Brokerages Must Reconcile Private-Fund Positions Every Month. FINRA Says the Funds Do Not Send Statements That Often.

FINRA has asked the Securities and Exchange Commission to drop a monthly bookkeeping requirement that, by its own account, firms often cannot meet because the underlying funds do not produce the paperwork on that cycle. The filing was published in the Federal Register on 9 September 2026 and the comment file closes on 30 September.

What the rule requires now

FINRA Rule 4522 governs the records a carrying or clearing member keeps for securities it holds for itself or for customers. The relevant provision requires a firm to receive position statements from the issuer at least once a month and to reconcile against them on the same cadence.

Receive position statements as frequently as good business practice requires, but no less than once per month.

That works for securities held in the ordinary custody chain. It works less well for positions in private funds — hedge funds, private credit funds, private equity vehicles — that are not certificated and not held at a depository. For those, the record of who owns what lives on a register maintained by the issuer or its agent.

What would change

The proposal would carve out, in the filing language, uncertificated investments in unregistered investment funds where ownership by the member or its customers is directly recorded on the issuer ownership registry maintained by the issuer or its agent — or, where no such registry exists, is directly recognised by the issuer.

For positions falling inside that exception, the monthly statement requirement would not apply, and reconciliation would be required at least once per quarter.

Reduce the particular compliance challenges related to uncertificated investments while ensuring that member firms maintain accurate records of these securities in their possession.

What does not change

SEC Rule 17a-13, the quarterly securities count and verification requirement that applies to broker-dealers independently of FINRA rules, would continue to apply. A firm relying on the proposed exception would still have to verify these positions quarterly under federal rule; the change is to the FINRA monthly layer sitting on top of it.

Scale

FINRA estimates there are approximately 70 carrying and clearing firms that currently carry US or foreign private funds. That is a small number of firms, but they are the firms holding custody for a large share of the alternative investments that have moved onto retail and wealth-management platforms in recent years.

The timetable

• SEC Release No. 34-106269, dated 3 September 2026
• Federal Register publication: 9 September 2026 (document 2026-18292)
• Comment deadline: 30 September 2026
• File number: SR-FINRA-2026-019

A self-regulatory organisation rule change of this kind does not take effect on filing. The SEC takes comment, then approves, disapproves, or institutes proceedings. If approved, FINRA announces an effective date separately.