FINRA Announces Plan to Consolidate Examination and Risk Monitoring Programs

October 1, 2018 by FINRA

WASHINGTON – FINRA announced today that it plans to consolidate its Examination and Risk Monitoring Programs, integrating three separate programs into a single, unified program to drive more effective oversight and greater consistency, eliminate duplication and create a single point of accountability for the examination of firms. The effort is a result of FINRA360, the organization’s ongoing comprehensive self-evaluation and improvement initiative.

FINRA regulates more than 3,700 firms and 630,000 individual brokers, and regularly examines every firm for compliance with FINRA’s rules and those of the SEC and the MSRB. Those examination responsibilities are currently divided among three different programs responsible for business conduct, financial and trading compliance. The consolidation will bring those programs under a single framework designed to better direct and align examination resources to the risk profile and complexity of member firms. Among other benefits, FINRA expects the new structure to increase the efficiency and effectiveness of the program.

Planning for the consolidation is already underway, overseen by Bari Havlik, who joined FINRA in April as Executive Vice President of Member Supervision. She will be supported by a steering committee of senior executives. 

“Our Examination and Risk Monitoring program is central to our efforts to protect investors and guard the integrity of markets.  After careful consideration and extensive feedback from internal and external stakeholders, we are moving toward a program structure that is based on the firms we oversee. By directing our expertise and resources in a more tailored way, we will become more effective at examining for compliance,” said FINRA President and CEO Robert W. Cook. “Bari brings valuable perspective to her role at the helm of this transformation and, under her leadership, we have begun to create and implement a roadmap that thoughtfully and methodically builds towards the new structure.”

Havlik said, “Implementing a unified program structure will help make us a more agile and risk-focused regulator while focusing on enhanced training and career opportunities for our staff.  We are evolving the program in a way that addresses specific feedback that we’ve received as part of FINRA360. This will be a significant undertaking that will continue through 2019, but our work is well underway. I look forward to keeping our stakeholders updated as we progress.”

Exams executed pursuant to FINRA’s Regulatory Service Agreements (RSAs) with exchange clients will be performed by a separate, specialized unit housed in FINRA’s Market Regulation department to ensure consistency across RSA exams, provide dedicated resources to RSA-specific rules and trading, and promote economies of scale for RSA client work. This group will work in close coordination with the consolidated FINRA Examination and Risk Monitoring team.

ABOUT FINRA

FINRA is not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry – brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.

Originally Posted at FINRA on October 1, 2018 by FINRA.