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Monthly Regulatory Summary (November 2023)

Monthly Regulatory Summary (November 2023)

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December 8, 2023

As the regulatory landscape is constantly evolving, Compliance Risk Concepts (“CRC”) is issuing its monthly review and summary of FINRA, SEC, and NFA notices and bulletins to assist our clients in keeping abreast of notable regulatory developments and deadlines in an effort to strengthen their compliance and regulatory initiatives.


Regulatory Notices

Per Regulatory Notice 23-19, FINRA has adopted a short-form membership application process for certain firms that must become FINRA members due to the recent amendments to Rule 15b9-1 of the Securities Exchange Act of 1934. Firms that are eligible for the short-form membership application process also must have been a member of a national securities exchange with which FINRA has had a regulatory services agreement for the 12-month period prior to August 23, 2023. FINRA has further adopted a partial waiver of the new membership application fee for those firms that apply for FINRA membership through the short-form membership application process. These rule changes became effective on October 30, 2023.

The text of the rule changes is set forth in Attachment A. The short-form application is set forth in Attachment B.


Final Rules

Per Release No. 34-98845, the SEC is adopting a set of rules and forms under the Securities Exchange Act of 1934 (“SEA”) that would create a regime for the registration and regulation of security-based swap execution facilities (“SBSEFs”) and address other issues relating to security-based swap (“SBS”) execution generally. One of the rules being adopted implements an element of the Dodd-Frank Act that is intended to mitigate conflicts of interest at SBSEFs and national securities exchanges that trade SBS (“SBS exchanges”). Other rules being adopted address the cross-border application of the SEA’s trading venue registration requirements and the trade execution requirement for SBS. In addition, the SEC is amending an existing rule to exempt, from the SEA definition of “exchange,” certain registered clearing agencies, as well as registered SBSEFs that provide a market place only for SBS. The SEC is also adopting a new rule that, while affirming that an SBSEF would be a broker under the SEA, exempts a registered SBSEF from certain broker requirements. Further, the SEC is adopting certain new rules and amendments to its Rules of Practice to allow persons who are aggrieved by certain actions by an SBSEF to apply for review by the SEC. Finally, the SEC is delegating new authority to the Director of the Division of Trading and Markets and to the General Counsel to take actions necessary to carry out the rules being adopted.

The SEC is adopting the following compliance schedule for Regulation SE. The SBSEF rules shall become effective 60 days after the date of publication in the Federal Register (“Effective Date”). Once Regulation SE has become effective, any entity that meets the definition of SBSEF may file an application to register with the SEC on Form SBSEF at any time after the Effective Date. As discussed above, the Temporary SBSEF Exemptions will expire 180 days after the Effective Date for any entity that has not filed an application to register with the SEC on Form SBSEF.

For an entity that has submitted an application on Form SBSEF by 180 days after the Effective Date, the exemptive relief relating to SBSEF registration would expire 240 days after the Effective Date, except with respect to an entity whose application on Form SBSEF is complete (having responded to requests by the SEC’s staff for revisions or amendments) within 240 days of the Effective Date. An entity that has submitted an application within 180 days of the Effective Date and whose application is complete within 240 days of the Effective Date will continue to benefit from the exemption from registration until 30 days after the SEC acts to approve or disapprove the application on Form SBSEF.

Per Release No. 34-98959, the SEC is adopting rules under the Securities Exchange Act of 1934 (“Exchange Act”) to improve the governance of clearing agencies registered with the SEC (“registered clearing agencies”) by reducing the likelihood that conflicts of interest may influence the board of directors or equivalent governing body (“board”) of a registered clearing agency. The rules identify certain responsibilities of the board, increase transparency into board governance, and, more generally, improve the alignment of incentives among owners and participants of a registered clearing agency. In support of these objectives, the rules establish new requirements for board and committee composition, independent directors, management of conflicts of interest, and board oversight.

The SEC is adopting a compliance date of 12 months after publication in the Federal Register for Rule 17Ad-25, except that the compliance date for Rules 17Ad-25(b)(1), (c)(2), and (e) is 24 months after publication in the Federal Register.

Per Release No. 33-11254, the SEC is adopting a rule to implement Section 621 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) prohibiting an underwriter, placement agent, initial purchaser, or sponsor of an asset-backed security (including a synthetic asset-backed security), or certain affiliates or subsidiaries of any such entity, from engaging in any transaction that would involve or result in certain material conflicts of interest.

The final rule is effective 60 days after publication in the Federal Register. Under the compliance date that the SEC is adopting in this release, any securitization participant must comply with the prohibition and the requirements of the exceptions to the final rule, as applicable, with respect to any ABS the first closing of the sale of which occurs 18 months after publication in the Federal Register.

Proposed Rules

There were no proposed rules in November.

Interim Final Rules

There were no interim final rules in November.

Interpretive Releases

There were no interpretive releases in November.

Policy Statements

There were no policy statements in November.


Notices to Members

Notice I-23-20

November 20, 2023

Request for Public Representative Nominations for NFA's Board of Directors

Please Route To:
Sr. Management

NFA's Board of Directors (Board) amended NFA's Articles of Incorporation (Articles) to reduce the size of NFA's Board from 29 to 21 Directors. The Board's new composition becomes effective at the Board's Annual Meeting on February 15, 2024, at which time the terms of all current Public Representatives - Ana Beskin, Michael C. Dawley, Ronald H. Filler, Arthur W. Hahn, Douglas E. Harris, Mary M. McDonnell, Michael H. Moskow, Ronald S. Oppenheimer, Todd E. Petzel, and Michael R. Schaefer - will expire. NFA is seeking nominations to fill seven Public Representative vacancies. The incumbent Public Representatives are eligible for nomination.*

NFA's Articles permit NFA Members and non-Members to nominate Public Representatives. At its February 15, 2024 Annual Meeting, the Board will elect, by majority vote, from among the nominees seven Public Representatives to serve on the Board.

Over the years, NFA's Board has consistently included Public Representatives with outstanding credentials, and their contributions to NFA have been enormous. Public Representatives bring the perspective of non-Members to the Board. Public Representative candidates must be knowledgeable of the markets and the Members regulated by NFA and have no material relationship with NFA that would impact their ability to provide an impartial, objective analysis of the issues that come before the Board. NFA Bylaw 517 sets forth the qualifications for Public Representatives as follows:

To qualify as a Public Representative of NFA, an individual must first be found by the Board, on the record, to have no material relationship with NFA that might reasonably affect the independent judgment of the public representative. Any of the following relationships during the previous three years shall be considered a material relationship with NFA:

(a) The Director or Member of the Director's immediate family (i.e., spouse, parents, children and siblings) is an NFA Officer or employee;

(b) The Director is an NFA Member, Associate Member or a principal of an NFA Member or has an immediate family Member (i.e., spouse, parents, children and siblings) who is an NFA Member, Associate Member or principal of an NFA Member;

(c) The Director, or a firm with which the Director is an officer, director or partner receives more than $100,000 in combined annual payments from NFA, or the Director, or a firm with which the Director is an officer, director or partner receives more than $100,000 annually from an NFA Member or Associate Member for legal, accounting or consulting services related to the NFA Member's or Associate Member's CFTC-registered activities. Compensation for services as a Director of NFA does not count towards the annual $100,000 payment limit, nor does deferred compensation for services prior to becoming a Director so long as compensation is in no way contingent, conditioned or revocable.

Public representation on NFA's Board of Directors is an important matter. We ask that you give serious consideration to submitting a nomination to fill these vacancies. The deadline for submitting Public Representative nominations is Tuesday, January 9, 2024.

Nominations may be submitted by mail or email by January 9, 2024 to:

By Mail:
Carol A. Wooding
General Counsel and Secretary
320 South Canal, Suite 2400
Chicago, Illinois 60606

By Email:

Notice I-23-21

November 21, 2023

FCM and IB Members—FinCEN adopts terrorism crowdfunding report and updates its list of FATF-identified jurisdictions with AML/CFT deficiencies

On November 3, 2023, the Financial Crimes Enforcement Network (FinCEN) issued a news release informing U.S. financial institutions of the Financial Action Task Force's (FATF) recent public statement. The statement announces the FATF's adoption of a report regarding terrorist groups' use of crowdfunding techniques to raise money for attacks. Additionally, the FATF reiterates that all jurisdictions should be vigilant of current and emerging risks from the circumvention of measures taken against the Russian Federation to protect the international financial system.

The release also announced that the FATF reissued its list of jurisdictions with strategic AML/CFT deficiencies. NFA Member futures commission merchants (FCM) and introducing brokers (IB) should review this release to ensure that their AML programs have the most current information on FATF-identified jurisdictions with AML/CFT deficiencies and revise their AML programs accordingly. A copy of the news release is available on FinCEN's website.

News Releases

November 15, 2023

NFA orders London, United Kingdom introducing broker Braemar Securities LTD to pay a $140,000 fine

November 15, Chicago—NFA has ordered Braemar Securities LTD (Braemar Securities) to pay a $140,000 fine. Braemar Securities is an introducing broker (IB) Member of NFA located in London, United Kingdom.

The Decision, issued by an NFA Hearing Panel (Panel), is based on a Complaint issued by NFA's Business Conduct Committee and a settlement offer submitted by Braemar Securities, in which the firm neither admitted nor denied the allegations in the Complaint. The Complaint charged Braemar Securities with failing to comply with its communication recordkeeping obligations, in violation of NFA Compliance Rule 2-10, and disclosing customers' confidential non-public information, in violation of NFA Compliance Rule 2-26. The Complaint further charged Braemar Securities with a failure to supervise, in violation of NFA Compliance Rule 2-9.

In its Decision, the Panel found that Braemar Securities violated NFA Compliance Rules 2-10, 2-26 and 2-9.

The complete text of the Complaint and Decision can be viewed on NFA's website.

Hot Issue

The SEC is continuing its enforcement activity against cypto asset securities trading platforms. In its latest publicized move, the SEC charged Payward Inc. and Payward Ventures Inc., together known as Kraken, with operating Kraken’s crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency. The SEC alleged that Kraken:

  • Provides a marketplace that brings together the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interact, and thus operates as an exchange;
  • Engages in the business of effecting securities transactions for the accounts of Kraken customers, and thus operates as a broker;
  • Engages in the business of buying and selling securities for its own account without an applicable exception, and thus operates as a dealer; and
  • Serves as an intermediary in settling transactions in crypto asset securities by Kraken customers, and acts as a securities depository, and thus operates as a clearing agency.

The November action follows charges against Coinbase in June and Bittrex in April.

Our Perspective

Regulators continue to demonstrate their commitment to protecting investors by aggressively pursuing bad actors and reviewing and updating regulations to guard investors against constantly evolving threats.

The best approach to regulatory compliance is a proactive one. Staying ahead of the curve by taking note of statements and guidance released by regulators and using them as a barometer to assess the current regulatory climate can help ensure that a firm is prepared for a regulatory exam. Rather than scrambling to rectify issues or meet deadlines, a thorough, active compliance program that considers and incorporates regulatory developments is in a better position to satisfy regulators and preserve operations so they can best serve their clients.

For more information, please contact:

Mitch Avnet

p. (646) 346-2468

David Amster

p. (917) 568-6470


  • FINRA Notices
  • SEC Regulatory Actions
  • SEC Press Releases
  • NFA Notices
  • NFA New Releases



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