FINRA Rule Changes on the Horizon
As the financial industry continues to evolve, through rapid technological advancements and emerging market risks, regulators are adapting in response. In 2025, the Financial Industry Regulatory Authority (FINRA) is rolling out a series of updates aimed at strengthening investor protections, modernizing compliance obligations, and addressing new threats to market integrity. These developments, outlined in FINRA’s 2025 Annual Regulatory Oversight Report and recent rule amendments, signal a significant shift in regulatory priorities. For legal and compliance professionals, understanding what’s changing and why is essential to staying ahead of enforcement risks and guiding clients effectively.
Key FINRA Rule Changes and Regulatory Focus Areas for 2025
- Amendments to Rule 3240 on Borrowing and Lending
Beginning April 28, 2025, FINRA will implement amendments to Rule 3240 that impose stricter limits on borrowing and lending relationships between registered individuals and their customers. Key changes include a stronger general prohibition, narrower exceptions, an updated definition of “immediate family,” and enhanced notice and approval requirements. The amendments apply to new or modified arrangements from the effective date onward and are not retroactive.
- Enhanced Cybersecurity and Data Protection Requirements
In response to escalating cyber threats, FINRA’s 2025 oversight report outlines strengthened cybersecurity expectations for member firms. Key measures include enhanced monitoring for account intrusions, detection of imposter domains, secure outbound email protocols, stronger identity verification for new accounts, regular incident response exercises, network segmentation, and continuous employee security training. These updates aim to better protect client data and firm infrastructure from sophisticated cyberattacks.
- Increased Oversight of Third-Party Vendors
FINRA’s 2025 regulatory priorities emphasize stronger oversight of third-party vendors to address growing cybersecurity and operational risks. Firms are expected to maintain updated vendor inventories, conduct risk assessments, implement supervisory controls, prohibit the misuse of generative AI on sensitive data, and promptly revoke vendor access upon relationship termination. These measures aim to mitigate vulnerabilities exposed by third party-related cyber incidents and service disruptions.
- Stricter Record-Keeping and Reporting Obligations
FINRA has strengthened its rules on supervising, documenting, and preserving business communications such as emails, texts, and chats. Firms must establish written procedures to ensure proper recordkeeping, particularly when using third-party services. These updates, aligned with recent SEC amendments, aim to enhance transparency, accountability, and regulatory access to communications.
- Updated Best Practices for Customer Data Privacy
To address evolving data protection challenges, FINRA expects firms to strengthen encryption and access controls for customer data, implement strict policies for handling personally identifiable information (PII), enhance transparency regarding data collection and sharing, and conduct periodic privacy audits. These steps support compliance with regulatory standards and protect investor information.
- Focus on Emerging Topics
FINRA’s 2025 report highlights new regulatory priorities, including the risks of artificial intelligence—particularly regarding third-party use and data security—oversight of extended hours trading, and the detection of evolving investment fraud schemes. These focus areas reflect FINRA’s commitment to addressing emerging threats to investor protection and market integrity.
The 2025 FINRA rule changes underscore a heightened regulatory focus on cybersecurity, third-party oversight, data protection, and evolving financial practices. As the regulatory environment grows more complex, practitioners must stay proactive—understanding and integrating these updates into their compliance strategies is essential to safeguarding client interests and minimizing exposure to regulatory risk. Ongoing attention to FINRA’s guidance and rulemaking will be key to navigating these changes effectively and maintaining a strong position in an increasingly scrutinized marketplace.