FINRA Safe Harbor on Desk Commentary

Dear Ms. Mitchell,

The Security Traders Association (“STA”) [1]welcomes the opportunity to comment on proposed amendments to FINRA Rule 2241 (Research Analysts and Research Reports) and FINRA Rule 2242 (Debt Research Analysts and Debt Research Reports) to create a limited safe harbor for “specified brief, written analysis distributed to eligible institutional investors that comes from sales and trading or principal trading personnel but that may rise to the level of a research report (desk commentary)”[2], herein referred to as, the “Proposal”, or the “Safe Harbor”. The Safe Harbor would be non-exclusive and only available to communications that meet specific conditions regarding the author, the content of the communication and the recipient of the communication. Each limitation reflects FINRA’s stated objective to ensure that retail investors retain the full protections of the research rules and that any safe harbor does not cause firms to migrate their research function to the trading desk to avoid Rules 2241 or 2242.

[1] The STA is a trade organization founded in 1934 for individual professionals in the securities industry and is committed to promoting goodwill and fostering high standards of integrity in accord with the Association’s founding principle, Dictum Meum Pactum – “My Word is My Bond”

[2] FINRA Regulatory Notice 17-16 April 2017

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