a Canadian stock exchange or securities regulator shall be exempt from the requirement to pass the SIE.

        .02 Additional Qualification Requirements for Persons Engaged in Security Futures Activities. Each person who is registered with FINRA as a General Securities Representative, United Kingdom Securities Representative, Canada Securities Representative, Options Representative, Registered Options Principal or General Securities Sales Supervisor shall be eligible to engage in security futures activities as a representative or principal, as applicable, provided that such individual completes a Firm Element program as set forth in Rule 1240 that addresses security futures products before such person engages in security futures activities.

        .03 Members With One Registered Options Principal. A member that has one Registered Options Principal shall promptly notify FINRA in the event such person is terminated, resigns, becomes incapacitated or is otherwise unable to perform the duties of a Registered Options Principal.

        Following receipt of such notification, FINRA shall require the member to agree, in writing, to refrain from engaging in any options-related activities that would necessitate the prior or subsequent approval of a Registered Options Principal until such time as a new Registered Options Principal has been qualified.

        Members failing to qualify a new Registered Options Principal within two weeks following the loss of their sole Registered Options Principal, or by the earliest available date for administration of the Registered Options Principal examination, whichever is longer, shall be required to cease doing an options business; provided, however, they may effect closing transactions in options to reduce or eliminate existing open options positions in their own account as well as the accounts of their customers.

        .04 Scope of General Securities Sales Supervisor Registration Category. The General Securities Sales Supervisor category is an alternate category of registration designed to lessen the qualification burdens on principals of general securities firms who supervise sales. Without this category of limited registration, such principals would be required to separately qualify pursuant to the rules of FINRA, the MSRB, the NYSE and the options exchanges. While persons may continue to separately qualify with all relevant self-regulatory organizations, the General Securities Sales Supervisor examinations permit qualification as a supervisor of sales of all securities through one registration category. Persons registered as General Securities Sales Supervisors may also qualify in any other category of principal registration. Persons who are already qualified in one or more categories of principal registration may supervise sales activities of all securities by also qualifying as General Securities Sales Supervisors.

        Any person required to be registered as a principal who supervises sales activities in corporate, municipal and option securities, investment company products, variable contracts, direct participation program securities as defined in paragraph (b)(8)(A) of this Rule, and security futures (subject to the requirements of Supplementary Material .02 of this Rule) may be registered solely as a General Securities Sales Supervisor. In addition to branch office managers, other persons such as regional and national sales managers may also be registered solely as General Securities Sales Supervisors as long as they supervise only sales activities.

        .05 Scope of Operations Professional Requirement. Any person whose activities are limited to performing a function ancillary to a covered function specified in paragraph (b)(3)(A)(ii) of this Rule, or whose function is to serve a role that can be viewed as supportive of or advisory to the performance of a covered function specified in paragraph (b)(3)(A)(ii) of this Rule (e.g., internal audit, legal or compliance personnel who review but do not have primary responsibility for any covered function), or who engages solely in clerical or ministerial activities in a covered function specified in paragraph (b)(3)(A)(ii) of this Rule shall not be required to register as an Operations Professional. For the purpose of paragraph (b)(3)(A)(i)c. of this Rule, the determination as to what constitutes “materially” or “material” is based on a member's pre-established spending guidelines and risk management policies.

        An employee of a foreign broker-dealer whose activities, relating to a transaction in foreign securities on behalf of a customer of a member, are limited to facilitating the clearance and settlement of the transaction shall not be required to register as an Operations Professional where:

        (a) the member sending the order for a transaction in foreign securities on behalf of the customer to the foreign broker-dealer is not a direct participant of the applicable foreign clearing system; and
        (b) in executing such order in the foreign market, the foreign broker-dealer accepts the member's customer's instructions to settle the transaction in foreign securities on a DVP/RVP basis through the foreign clearing system and settle directly with a custodian for the customer.

        .06 Eliminated Registration Categories. Subject to the lapse of registration provisions in Rule 1210.08, each person who is registered with FINRA as an Order Processing Assistant Representative, a United Kingdom Securities Representative, a Canada Securities Representative, an Options Representative, a Corporate Securities Representative or a Government Securities Representative on [the effective date of the proposed rule change] and each person who was registered with FINRA in such categories within two years prior to [the effective date of the proposed rule change] shall be eligible to maintain such registrations with FINRA. However, if persons registered in such categories subsequently terminate such registration(s) with FINRA and the registration remains terminated for two or more years, they shall not be eligible to re-register in such categories. In addition, each person who is registered with FINRA as a Foreign Associate on [the effective date of the proposed rule change] shall be eligible to maintain such registration with FINRA. However, if persons registered as Foreign Associates subsequently terminate such registrations with FINRA, they shall not be eligible to re-register as Foreign Associates.

        Amended by SR-FINRA-2017-007.
        Amended by SR-FINRA-2011-060 eff. Oct. 17, 2011.
        Amended by SR-FINRA-2011-040 eff. Oct. 17, 2011.
        Adopted by SR-FINRA-2011-013 eff. Oct. 17, 2011.

        Selected Notice: 11-33.

      • 1230. Associated Persons Exempt from Registration

        This rule was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this rule has not yet been determined.

        The following persons associated with a member are not required to be registered with FINRA:
        (a) persons associated with a member whose functions are solely and exclusively clerical or ministerial; and
        (b) persons associated with a member whose functions are related solely and exclusively to:
        (1) effecting transactions on the floor of a national securities exchange and who are appropriately registered with such exchange;
        (2) transactions in municipal securities;
        (3) transactions in commodities; or
        (4) transactions in security futures, provided that any such person is registered with a registered futures association.

        • • • Supplementary Material: --------------

        .01 Registration Requirements for Associated Persons Who Accept Customer Orders. The function of accepting customer orders is not considered a clerical or ministerial function. Each person associated with a member who accepts customer orders under any circumstances shall be registered in an appropriate registration category pursuant to Rule 1220. An associated person shall not be considered to be accepting a customer order where occasionally, when an appropriately registered person is unavailable, the associated person transcribes order details submitted by a customer and the registered person contacts the customer to confirm the order details before entering the order.

        Adopted by SR-FINRA-2017-007.

      • 1240. Continuing Education Requirements

        This rule was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this rule has not yet been determined.

        This Rule prescribes requirements regarding the continuing education of specified persons subsequent to their initial registration with FINRA. The requirements shall consist of a Regulatory Element and a Firm Element as set forth below.
        (a) Regulatory Element
        (1) Requirements
        All covered persons shall comply with the requirement to complete the Regulatory Element.
        Each covered person shall complete the Regulatory Element on the occurrence of their second registration anniversary date and every three years thereafter, or as otherwise prescribed by FINRA. On each occasion, the Regulatory Element must be completed within 120 days after the person's registration anniversary date. A person's initial registration date, also known as the "base date," shall establish the cycle of anniversary dates for purposes of this Rule. The content of the Regulatory Element shall be appropriate to either the registered representative or principal status of persons subject to the Rule. The content of the Regulatory Element for a person designated as eligible for a waiver pursuant to Rule 1210.09 shall be determined based on the person's most recent registration status, and the Regulatory Element shall be completed based on the same cycle had the person remained registered.
        (2) Failure to Complete
        Unless otherwise determined by FINRA, any covered persons who have not completed the Regulatory Element within the prescribed time frames will have their registrations deemed inactive until such time as the requirements of the program have been satisfied. Any person whose registration has been deemed inactive under this Rule shall cease all activities as a registered person and is prohibited from performing any duties and functioning in any capacity requiring registration. Further, such person may not accept or solicit business or receive any compensation for the purchase or sale of securities. However, such person may receive trail or residual commissions resulting from transactions completed before the inactive status, unless the member with which such person is associated has a policy prohibiting such trail or residual commissions. A registration that is inactive for a period of two years will be administratively terminated. A person whose registration is so terminated may reactivate the registration only by reapplying for registration and meeting the qualification requirements of the applicable provisions of Rules 1210 and 1220. FINRA may, upon application and a showing of good cause, allow for additional time for a covered person to satisfy the program requirements. If a person designated as eligible for a waiver pursuant to Rule 1210.09 fails to complete the Regulatory Element within the prescribed time frames, the person shall no longer be eligible for such a waiver.
        (3) Disciplinary Actions
        Unless otherwise determined by FINRA, a covered person, other than a person designated as eligible for a waiver pursuant to Rule 1210.09, will be required to retake the Regulatory Element and satisfy all of its requirements in the event such person:
        (A) is subject to any statutory disqualification as defined in Section 3(a)(39) of the Exchange Act;
        (B) is subject to suspension or to the imposition of a fine of $5,000 or more for violation of any provision of any securities law or regulation, or any agreement with or rule or standard of conduct of any securities governmental agency, securities self-regulatory organization, or as imposed by any such regulatory or self-regulatory organization in connection with a disciplinary proceeding; or
        (C) is ordered as a sanction in a disciplinary action to retake the Regulatory Element by any securities governmental agency or self-regulatory organization.
        The retaking of the Regulatory Element shall commence with participation within 120 days of the covered person becoming subject to the statutory disqualification, in the case of (A) above, or the disciplinary action becoming final, in the case of (B) and (C) above. The date of the disciplinary action shall be treated as such person's new base date with FINRA.
        (4) Reassociation in a Registered Capacity
        Any covered person who has terminated association with a member and who has, within two years of the date of termination, become reassociated in a registered capacity with a member shall participate in the Regulatory Element at such intervals that may apply (second anniversary and every three years thereafter) based on the initial registration anniversary date rather than based on the date of reassociation in a registered capacity.
        (5) Definition of Covered Person
        For purposes of this Rule, the term "covered person" means any person, other than a Foreign Associate, registered with FINRA pursuant to Rule 1210, including any person who is permissively registered pursuant to Rule 1210.02, and any person who is designated as eligible for a waiver pursuant to Rule 1210.09.
        (6) Delivery of the Regulatory Element
        The continuing education Regulatory Element program will be administered through Web-based delivery or such other technological manner and format as specified by FINRA.
        (7) Regulatory Element Contact Person
        Each member shall designate and identify to FINRA (by name and e-mail address) an individual or individuals responsible for receiving e-mail notifications provided via the Central Registration Depository regarding when a covered person is approaching the end of his or her Regulatory Element time frame and when a covered person is deemed inactive due to failure to complete the requirements of the Regulatory Element program. Each member shall identify, review, and, if necessary, update the information regarding its Regulatory Element contact person(s) in the manner prescribed by Rule 4517.
        (b) Firm Element
        (1) Persons Subject to the Firm Element
        The requirements of this subparagraph shall apply to any person registered with a member who has direct contact with customers in the conduct of the member's securities sales, trading and investment banking activities, any person registered as an operations professional pursuant to Rule 1220(b)(3) or a research analyst pursuant to Rule 1220(b)(6), and to the immediate supervisors of such persons (collectively, "covered registered persons"). "Customer" shall mean any natural person and any organization, other than another broker or dealer, executing securities transactions with or through or receiving investment banking services from a member.
        (2) Standards for the Firm Element
        (A) Each member must maintain a continuing and current education program for its covered registered persons to enhance their securities knowledge, skill, and professionalism. At a minimum, each member shall at least annually evaluate and prioritize its training needs and develop a written training plan. The plan must take into consideration the member's size, organizational structure, and scope of business activities, as well as regulatory developments and the performance of covered registered persons in the Regulatory Element. If a member's analysis establishes the need for supervisory training for persons with supervisory responsibilities, such training must be included in the member's training plan.
        (B) Minimum Standards for Training Programs — Programs used to implement a member's training plan must be appropriate for the business of the member and, at a minimum must cover training in ethics and professional responsibility and the following matters concerning securities products, services, and strategies offered by the member:
        (i) General investment features and associated risk factors;
        (ii) Suitability and sales practice considerations; and
        (iii) Applicable regulatory requirements.
        (C) Administration of Continuing Education Program — A member must administer its continuing education programs in accordance with its annual evaluation and written plan and must maintain records documenting the content of the programs and completion of the programs by covered registered persons.
        (3) Participation in the Firm Element
        Covered registered persons included in a member's plan must take all appropriate and reasonable steps to participate in continuing education programs as required by the member.
        (4) Specific Training Requirements
        FINRA may require a member, individually or as part of a larger group, to provide specific training to its covered registered persons in such areas as FINRA deems appropriate. Such a requirement may stipulate the class of covered registered persons for which it is applicable, the time period in which the requirement must be satisfied and, where appropriate, the actual training content.
        Amended by SR-FINRA-2017-007.
        Amended by SR-FINRA-2015-050 eff. Dec. 24, 2015.
        Amended by SR-FINRA-2015-015 eff. Oct. 1, 2015.
        Amended by SR-FINRA-2015-004 eff. Feb. 12, 2015.
        Amended by SR-FINRA-2011-013 eff. Oct. 17, 2011.
        Amended by SR-NASD-2007-034 eff. Dec. 31, 2007.
        Amended by SR-NASD-2004-098 eff. April 4, 2005.
        Amended by SR-NASD-2003-183 eff. April 16, 2004.
        Amended by SR-NASD-2002-154 eff. July 29, 2003.
        Amended by SR-NASD-2000-64 eff. March 11, 2001.
        Amended by SR-NASD-98-03 eff. July 1, 1998.
        Amended by SR-NASD-95-22 eff. July 1, 1995.
        Adopted by SR-NASD-94-72 eff. July 1, 1995.

        Selected Notices: 94-59, 95-13, 95-35, 96-27, 98-23, 01-14, 03-44, 04-22, 05-20, 07-42, 11-33, 15-28.

      • Rule 311. Formation and Approval of Member Organizations

        This version was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this version has not yet been determined.

        (a) Any person who proposes to form a member organization and any member organization which proposes to admit therein any approved person shall notify the Exchange in writing before any such formation or admission and shall submit such information as may be required by the Rules of the Exchange. No such member organization shall become or remain a member organization unless all persons required to be approved are so approved and execute such agreements with the Exchange as the Rules of the Exchange may prescribe.
        (b) The Board of Directors shall not approve a partnership or corporation as a member organization unless:
        (1) each director of such corporation is a member, principal executive or an approved person; and
        (2) every person who controls such corporation is a member, principal executive or approved person; and
        (3) every natural person who is a general partner in such partnership is a member or principal executive and every other person who controls such partnership is a member, principal executive or approved person; and
        (4) every person who engages in a securities or kindred business and is controlled by or under common control with such partnership or corporation is an approved person; and
        (5) The Board of Directors of such corporation designates "principal executives"; and
        (6) such partnership or corporation complies with such additional requirements as the rules of the Exchange may prescribe.
        (7) every employee who is associated as a member with such member organization is designated with a title, such as vice president, consistent with his responsibilities and the usage of titles within such organization.
        (c) In the case of existing corporations making application to become member corporations, there shall be submitted to the Exchange:
        (1) A certified list of all holders of record of each class of stock, giving the name and address of the holder and the number of shares of each class of such stock held;
        (2) A certified list of all persons who are to become members, principal executives, directors or approved persons,
        (3) A certified list of all persons designated as principal executives of the corporation.
        In the case of corporations proposed to be organized, similar information shall be submitted to the Exchange.
        (d) The approval of a corporation as a member corporation constitutes only a revocable privilege and confers on the corporation no right or interest of any nature whatsoever to continue as a member corporation.
        (e) No member corporation shall issue any publicly held security in the form of non-voting common stock unless the Exchange determines that the non-voting common stock has normal and appropriate preferences which entitle it to be regarded as preferred stock.
        (f) Every member firm shall be a partnership and every member corporation shall be a corporation created or organized under the laws of, and shall maintain its principal place of business in, the United States or any State thereof. The Exchange may, in its discretion, and on such terms and conditions as the Exchange may prescribe, approve as a member organization entities that have characteristics essentially similar to corporations, partnerships, or both. Such entities, and persons associated therewith shall, upon approval, be fully, formally and effectively subject to the jurisdiction, and to the Rules of the Exchange to the same extent and degree as are any other member organization and person associated therewith.
        (g) Each member organization shall execute and file with the Exchange a written agreement in a form acceptable to the Exchange evidencing
        (1) the authority of any member who is an officer or employee of such member organization to transact business on the Floor on behalf of such member organization, and
        (2) such member organization's responsibility and obligation with respect to any contract entered into on the Floor by any such member.
        Amendments.
        March 26, 1970.
        July 11, 1974, effective July 18, 1974.
        August 9, 1976.
        July 13, 1978.
        April 2, 1979.
        January 21, 1981.
        March 29, 1989.
        September 13, 1994.
        February 27, 2006, effective March 8, 2006 (NYSE-2005-77), amended by SR-FINRA-2008-034 eff. Jan. 1, 2008.
        Amended by SR-FINRA-2008-036.

        • • • Supplementary Material: --------------

        .10 Rescinded effective February 15, 1979. (See Rule 351 for reporting requirements.)
        .11 Application

        The papers required to be submitted prior to approval of the formation or admission of a member organization are as follows:
        (1) Letter giving name and address of proposed or existing organization, date of proposed formation or admission, and names of all proposed or present officers and other parties required to be approved by the Exchange under Rules 304 and 311; and
        (2) individually executed applications by all parties whose approval by the Exchange is required.
        The papers required to be submitted prior to approval of the admission to an existing member organization of any party requiring the approval of the Exchange under Rules 304 and 311, are as follows:
        (1) Letter stating name of such proposed party and proposed date of admission to member organization; and
        (2) an individually executed application by such proposed party.
        .12 Authorization and Statement of Understanding

        Each member organization, or proposed member organization, must submit the following authorization and statement of understanding executed by each natural person requiring the approval of the Exchange under Rule 304:
        "In connection with my current application, I authorize the New York Stock Exchange, Inc. and any agent acting on its behalf, to conduct an investigation of my character, credit worthiness, ability, business activities, educational background, previous employment and reasons for termination thereof.

        "I authorize and request any and all of my former employers, and any other person to furnish to the Exchange, and any agent acting on its behalf, any information that they may have concerning my character, credit worthiness, ability, business activities, educational background, general reputation, previous employment and reasons for termination thereof . . . Moreover, I hereby release each such employer and each such other person from any and all liability of whatsoever nature by reason of furnishing such information to the Exchange and any agent acting on its behalf.

        "Further, I recognize that I will be the subject of an investigative report ordered by the Exchange and acknowledge that I have been informed of my right to request information from the Exchange concerning the nature and scope of the investigation requested."
        .13 Agreement with the Exchange

        Each member corporation and each member and approved person of the corporation must agree with the Exchange that if any person required to be approved by the Exchange as a member or approved person fails or ceases to be so approved, the corporation may be deprived by the Exchange of all the privileges of a member corporation unless the corporation redeems or converts the stock held by such person as required under Rule 312.
        .14 Partnership agreements

        For information regarding the submission of copies of proposed partnership articles, see ¶2313.10.
        .15 Corporate documents

        For information regarding the submission of copies of proposed or existing corporate documents and other agreements, see ¶2313.20.
        .16 Filing With Agent

        Any filing or submission required under this rule which is made with a properly authorized agent acting on behalf of the Exchange shall for purposes of this rule be deemed to be a filing with the Exchange.

        Amendments.
        March 26, 1970.
        July 11, 1974, effective July 18, 1974.
        August 9, 1976.
        July 13, 1978.
        April 2, 1979.
        January 21, 1981.
        March 29, 1989.
        September 13, 1994.
        February 27, 2006, effective March 8, 2006 (NYSE-2005-77), amended by SR-FINRA-2008-034 eff. Jan. 1, 2008.
        Amended by SR-FINRA-2008-036 eff. Nov. 11, 2008.
        Amended by SR-FINRA-2017-007.

        Selected Notice: 08-64.

      • Rule 321. Formation or Acquisition of Subsidiaries

        This version was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this version has not yet been determined.

        No member organization may, without the prior written approval of the Exchange, form or acquire a subsidiary company. The member organization shall require such subsidiary to comply with the following provisions.


        • • • Supplementary Material: --------------

        Information Regarding Subsidiary Companies of Member Organizations

        .10 Definition of subsidiary

        For purposes of this rule, the term "subsidiary" means an entity engaged in a securities or kindred business that is controlled by a member organization within the meaning of Rule 2. However, control shall not be presumed, for purposes of this rule, merely because a member is a director or principal executive of another person.

        Adopted.
        August 31, 1993.
        February 27, 2006, effective March 8, 2006 (NYSE-2005-77).
        Amended by SR-FINRA-2008-036 eff. Nov. 11, 2008.

        Selected Notice: 08-64.
        .11 Form of organization

        A subsidiary shall be an incorporated company or partnership.

        Amendments.
        August 31, 1993.
        August 19, 1994.
        .12 Name

        The name of the subsidiary and the name of the member organization must be sufficiently different to prevent confusion. The mere addition of "Inc." or "and Co." may not be sufficient.

        Amendments.
        August 31, 1993.
        August 19, 1994.
        .13 Severance of connection with subsidiary

        The Exchange may at any time require that the member organization and the partners or stockholders thereof sever all connections with the subsidiary including the disposition of all securities and other interests therein, or such amount thereof as determined by the Exchange. Concurrent with or at any time after directing such severance, the Exchange may require the member organization to change its name if the Exchange finds that the name of the former subsidiary may be confused with the name of such member organization.

        Amendment and Renumbered.

        August 31, 1993.
        February 27, 2006, effective March 8, 2006 (NYSE-2005-77).
        .14 List of stockholders

        A list of stockholders or partners of the subsidiary shall upon request be submitted to the Exchange.

        Amendment and Renumbered.

        August 31, 1993.
        .15 Reserved.

        Amendment and Renumbered.

        August 31, 1993.
        Amended by SR-FINRA-2017-007.
        .16 Capital requirements

        The Exchange will not prescribe capital requirements for a subsidiary. However, the Exchange will require a pro forma balance sheet of the subsidiary to be filed with it before any action is taken on a member or member organization's application to form such a subsidiary. The Exchange may, however, require the submission of subsequent financial statements.

        Amendment and Renumbered.

        August 31, 1993.
        .17 Banking commitments

        A subsidiary's banking and other commitments, loans and obligations shall be kept separate and distinct from those of the member or member organization with which it is affiliated.

        Amendment and Renumbered.

        August 31, 1993.
        .18 Functions of a subsidiary

        A subsidiary may be formed to do an underwriting, agency or dealer business, or any other business acceptable to the Exchange.

        Amendment and Renumbered.

        August 31, 1993.
        .19 Offices

        A subsidiary will be permitted, under the conditions set forth in Rule 343 to occupy the same quarters as those of the member organization.

        Amendment and Renumbered.

        August 31, 1993.
        .20 Books and records

        A subsidiary shall keep books and records separate and distinct from those of the member or member organization with which it is affiliated and such books and records shall, upon request, be made available by the member or member organization for inspection by the Exchange. However, such books and records may be maintained by the member or member organization.

        Amendment and Renumbered.

        August 31, 1993.
        .21 Transactions between members or member organizations and subsidiaries

        A subsidiary will not be prohibited by the Exchange from having cash or margin brokerage transactions effected for its account by the member or member organization (See Section 11(a) of the Securities Exchange Act of 1934). The rules and regulations applicable generally to customer's accounts shall be applicable to each such account.

        Amendment and Renumbered.

        August 31, 1993.
        .22 Conditions to be complied with after organization of subsidiary but prior to commencement of business

        No subsidiary shall commence business after its organization without the prior written approval of the Exchange. Before giving such approval there shall be submitted to the Exchange an opinion of counsel, in form and substance satisfactory to the Exchange, stating (1) that the subsidiary is duly organized and existing, and (2) that the securities, if any, of the subsidiary has been duly and validly issued and is fully paid and non-assessable.

        Amendment and Renumbered.

        August 31, 1993.
        .23 New issues

        The provisions of Section 11(d)(1) of the Securities Exchange Act of 1934, relating to the extension or maintenance of credit in connection with new issues, will apply to transactions by a member or member organization in new issues in the distribution of which its subsidiary participated with the same force and to the same extent as if the member or member organization itself had participated in the distribution of such new issues.

        Amendment and Renumbered.

        August 31, 1993.
        .24 Reserved.

        Amendment and Renumbered.

        August 31, 1993.
        March 22, 2001 (NYSE-2000-37).

        Amendments.
        August 31, 1993.
        August 19, 1994.
        Amended by SR-FINRA-2009-044 eff. Dec. 14, 2009.

        Selected Notice: 09-60.

      • Rule 311 Formation and Approval of Member Organizations

        This version was introduced with the filing of SR-FINRA-2017-007 which has been approved by the SEC. The effective date for this version has not yet been determined.

        (b)
        (5) OFFICERS
        /01 Reserved.
        /02 Reserved.
        /03 Reserved.
        /06 Limitations on Principal Executives

        Principal Executives may be part-time employees, subject to the prior approval of the member organization pursuant to Rule 346(e).
        (f) PRINCIPAL PLACE OF BUSINESS
        /01 Criteria

        In order to satisfy the rule's requirement that a member organization's principal place of business be maintained within the U.S., at least the following must be located within the U.S., at a definite and manned physical location which is adequate to serve as the site for Exchange inspection of the organization:
        a) Assets of customers who are citizens or residents of the U.S. and assets associated with transactions effected in the U.S., except for: (1) funds which are ordinarily held in branch offices or in transit, and (2) securities which are held as provided for in SEA Rule 15c3-3(c).

        To the extent that the broker-dealer introduces customer accounts on a fully disclosed basis to a carrying firm which is located in the U. S., such customer assets may be located at the carrying firm.
        b) Books and records customarily maintained by brokers and dealers at their principal place of business and sufficient to permit the Exchange to conduct its inspection of the member organization.

        The utilization of a clearing broker, a bank, or a service bureau which prepares or maintains the member organizations' books and records in accordance with SEA Rules 17a-3 and 17a-4 would satisfy this criterion if such broker, bank or bureau is located in the U.S., and the records would be readily accessible to the Exchange.
        c) Member organization capital sufficient to meet applicable capital requirements.
        d) All allied members, qualified and authorized to perform Rule 342 functions.
        e) Clearance, settlement and securities handling operations which pertain to securities transactions effected in the U.S., to the extent that such operations are maintained by the broker-dealer.
        f) Operations pertaining to foreign securities transactions effected on behalf of customers who are citizens or residents of the U.S., to the extent that such operations are customarily maintained by a broker-dealer at a principal place of business.
        (g) MINIMUM OF ACTIVE PARTNERS IN MEMBER ORGANIZATIONS — USE OF MEMBER ORGANIZATION NAME
        /01 Reserved.
        /02 Divisions of Member Organizations — Names

        Divisions that are not separate legal entities may not be identified by the use of such words as "Company", "Corporation" or "Incorporation", which connote separate entities. Persons staffing such divisions should not have the title of "President", which indicates a separate entity. The titles, "Vice President" or "Assistant Vice President" are satisfactory when used in a context which does not convey the existence of authority on behalf of the member organization not, in fact, possessed by that individual.


        Amendment.
        Amended by SR-FINRA-2008-036 eff. Nov. 11, 2008.
        Amended by SR-FINRA-2008-030 eff. Dec. 15, 2008.
        Amended by SR-FINRA-2017-007.

        Selected Notices: 08-57, 08-64.

    • SR-FINRA-2010-056

      • 1113. Restriction Pertaining to New Member Applications

        This rule was introduced with the filing of SR-FINRA-2010-056 which has been approved by the SEC. The effective date for this rule has not yet been determined.

        The Department of Member Regulation shall reject an application for membership with FINRA pursuant to NASD Rule 1013 in which either the applicant or an associated person, as defined in Article I of the FINRA By-Laws, is subject to a statutory disqualification, as defined in Article III, Section 4 of the FINRA By-Laws. Any such application as described in this Rule that is approved by virtue of Department of Member Regulation error or applicant error (including, but not limited to, an inadvertent or intentional misstatement or omission by the applicant or associated person) shall be subject to cancellation of membership in accordance with Rule 9555.
        Adopted by SR-FINRA-2010-056.

      • 9521. Purpose and Definitions

        (a) Purpose
        The Rule 9520 Series sets forth procedures for a person to become or remain associated with a member, notwithstanding the existence of a statutory disqualification as defined in Article III, Section 4 of the FINRA By-Laws and for a current member or person associated with a member to obtain relief from the eligibility or qualification requirements of the FINRA By-Laws and FINRA rules. Such actions hereinafter are referred to as "eligibility proceedings."
        (b) Definitions
        (1) The term "Application" means FINRA's Form MC-400 for individuals or Form MC-400A for members, filed with the Department of Registration and Disclosure (“RAD”).
        (2) The term "disqualified member" means a member that is or becomes subject to a disqualification or is otherwise ineligible for membership under Article III, Section 3 of the FINRA By-Laws.
        (3) The term "disqualified person" means an associated person or person seeking to become an associated person who is or becomes subject to a disqualification or is otherwise ineligible for association under Article III, Section 3 of the FINRA By-Laws.
        (4) The term "sponsoring member" means the member that is sponsoring the association or continued association of a disqualified person to be admitted, readmitted, or permitted to continue in association. A sponsoring member, however, may not sponsor the association or continued association of a disqualified person to be admitted, readmitted, or permitted to continue in association if that disqualified person is directly or indirectly the beneficial owner of more than five percent of the sponsoring member.
        Amended by SR-FINRA-2010-056.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
        Amended by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 00-56, 08-57.

      • 9522. Initiation of Eligibility Proceeding; Member Regulation Consideration

        (a) Initiation by FINRA
        (1) Issuance of Notice of Disqualification or Ineligibility
        If FINRA staff has reason to believe that a disqualification exists or that a member or person associated with a member otherwise fails to meet the eligibility requirements of FINRA, FINRA staff shall issue a written notice to the member. The notice shall specify the grounds for such disqualification or ineligibility. FINRA staff shall not issue such written notice to members with respect to disqualifications arising solely from findings or orders specified in Section 15(b)(4)(D), (E), or (H) of the Exchange Act or arising under Section 3(a)(39)(E) of the Exchange Act, unless the member is required to file an application pursuant to a Regulatory Notice entitled "Eligibility Proceedings: Amendments to FINRA Rule 9520 Series to Establish Procedures Applicable to Firms and Associated Persons Subject to Certain Statutory Disqualifications" (the "SD Regulatory Notice").
        (2) Notice Regarding a Member
        A notice issued to a disqualified member shall state that the disqualified member may apply for relief by filing an application or, in the case of a matter set forth in Rule 9522(e)(1), a written request for relief, within ten business days after service of the notice. If the member fails to file the application or, where appropriate, the written request for relief, within the 10-day period, the membership of the member shall be canceled, unless the Department of Member Regulation grants an extension for good cause shown.
        (3) Notice Regarding an Associated Person
        A notice issued regarding a disqualified person to a member shall state that such member may file an application on behalf of itself and such person or, in the case of a matter set forth in Rule 9522(e)(1), a written request for relief, within ten business days after service of the notice. If the member fails to file the application or, where appropriate, the written request for relief, within the 10-day period, the registration of the disqualified person shall be revoked, unless the Department of Member Regulation grants an extension for good cause shown.
        (4) Service
        A notice issued under this paragraph (a) shall be served by facsimile or pursuant to Rules 9131 and 9134.
        (b) Obligation of Member to Initiate Proceeding
        (1) A member shall file an application or, in the case of a matter set forth in Rule 9522(e)(1), a written request for relief, with RAD, if the member determines prior to receiving a notice under paragraph (a) that:
        (A) it has become a disqualified member;
        (B) a person associated with such member has become a disqualified person; or
        (C) the member wishes to sponsor the association of a person who is a disqualified person.
        (2) For any disqualifications arising solely from findings or orders specified in Section 15(b)(4)(D), (E), or (H) of the Exchange Act or arising under Section 3(a)(39)(E) of the Exchange Act, a member shall not file an application unless instructed to do so by the SD Regulatory Notice.
        (c) Withdrawal of Application
        A member may withdraw its application or written request for relief prior to a hearing by filing a written notice with RAD pursuant to Rules 9135, 9136, and 9137. A member may withdraw its application after the start of a hearing but prior to the issuance of a decision by the National Adjudicatory Council by filing a written notice with RAD and the Office of General Counsel pursuant to Rules 9135, 9136, and 9137.
        (d) Ex Parte Communications
        The prohibitions against ex parte communications set forth in Rule 9143 shall become effective under the Rule 9520 Series when FINRA staff has initiated the eligibility proceeding and FINRA staff has knowledge that a member intends to file an application or written request for relief pursuant to the Rule 9520 Series.
        (e) Member Regulation Consideration
        (1) Matters that may be Approved by the Department of Member Regulation without the Filing of an Application
        The Department of Member Regulation, as it deems consistent with the public interest and the protection of investors, is authorized to approve a written request for relief from the eligibility requirements by a disqualified member or a sponsoring member without the filing of an application by such disqualified member or sponsoring member if a disqualified member or disqualified person is subject to one or more of the following conditions but is not otherwise subject to disqualification:
        (A) a disqualified member or disqualified person is subject to a disqualification based on an injunction that was entered ten or more years prior to the proposed admission or continuance by order, judgment, or decree of any court of competent jurisdiction from acting as an investment adviser, underwriter, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, transfer agent, foreign person performing a function substantially equivalent to any of the above, entity or person required to be registered under the Commodity Exchange Act, or any substantially equivalent foreign statute or regulation, or as an affiliated person or employee of any investment company, bank, insurance company, foreign entity substantially equivalent to any of the above, or entity or person required to be registered under the Commodity Exchange Act or any substantially equivalent foreign statute or regulation, or from engaging in or continuing any conduct or practice in connection with any such activity, or in connection with the purchase or sale of any security.
        (B) a sponsoring member makes a request to change the supervisor of a disqualified person; or
        (C) a disqualified member or sponsoring member is a member of both FINRA and another self-regulatory organization; and:
        (i) the other self-regulatory organization intends to file a Notice under SEA Rule 19h-1 approving the membership continuance of the disqualified member or, in the case of a sponsoring member, the proposed association or continued association of the disqualified person; and
        (ii) the Department of Member Regulation concurs with that determination.
        (2) Matters that may be Approved by the Department of Member Regulation after the Filing of an Application
        The Department of Member Regulation, as it deems consistent with the public interest and the protection of investors, is authorized to approve an application filed by a disqualified member or sponsoring member if the disqualified member or disqualified person is subject to one or more of the following conditions but is not otherwise subject to disqualification (other than a matter set forth in paragraph (e)(1)):
        (A) The disqualified person is already a participant in, a member of, or a person associated with a member of, a self-regulatory organization (other than FINRA), and the terms and conditions of the proposed admission to FINRA are the same in all material respects as those imposed or not disapproved in connection with such person's prior admission or continuance pursuant to an order of the SEC under SEA Rule 19h-1 or other substantially equivalent written communication;
        (B) The Department of Member Regulation finds, after reasonable inquiry, that except for the identity of the employer concerned, the terms and conditions of the proposed admission or continuance are the same in all material respects as those imposed or not disapproved in connection with a prior admission or continuance of the disqualified person pursuant to an order of the SEC under SEA Rule 19h-1 or other substantially equivalent written communication, and that there is no intervening conduct or other circumstance that would cause the employment to be inconsistent with the public interest or the protection of investors;
        (C) The disqualification previously was a basis for the institution of an administrative proceeding pursuant to a provision of the federal securities laws, and was considered by the SEC in determining a sanction against such disqualified person in the proceeding; and the SEC concluded in such proceeding that it would not restrict or limit the future securities activities of such disqualified person in the capacity now proposed, or, if it imposed any such restrictions or limitations for a specified time period, such time period has elapsed;
        (D) The disqualification consists of a court order or judgment of injunction or conviction, and such order or judgment:
        (i) expressly includes a provision that, on the basis of such order or judgment, the SEC will not institute a proceeding against such person pursuant to Section 15(b) or 15B of the Exchange Act or that the future securities activities of such persons in the capacity now proposed will not be restricted or limited; or
        (ii) includes such restrictions or limitations for a specified time period and such time period has elapsed;
        (E) The disqualified person's functions are purely clerical and/or ministerial in nature; or
        (F) The disqualification arises from findings or orders specified in Section 15(b)(4)(D), (E), or (H) of the Exchange Act or arises under Section 3(a)(39)(E) of the Exchange Act.
        (3) Rights of Disqualified Member, Sponsoring Member, Disqualified Person, and Department of Member Regulation
        (A) In the event the Department of Member Regulation does not approve a written request for relief from the eligibility requirements pursuant to paragraph (e)(1), the disqualified member or sponsoring member may file an application, and such member shall have the right to proceed under Rule 9523 or 9524, as applicable. The Department of Member Regulation may require a disqualified member or sponsoring member to file an application with RAD, notwithstanding the provisions of paragraph (e)(1).
        (B) In the event the Department of Member Regulation does not approve an application pursuant to paragraph (e)(2), the disqualified member or sponsoring member shall have the right to proceed under Rule 9523 or 9524, as applicable.
        Amended by SR-FINRA-2010-056.
        Amended by SR-FINRA-2008-045 eff. June 15, 2009.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2004-133 eff. March 7, 2005.
        Amended by SR-NASD-2002-02 eff. January 3, 2002.
        Amended by SR-NASD-99-76 eff. Sept. 11, 2000.
        Amended by SR-NASD-98-57 eff. March 26, 1999.
        Amended by SR-NASD-97-81 eff. Jan. 16, 1998.
        Adopted by SR-NASD-97-28 eff. Aug. 7, 1997.

        Selected Notices: 99-16, 00-56, 05-12, 08-57, 09-19.

      • 9523. Acceptance of Member Regulation Recommendations and Supervisory Plans by Consent Pursuant to SEA Rule 19h-1

        (a) With respect to all disqualifications, except those arising solely from findings or orders specified in Section 15(b)(4)(D), (E) or (H) of the Exchange Act or arising under Section 3(a)(39)(E) of the Exchange Act, after an application is filed, the Department of Member Regulation may recommend the continued membership of a disqualified member or sponsoring member or the association or continuing association of a disqualified person pursuant to a supervisory plan where the disqualified member, sponsoring member, and/or disqualified person, as the case may be, consent to the recommendation and the imposition of the supervisory plan. The disqualified member, sponsoring member, and/or disqualified person, as the case may be, shall execute a letter consenting to the imposition of the supervisory plan.
        (1) If a disqualified member, sponsoring member, and/or disqualified person submitted an executed letter consenting to a supervisory plan, by the submission of such letter, the disqualified member, sponsoring member and/or disqualified person waive:
        (A) the right to a hearing before a Hearing Panel and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or otherwise challenge the validity of the supervisory plan, if the supervisory plan is accepted.
        (B) any right of the disqualified member, sponsoring member, and/or disqualified person to claim bias or prejudgment by the Department of Member Regulation, the General Counsel, the National Adjudicatory Council, or any member of the National Adjudicatory Council, in connection with such person's or body's participation in discussions regarding the terms and conditions of the Department of Member Regulation's recommendation or the supervisory plan, or other consideration of the recommendation or supervisory plan, including acceptance or rejection of such recommendation or supervisory plan; and
        (C) any right of the disqualified member, sponsoring member, and/or disqualified person to claim that a person violated the ex parte prohibitions of Rule 9143 or the separation of functions prohibitions of Rule 9144, in connection with such person's or body's participation in discussions regarding the terms and conditions of the recommendation or supervisory plan, or other consideration of the recommendation or supervisory plan, including acceptance or rejection of such recommendation or supervisory plan.
        (2) If a recommendation or supervisory plan is rejected, the disqualified member, sponsoring member, and/or disqualified person shall be bound by the waivers made under paragraph (a)(1) for conduct by persons or bodies occurring during the period beginning on the date the supervisory plan was submitted and ending upon the rejection of the supervisory plan and shall have the right to proceed under this rule and Rule 9524, as applicable.
        (3) If the disqualified member, sponsoring member, and/or disqualified person execute the letter consenting to the supervisory plan, it shall be submitted to the Office of General Counsel by the Department of Member Regulation with a proposed Notice under SEA Rule 19h-1, where required. The Office of General Counsel shall forward the supervisory plan and proposed Notice under SEA Rule 19h-1, if any, to the Chairman of the Statutory Disqualification Committee, acting on behalf of the National Adjudicatory Council. The Chairman of the Statutory Disqualification Committee may accept or reject the recommendation of the Department of Member Regulation and the supervisory plan or refer them to the National Adjudicatory Council for acceptance or rejection by the National Adjudicatory Council.
        (4) If the recommendation and supervisory plan is accepted by the National Adjudicatory Council or the Chairman of the Statutory Disqualification Committee, it shall be deemed final and, where required, the proposed Notice under SEA Rule 19h-1 will be filed by FINRA. If the recommendation and supervisory plan are rejected by the Chairman of the Statutory Disqualification Committee or the National Adjudicatory Council, FINRA may take any other appropriate action with respect to the disqualified member, sponsoring member, and/or disqualified person. If the recommendation and supervisory plan are rejected, the disqualified member, sponsoring member, and/or disqualified person shall not be prejudiced by the execution of the letter consenting to the supervisory plan under this paragraph (a) and the letter may not be introduced into evidence in any proceeding.
        (b) With respect to disqualifications arising solely from findings or orders specified in Section 15(b)(4)(D), (E) or (H) of the Exchange Act or arising under Section 3(a)(39)(E) of the Exchange Act, after an application is filed, in approving an application under Rule 9522(e)(2)(F), the Department of Member Regulation is authorized to accept the continued membership of a disqualified member or sponsoring member or the association or continuing association of a disqualified person pursuant to a supervisory plan where the disqualified member, sponsoring member, and/or disqualified persons, as the case may be, consent to the imposition of the supervisory plan. The disqualified member, sponsoring member, and/or disqualified person, as the case may be, shall execute a letter consenting to the imposition of the supervisory plan. The Department of Member Regulation shall prepare a proposed Notice under SEA Rule 19h-1, where required, and FINRA shall file such Notice.
        (1) If a disqualified member, sponsoring member, and/or disqualified person submitted an executed letter consenting to a supervisory plan, by the submission of such letter, the disqualified member, sponsoring member and/or disqualified person waive:
        (A) the right to a hearing before a Hearing Panel and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or otherwise challenge the validity of the supervisory plan, if the supervisory plan is accepted;
        (B) any right of the disqualified member, sponsoring member, and/or disqualified person to claim bias or prejudgment by the Department of Member Regulation or the General Counsel in connection with such person's or body's participation in discussions regarding the terms and conditions of the Department of Member Regulation's recommended supervisory plan, or other consideration of the supervisory plan, including acceptance or rejection of such recommendation or supervisory plan; and
        (C) any right of the disqualified member, sponsoring member, and/or disqualified person to claim that a person violated the ex parte prohibitions of Rule 9143 or the separation of functions prohibitions of Rule 9144, in connection with such person's or body's participation in discussions regarding the terms and conditions of the supervisory plan, or other consideration of the supervisory plan, including acceptance or rejection of such supervisory plan.
        (2) If the supervisory plan is rejected, the disqualified member, sponsoring member, and/or disqualified person shall be bound by the waivers made under paragraph (b)(1) for conduct by persons or bodies occurring during the period beginning on the date the supervisory plan was submitted and ending upon the rejection of the supervisory plan and shall have the right to proceed under Rule 9524.
        Amended by SR-FINRA-2010-056.
        Amended by SR-FINRA-2008-045 eff. June 15, 2009.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Adopted by SR-NASD-99-76 eff. Sept. 11, 2000.

        Selected Notices: 00-56, 08-57, 09-19.