FINRA Asks SEC to Ease Monthly Reconciliation Rule for Private Funds
The Financial Industry Regulatory Authority filed a proposed rule change with the U.S. Securities and Exchange Commission on Aug. 25 that would ease reconciliation requirements for broker-dealers carrying certain private fund positions.
The proposal, SR-FINRA-2026-019, would amend Rule 4522, which currently requires members to receive position statements and reconcile customer holdings at least once a month. Under the change, uncertificated investments in unregistered investment funds – positions tracked as capital account balances rather than shares or units, where ownership is recorded directly by the fund rather than a custodian – would move to quarterly reconciliation.
FINRA said the monthly standard is impractical for this asset class because private funds typically strike net asset value and issue capital account statements quarterly, not monthly. The proposal builds on a January 2026 SEC staff no-action position and interim FINRA guidance on the same issue, and would convert that informal relief into a permanent rule.
The proposal continues a run of FINRA rulemaking aimed at reducing friction for alternative investment distribution. FINRA proposed a related change to communications that include performance projections earlier this year, and the SEC separately approved FINRA amendments expanding private placement exemptions and easing real estate investment trust and direct participation program capital rules.
FINRA estimates roughly 70 firms carry U.S. or foreign private fund positions and would be affected, primarily those serving institutional investors in private equity, private credit, and similar unregistered vehicles. Funding portals and capital acquisition brokers are excluded. Firms would remain subject to quarterly reconciliation requirements under SEC Rule 17a-13 regardless of the outcome.
The filing opens a 21-day public comment period once published in the Federal Register. The SEC then has 45 days to act, extendable to 90 days. If approved, FINRA would announce an effective date in a regulatory notice.
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