FINRA proposes exempting certain alternative investments from monthly reconciliation
Carrying and clearing members subject to SEA Rule 17a-13 would be exempt from monthly position-statement requirements for uncertificated investments in unregistered funds, pending comment.
On September 3, 2026, FINRA filed a proposed rule change (Release No. 34-106269; File No. SR-FINRA-2026-019) to amend FINRA Rule 4522, which governs periodic security counts, verifications and comparisons. The amendment would except uncertificated investments in unregistered investment funds from the monthly position-statement and reconciliation obligations set out in paragraph (b)(1) of the rule.
Under the current framework, SEA Rule 17a-13 requires broker-dealers to conduct quarterly physical counts and to record unresolved differences within seven business days. FINRA Rule 4522 adds that carrying or clearing members must receive position statements at least once per month and reconcile them promptly. Members offering alternative investments have argued that many such products - particularly capital-balance funds and other uncertificated holdings - cannot provide the required monthly statements, creating compliance challenges.
The proposed language revises the first sentence of paragraph (b)(1) to read that members shall receive position statements "as frequently as good business practice requires, but no less than once per month ... except that this requirement shall not apply to uncertificated investments in unregistered investment funds, where ownership ... is directly recorded on the issuer's ownership registry ... or, if no such registry exists, is directly recognized by the issuer." FINRA notes that the amendment does not alter the quarterly count and verification duties of SEA Rule 17a-13.
The proposal aligns with a recent SEC staff no-action letter dated January 6, 2026, which granted relief for capital-balance funds that meet specific reconciliation and disclosure conditions. FINRA has also issued guidance indicating that compliance with the letter's circumstances satisfies Rule 4522(b)(1) for those funds.
The Commission is publishing this notice in the Federal Register (Vol. 91, No. 173, pp. 57402-57405) to solicit comments from interested parties. The proposed rule change and supporting materials are available on FINRA's website and at its principal office.
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