October 16, 2019

October 16, 2019

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October 14, 2019

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FINRA Requests Further Comments on the Effectiveness and Efficiency of Its Payments for Market Making Rule

On November 28, as part a retrospective rule review, the Financial Industry Regulatory Authority (FINRA) requested comments on Rule 5250 (payments for market makers). FINRA’s retrospective rule review process examines significant rulemaking to determine whether the FINRA rule or rule set is meeting its intended objectives by reasonably efficient means and, as necessary, make any amendments to the rules based on these findings.

Rule 5250 prohibits a member or associated person from accepting payment or other consideration, directly or indirectly, from an issuer or its affiliates and promoters, for publishing a quotation, acting as a market maker or in connection with submitting an application. The rule is intended to assure that members act in an independent capacity when publishing a quotation or making a market in an issuer’s securities.

FINRA seeks comment on any aspect of the rule together with answers to the following questions:

  1. Has the rule effectively addressed the problem it was intended to mitigate?

  2. What has been your experience with implementation of the rule, including any ambiguities in the rule or challenges to comply with it?

  3. What have been the economic impacts, including costs and benefits, arising from the rule?

  4. Can FINRA make the rule, interpretations or attendant administrative process more efficient and effective?

The comment period expires on January 29, 2018

©2019 Katten Muchin Rosenman LLP


About this Author

Kevin M. Foley, Finance Lawyer, Katten Llaw Firm

Kevin M. Foley has extensive experience in commodities law and advises a wide range of clients, both in the United States and abroad, on compliance with the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (CFTC) affecting traditional exchange-traded products, as well as the over-the-counter markets involving swaps and other derivative instruments. His clients include futures commission merchants, derivatives clearing organizations, designated contract markets, foreign boards of trade and an industry trade association.


Timothy Nolan, Katten Law Firm, Chicago, Corporate Law Attorney

Timothy Nolan concentrates his practice on transactional, corporate and regulatory aspects of financial services matters. Timothy is able to provide legal services to a wide variety of clients, including proprietary trading firms, hedge funds, broker-dealers, registered investment advisers, commodity trading advisers, financial institutions and general corporate clients.

Prior to joining Katten, Timothy served as the CEO and the president of the board of directors of a small commercial real estate company and spent 10 years in the scrap recycling industry, including several years as general manager of a mid-sized company. In his time in the scrap recycling industry, Timothy worked with traders, brokers, importers and exporters, and other industry professionals around the world relating to ferrous, non-ferrous and precious metal recycling, together with paper and plastic recycling.