09.11.26

SEC OKs Dropping Approval Requirement for Advisor Bulk Orders

by: Jake Martin

The U.S. Securities and Exchange Commission approved a proposal by the Financial Industry Regulatory Authority (FINRA) to eliminate the deadline for broker-dealers to receive allocation instructions before qualifying for an exemption from principal approval requirements on investment advisor bulk orders. Previously, the exemption applied only when specific instructions arrived by the end of the trade day. FINRA said removing the restriction will reduce processing bottlenecks and settlement risks, particularly as firms use automated workflows and the T+1 settlement cycle. The change also accommodates situations in which advisors receive customer approvals or establish new accounts after trades occur. Broker-dealers remain prohibited from knowingly facilitating allocations that conflict with an advisor’s instructions or fiduciary duties, including post-trade cherry-picking. FINRA will issue a notice establishing the effective date.

Read the full article on Financial Advisor IQ