The Texas State Securities Board has announced a significant update to its rules, effective March 13, 2025, which introduced several key changes designed to align Texas securities laws with federal regulations and standards set by industry organizations such as FINRA and NASAA. Here are the key points:
- Adoption of FINRA MQP and NASAA EVEP: The Texas State Securities Board will begin recognizing the FINRA Minimum Qualification Program (MQP) and the NASAA Exam Vendor Education Program (EVEP) for examination requirements. This will help streamline regulatory processes for broker-dealers and investment advisers operating in Texas.
- FINRA RIPP and Residential Supervisory Locations (RSLs): A new amendment to the Board’s rules will allow registered Texas dealers participating in FINRA’s Remote Inspections Pilot Program (RIPP) to comply with Texas supervision rules by conducting internal inspections in accordance with FINRA’s rules. Additionally, rules related to residential supervisory locations (RSLs) for dealers have been updated to align with FINRA standards.
- SEC Regulation Best Interest (Reg BI): The Board has adopted a new rule (§115.24) recognizing the SEC’s Reg BI, which establishes standards of conduct for broker-dealers and investment advisers. This rule is intended to ensure that financial professionals act in the best interest of their clients when making recommendations.
- SEC Marketing Rule: The Texas State Securities Board has also adopted the SEC’s Marketing Rule by reference under the amendment to §116.15, which aligns Texas regulations with those of SEC-registered investment advisers. This change provides Texas investment advisers greater flexibility in marketing their services and also adjusts recordkeeping requirements to ensure compliance.
These changes were unanimously adopted at the Board’s February 20, 2025, meeting, following a public comment period. The changes will be published in the March 7, 2025, issue of the Texas Register and will go into effect on March 13, 2025. The Texas State Securities Board has made the updated rules available on its website, where interested parties can review them.
This rulemaking represents a harmonization of Texas securities regulations with both federal law and industry best practices, enhancing consistency and clarity for regulated entities in the state.