FINRA Issues Massive Examinations and Priorities Report
FINRA has published its annual Report on Examination and Risk Monitoring Program, to report on its examination findings and highlight examination priorities. FINRA intends the report to “inform member firms’ compliance programs” to conduct gap analyses, training, and remediation. FINRA highlights its focus on its upcoming reviews of Regulation Best Interest and Form CRS compliance, cybersecurity, “game-like” trading platforms, cash sweep, and trade routing especially by zero commission brokers. The voluminous tome (46 pages; approximately 30,000 words) also addresses a wide variety of topics including Firm Operations (AML, OBAs, Fixed Income Pricing); Communications and Sales (Reg BI, Private Placements, Variable Annuities); Market Integrity (Best Execution, Large Trader Reporting); and Financial Management (Net Capital, Customer Protection).
OUR TAKE: For compliance newbies, the Report offers a comprehensive guide to everything that FINRA might examine. (Is the Report actually longer than the FINRA manual itself?) For more experienced compliance professionals, the Report offers little help because it fails to prioritize (or de-prioritize) the regulatory concerns. On the plus side, compli-pros can show selections to nudge upper management into line.