It’s finally here. After over a year of discussion and a postponement, Financial Industry Regulatory Authority (FINRA) Rule 2111 on suitability requirements governing the sale of securities is set for implementation July 9. Also scheduled to go into effect on the same date is its companion regulation, FINRA Rule 2090, or Know Your Customer.
The new rules essentially combine, with two significant changes, previous regulations from the National Association of Securities Dealers (NASD) and the New York Stock Exchange (NYSE) covering suitability standards when securities such as equities, fixed income products, mutual funds, derivatives and variable annuities are being sold by broker-dealers.
Yet NAIFA was pleased that the new rule excludes non-securities, Sanders noted. When the revamped regulation was first being discussed, FINRA had sought to include non-securities, but later left such products out of the rule.
Sanders said NAIFA members have not expressed great concern over the updated regulation at this time.