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Finra Streamlining Broker Dealer eExams

CEO Robert Cook says three examination teams may be consolidated

Investment News, Mark Schoeff Jr., reported on 3.20.2018 – that Finra could streamline its examination program this year for Broker Dealers.

Robert W. Cook, president and chief executive of the Financial Industry Regulatory Authority Inc., said the agency is reviewing the structure of its exam function, which involves three teams: sales practice, risk oversight, and operational regulation and market regulation.

“We’re going to be looking at whether it makes sense ultimately to consolidate — if so, how — or to coordinate. That’s a decision I expect we’ll be making this year,” Mr. Cook said Tuesday at the Securities Industry and Financial Markets Association Compliance & Legal Society conference in Orlando, Fla.

The move would be a further step in the “enhanced examination framework” that the broker-dealer self-regulator adopted this year, according to Mr. Cook. Under that initiative, Finra is trying to make its exams more risk-focused, choosing firms based on their business models and investor-protection dangers they present.

The changes won’t affect the frequency of Finra’s examinations of its approximately 3,700 members.
Finra is “still examining every firm on an every-four-year backstop basis, but moving away from designating firms as 1-, 2-, 3- or 4-year cycle firms [to] instead focusing on [whether] they’re a this-year firm or not based on their risk profile,” Mr. Cook said.

Finra has taken on more responsibility for broker-dealer examinations over the last two years, as the Securities and Exchange Commission has shifted about 100 of its examiners from broker examinations to investment-adviser examinations in order to increase coverage of advisers.
“In the Finra space, oversight is enhanced, but I think it’s been very constructive,” Mr. Cook said. Read More>>

Posted in: Independent Broker Dealer News

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