On August 23rd, the SEC announced that it is adopting rule amendments to an exemption from Section 15(b)(8) of the Exchange Act. Under Section 15(b)(8), a broker or dealer registered with the SEC must join a national securities association unless the broker or dealer makes transactions in securities specifically on an exchange of which it is a member. Presently, the Financial Industry Regulatory Authority (FINRA) is the only registered association. The SEC initially proposed these amendments in March 2015 and subsequently re-proposed the amendments in July 2022.
The adopted amendments will implement the following changes:
replacement of rule provisions that provide an exemption for proprietary trading with narrower exemptions from association membership for any registered broker or dealer that is a member of an association, carries no customer accounts, and effects transactions in securities otherwise than on an association of which it is a member
creation of exemptions for such transactions that:
result solely from orders that are routed by an association (of which the broker or dealer is a member) to comply with Rule 611 of Regulation NMS or the Options Order Protection and Locked/Crossed Market Plan
are solely for the purpose of executing the stock leg of a stock-option order
The final rule will go into effect 60 days following its publication in the Federal Register. The compliance date will be 365 days from the date of publication in the Federal Register.
For further details on the final rule, visit the SEC’s website.