The SEC approved on an accelerated basis a FINRA proposal to adopt FINRA Rule 0180 which is designed to ease the transition to the treatment of security-based swaps as securities under the Securities Exchange Act of 1934 (the “Exchange Act”) pursuant to the Dodd-Frank Act, and related consequences under FINRA rules. FINRA Rule 0180 exempts members’ activities and positions with respect to security-based swaps from FINRA rules, subject to certain exceptions. Among the exceptions are (a) FINRA Rule 2010 (standards of commercial honor and principles of trade), FINRA Rule 2020 (use of manipulative, deceptive or other fraudulent devices), FINRA Rule 3310 (anti-money laundering program) and FINRA Rule 4240 (margin requirements for credit default swaps); and (b) to the extent they would have applied as of July 15, 2011, NASD Rule 3110 (books and records) and all successor FINRA Rules to such NASD Rule, the FINRA Rule 4500 Series (books, records and reports); and the FINRA Rule 4100 Series (financial condition). Rule 0180 will expire on January 17, 2012 although FINRA intends to amend the expiration date in subsequent filings as necessary to ensure that its expiration date is coordinated with the termination of relevant provisions of the SEC exemptive order addressing related issues under the Exchange Act. Comments on Rule 0180 may be submitted no later than 21 days after its publication in the Federal Register.
Alert July 19, 2011