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FINRA RSL Update

Are you looking for updates on the Residential Supervisory Location (RSL) Designation? FINRA recently released an updated FAQ about RSLs. These FAQs offer a quick go-to guide for broker-dealers who want to use the RSL designation. The first day firms may use the RSL designation was June 1, 2024, so the sooner broker-dealers familiarize themselves with the RSL updates, the better prepared they can be to decide whether the RSL designation is appropriate for them and the reporting requirements. 

The FAQ contains a thorough explanation of the following topics:

  • Residential Supervisory Location Designation
  • Updating Uniform Registration Forms
    • Form U4 (Uniform Application for Securities Industry Registration or Transfer) 
    • Form BR (Uniform Branch Office Registration Form)
  • RSL Reporting- Compliance with Rule 3110.19(d)
  • Display of Address of Private Residence on BrokerCheck
  • Meaning of “Regularly Conducts” Under FINRA Rule 3110(f)(2)
  • Office Classification for Hybrid Work Arrangements
  • RSL Conditions/Recordkeeping
  • RSL Location Ineligibility Criteria/Supervisor with Less than One Year of Direct Supervisory Experience
  • Supervision of Other Branch Offices from an RSL
  • Membership Application Program (MAP)/ “Material Change in Business Operations”

RSLs may be the perfect solution for broker-dealers who allow workers to have a hybrid work situation or small broker-dealer firms that may have residential office locations. It allows broker-dealers to treat private residences where people engage in certain  supervisory activities as non-branch locations. 

However, there are several exclusions and conditions for RSLs that are identified in the Rule. The conditions include amended written supervisory procedures that specifically address RSLs, not holding the location out to the public as a place of business for the firm, not meeting with customers at the location, and other conditions addressed in FINRA Rule 3110.19. are reasonably designed to achieve compliance, even with remote office inspection. Other conditions include that the firm does not represent the location at the office or conduct in-person customer or prospective customer meetings there; that the location only contains one associate for multiple associates in the same immediate family; and that they do not handle customer funds or securities at the RSL. Additionally, the associated person must also be connected to an associated branch office, with their information available on communication material. The FAQs help explain how individual associates and broker-dealers can comply with those rules. 

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