septembre 06 2023

SEC Significantly Narrows Exemption from FINRA Membership for Proprietary Trading Firms


On August 23, 2023, the U.S. Securities and Exchange Commission (“SEC”) adopted amendments (the “Amendments”) to Rule 15b9-1 under the Securities Exchange Act of 1934 that generally eliminate the exemption from the requirement to become a member of a national securities association – effectively, the Financial Industry Regulatory Authority, Inc. (“FINRA”) – for SEC-registered broker-dealers that engage in proprietary trading of securities off the national securities exchanges of which they are members. As a result, proprietary trading firms that can no longer rely on Rule 15b9-1 must either become members of FINRA or limit their trading activities to the exchanges of which they are members. The Amendments become effective 60 days after publication in the Federal Register, and the compliance date is one year after publication in the Federal Register.

In this Legal Update, we provide an overview of the Amendments and discuss certain considerations relating to FINRA new member applications and regulatory fees.

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