Preparing for the Consolidated FINRA Rules

Earlier this year, the SEC approved FINRA’s new consolidated rules*, which cover required supervision systems and responsibilities, written supervisory procedures and supervision of supervisory personnel for broker-dealer firms.

The new rules will become effective on December 1, 2014, and essentially consolidate and codify guidance that’s already in place—with some important updates.

Look closely at the rules for internal electronic communications

If you’re in compliance and responsible for governing books and records, you’ll want to pay close attention to FINRA Rule 3110 (formerly NASD rule 3010), which outlines requirements for a broker-dealer’s electronic communications supervisory procedures and systems.

Of particular interest, Rule 3110 (b)(4) requires a firm to have supervisory procedures in place to review incoming and outgoing written and electronic communications related specifically to the firm’s securities or investment banking.

While FINRA has required those procedures for quite some time, the consolidated rules now put an emphasis on the review and supervision of internal firm communications.

In the past, FINRA language about internal communications wasn’t as specific, and appeared buried among other more ‘important’ rules.

Keep the big picture in mind

Overall, you’ll want your archiving solution to help you identify and review messages that might violate your firm’s usage policies, in compliance with FINRA’s consolidated rules.

The good news is, if you use The Smarsh Archiving Platform, you already have a solution at your fingertips to help supervise communications across your entire firm, and identify risk.

* FINRA Regulatory Notice 14–10 includes new rules 3110, 3120, 3150 and 3170, which replace NASD Rules 3010, 3012 and 3110(i).