Feb 23, 2012
--- The Securities Industry and Financial Markets
Association (SIFMA) developed an Institutional Suitability Certificate to facilitate
broker/dealer compliance with new FINRA Rule 2111, specifically when dealing
with institutional clients. ---
The
Financial Industry Regulatory Authority’s (FINRA) Rule 2111 establishes new
suitability requirements that broker/dealers must satisfy when recommending
transactions or investment strategies involving securities to clients. The rule
provides an exception from the “customer-specific” suitability obligation for
institutional accounts (as defined in FINRA Rule 4512(c)) that are capable of
evaluating risks independently and affirmatively indicate to broker/dealers
that they are exercising independent judgment in evaluating a firm’s securities
recommendations.
The
Institutional Suitability Certificate is a form that institutional clients can
sign to make this indication.
“This form will provide an efficient way for
institutional investors to elect to be treated as an institutional account by
their broker/dealer(s), with access to the full range of products and services
available on their broker/dealer’s institutional platform,” said Ira Hammerman,
SIFMA senior managing director and general counsel.
The
Institutional Suitability Certificate is available here
and will be distributed and maintained by various vendors starting on or around March 1, 2012.
The
deadline for compliance with FINRA Rule 2111 is July 9, 2012.
Corie Russell