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PODCAST

FINRA Annual Conference: Fireside Chat with Eileen Murray

May 17, 2022

The FINRA Annual Conference is happening now, in-person in Washington, DC, and virtually. The event is packed full of panels with information on all the latest compliance trends and emerging regulatory issues. 

On today's episode, we're taking you behind the scenes of the opening plenary session, a conversation between FINRA President and CEO Robert Cook and the outgoing chair of the FINRA Board of Governors, Eileen Murray. 

How are we doing? Take the FINRA Unscripted survey today.

Resources mentioned in this episode:

2023 FINRA Annual Conference

Episode 36: Digital Experience Transformation

Episode 98: Deep Learning: The Future of the Market Manipulation Surveillance Program

Listen and subscribe to our podcast on Apple PodcastsGoogle PodcastsSpotify or wherever you listen to your podcasts. Below is a transcript of the episode. Transcripts are generated using a combination of speech recognition software and human editors and may contain errors. Please check the corresponding audio before quoting in print. 

FULL TRANSCRIPT 

00:00 - 00:23

Kaitlyn Kiernan: The FINRA Annual Conference is happening now in-person in Washington, DC, and virtually. The event is packed full of panels with information on all the latest compliance trends and emerging regulatory issues. On today's episode, we're taking you behind the scenes of the opening plenary session, a conversation between FINRA President and CEO Robert Cook and the outgoing chair of the FINRA Board of Governors, Eileen Murray.

00:23 – 00:32

Intro Music

00:33 - 01:48

Robert Cook: Well, good morning, everyone. Thank you, Katye, for that kind of welcome. If you don't know Katye already, this is a great chance to get to know our head of Member Relations and Education. Katye and her team have been so central to organizing this event. And in fact, I want to take a moment to thank her and all the rest of the FINRA staff who have been working incredibly hard right up to this last minute and will continue working throughout the next few days to keep us here with our content and our programming, to make sure everything is running on time, but also to make sure we're staying safe. So, Katye and team, thank you so much.

Now it's my great honor to kick off our first plenary session, and I want to make sure to welcome everyone who came in person. Also, thanks to all those who are attending virtually. And this is going to be a bit of an experiment for us and the first time we're really running this kind of hybrid conference. So, we have not only people watching virtually, but also people speaking virtually. So, I might have to get a little used to this, you know, back and forth here to figure out which way to be looking at any particular time. But it's my great pleasure to kick this off by introducing the chair of FINRA's Board of Governors, Eileen Murray. Eileen, welcome.

01:50 - 01:51

Eileen Murray: Thank you, Robert.

01:54 - 03:35

Robert Cook: So just a little bit about Eileen before we kick off and I'm going to ask her some some questions. Eileen is, as I said, the chair of FINRA's Board of Governors. She previously was co-CEO of Bridgewater Associates. She joined the Board in 2016, just a few months actually after I joined FINRA. And I've just benefited enormously from Eileen's guidance and mentoring, especially during the last two years when she served as chair. Her, unfortunately, her six-year term as a member of our Board—we have term limits on our Board—her six-year term is coming to an end this summer, but she's going to be leaving FINRA as a much different place than than when she joined.

During Eileen's time, she was very supportive of our work, starting with our 2017 Special Notice on engagement and helping to think about how do we get more input and feedback, and how do we make sure we have a culture of self-reflection and continuous improvement at FINRA? She was also one of the driving forces behind the Board's first ever public statement on diversity and inclusion in 2020. And she's also been championing our move on greater transparency across a number of dimensions, and I think she'll talk about some of that today, but she's been very supportive of our work to provide more transparency about the Board, about our finances, our operations, our technology and so forth.

I know I'm going to miss having her perspective available to me every day, but I thought this was a great chance to ask Eileen before she leaves to reflect a little bit on her time on the board and maybe a little bit about where she sees the future of FINRA going. So, Eileen, again, welcome. Thank you so much for being here.

03:35 - 03:36

Eileen Murray: Thank you, Robert.

03:36 - 03:55

Robert Cook: Let me just kick us off and dive right into some questions. As I mentioned, you're nearing the end of your two-year term as chair of the Board of Governors. Can you tell us a little bit that perhaps about, you know, think back when you joined the Board and when you became chair. What most surprised you about your experience on the Board?

03:56 - 08:46

Eileen Murray: Sure. Thanks, Robert. I can't help but saying, Robert, you wanted to know where to look. You're always looking ahead, and I admire that. But let me answer your question. In terms of what surprised me most was really not not so much the diversity of the board, because I expected that, but the inclusivity. And and so when I first came on the board and, as you know, over the last six years, we've made tremendous progress in enhancing the diversity of the board, both from a race and gender affected. And as we all know, diversity is one part of the puzzle, but without inclusion, it doesn't really work that well.

And so, what really made me feel great about the Board and I was surprised as to the extent of it was the level of the atmosphere of inclusivity, which is which permeates every part of FINRA, anyone I've met etc. And so, so that was one surprise. And if you step back, clearly, you know, I would characterize the relationship with the Board management as one of a high degree of mutual respect, candor and curiosity in terms of a desire to continually evolve FINRA. And so that was point one.

And, you know, when we went into COVID, which is most of my term as chair has been through COVID, I was a little bit concerned about how well would you connect to each other as a Board as we went over the Zoom environment, and I was pretty surprised when we looked at the Board survey results this year, which we survey our board every year, the two areas that were stronger in terms of how we performed as Board is that committee meetings are held in a manner that ensure open communication, meaningful participation and timely resolution. The Governors actively speak up and offer their views. I was surprised that we made a meaningful uptick in that in those two categories. I mean, we're above average, but we're about a [indiscernible] now, and that's surprising. And what it makes me feel great about is we continue to mine the Board members experiences by their being able to bring your authentic self to the table and being comfortable to stand up and share their perspective. So that that would be point one.

Point two is when I first got on the FINRA Board, I was pretty surprised at how advanced FINRA was in technology. For example, you know, we're in 2022 and I know a lot of firms are still working on cloud adoption. FINRA started that back in 2013, which which surprised me. And thankfully FINRA was doing that. And then lastly, I would say the management team. What surprised me is the degree of openness and curiosity and desire to just desire to continue to move FINRA forward. And you've been great, Robert, is bringing external constituents in. You've enacted a multiyear strategic plan for FINRA that's been embarked upon, and you've brought many different parties to the table.

And I would say FINRA management team have been actively curious and learning and having quality back and forth with those different teams. Be it E&Y, be it Accenture, be it PWC. And at our last Board meeting, I need this last point, I've watched CEA Partners, by way of example, give a report back to FINRA on areas for improvement and the degree of management participation and agreement was was wonderful in terms of the level of collaboration. So, it was a spirit of let's move forward, there was no defensiveness, etc. And I think that's pretty unique. and something that really helps propel FINRA forward.

08:49 - 09:36

Robert Cook: That's great perspectives. Eileen and I also, in addition to kind of sharing what some of the things that surprised you, I think it helps provide a little bit more context about how incredibly important our Board is to our operations at FINRA and what a close role they have in overseeing, governing everything from our rulemaking to our our examination programs and so forth. And we're very lucky to have a very distinguished and capable Board that we can leverage when we're thinking about how to engage in best practices and improve our operations.

So, Eileen, thinking about your tenure as a Governor, maybe you could share with us some things that that you're most proud about, either looking over your whole tenure as Governor or as in your tenure as Chair?

09:37 - 13:16

Eileen Murray: Yeah. I guess two things come to mind. One is the speed with which FINRA has made progress on making the Board more diverse. I mean, I've been on the board in six years, and I've seen more progress at FINRA in terms of diversity than I've seen at other firms that I were I was a member of for decades. So, I'm really proud of that because I think diversity and inclusion is critical to a firm doing really well, because if you have diversity of thought which is required to, you know, move onwards and upwards.

The other area, I think, really, I feel great about is the whole technology area. And I'd say there's four things that come to mind: the Consolidated Audit Trail, the market manipulation surveillance surveillance program, the Digital Experience Transformation, and the Registration System Transformation. And let me just talk about CAT for a minute, because I think it goes back to, you know, the industry, the Board being are really the beneficiaries of FINRA's management team's strategic vision and tremendous execution skills. So, so CAT, the progress on CAT, and the speed in handling that data just simply wouldn't have been possible without FINRA's first mover advantage. And again, it demonstrated strategic vision and great execution skills on the part of FINRA's management.

I mean, Robert, let's not forget the original specifications for CAT were, and correct me on these numbers if I'm wrong, if you look at the original specifications for CAT, they called for processing 58 billion daily market events. In the first quarter of this year, that number averaged 415 billion events per day with a peak of 604 billion. That's seven times the processing volume originally projected and ten times what was projected on a peak day.

The other ones I mentioned, the market manipulation surveillance program, the Digital Experience Transformation and Registration System Transformation, these are huge transformations that have enabled FINRA and its members to digest data more quickly. It's made the cost of compliance cheaper and as important; I think, it makes people's jobs a lot more interesting by automating a lot of these processes.

So, so there's that whole technology area. And then the other piece I feel great about is there was there was a great relationship between the new management and the Board that I came into this position. And I think it's stronger right now. And I would imagine they continue to strengthen, which will continue to serve well for the Board, the industry and FINRA going forward.

13:19 - 13:44

Robert Cook: Well, thank you, Eileen, for that sort of helpful look back at what some of the things that have been happening over the last six years during your tenure. I want to switch vision here and look forward, as you suggested at the beginning, and and get your perspective based on your experience as your term comes to an end. What do you see as some of the greatest areas of opportunity over the next six years or so?

13:47 - 18:24

Eileen Murray: Well, as you can see from my cup, I see a great opportunity for the Yankees, but I hope that works out well. But, you know, when we step back, you know, in my entire career, you know, we've always been talking about the rate of change, the speed of change and uncertainty and so forth, and it just gets quicker and quicker. And I think that FINRA is in a unique place and has a tremendous opportunity to continue to play a leadership role by having a really forward-looking strategy towards technology as it has in my entire 6 years on the board.

And I think things that might impact the industry, which will be opportunities as well as challenges for FINRA, are many technologies, including but not limited to, for example, blockchain. It's important for FINRA to keep an eye on A.I. and the metaverse, however we define that, which is still in progress, and other newer technologies, including issues around privacy and security and how these newer technologies might impact the industry. I think there's a tremendous opportunity, and again, opportunities also come with challenges, in terms of advanced analytics. And some of the some of the advanced analytics pilots that I've seen at FINRA are just awesome and very inspirational in terms of the imagination to put different things together, looking at and how FINRA can do things more effectively internally as well as helping the membership. So, I'm really excited about that.

As you know, I mean, when you look at advanced analytics, the goal is to take this massive data across the organization and make it more usable and provide better insights to form and enhance better decision making. And I think that will drive better regulation and more efficient operations for years ahead. But as important, and perhaps more importantly from my perspective, is it creates an environment for the types of work that I think are much more exciting for employees. And so, and I think that's another area that we need to continue to focus on.

The other area I will talk about a little bit is the whole digital asset space. A lot of our mission of investor protection, it's important that we have a pulse on new new products and digital assets is an incredibly important part of the future. And I really do believe FINRA, as the membership gets more and more involved in digital assets, is uniquely positioned to really help help out with that in looking ahead. I mean, we have 80 years—80 years—of experience in terms of member registration and market surveillance combined with a real heavy investment in technology and data analytics, plus a board with a lot of industry experience, which I think positions FINRA well as its members get more involved in the digital asset class, which is really part of the future. And so, I think there's tremendous opportunity, of course, that comes with challenges.

And then the last opportunity I would say for FINRA, which I probably should have said first, is to continue to attract great talent, which is which is you folks have been a great job. I mean, Robert, when I look at the progress that we've made on diversity, when I look at the progress on any number of initiatives and spend a lot of time on it's all about the people and the people you're bringing in, the people who are developing and the people you're retaining through really active management of career, career opportunities. And so, I hope you continue with that. I believe you will continue with that knowing who you are. And I see those all as opportunities and again think all opportunities that are worthwhile come with some significant challenges, and I have every confidence in the management team and the board to take that mantle as as we move forward.

18:26 - 19:32

Robert Cook: Well, thank you, Eileen. And also, it's a great setup to so many of the sessions that we're having in the conference as well. We got, as you mentioned, Advanced Analytics, you mentioned diversity and inclusion, you mentioned CAT. And so, anyone who wants to learn more about what FINRA is doing in some of those spaces, please make sure and avail yourself also of the of the opportunities to learn about FINRA's digital system transformation for interacting with members that we have booths on as well.

So, and Eileen, you mentioned diversity and inclusion, you mentioned it at the context of the Board, you mentioned in the context of FINRA, but I know this is a topic you just care so deeply about and have thought so deeply about. I just wanted to invite your thoughts a little bit on this topic of diversity, equity and inclusion more generally in thinking about the industry and maybe you could share a little bit you're thinking about why is this an important topic for the industry to focus on? And what would you suggest that we as an industry do to promote greater diversity, equity and inclusion?

19:33 - 23:27

Eileen Murray: Yeah, I think that's a great question, Robert, and one that I've spent a lot of my career on. I think simply for some people, the importance of diversity, equity and inclusion as we track the best talent and that and I believe that diversity of thought is really critical to that. And you get that through diversity, through diverse talent. So, and it basically impacts the bottom line. It improves profitability from my perspective. In terms of my career, I would not be as I would not have enjoyed the kind of success I had if I didn't have diverse teams of people from all around the globe who brought very different perspectives. And initially in my career, I wasn't really conscious of the tremendous value of diversity and inclusion but became more conscious of it as my career moved on. But I wouldn't be where I am today without a diverse team of people. And so, so I think it continues to be important.

You know, when we look at the pandemic and we look at, to use it as an example, the hybrid work environment that we find ourselves in today, which, by the way, I applaud. I've always been a big believer in, you know, flexibility in the work environment for for professionals. And that, I think, helps with, you know, diversity. And I remember before work from home was popular, I was doing it in the mid-80s to retain women who had recently become moms where I was working and the technology wasn't as sophisticated as it was today, but we were able to make it work, and we were able to retain that talent.

So, you know, when you step back and you say, why diversity and inclusion, it's good for the business. It's good for profitability. But quite candidly, from my perspective, it's just the right thing to do. We still have as an industry a lot of progress to make. And I think, you know, if you take a look at firms are doing well with it, why is that? I think a focus, a greater focus on inclusion is critically important. And I think there are a lot of things that are going on that will continue to help move that forward.

And I hope, and I'm I really mean this, I hope that the progress and the rate of change that I've seen at FINRA in diversity, equity and inclusion, I hope we see that in other parts of financial services where it hasn't been as rapid or a speedy a movement. And I think if you look at the things that you've done, Robert, in terms of, you know, having diverse [Board] slates, understanding why someone can or can't do a particular role, a maniacal focus on career development and opportunities.

And, you know, looking at pay practices from an independent point of view are just small things that I think are table stakes. So, let's put those aside because I'm going to assume everyone's going to do them. But how do you make people feel included? How do you get people to understand they can bring their authentic self to the table and that you want to hear what they have to say? How do you create an environment that's safe and comfortable for people to be themselves? And that's where I think we need to continue to make a lot of progress. I'm hopeful we will. And if we all step back and look at where others are doing things better than we did myself, I hope you all knock on each other’s doors and understand those practices so that we can enact them in the places that we're in.

23:30 - 23:59

Robert Cook: Well, thank you for that, Eileen. And I'll take the moment to plug, we do have a session on diversity and inclusion at this conference. We'll have a great speaker. Former SEC Commissioner [Roel] Campos will be sharing his perspectives. And for those of you who are not aware FINRA hosts, and has for over a decade, an annual Diversity Summit that's really devoted entirely to how to diversity and inclusion in the industry and best practices. And I really encourage you to attend that annual event as well. So...

24:01 - 24:40

Eileen Murray: Robert, can I just make one more point? I just want to say that, you know, when we finish a race and you finish the test, you feel good. It's over. Moving on from the FINRA Board, I will miss you all. It's been my great honor and privilege to serve as the Board Chair. I've made a lot of friends on the Board as well as at FINRA, and I hope I know you all until they put pennies in my eyes, and if I can be of any help to FINRA, it would be my great pleasure to do that. So, thank you for that. The opportunity to serve as the Board Chair. It's been one of the best experiences in my career. So, thank you so much from the bottom of my heart.

24:41 - 25:08

Robert Cook: And thank you, Eileen. I want to thank you. Thank you for your tremendous leadership over the last few years and then for taking a moment to be here with us today. We're going to miss you, your guidance and your chairmanship, and we're going to miss your expertise on the Board. But we know you know where to find you and we will be sure to reach out to you where we can. Eileen, thank you again so much for being here today.

25:08 - 25:12

Eileen Murray: Thank you, Robert. Thank you, everybody, enjoy the conference. Goodbye.

25:13 - 25:34

Kaitlyn Kiernan: That's it for today's episode of FINRA Unscripted. If you have any ideas for future episodes, you can email us at [email protected] And if you don't want to miss out on the action for next year's annual conference, be sure to visit the link in our show notes for more information on how to join us in 2023. Today's episode was edited by John Williams. Until next time.

25:34 – 25:39

Outro Music

25:39 – 26:07

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26:07 – 26:12

Music Fades Out

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