A new regulatory regime designed to make financial intermediaries more transparent is set to take effect later this year.
The Financial Services Futures Trading Commission (FSTC), a U.S. regulator that regulates securities exchanges and brokerages, announced in May that it is issuing new regulations that will require banks and broker-dealers to identify and disclose certain transactions that are not disclosed in other forms of disclosure.
The new regulations will also require financial institutions to disclose to customers what the company is doing with the funds it holds.
This could potentially allow the consumer to know whether a broker-client relationship is a regular one or not, or the identity of a person in the relationship.
The rules are expected to go into effect in August.
They come as the market is in flux following a series of scandals and scandals in which brokers and investors are accused of misleading customers.
For example, an investor was caught on video in a transaction selling an apartment to a broker.
In response, an anti-broker group called Protectors Against Brokers (PBA) sued the broker-advisor, claiming it violated the Commodity Exchange Act (CEA) by not telling the investor the true nature of the transaction.
The broker was later found liable.
In a statement, the PBA said that it did not “knowingly” sell the property, but it did know the broker sold the apartment to someone else.
The regulators say they want to ensure that brokers are not misleading customers and that consumers are informed of any transactions they may be interested in.
This will be especially important for consumer-directed investment vehicles (CDIVs), which often are used for buying and selling stocks and bonds.
The Securities and Exchange Commission (SEC) has also announced it will be working with banks and brokers to develop new tools to help consumers avoid this type of transaction.