Finra Advances Outside Business Activity Rule Re-Write
January 15, 2026
https://www.advisorhub.com/finra-advances-outside-business-activity-rule-re-write/
Nine months after introducing an update to its outside business activity rules, the Financial Industry Regulatory Authority on Wednesday advanced the proposal to the Securities and Exchange Commission.
Finra concurrently issued a notice that it had filed its proposed rule with the SEC which will solicit public comments for 90 days before deciding whether it should be approved.
Finra’s proposal seeks to replace two OBA rules—3270 and 3280—with one consolidated Rule 3290 and is intended to streamline oversight and reduce what the self-regulator described as unnecessary compliance burdens tied to low-risk and non-investment-related activities.
The proposal would eliminate the reporting and assessment of activities such as brokers refereeing sports games, driving for a car service or bartending on weekends. It also would allow brokers to proceed with those OBAs without acquiring their firms’ approvals, including a securities transaction, if no compensation is at stake. Among the activities excluded from reporting requirements are personal real estate transactions such as rentals and sales of homes.
The updated rule would allow firms to focus on more substantive potential conflicts that could include brokers selling away potentially risky products such as crypto assets, fixed annuities, commodities or private placements, Finra said in its proposal.
The proposal sparked controversy and confusion when Finra published it for comments in March. Over three months, it garnered 216 responses with broad opposition from both industry constituents and investor advocates.
Finra in May issued a statement seeking to provide clarity, including noting that the rule would not impose new obligations for broker-dealers supervising outside activities at third-party RIAs. It also noted that personal investments in non-securities, including Bitcoin, would not qualify as outside business activities under the rule.
Critics, including the Public Investors Advocate Bar Association, argued that requiring disclosure of all outside business activities provides important investor protections.
Finra said in the proposal that the new approach would “enhance efficiency without compromising protections for investors and members relating to outside activities,” while clarifying expectations and eliminating reporting requirements for certain low-risk conduct.
Finra has previously sought to streamline OBA disclosure rules. In 2018, it had proposed revising the two rules to narrow what would qualify as an outside activity and exempt them from supervisory and record-keeping requirements tied to their brokers’ unaffiliated RIAs. That proposal, which generated mixed reviews and alternative proposals from the industry, stalled without approvals.