In major tech upgrade, FINRA promises to ease brokers’ compliance burden
By the end of the month, brokers will see their first glimpse of a new online registration system at FINRA, the first step in a multiphase technology overhaul at the regulator.
FINRA plans to unveil a new user interface for its online central registration depository system on June 30. The system acts as a hub for information about brokers and their firms that consumers can access through the BrokerCheck system.
The technology overhaul promises to “strengthen an essential function of the securities industry,” FINRA President Robert Cook says in a statement.
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"The transformation will allow FINRA to develop systems that help firms effectively maintain compliance programs and reduce compliance costs, while continuing to operate and enhance BrokerCheck as an essential tool for investors," Cook says.
FINRA’s technology upgrade comes as the latest move in what has been a busy year for industry regulators. FINRA continues its ongoing review of its processes and organizational structure in what it’s calling FINRA 360. In April, the regulator published a one-year update on that initiative, touting its success in consolidating two enforcement units into a single division, rolling out a helpline for small firms and enhancing training for its examination staff.
Meanwhile, at the SEC, the commission recently confirmed two new commissioners to give the agency a full complement of five. It also rolled out a long-anticipated package of rule proposals for advisors and broker-dealers working with retail clients.
At FINRA, officials have been working to modernize the group’s internal technology and have implemented a cloud-computing system that has enabled data capacity to scale up as demand surges. In the first week of February, as the markets shot up and down, FINRA handled a record number of electronic messages associated with the spike in trading activity. The regulator boasted that in four record-setting days, capped by one day that saw its network process 99 billion messages, FINRA’s systems “handled the unprecedented volume seamlessly” thanks to its cloud strategy.
With the new upgrades to its registration and disclosure system, FINRA is promising brokers a more efficient and accessible process that will ultimately ease their compliance burden.
FINRA’s work on the CRD and other systems comes alongside similar efforts at the SEC and the North American Securities Administrators Association, which includes state regulators.
The new registration systems will pull in information from across FINRA’s regulatory activities, aiming to deliver investors a fuller picture of a firm or individual broker’s track record, the organization says.
FINRA’s CRD system includes information on nearly 3,800 broker-dealers and more than 630,000 registered individuals, and experiences “consistently high usage volume,” the regulator reports. Last October, FINRA’s web CRD system processed its 50 millionth registration since its launch in 1999. Last year alone, the system processed 2.1 million filings. FINRA says that it has routinely updated its registration systems, but that they were built on legacy technology that has aged past its use.
In addition to the new online interface slated to appear at the end of June, FINRA is promising to deliver a new system for compliance personnel to review information about individuals, branches and their firm, as well as an automated system to notify registered reps when a new Form U5 is available to review.
Looking further ahead, FINRA is anticipating more improvements to streamline its registration and disclosure system, including accepting paperless updates that wouldn’t require the submission of a complete form, e-signature capability and the capacity for accepting bulk transaction filings.