On March 2, 2026, the Financial Industry Regulatory Authority (FINRA) released Regulatory Notice 26-06, requesting feedback and commentary on current arbitration processes utilized for dispute resolution among brokers and customers. FINRA’s recent publication comes at a time when its existing dispute resolution system has been under heavy criticism from industry parties and investors. The measure also reflects FINRA’s efforts set forth in its FINRA Forward Modernization Initiative, which is aimed at developing regulations and administrative procedures adaptable to current society.

Arbitration in FINRA’s forum may arise by mutually executed pre-dispute agreements between parties or automatically, under Rule 12200, as a dispute between a customer and member. The question of whether parties may contractually agree to opt out of arbitration in favor of resolution through the courts is one area in which FINRA seeks to examine. Proponents of forum selection clauses have suggested the use of such clauses based on certain categories of claims and disputes involving institutional customers. Another area of discussion stems from the eligibility requirements governing the time limit in which a claim must be submitted for arbitration. The existing procedures require submission of a claim for arbitration within six years of the occurrence or event giving rise to the claim. Based on member criticism, however, FINRA has requested additional commentary as to whether the current eligibility rule should be all together abolished or whether the rule should operate as a statute of repose, rather than a statute of limitations. All members should respond to this request and demand that it should be a statute of repose running from the date of the transaction.

Aside from substantive changes, FINRA has sought member commentary on existing regulations governing the qualifications and selection of arbitrators. Current regulations require new arbitrators to have a four year degree and at least five years of full time paid professional work experience. However, FINRA has requested commentary as to whether arbitrators should have backgrounds in specific areas of expertise and whether professional certifications may be used to satisfy four year educational degree requirements. Additionally, FINRA has requested member commentary on the question of whether additional training should be mandatory for arbitrators. The application of punitive damages, including availability in damage awards and monetary limitations on such awards, is also an area in which FINRA has evidenced a potential need for reform.