In our capacity as advisers to financial institutions, we carefully monitor FINRA’s rulemaking and enforcement activities with a view to thinking about how these affect market participants and their activities. FINRA’s March 2017 announcement of its engagement initiative provides an opportunity for the industry to consider FINRA’s activities on a much broader level.
FINRA’s special notice reflects its previously announced plans to examine its rules and procedures based on its interaction with the industry. For example, in his cover letter to FINRA’s 2017 examination priorities letter, Robert Cook, FINRA’s President and CEO, discussed his “never ending” listening tour of the industry.
The special notice describes in detail the (many!) current forums, such as advisory and other committees, in which FINRA interacts with industry participants and other interested persons in order to monitor industry developments and help inform its rulemaking and other activities. Among other things, FINRA requests comments on whether these mechanisms are effective and appropriate.
The notice discusses FINRA’s rulemaking process, including the means by which FINRA obtains the public’s views regarding its proposals through, for example, its comment process. The notice seeks comments as to how, for example, the comment process can be made more useful and more inclusive.
As to examination and enforcement activities, the notice describes the means by which FINRA communicates its planned activities, such as its annual priorities letter, as well as the means by which FINRA disseminates information about its completed activities, such as its disciplinary database and its posting of decisions. Many market participants use this information as a tool to guide their ongoing compliance priorities. FINRA’s request for comment includes questions, for example, as whether its current communications provide sufficient transparency and useful guidance to the market.
FINRA has requested comments on the initiative, and the comment period will end on May 5, 2017.
Our Take. As a self-regulatory organization, FINRA is uniquely positioned to interact with the financial services industry, as well as investors, to help ensure that it is properly fulfilling its role. FINRA’s engagement initiative provides an important means by which the industry and the public can help inform FINRA as to the extent to which it is performing its duties effectively.