On January 4, new President and CEO Richard Cook issued FINRA’s Annual Regulatory and Examination Priorities Letter. This year’s list in summary is:
New for 2017:
Targeted electronic off-site reviews “on select firms not scheduled for cycle exams.” An annual summary report of key exam findings on selected issues More resources for small firms, including: – Compliance calendar; – Compliance service provide directory.
High-Risk / Recidivist Brokers
Dedicated exam group Supervisory procedures and due-diligence Branch inspections
Seniors: fraud and abuse; complex products; microcap pump-and-dump Suitability & Concentration: interest-rate risk; ETPs, non-traded REITs Churning Long-term Products: mutual funds, UITs, Vas OBA & Private Securities Transactions Social Media & ESI Retention / Supervision
Liquidity Risk: firms’ liquidity risk management plans (Reg. Notice 15-33). Financial Risk Management Credit Risk: Rule 4210 – margin on covered agency trades
Cybersecurity: risk mitigation programs, especially branch office controls and WORM document retention Supervisory Controls Testing Customer Protection and Asset Segregation Reg. SHO: good locate and closing out fails AML: automated process deficiencies; dedicated surveillance MA Registration: proper registration and examination
Manipulation: Big data to detect layering and spoofing Best Execution: Reg. Notice 15-46 Audit Trail Reporting: responding promptly to early remediation reports Tick Size Pilot Market Access Rule compliance Trading Exams: alternative trading systems disclosures Fixed Income surveillance
The letter is here.