FINRA Annual Regulatory and Examination Priorities letter

 At the beginning of each year, FINRA publishes its Annual Regulatory and Examination Priorities Letter to focus on key issues to FINRA's regulatory programs. In January 2017, FINRA published its Annual Regulatory and Examination Priorities Letter. The letter provides information about areas FINRA plans to review in its 2017 exams. It's based on observations from regulatory programs as well as input from various stakeholders (member firms, other regulators and investor advocates). Firms find the annual Priorities Letter useful in reviewing their compliance programs and to address their internal training and communications.

Common Themes for FINRA Annual Priorities Letter

• Compliance
• Supervision
• Risk Management
• Promoting Investor Confidence

New Areas of Focus for FINRA

• Recognizing the vital role small firms play in promoting capital formation.
• Introduction of a Compliance Calendar.
• Publishing a directory of compliance service providers.
• Publishing common examination findings that can help inform firms of deficiencies FINRA has observed.

High-risk and Recidivist Brokers

FINRA is devoting particular attention to firms’ hiring and monitoring of high-risk and recidivist brokers, including whether firms establish appropriate supervisory and compliance controls for such individuals.

Sales Practices

Investor protection lies at the heart of FINRA’s mission and as such, protecting senior investors will remain a top priority in 2017.

Financial Risks

• Lacked liquidity risk management plans.
• Did not conduct stress tests.
• Applied insufficient rigorous assumptions in their stress tests or maintained insufficient sources of funding.

Cybersecurity Risks

Cybersecurity threats remain one of the most significant risks many firms face. In 2017, FINRA will continue to assess firms’ programs to mitigate those risks.

Market Integrity

Detecting and deterring manipulation remains a critical priority for FINRA.

Conclusion

FINRA urges compliance staff, supervisors and senior business leaders to consider the topics addressed in their Regulatory and Examination Priorities Letter. Applying the information as part of firms’ compliance, supervision and risk management practices can better protect investors, the markets and firms themselves.