FINRA Regulatory Notice on expungement of customer dispute information
FINRA has published Regulatory Notice 23-12 outlining changes it is adopting to its Codes of Arbitration Procedure to amend the process relating to requests to expunge customer dispute information in the FINRA Dispute Resolution Services (DRS) arbitration forum.
The amendments impose requirements on expungement requests
(a) filed by an associated person during an investment-related, customer-initiated arbitration (customer arbitration), or filed by a party to the customer arbitration on behalf of an associated person (on-behalf-of request), or
(b) filed by an associated person separate from a customer arbitration (straight-in request).
The primary changes include:
- requiring that a straight-in request be decided by a three-person panel that is randomly selected from a roster of experienced public arbitrators with enhanced expungement training (Special Arbitrator Roster);
- prohibiting parties to a straight-in request from agreeing to fewer than three arbitrators to consider their expungement requests, striking any of the selected arbitrators, stipulating to an arbitrator’s removal, or stipulating to the use of pre-selected arbitrators;
- providing notifications to state securities regulators of all requests to expunge customer dispute information and a mechanism for state securities regulators to attend and participate in expungement hearings in straight-in requests;
- imposing strict time limits on the filing of straight-in requests;
- specifying procedures for requesting expungement of customer dispute information during simplified customer arbitrations;
- codifying and updating the best practices in the Notice to Arbitrators and Parties on Expanded Expungement Guidance (Guidance) applicable to all expungement hearings, which include establishing additional requirements for expungement hearings, facilitating customer attendance and participation in all aspects of the expungement hearings and codifying the panel’s ability to request any evidence relevant to the expungement request;
- requiring the unanimous agreement of the panel to issue an award containing expungement relief; and
- establishing procedural requirements for filing expungement requests, which include on-behalf-of requests.
The amendments come into effect on 16th October 2023.
CSRC and HK SFC agree on block trading
The China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (SFC) have reached consensus on the introduction of block trading (manual trades) under the mutual stock market access arrangements between the Mainland and Hong Kong (known as the “Stock Connect” which relaxes restrictions that historically split the Chinese stock market between shares targeted at local investors and those available to international investors).
The initiative will further enhance the Stock Connect arrangements, make available more trading mechanisms, enhance trading efficiency, and promote the mutual development of both capital markets.
Under Stock Connect, offshore investors will be able to conduct block trades on the Shanghai Stock Exchange and the Shenzhen Stock Exchange through the northbound trading link while Mainland investors will be able to conduct manual trades on the Stock Exchange of Hong Kong Limited (SEHK) through the southbound trading link. Both northbound and southbound block trading will be introduced at the same time.
A selected summary of key developments for regulated financial institutions
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