In 2019, the Securities and Exchange Commission (SEC) adopted amendments that revise certain of the Financial and Operational Combined Uniform Single (FOCUS) reporting and annual report requirements that apply to brokers and dealers pursuant to SEA Rule 17a-5 to take account of security-based swap (SBS) activity. Further, as a result of these changes, to avoid duplication with the SEC’s new requirements, FINRA has revised the Supplemental Inventory Schedule (SIS) so that members that file the new FOCUS Report Part II, pursuant to the SEC’s amendments, will no longer need to file the SIS. The SEC’s new FOCUS reporting requirements, and the revised SIS, will apply beginning with FOCUS reports and SIS filings that report on the period ending October 31, 2021 and are required to be filed in November 2021. Additionally, FINRA has redesigned its eFOCUS filing system to add certain enhancements and features to improve members’ filing experience. Members that are quarterly filers may access the new system on FINRA Gateway beginning June 24, 2021. The new system will be made available to monthly filers beginning in July 2021.
Background
In 2019, the SEC, as part of its rule makings pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act to establish a regulatory framework for SBS, has adopted amendments to the FOCUS reporting and annual report requirements that apply to brokers and dealers. The amendments are designed, among other things, to elicit more detailed information about derivatives positions and exposures. Below are some highlights of how the SEC’s amendments impact financial reporting:
- The SEC has amended FOCUS Report Part II. Members that currently file FOCUS Report Part II will file the amended FOCUS Report Part II;
- FOCUS Report Part II CSE will be discontinued. Firms that currently file FOCUS Report Part II CSE will instead file FOCUS Report Part II, as amended;
- Schedule 1 (Aggregate Securities, Commodities and Swaps Positions) of FOCUS Report Part II, as amended, elicits substantially all the information that the current SIS requires. To avoid duplication with Schedule 1 of the SEC’s amended FOCUS Report Part II, FINRA has revised the SIS so that members that file FOCUS Report Part II, as amended, will not need to file the SIS;
- The SEC has updated the Facing Page and Oath or Affirmation (Part III of Form X-17A-5), which members submit with their annual reports pursuant to Rule 17a-5. All members will use the amended Facing Page and Oath or Affirmation;
- FOCUS Report Part IIA is unchanged.
The SEC’s new FOCUS reporting requirements, and the revised SIS, will apply beginning with FOCUS reports and SIS filings that report on the period ending October 31, 2021 and are required to be filed in November 2021.
Additionally, to improve members’ filing experience, FINRA is making available a redesigned eFOCUS system. Members that are quarterly filers may access the new system on FINRA Gateway beginning June 24, 2021. The new system will be made available to monthly filers beginning in July 2021. Members may visit FINRA’s eFOCUS page for further information about user support and logging in to the redesigned eFOCUS system.
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