The brokerage industry’s chief regulator said Tuesday that its examiners will spend more time on “open-ended thematic reviews” that can identify where controls on financial risks break down.
Financial Industry Regulatory Authority will use sophisticated risk analysis and examination technology to build models of how different brokerages operate their businesses and collect supplementary income data as well as detailed purchase and sales data, customer data and data about the broker, in the quest to reduce risks, Chairman Richard G. Ketchum said.“We are using more sophisticated risk analysis to help ensure our examiners are asking the right questions when they walk in the door,’’ he told brokers attending FINRA’s annual conference, in Washington. “To help target examination protocols, we are developing comprehensive profiles of your business models and underlying risks. We will also be asking firms to provide detailed securities and financial transactional data, including purchase and sales data, customer data and data about the broker.’’
