FINRA360 Progress Report
We launched FINRA360 in March 2017 with one overarching objective: to ensure that FINRA is operating as the most effective and efficient self-regulatory organization (SRO) we can be.
The time was right for us to begin such a review. In the 10 years since the NASD and NYSE Regulation merged to form FINRA, the industry and financial markets had changed significantly. And in traveling around the country and meeting with a broad range of stakeholders —including many of our members, as well as investors, investor advocates, regulators, trade associations and FINRA employees—I hear a lot about what FINRA is doing well and where there are opportunities for improvement.
FINRA360 provides a framework to address feedback, engage in thoughtful analysis to determine opportunities for improvement, and make changes that will produce a more effective, more efficient organization.
In analyzing the suggestions and comments we receive and deciding which ones to implement, we emphasize changes that benefit investors, promote compliance, address duplicate operations, enhance transparency, foster engagement or improve our day-to-day supervisory interactions with firms. We believe that these priorities provide us with a structure for analysis that ensures any changes we select for implementation have the greatest positive impact on FINRA, investors and the industry.
Our continuing work under FINRA360 also must reflect our unique identity as an SRO that stands at the intersection of regulation and industry. Our mission is investor protection and market integrity, and our task is to work with our members, investors and other stakeholders to cultivate a deep expertise in the securities industry that enables more effective regulation and promotes vibrant capital markets. As an SRO, for example, we are in a position to involve the industry more directly in our deliberations and thus benefit from its expertise on relevant matters, such as the different business models of firms and how they operate in practice, the complex and rapidly evolving securities markets in which they trade, and the concerns of the wide range of investors they serve. We can combine what we learn from the firms we regulate with the input we actively seek from the investing public and others representing them to strengthen our regulatory programs and develop solutions that are more practical, tailored and effective. And we can develop compliance tools and other resources to assist our members with fulfilling their regulatory obligations.
As indicated in the attached Progress Report, FINRA360 is resulting in significant change across the organization. This effort has involved hundreds of stakeholders and FINRA staff in an effort to improve our efficiency and operations. Major actions to date include:
- Integrating our two Enforcement programs into a single unified structure;
- Publicly releasing annual Examinations Findings Report detailing our observations from the prior year's examinations;
- Publishing an annual summary of our 2018 budget and of our financial guiding principles;
- Launching a Small Firm Helpline to address routine questions about FINRA and clarifying our interpretive process to provide clear answers on FINRA rules;
- Creating an Innovation Outreach Initiative and a new Office of Financial Innovation to address the growing activity in FinTech;
- Increasing funding for training of examiners and regulatory coordinators;
- Updating the activities of our advisory and governance committees and enhancing our transparency regarding what they do and how interested parties can get involved; and
- Transforming our risk monitoring and examination programs to integrate them into a single more effective, efficient and consistent program by, among other things, organizing the program around the business models of the firms we regulate to eliminate duplication and deliver exams that are more tailored to the risks of the firms’ businesses.
- Continuing to conduct retrospective rule reviews to ensure rules remain relevant and narrowly tailored to achieve their regulatory objectives, in light of market, technological, regulatory and other environmental changes.
Even as we implement the ongoing change sparked by FINRA360, our staff remains focused on performing our many operational and oversight responsibilities, including examinations, surveillance and enforcement. And in the normal course of doing this work, we also have made many improvements to our operations that are not discussed in the attached report. To mention just a few examples, we continue to enhance our ability to identify and take action against brokers and firms that present heightened risk of fraud or investor harm. We also published a comprehensive paper providing perspectives on customer recovery of judgments and awards, with a particular focus on the arbitration forum operated by FINRA, while also issuing several rule proposals related to arbitration awards.
We have accomplished a great deal, but we still have much more work ahead of us as we continue this multi-year initiative. Expect more to come.
President and Chief Executive Officer
Table of Contents
- Changes to FINRA Enforcement Structure
- FINRA Examination Program Improvements
- FINRA Annual Budget Summary and Financial Principles
- Interim Report on Use of Fine Monies
- Data and Analytics
- Regulatory Operations Oversight Committee (ROOC)
- Enhancements to FINRA’s Disclosure Review Process Relating to Public Financial Records
- Central Registration Depository (CRD) Improvements
- Examination Findings
- Changes to FINRA Advisory Committees
- Small Firm Helpline
- Small Firm Report
- Additional Small Firm Initiatives
- Changes to FINRA Rulemaking Process
- Changes to Engagement with Member Firms: Compliance Tools and Resources
- Innovation Outreach Initiative
- Industry Continuing Education
- Enhancements to the Securities Industry Continuing Education Program (CE Program)
- FINRA Governance and Transparency
- Annual Industry Snapshot