The Financial Industry Regulatory Authority (FINRA) is considering a significant potential change in how it governs certain areas of conflicts of interest by consolidating its rules on Outside Business Activities (OBA) and Private Securities Transactions (PST). This proposal could bring much-needed clarity and efficiency to compliance processes for member firms.
Current Landscape: OBA and PST Rules
At present, OBAs and PSTs are governed separately under FINRA Rules 3270 and 3280. These rules outline how registered representatives must disclose and seek approval for activities and private securities transactions outside their primary roles with their member firms. While these rules aim to safeguard investors and ensure firms maintain proper oversight, their separate governance has sometimes led to confusion, questions over supervisory responsibilities and administrative inefficiencies.
The Proposal: A Unified “Outside Activities Requirements Rule”
FINRA’s proposal seeks to merge Rules 3270 and 3280 into a single, streamlined “Outside Activities Requirements Rule.” This initiative, which FINRA’s Board of Governors approved for further consideration in late 2024, reflects a broader effort to modernize and simplify the regulatory framework.
The primary goals of this consolidation include:
- Simplified Compliance: By creating a unified rule, FINRA aims to eliminate redundant or overlapping requirements, making compliance more straightforward for firms and registered representatives.
- Enhanced Focus on Risk: The proposed rule is expected to prioritize activities that pose higher risks to investors, aligning regulatory oversight with areas of greatest concern including potential conflicts of interest.
- Increased Clarity: Consolidation will likely provide clearer guidelines for firms and representatives, reducing ambiguity and potential misunderstandings.
Industry Implications
For firms, the consolidation could mean a more manageable compliance process, with reduced administrative burdens and potentially lower costs. Registered representatives may benefit from clearer expectations and streamlined procedures for disclosing outside activities and private securities transactions. However, as with any regulatory change, there will be a transition period. Firms will need to update their policies and procedures to align with the new rule, and training programs may require revisions to ensure compliance. Firms may need to re-evaluate prior approvals of outside activities that involve private securities transactions, particularly firms which have allowed representatives to engage as part of an independent registered investment adviser.
Next Steps: SEC Review and Public Comment Period
FINRA has now formally filed its proposed “Outside Activities Requirements Rule” with the U.S. Securities and Exchange Commission (SEC). As part of the SEC’s rulemaking process, the proposal has been published for public comment.
Comments must be submitted to the SEC by February 24, 2026.
During this review period, industry participants—including member firms, registered representatives, compliance professionals, and investor advocates—have the opportunity to provide feedback directly to the SEC. The Commission will evaluate submitted comments as it determines whether to approve, disapprove, or institute further proceedings regarding the proposal.
This phase is a critical step in the rulemaking process. Firms should:
- Carefully review the proposed rule text and accompanying economic analysis
- Evaluate potential operational and supervisory impacts
- Consider submitting formal comment letters to the SEC
- Begin assessing how policy, procedure, and technology updates may be required if the rule is approved
While the proposal is not yet final, firms may benefit from early planning—particularly those with complex outside activity approval workflows, hybrid RIAs, or high volumes of private securities transactions.
Staying Informed
As this proposal develops, it’s essential for firms and registered representatives to stay informed and engaged. Regularly checking FINRA’s official updates, participating in industry discussions, and preparing for potential changes will help ensure a smooth transition if the consolidation moves forward.
Conclusion
FINRA’s proposed consolidation of the OBA and PST rules into a unified “Outside Activities Requirements Rule” marks a meaningful step toward modernizing regulatory oversight of outside activities and private securities transactions. By streamlining requirements and sharpening the focus on higher-risk activities, the proposal seeks to enhance clarity, improve efficiency, and better align supervision with investor protection objectives.
With the rule now formally filed with the SEC and open for public comment through February 24, 2026, firms have a timely opportunity to assess the proposal’s operational impact and contribute to the regulatory dialogue. Whether through submitting comments or conducting internal readiness assessments, proactive engagement now can position firms for a smoother transition should the rule be approved. For more details, visit FINRA’s official site and stay tuned for updates as this initiative progresses.
Should these proposed rule changes be approved, RegEd’s Conflict of Interest suite is prepared to support you during the transition. Click here to learn more.
About RegEd
RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.
Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.
Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please visit www.reged.com.