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Monthly Regulatory Summary (September 2021)

Monthly Regulatory Summary (September 2021)

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October 6, 2021


Regulatory Notices

Per Notice 21-31, FINRA has established a new Supplemental Liquidity Schedule (SLS). The new SLS, which members subject to the requirement will need to file as a supplement to the FOCUS Report, is designed to improve FINRA’s ability to monitor for events that signal an adverse change in the liquidity risk of the members with the largest customer and counterparty exposures. FINRA is issuing this Notice to provide further information on the new requirement, which will become effective on March 1, 2022. For members subject to the requirement, the first SLS must be completed as of the end of March 2022 and will be due by May 4, 2022.

The SLS, and instructions thereto, is available in Attachment A. FINRA will make the SLS available through FINRA Gateway. 

Per Notice 21-32, FINRA requests comment on a proposed change to its current policy relating to the assignment of OTC symbols to unlisted equity securities. Specifically, FINRA is considering whether it should begin assigning OTC symbols to unlisted equity securities that do not have a valid CUSIP identifier, in the limited circumstance where a member firm demonstrates its best efforts to obtain a CUSIP identifier and provides documentation to identify the security.

Per Notice 21-33, FINRA adopted amendments to Rule 6432 (Compliance with the Information Requirements of SEA Rule 15c2-11) in light of the Securities and Exchange Commission’s (SEC) amendments to SEC Rule 15c2-11 (SEC Rule 15c2-11). As amended, Rule 6432 will require a qualified inter-dealer quotation system (Qualified IDQS) to submit a modified Form 211 filing to FINRA in connection with each initial information review, and a daily security file to FINRA containing summary information for all securities quoted on its system on each day that it makes a publicly available determination permitted under SEC Rule 15c2-11, among other amendments. The amendments to Rule 6432 will take effect on September 28, 2021—in line with the compliance date for the amendments to SEC Rule 15c2-11.

The amended rule text is available in the online FINRA Manual.

Per Notice 21-34, FINRA has adopted new rules to address firms with a significant history of misconduct. New Rule 4111 (Restricted Firm Obligations) requires member firms that are identified as “Restricted Firms” to deposit cash or qualified securities in a segregated, restricted account; adhere to specified conditions or restrictions; or comply with a combination of such obligations. New Rule 9561 (Procedures for Regulating Activities Under Rule 4111) and amendments to Rule 9559 (Hearing Procedures for Expedited Proceedings Under the Rule 9550 Series) establish a new expedited proceeding to implement Rule 4111.

The new rules and rule amendments become effective on January 1, 2022.

The rule text is available in Attachment A. A flow chart of the Rule 4111 process is available in Attachment B.

Special Notices

There were no Special Notices in September.


Final Rules

Per Release No. 33-10984, The Securities and Exchange Commission (“Commission”) is adopting amendments to Volumes I and II of the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) Filer Manual (“Filer Manual”) and related rules and forms.  The EDGAR system was upgraded on September 20, 2021.

Proposed Rules

Per Release No. 34-91603, The Securities and Exchange Commission (“Commission”) is proposing to amend Form N-PX under the Investment Company Act of 1940 (“Investment Company Act”) to enhance the information mutual funds, exchange-traded funds (“ETFs”), and certain other funds currently report annually about their proxy votes and to make that information easier to analyze. The Commission also is proposing rule and form amendments under the Securities Exchange Act of 1934 (“Exchange Act”) that would require an institutional investment manager subject to section 13(f) of the Exchange Act to report annually on Form N-PX how it voted proxies relating to executive compensation matters, as required by section 14A of the Exchange Act. The proposed reporting requirements for institutional investment managers, if adopted, would complete implementation of section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”).

Interim Final Rules

There were no interim final rules in September.

Interpretive Releases

There were no interpretive releases in September.

Policy Statements

There were no policy statements in September.


Notices to Members

Per Notice I-21-28: 

Recognizing that Members may permanently adopt hybrid work environments and permit APs to work remotely, NFA recently amended its definition of branch office. The amended definition excludes any remote working location or flexible shared workspace where one or more APs from the same household live or rent/lease, provided:

  • The AP(s) does not hold the location out publicly as the Member's office;
  • The AP(s) does not meet with customers or physically handle customer funds at the location; and
  • Any CFTC or NFA-required records created at the remote location are accessible at the firm's main or applicable branch office(s) as required under CFTC and NFA requirements.

Members may delist locations currently identified as branch offices if they fall outside of the amended definition.

These amendments will become effective on September 23, 2021, at which time the relief provided in Notice to Members I-20-12 will expire.

Per Notice I-21-29:

NFA has amended Financial Requirements Section 18 to specify that Swap Dealers (SD) Members subject to the filing requirements under CFTC Regulation 23.105(k) will satisfy NFA's requirement by filing the information specified by NFA in the form and manner provided by NFA. This amendment will become effective October 6, 2021.

NFA adopted the proposed amendments for two reasons. First, NFA has developed standardized tables available in WinJammer™ to collect the specific information from SD Members. The tables will facilitate NFA's collection and analysis of the information and will also provide SD Members with certainty on the format for filing the information. Second, NFA has identified certain information required by CFTC Regulation 23.105(k) that is similar in nature to information that NFA will collect under CFTC Regulation 23.105(l). NFA's standardized tables will not collect this similar information.

The information that will be required by the standardized tables includes:

  • Product category and the amount of the deduction for market risk on each product for which the SD calculates a deduction for market risk other than in accordance with a model;
  • Daily intra-month VaR;
  • Product category and the deduction for market risk on each product for which the SD uses scenario analysis;
  • 10 largest commitments listed by counterparty;
  • Number of business days for which the actual daily net trading loss exceeded the corresponding daily VaR; and
  • Backtesting results of all internal models used to compute allowable capital, including VaR, and credit risk models, indicating the number of backtesting exceptions.

Per Notice I-21-30:

NFA has amended Financial Requirements Section 10 to impose a $1,000 per business day late fee on each financial report or other filing required by Financial Requirements Section 17 submitted after its due date. This late fee is consistent with the late fee NFA imposes on futures commission merchant, introducing broker and forex dealer Members that submit late financial filings.

NFA also adopted a new Interpretive Notice to Financial Requirements Section 17 entitled Financial Requirements Section 17: Initial Margin Model Ongoing Monitoring Reports clarifying NFA's expectations regarding quarterly and annual initial margin (IM) model performance reporting. The Interpretive Notice specifies the information currently required to be submitted and clarifies due dates for these filings.

The amendment to Financial Requirements Section 10 and the new Interpretive Notice will become effective on October 6, 2021.

Per Notice I-21-31:

NFA utilizes an electronic voting process for contested Directors' elections, contested Nominating Committee member elections and Articles' amendments approval votes. If elections are necessary, NFA has engaged a third-party election service provider to administer the electronic voting process. To facilitate the electronic voting process, each Member shall designate an Executive Representative who will have the Member's sole authority to sign nominations made by petition, receive notices of Member meetings and proxy materials, complete proxy cards and provide voting instructions and cast votes on behalf of the Member. Members may designate an Executive Representative through NFA's website. Only firm personnel who are the Security Manager or are authorized to view, update and file information in ORS may complete the Executive Representative Contact form.

If a Member fails to complete this form and designate an Executive Representative, the Member's membership contact listed in ORS will be deemed to be the Executive Representative. If a Member has already designated an Executive Representative, it is not necessary to do so again unless the person designated as the Executive Representative has changed.

Board and Nominating Committee Members' Terms to Expire at 2022 Board of Directors' Regular Annual Meeting

The Notice provides a list of the FCM, IB, CPO/CTA and SD/MSP/RFED Board and Nominating Committee members whose terms shall expire at the Board of Directors' regular annual meeting on February 17, 2022.

The Nominating Committee relies heavily on the recommendations of the membership in making its nominating decisions. Please give this matter serious consideration and return your submission(s) to NFA by mail, email or fax for receipt no later than October 13, 2021.

Per Notice I-21-32:

NFA has amended Compliance Rule 2-49 to provide that any swap dealer (SD) Member that violates CFTC Regulation 37.12 or the Part 50 Regulations will be deemed to have also violated an NFA requirement. This amendment will become effective on September 30, 2021.

News Releases

September 16, 2021

NFA orders London, U.K. swap dealer ED&F Man Capital Markets Limited to pay a $150,000 fine

September 16, Chicago—NFA has ordered London, U.K. swap dealer ED&F Man Capital Markets Limited (ED&F Man) to pay a $150,000 fine.

The Decision, issued by NFA's Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by ED&F Man, in which it neither admitted nor denied the allegations. The Committee found that ED&F Man failed to comply with the qualification testing requirement as to certain associated persons by the compliance date.

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

Hot Issues


Cybercrime is constantly developing. With attacks becoming more prevalent and sophisticated. Now is the time to perform a cybersecurity check for your firm to ensure not only compliance with industry standards, but confirm the firm’s ability to prevent, detect, and respond to evolving cyber threats. Prevention begins with training; make certain that in addition to proper security measures, applicable personnel has been rigorously trained with respect to information and technology security measures. 

Regulatory Exam Preparedness

Regulators have been out in force throughout the pandemic and continue to do so. We have observed trends toward lengthy, deeper dive exams, conducted remotely. Firms should consider initiatives aimed at identifying and remediating regulatory gaps in their programs, particularly with respect to current exam focus area trends. 

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 September 2021 Industry Notices
  • SEC Regulatory Actions
  • NFA Notices
  • NFA Press Releases


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