Procedures on Grievances Concerning the Automated Systems
SERIES 7 | SERIES 24 | FINANCIAL REGULATION COURSES
FINRA Rule 9700 is the series header for the Procedures on Grievances Concerning the Automated Systems framework within the 9000 Code of Procedure — the organizational marker grouping the seven rules that define how persons aggrieved by the operations of FINRA's automated quotation, execution, or communication systems may seek redress. Its title — Procedures on Grievances Concerning the Automated Systems — announces both the subject matter and the distinctive institutional context that sets the Rule 9700 series apart from every other proceeding series in the Code: these proceedings do not address member or associated person misconduct, rule violations, or regulatory enforcement.
They address grievances against FINRA itself — specifically, against the operations of automated systems that FINRA or FINRA Regulation owns and operates and that the SEC has approved. FINRA Rule 9700 has no operative text of its own — it functions as the series marker organizing the complete automated systems grievance framework. The phrase Rule 9700 Series, used in FINRA regulatory guidance and OHO topic listings, derives its collective legal meaning from this series header provision.
FINRA Rule 9700 sits within the 9000 Code of Procedure as the series header for the seven-rule automated systems grievance framework, positioned between the Rule 9600 Procedures for Exemptions series and the Rule 9800 Temporary and Permanent Cease and Desist Orders series in the Code's table of contents. The Rule 9700 series was substantially restructured through SR-NASD-2002-97 effective July 29, 2002, further amended through SR-NASD-2005-087 effective August 1, 2006, SR-NASD-2007-052 effective August 1, 2008, and subsequent amendments updating institutional references from NASD to FINRA.
The Policy Foundation: Grievances Against FINRA's Automated Systems
The Rule 9700 series exists because FINRA operates critical automated market infrastructure — quotation systems, execution systems, and communication systems — that directly affect the ability of market participants to access markets, execute transactions, and report information. When these systems malfunction, produce incorrect results, or are operated in ways that cause harm to market participants, the affected parties need a formal mechanism to seek redress that is distinct from the disciplinary and enforcement proceedings framework that governs member misconduct.
FINRA's automated systems include the systems underlying FINRA's quotation services, trade reporting facilities, order audit trail systems, and other market infrastructure that member firms and other market participants use in the ordinary course of their regulated activities. Malfunctions in these systems — outages, erroneous data, incorrect execution processing, or communication failures — can cause real financial harm to market participants that is not addressable through the standard Code of Procedure framework because the harm flows from FINRA's own system operations rather than from a member's or person's misconduct.
The Rule 9700 series provides a formal, transparent, and independently adjudicated mechanism for raising and resolving these grievances — ensuring that FINRA is accountable for the proper operation of its automated systems in the same way that members are accountable for their regulatory obligations.
The Seven Rules Within FINRA Rule 9700's Series
FINRA Rule 9710 — Purpose — establishes the purpose of the Rule 9700 series in a single sentence: to provide, where justified, redress for persons aggrieved by the operations of any automated quotation, execution, or communication system owned or operated by FINRA or FINRA Regulation and approved by the SEC, not otherwise provided for by FINRA rules. The where justified qualifier confirms that the Rule 9700 series is not a mechanism for obtaining redress for every complaint about FINRA's automated systems — it applies when the specific grievance warrants redress. The not otherwise provided for by FINRA rules qualifier ensures that the Rule 9700 series is a gap-filling mechanism for automated system grievances that fall outside other available remedies rather than an alternative pathway for matters with existing remedial frameworks. FINRA Rule 9710 was last amended by SR-FINRA-2015-034 effective December 20, 2015 — updating the institutional references from NASD and its subsidiaries to FINRA and FINRA Regulation, and from Commission approval references to SEC approval references, to reflect FINRA's post-2007 consolidated regulatory structure.
FINRA Rule 9720 — Form of Application — governs how an automated systems grievance application must be prepared and submitted. All applications must be in writing and must specify in reasonable detail the nature of and basis for the redress requested. If the application consists of several allegations, each must be stated separately. All applications must be signed and must be directed to FINRA's Office of Hearing Officers relating to the automated quotation, execution, or communication system at issue. The OHO filing destination for automated systems grievances — rather than the department or staff filing destination applicable to Rule 9600 series exemption applications — reflects the adjudicative character of the Rule 9700 series. Unlike exemption applications, which are administrative matters evaluated by the relevant regulatory department, automated systems grievances are adjudicative matters heard by OHO Hearing Officers.
FINRA Rule 9730 — Request for Hearing — governs the applicant's right to request a formal hearing on the automated systems grievance. An applicant may file a written request for a hearing with OHO if the applicant is not satisfied with the consideration of their application under FINRA Rule 9740, or if FINRA's staff takes no action within a reasonable time after the application is filed. The hearing request right ensures that applicants who believe their grievance has not been adequately considered have access to a formal adjudicative proceeding rather than being limited to the written submissions process.
FINRA Rule 9740 — Consideration of Applications — governs the initial consideration of automated systems grievance applications before any hearing is requested. FINRA staff considers the application and may resolve the grievance at the staff level. This initial staff consideration mirrors the first-tier review available under FINRA Rule 9620 for exemption applications and reflects the Code's general preference for efficient, staff-level resolution of administrative matters before formal adjudication is required.
FINRA Rule 9750 — Decision — governs the Hearing Officer's decision on an automated systems grievance hearing. After conducting the hearing, the Hearing Officer issues a written decision setting forth their findings and conclusions. The decision is served on the applicant and is effective upon service. If no hearing is held because the matter is resolved at the staff level under FINRA Rule 9740, the staff-level resolution serves as the operative outcome without requiring a formal Hearing Officer decision.
FINRA Rule 9760 — Call for Review by the National Adjudicatory Council — establishes the NAC's discretionary authority to call a FINRA Rule 9750 Hearing Officer decision for review, parallel to the NAC's call-for-review authority in disciplinary proceedings under FINRA Rule 9312. The NAC may call a FINRA Rule 9750 decision for review within the prescribed period and, if it does so, may affirm, modify, or reverse the Hearing Officer's determination. The NAC's call-for-review authority ensures that significant or novel automated systems grievance decisions receive NAC oversight when appropriate.
FINRA Rule 9770 — Application to SEC for Review — establishes the applicant's right to seek SEC review of a final FINRA automated systems grievance determination, parallel to FINRA Rule 9370's SEC review right for disciplinary proceedings and FINRA Rule 9527's SEC review right for eligibility proceedings. The right to SEC review is governed by Exchange Act Section 19, ensuring that the final tier of administrative review for automated systems grievances is subject to the same external appellate framework as all other final FINRA actions.
The Rule 9700 Series in OHO's Practice
The OHO topic index specifically lists the Rule 9700 series — Procedures on Grievances Concerning the Automated Systems — as one of the rule series within OHO's adjudicative jurisdiction. This listing confirms that Rule 9700 series proceedings are within OHO's formal adjudicative scope rather than being handled purely administratively. However, Rule 9700 series proceedings are among the rarest in OHO's docket — formal grievance hearings under FINRA Rule 9730 and Hearing Officer decisions under FINRA Rule 9750 are uncommon because most automated systems grievances are either resolved at the staff level under FINRA Rule 9740 or involve situations where the standard market dispute resolution mechanisms of the securities industry provide adequate remedies outside the Rule 9700 framework.
The not otherwise provided for by FINRA rules qualifier in FINRA Rule 9710's purpose statement is the primary reason for this rarity — many potential automated system grievances either fall within existing market regulation and reporting frameworks or are addressed through commercial relationships and standard market practice rather than through the Code of Procedure's formal adjudicative framework.
The Rule 9700 Series and FINRA's Market Systems
The automated quotation, execution, or communication systems owned or operated by FINRA or FINRA Regulation that form the subject matter of Rule 9700 series grievances encompass a broad range of market infrastructure. FINRA's trade reporting facilities — the FINRA/NYSE Trade Reporting Facility, the FINRA/Nasdaq Trade Reporting Facility, and the OTC Reporting Facility — are core reporting infrastructure whose malfunctions could affect members' ability to fulfill their trade reporting obligations. FINRA's Order Audit Trail System — OATS, now succeeded by CAT — was the comprehensive order tracking system whose operational failures could affect the completeness of FINRA's surveillance data. FINRA's quotation systems — including the OTC Bulletin Board and related quotation infrastructure — directly affect the ability of issuers and market makers to display quotations and access the quotation marketplace.
A member firm whose trade report was rejected by a FINRA reporting system due to a system malfunction, causing the firm to incur regulatory penalties for late reporting despite timely submission, has a potential Rule 9700 series grievance. A market participant whose access to a FINRA-operated quotation system was disrupted by a system failure, causing financial harm, has a potential Rule 9700 series grievance. The Rule 9700 series provides the formal adjudicative pathway for such claims when other remedies are unavailable or inadequate.
Connection to FINRA Rules 9710 Through 9770 and the Broader Code Architecture
FINRA Rule 9700 connects to FINRA Rules 9710 through 9770 as the series header organizing those seven rules. It connects to the broader Code of Procedure architecture as the bridge between the Rule 9600 Procedures for Exemptions series — administrative relief from FINRA rules — and the Rule 9800 Temporary and Permanent Cease and Desist Orders series — FINRA's most powerful interim enforcement tools. The Rule 9700 series' unique positioning as the only series in the Code that addresses grievances against FINRA's own operations rather than member or associated person conduct makes it institutionally distinctive — it represents FINRA's acknowledgment that as an operator of critical market infrastructure, it must be subject to a formal accountability mechanism for system failures that cause harm to market participants.
Examination Relevance and Key Takeaways
FINRA Rule 9700 is tested on the Series 7 and Series 24 examinations as the series header of the automated systems grievance framework — a distinctive series because it addresses grievances against FINRA's own operations rather than member misconduct.
The key points to retain are these: FINRA Rule 9700 is the series header for the seven-rule automated systems grievance framework encompassing FINRA Rules 9710 through 9770 — it has no operative text but organizes the complete procedural framework for grievances against FINRA's automated systems; the Rule 9700 series addresses grievances by persons aggrieved by the operations of any automated quotation, execution, or communication system owned or operated by FINRA or FINRA Regulation and approved by the SEC as stated in FINRA Rule 9710; the series applies only where not otherwise provided for by FINRA rules — it is a gap-filling mechanism for automated system grievances without other available remedies; the seven-rule series covers FINRA Rule 9710 purpose, FINRA Rule 9720 application form requirements, FINRA Rule 9730 hearing request right, FINRA Rule 9740 initial staff consideration, FINRA Rule 9750 Hearing Officer decision, FINRA Rule 9760 NAC call-for-review authority, and FINRA Rule 9770 SEC review right; applications are filed with OHO rather than with FINRA department staff — reflecting the adjudicative character of Rule 9700 series proceedings; the series is unique in the Code as the only framework addressing grievances against FINRA's own system operations rather than member or associated person conduct; formal Rule 9700 series hearings are rare in practice as most grievances are resolved at the staff level or fall within existing remedial frameworks; and the series was last substantively amended by SR-FINRA-2015-034 effective December 20, 2015 updating institutional references from NASD to FINRA and FINRA Regulation.
