Understanding and Appropriately Responding to Regulator Changes due to COVID-19
A Summary of Financial Regulator Changes due to the COVID-19 Pandemic
There is no doubt that COVID-19 will continue to disrupt various industries, people, and businesses for years to come. Like many companies, regulator representatives who traditionally conduct on-premise inquiries and in-person meetings have needed to adjust to accommodate the health and safety of all persons involved.
Regulators have introduced new measures and provided greater reprieve on certain regulatory requirements due to COVID-19. The combination of business uncertainty and ever-changing regulations makes this an integral time to keep up to date with regulation and regulator changes. The new presidential administration and post-COVID operations may also impact a firm’s regulatory reporting in the future. In addition, firms are shifting their priority and resources to areas of their business that need more attention.
With uncertainty surrounding business requirements for regulatory reporting, Infobelt provides a resource for firms to understand all changes to regulator operations. Here is a summary of regulator changes due to the COVID-19 pandemic:
FINRA
FINRA has proposed rules changes to temporarily amend certain timing, services, and other procedural requirements during the pandemic, including suspension to in-person signing and implementing extensions to office inspections. FINRA also created a COVID Fraud Task Force “to establish a coordinated response across the organization to potential COVID-related fraud in the broker-dealer industry and in U.S. markets.”
FINRA has since resumed regulatory inquires, including cycle examinations, but will continue to evaluate all circumstances on a case-by-case basis for individual firms. “FINRA remains fully operational through the support of our robust remote work capabilities and continues to carry out all of our regulatory responsibilities, protecting investors and market integrity…We also understand that firms must prioritize resources to respond to and protect their investor clients amidst unprecedented market turmoil.” During this time, FINRA would also like to remind everyone to keep aware of fraud, illicit schemes, and other manipulative activities that arise from the conditions created by COVID-19.
To view FINRA’s COVID-19 temporary amendments to regulations, click here.
SEC
The SEC encourages all parties to file and serve documents electronically during this time. The SEC and its associated offices have moved to conducting examinations off-site through correspondence, unless it is absolutely necessary to be on-site.
As quoted from the SEC COVID-19 announcement page, “Like the rest of the agency, the Division of Enforcement and the Office of Compliance Inspections and Examinations continue to execute on their mission of protecting investors and remain fully operational. The agency is actively monitoring our markets for frauds, illicit schemes and other misconduct affecting U.S. investors relating to COVID-19 — and as circumstances warrant, will issue trading suspensions and use enforcement tools as appropriate.”
Most significantly, the SEC has a temporary exception for Rule 606. Rule 606 outlines data reporting timing for customer orders in equities and options trading.
To view all SEC announcements due to COVID-19, please click here.
MSRB
The MSRB filed a proposed rule change to provide regulatory relief on a temporary basis to brokers, dealers, and advisors in light of the challenges due to the COVID-19 pandemic. In a statement posted to their website, “The MSRB remains fully operational and able to continue our important work safeguarding the municipal market. We remain in close communication with fellow regulators, including the SEC and FINRA, and market participants.” In addition, MSRB has temporarily suspended late fees and modifies due dates for certain regulatory obligations.
To view the document in its entirety: click here.
CFTC
The CFTC issued a series of temporary, targeted relief to designated market participants in response to the COVID-19 pandemic. These efforts are designed to help facilitate orderly trading and liquidity in the U.S. derivatives markets.
To view all CFTC letters covering COVID-19, click here.
Maintaining a current and relevant regulations library is cumbersome and costly. Infobelt wants to ease the difficulty of keeping up to date with all regulator and regulation changes. Our team will happily provide a demo upon request.
Erica Minne and Kyra Neff contributed to this article and would be happy to discuss the information detailed above.