FINRA Proposes Applying Mark-up Policy to Transactions in Government Securities (Fed Reg.)

FINRA proposed applying certain rules regarding mark-ups and commissions to transactions in government securities. In particular, the FINRA proposal would amend FINRA Rule 0150 ("Application of Rules to Exempted Securities Except Municipal Securities") to apply FINRA Rule 2121 ("Fair Prices and Commissions"), Supplementary Material .01 ("Mark-Up Policy") and .02 ("Additional Mark-Up Policy for Transactions in Debt Securities, Except Municipal Securities") to transactions in exempted securities that are government securities.

FINRA noted that the amendments would allow it to bring mark-up/down cases relating to government securities under a particular rule, rather than the broad catch-all requirements of FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"). In addition, FINRA argued that the rule change would "clearly signal to members that conduct relating to mark-ups and commissions in the market for government securities directly implicates the mark-up rule, in addition to FINRA Rule 2010."

Comments on the proposed amendments must be submitted by October 27, 2015.