On April 7, 2016, the SEC approved new FINRA Rule 3210 (Accounts at Other Broker-Dealers and Financial Institutions), which will govern broker-dealer oversight of accounts opened or established by their associated persons at other broker-dealers and other financial institutions. The new rule will update and consolidate into the FINRA Rulebook similar rules by the NASD and the NYSE that are currently in effect. FINRA plans to announce an implementation date for new FINRA Rule 3210 at a later date.

Update: On June 30, 2016, FINRA issued a regulatory notice stating that FINRA Rule 3210 will take effect on April 3, 2017.

New FINRA Rule 3210 will require an associated person to obtain prior written consent from the broker-dealer with whom he or she is associated (employer member) before opening or otherwise establishing an account in which securities transactions can be effected and in which the associated person has a beneficial interest at either:

The new rule will require an employer member to consider the extent to which it will be able to obtain, upon written request, duplicate copies of confirmations and statements, or the transactional data contained in them, directly from a non-member financial institution in determining whether to provide its written consent to an associated person to open or maintain an account subject to the rule at a financial institution that is not an executing member (see Duplicate Copies of Confirmations and Statements). Obtaining duplicate confirmations and statements when an account is to be opened in a non-member foreign broker-dealer or financial institution can be problematic when providing them may conflict with foreign privacy laws.

An associated person will be presumed to have a beneficial interest in, and to have established, any account that is held by:

New FINRA Rule 3210 will allow an associated person to overcome the presumption of beneficial interest in an account by demonstrating to the satisfaction of the employer member that the associated person derives no economic benefit from, and exercises no control over, the account. The new rule will also eliminate the language in the current NASD and NYSE rules that references accounts or transactions where the associated person has "the power, directly or indirectly, to make investment decisions."

The new rule will require an associated person to provide written notice to the executing member, or other financial institution, of his or her association with the employer member before opening or otherwise establishing an account subject to the rule.

The new rule will also require an executing member, after receiving a written request from the employer member, to transmit duplicate copies of confirmations and statements, or the transactional data contained in them, with respect to an account subject to the rule.

Under the new rule, an associated person will be required to obtain the written consent of the employer member, within 30 days of becoming so associated, to maintain an account that was opened or otherwise established prior to the person's association with the employer member. The associated person will also be required to notify the executing member or other financial institution in writing of his or her association with the employer member.

New FINRA Rule 3210 will not apply to:

To learn more about the rules governing FINRA's supervision of broker-dealers and the recordkeeping requirements for broker-dealers, see Practice Notes, FINRA Supervision Rules and Broker-Dealer Recordkeeping.