741 BDs Opt In to FINRA Home Office Inspections
What You Need to Know
This represent 22% of FINRA member firms.
Opt-ins are highest among firms with 500 registered representatives or more.
The first phase of the three-year pilot progam started July 1 and ends Dec. 31.
The Financial Industry Regulatory Authority said Wednesday that 741 broker-dealers — 22% of FINRA member firms — have volunteered to participate in the initial phase of its Remote Inspections Pilot Program, which started on July 1.
The opt-in period ended on June 26. The initial phase of the pilot program started on July 1 and ends on Dec. 31.
“Opt-ins are highest among large firms (500 registered representatives or more), with a participation rate of 60% in this category,” Greg Ruppert, executive vice president and head of Member Supervision at FINRA and Jonathan Sokobin, executive vice president, chief economist and head of the Office of Regulatory Economics and Market Analysis at FINRA, said Wednesday in a blog post.
“Mid-size and small firm participation rates are 47% and 18% respectively,” Ruppert and Sokobin said. “Participant firms collectively cover 67% of all registered representatives and 53% of registered branches.”
The number of firms participating “reflects a desire on the part of broker-dealer member firms to continue allowing their registered reps to work remotely, albeit while inspecting those home offices in compliance with FINRA’s supervisory requirements under Rule 3110, and also without intruding in their private residences and inspecting those home offices in-person,” Ben Marzouk, partner at Eversheds Sutherland in Washington, told ThinkAdvisor Wednesday in an email. “The high Year 1 enrollment rates for the remote inspection pilot program definitely reflect an embrace of that thinking.”
FINRA’s new rules treating home offices as ”residential supervisory locations” and establishing the remote inspections pilot program were approved by the Securities and Exchange Commission in November, and FINRA adopted the new rules on Jan. 24.
The rules affecting residential supervisory locations, or RSLs, took effect June 1.
FINRA created in mid-May a new web page for the Remote Inspections Pilot Program, which ends on June 30, 2027.
