FINRA issued new COVID-19-related guidance (see here and here) on (i) fixed income mark-up disclosures and (ii) the payment of Funding Portal Gross Income Assessments ("FPGIAs").
In the first FAQ, FINRA addressed the COVID-19-related effects on a firm's process for providing disclosure of mark-ups on fixed income transactions to customers under FINRA Rule 2232 ("Customer Confirmations"). FINRA recognized that the volatility of current market conditions may result in challenges to firms' ordinary procedures for determining the prevailing market price ("PMP"). FINRA stated that firms that correct a PMP determination after a confirmation has been sent should document the basis of the correction and send a revised confirmation.
In the second FAQ, FINRA provided funding portal members additional time to pay the FPGIAs.
Commentary
The FINRA FAQ on mark-ups strongly suggests that firms should review their compliance procedures relating to PMP determinations and corrections. Firms should make sure that their processes are sufficiently flexible to account for the current market volatility and that they are sufficiently detailed as to any correction of a PMP determination.
Originally published April 27, 2020
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