FINRA OKs Electronic Delivery as the Default, Customer Protection From Financial Exploitation
During its final meeting of the year, the Financial Industry Regulatory Authority board approved three rule proposals, reflecting feedback the organization has received on the rule modernization effort that is part of FINRA Forward, a series of initiatives to improve FINRA’s effectiveness and efficiency in pursuing its mission of “protecting investors and safeguarding market integrity.”
“The board’s approval of these three rule proposals reflects FINRA’s commitment to modernizing our regulatory framework while strengthening investor protections for an evolving marketplace,” said Scott Curtis, FINRA’s board chair.
The three rule proposals that were approved are as follows.
Electronic delivery as the default: The board approved a proposal to permit member firms to use electronic delivery as the default means of providing information to customers under FINRA rules. The proposal supports modern communication practices and preferences while preserving customers’ ability to choose paper delivery. FINRA plans to file the proposed rule changes with the U.S. Securities and Exchange Commission and publish related guidance in a regulatory notice.
“By enabling electronic delivery as a default option, we’re aligning our rules with how many investors prefer to receive information in the digital age,” said Curtis.
Customer protection from financial exploitation: The board approved a proposal that would better equip member firms to protect customers from financial exploitation. The proposal includes amendments to boost the adoption and usefulness of customers’ trusted contacts and allow member firms greater flexibility to extend temporary holds when they reasonably suspect financial exploitation of a senior or vulnerable adult. It would also offer member firms a new optional shorter temporary hold, i.e., a “speed bump,” to protect customers of any age from suspected fraud. FINRA will be issuing a regulatory notice seeking comment on the proposal.
Collective trust fund flexibility: The board approved a proposal that would provide more flexibility for collective trust funds – sometimes referred to as collective investment trusts, or CITs, to receive initial public offering allocations under FINRA’s new issue rules. The exemption would treat these pooled investment vehicles, which are generally used as investment options in qualified retirement plans, comparably to other types of pooled investments. FINRA plans to file the proposal with the SEC.
“By updating our new issue rules for collective trust funds, we’re ensuring retirement savers have equitable access to investment opportunities,” concluded Curtis.
Earlier this month, FINRA published its 2026 FINRA Regulatory Oversight Report, a resource that draws insights from FINRA’s regulatory operations programs that member firms can use to strengthen their compliance programs.
FINRA noted it had published the report earlier than usual after FINRA Forward feedback revealed support for getting access to the resource early, particularly as member firms do their annual compliance planning.
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