Dear Ms. Mitchell:
The Security Traders Association, (“STA”) welcomes the opportunity to offer comment on FINRA Retrospective Rule Review on the Effectiveness and Efficiency of Its Payment for Market Making Rule (“FINRA Rule 5250” or “Rule 5250”), Regulatory Notice 17-412 (the “Notice”). STA’s diverse membership, as measured by geography and business models, offers a unique perspective on the Notice which we hope will contribute favorably to any strategic decisions with respect to FINRA Rule 5250. STA commends FINRA for identifying Rule 5250 as part of its Retrospective Rule Review initiative.
Summary Views
STA recommends that FINRA file a proposed amendment to Rule 5250 that would: (a) permit FINRA members to accept one or more payments from the issuer of an Exchange-Traded Product (“ETP”) for purposes of acting as a registered market maker in the ETP; and (b) define suitable disclosure requirements for such market maker compensation arrangements. In our letter, we provide principle based explanations for such a rule filing and have identified specific areas where we recommend FINRA solicit industry input.
Read full letter here