FINRA is looking to help small Broker-Dealers Survive & Thrive

Per Investment News, FINRA’s new CEO, Robert Cook, is looking for ways to support the small broker-dealers.

Securities Investor Protection Corporation Reduces Rate Effective January 1, 2017

As of August 30, 2016, the Securities and Exchange Commission approved an amendment to the Assessments Bylaw of the Securities Investor Protection Corporation, which will reduce the assessment rate from 0.25% to 0.15% effective for fiscal years beginning January 1, 2017, or thereafter.  The rate reduction comes as a result of SIPC Fund reaching a cumulative balance of $2.5 billion with the expectation that it will remain above $2.5 billion for at least the next six months.

What this means for most broker dealers is that the implementation of the reduced rate will take effect on the upcoming SIPC 6 filing, based upon net operating revenue for the six months ended June 30, 2017.  The SIPC 6 filing is due on July 31, 2017, immediately after the second quarter Focus Report submission deadline.

We are encouraging firms to be mindful of the update and to take advantage of the cost savings resulting from the aforementioned amendment.

Please feel free to contact us at (212) 668-8700 or at if you have any questions.

What is a FinOp?

What is a Financial & Operations Principal (FinOp)?

Rule 1022 requires every FINRA member firm to designate one individual to serve as a Financial and Operational Principal (FinOp). The FinOp obtains qualification by passing the Series 27 or Series 28 examination. Upon registration, the FinOp becomes personally liable for the maintenance of the broker dealer’s books and records, the accuracy of the financial statements, compliance with applicable net capital rules, and the timely submission of all financial regulatory reports.

FinOp Responsibilities

A Series 27 licensed FinOp requires full knowledge of the practices in these categories:

  • Preservation of Accurate Books and Records
  • Financial Regulatory Reporting
  • Net Capital Compliance
  • Customer Protection

A FinOp is responsible for the facilitation of the following duties:

While the FinOp’s responsibilities are very well defined by FINRA Rule 1022 and the subsequent FinOp related FINRA notices, it is critical that the FinOp obtain industry experience to successfully apply the rules based upon industry best practices.  A qualified FinOp thoroughly understands the broker dealer’s business, its operations, and the reporting needs of management.

Why outsource the FinOp role?

While large broker dealers may employ an extensive accounting back-office, the majority of FINRA member firms are limited in scope. Despite their size restrictions, limited-purpose broker dealers are not afforded any leniency in complying with industry-wide licensing and regulatory requirements. The result is an inability for these member firms to employ qualified professionals at a reasonable cost. FINRA has acknowledged this and has accepted the utilization of the outsourced FinOp as an industry standard. Firms who elect to outsource the FinOp role should select qualified and experienced personnel employed on a part-time basis.

Contact ACI for more information on using our outsourced FinOp services.