On March 12, 2025, FINRA launched a broad review of regulatory requirements applicable to member firms and associated persons.1 In connection with this launch, FINRA has requested broad public comment on the scope of its review and its approach to rule modernization. The initial comment deadline is May 12, 2025, and member firms should take advantage of the opportunity to engage.
FINRA’s Review and Initial Comment Request
According to the regulatory notice announcing the review, FINRA is seeking to modernize its rules, remove unnecessary burdens, facilitate innovation and new technologies, and guide its approach with respect to non-FINRA regulatory requirements applicable to member firms. FINRA is also seeking to address areas where its rules may cause “confusion, impose unnecessary or duplicative burdens,” or be better tailored to member firms’ “regulatory and business environment.”
The initial focus of FINRA’s modernization efforts will be on areas where its rules or regulatory requirements affect
- member firms’ support of capital formation, including capital acquisition brokers and other “limited purpose” broker-dealer models designed to support capital formation; research analysts and research reports; and other rules, guidance, and processes impacting capital raising
- how member firms incorporate modern technology into their workplaces, including requirements regarding branch offices and remote work; registered representative credentialing and education; means of internal and customer communications (such as electronic delivery); and recordkeeping practices
FINRA expects to issue separate targeted requests for comment in these two areas soon. FINRA has also broadly invited member firms, investors, trade associations, and other interested parties to provide feedback on the scope of its modernization effort, including other FINRA rules, interpretations, and guidance that should be a focus of its review. FINRA has also included specific requests for comment related to the above and noted that “[c]omments are welcome regardless of whether the requirements are related to or derived from a statutory or other non-FINRA source.”2
FINRA notes that it will separately seek input on its modernization efforts from its Board of Governors, advisory committees, and regulatory teams, and will engage in additional outreach with its member firms and other parties through, for example, meetings and roundtables on specific topics.
What This Means for You
Firms should take advantage of FINRA’s invitation to comment in connection with its modernization effort, both now and as FINRA issues any subsequent targeted comment requests.3 This is a good opportunity for firms to educate receptive staff at FINRA about key issues, gaps, or concerns with existing FINRA rules or guidance. Given that certain FINRA rules may be outdated or lack clear regulatory guidance considering more recent changes to market structure and industry practices, firms should proactively engage with FINRA through the public comment process and other available outreach as part of this FINRA regulatory initiative. Assistance from legal counsel who are industry leaders in this area, such as the Sidley lawyers referenced below, can be helpful to successfully advocating for desired regulatory reforms.
1 FINRA Regulatory Notice 25-04 (Mar. 12, 2025), https://www.finra.org/sites/default/files/2025-03/Regulatory-Notice-25-04.pdf.
2 Id.
3 FINRA’s effort is parallel to the federal review for overbroad or burdensome regulations. See Exec. Order No. 14,219 (Feb. 19, 2025), https://www.govinfo.gov/content/pkg/FR-2025-02-25/pdf/2025-03138.pdf.
