SEC OKs FINRA Rule Change Easing Principal Approval for Adviser Bulk Orders

The SEC approved a FINRA rule change that allows broker-dealers to process bulk order allocations from investment advisers without principal approval, regardless of when the allocation instructions are received.

FINRA Rule 4515 ("Approval and Documentation of Changes in Account Name or Designation") requires a registered principal to approve any change to an account name or designation. Supplementary Material .01, the provision amended here, carves out orders from investment advisers placed for more than one customer. FINRA said the change applies to delivery-versus-payment and receive-versus-payment arrangements, and to prime brokers that receive allocation instructions directly from the adviser.

In the approval order, the SEC noted that the amendment removes the end-of-day cutoff for receiving allocation instructions. Previously, broker-dealers were exempt from obtaining principal approval for account name or designation changes on bulk orders only if they received the instructions by the end of the trade date. The amended provision drops the timing condition. Adviser bulk order allocations may now proceed without principal approval no matter when the instructions arrive.

The SEC found the change removes operational burdens that can delay timely allocation processing, while preserving investor protection safeguards. The SEC pointed to safeguards that remain: Exchange Act Rule 15c6-2, which governs same-day allocation, confirmation, and affirmation; Exchange Act Rule 17Ad-27, which requires central matching clearing agencies to adopt straight-through processing policies; Advisers Act Section 206 ("Prohibited transactions by investment advisers"); FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"); and FINRA Rule 3110 ("Supervision"). The order also notes that SEC staff examines adviser allocation practices. The provision still bars members from knowingly facilitating allocations that depart from the adviser's intent at the time of execution to allocate shares on a percentage basis, or from the adviser's fiduciary duty.

The rule change became effective September 2, 2026.