FINRA Pulls Proposal To Eliminate 5% Rule As A Result Of Commentary

Tuesday, February 05, 2013 07:22
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FINRA Pulls Proposal To Eliminate 5% Rule As A Result Of Commentary

Tags: FINRA | regulation | trade

Two years ago FINRA initiated a proposal that would update guidance regarding the 5% threshold for markups and markdowns. Commentary warned FINRA not to do away with the rule.

 
Now, the regulatory organization has backtracked on its proposal to do exactly that. As of last Thursday, FINRA’s website has an updated proposal that keeps the 5% threshold in place.

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Attorneys in the industry say that 5% is too much and the threshold should be more like 2% or 3%.
 
The Rule would be a component of Rule 2121 governing markups and markdowns and is part of FINRA’s continuing rule consolidation process.
 
FINRA is also trying to eliminate a proceeds rule that guides markups on round-trip transactions as well as a rule that mandates firms provide equity commission-rate schedules to clients.
 
The comment period ends April 1.

 

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