WASHINGTON—The Financial Industry Regulatory Authority (FINRA) issued a public statement, Framework Regarding FINRA's Approach to Economic Impact Assessment for Proposed Rulemaking. FINRA's framework, authored by the Office of the Chief Economist, will help ensure that its rules are better designed to protect the investing public and maintain market integrity while minimizing unnecessary burdens. The framework described in this statement applies specifically to the prospective analysis of rules and rule changes and describes how FINRA will evaluate significant new rule proposals, including amendments to existing rules.
The Framework Regarding FINRA's Approach to Economic Impact Assessment for Proposed Rulemaking outlines the three core principles that define FINRA's approach to conducting economic impact assessments for rulemaking:
"The framework we have outlined increases transparency around FINRA's analysis of the need for and potential consequences of proposed rules. It allows us to expand on FINRA's traditional approach to rulemaking by ensuring that we more formally, rigorously, and consistently develop rules that are effective and efficient," said FINRA's Chief Economist Jonathan Sokobin.
FINRA will make a determination early in the rule development process regarding the extent of the economic impact analysis required, and early initiatives will focus on complex rules or rules where economic impacts are likely to be significant.
FINRA expects that in significant future rule proposals, FINRA will address, as appropriate, the following questions.
FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.