Staying Ahead of the Curve: Key Takeaways from FINRA’s 2024 Annual Regulatory Oversight Report

The Financial Industry Regulatory Authority (FINRA) recently released its 2024 Annual Regulatory Oversight Report, offering valuable insights into the organization’s regulatory activities and key areas of focus for member firms. This report is a must-read for anyone in the broker-dealer industry, as it provides a roadmap for staying compliant and navigating the ever-evolving regulatory landscape.

Broad Scope, Deep Dive:

The 2024 report covers a wide range of topics, including:

• Financial Crimes: This section addresses areas like anti-money laundering, fraud, and sanctions, cybersecurity and technology management, and manipulative trading.
• Firm Operations: The report dives into critical aspects of firm operations, including outside business activities, books and records, off-channel communications, and regulatory reporting.
• Communications and Sales: With an emphasis on investor protection, FINRA highlights key considerations for member firms regarding Regulation Best Interest (Reg BI) and Form CRS compliance, and private placements.
• Market Integrity: FINRA’s focus on ensuring fair and efficient markets is evident in its examination of areas like trade execution, best execution, disclosure, and trade reporting.
• Financial Management: This section covers the topics of net capital, liquidity and credit risk management, and segregation of assets.

New for 2024:

The 2024 report also sheds light on emerging areas of regulatory focus, such as:

• Crypto Assets: As the crypto landscape continues to evolve, FINRA is actively engaged in providing guidance and oversight to ensure responsible innovation and investor protection in this space.
• OTC Quotations in Fixed Income Securities: The report highlights FINRA’s efforts to enhance transparency and best practices in the over-the-counter (OTC) fixed income market.
• Market Access: The report details the controls required with market access so as not to jeopardize member firms’ financial conditions, that of other market participants, the integrity of trading on the securities markets, and the stability of the financial system.

Actionable Insights:

Beyond highlighting key areas of focus, the 2024 report provides valuable takeaways for member firms seeking to strengthen their compliance programs. These include:

• Proactive Approach: The report encourages firms to take a proactive approach to compliance, staying ahead of regulatory changes and implementing effective risk management strategies.
• Tailored Programs: FINRA emphasizes the importance of tailoring compliance programs to the specific risks and business models of each firm.
• Effective Practices: The report shares valuable insights from FINRA’s oversight activities, showcasing effective practices observed across various member firms.

Conclusion:

FINRA’s 2024 Annual Regulatory Oversight Report is a valuable resource for member firms navigating the complex financial services regulatory landscape. By understanding the key areas of focus and incorporating the actionable insights provided, firms can stay compliant, mitigate risk, and build trust with their investors and securities regulators.

Quadrant’s team of experts can assist your firm with its compliance program to meet the rigorous requirements highlighted in FINRA’s report and beyond.