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New Finra pricing rules for illiquid investments shaking up IBD industry

January 27, 2016

Jan 26, 2016 @ 4:08 pm | By Bruce Kelly | Investment News

Firms need to be proactive in conveying information to their advisers

The Financial Industry Regulatory Authority Inc.’s new pricing rule for illiquid investment products is shaking up both the sponsors that create and issue products such as nontraded real estate investment trusts as well as the broker-dealers and advisers who sell them.

Broker-dealers have to be more proactive with their advisers who sell such investments. And product sponsors should watch out for greater opportunities to change products and reach new advisers to sell them due to the intense changes facing illiquid alternative investments.

Those were two of the conclusions reached by an industry panel Tuesday in Orlando, Fla., at the annual conference of the Financial Services Institute, an industry trade group for independent broker-dealers.

The goal of the new pricing rule, which takes effect in April, is to bring greater transparency to the pricing of nontraded REITs and other illiquid products as well as potentially bring down the costs, which currently typically include a generous 7% commission to advisers.

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Second Annual Blue Vault Broker Dealer Educational Summit 2016
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