SIFMA today announced it has developed a new Institutional Suitability Certificate to facilitate broker-dealer compliance with new FINRA Rule 2111, specifically when dealing with institutional clients.
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 inevaluating a firm’s securities recommendations.[i] The Institutional Suitability Certificate is a simple form that institutional clients can sign to make this indication.
“SIFMA is pleased to make the Institutional Suitability Certificate available for use by our members and all broker-dealer firms and their clients,” said Ira Hammerman, SIFMA senior managing director and general counsel. “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.”
The Institutional Suitability Certificate is available here and will be distributed and maintained by various vendors starting on or about March 1, 2012.
The deadline for compliance with FINRA Rule 2111 is July 9, 2012.