Finra extends feedback period on rule modernization

Finra wants to update any of its rules that are outdates and has extended a consultation period for stakeholders to provide feedback.

The regulator recently launched Finra Forward, a wide-ranging review of its rules and regulatory framework to modernize requirements, facilitate innovation and eliminate unnecessary burdens.

With the fast-moving nature of capital markets, the concern is that outdated rules reduce the competitiveness and operational stealth of firms and may even worsen potential misconduct. However, updating the rules and regulatory framework could have a major impact on firms’ compliance programs.  

In a blog post, CEO Robert Cook said that having clear and up to date rules and framework helps member firms to operate, compete, and innovate on a level playing field and to better serve clients and manage risks in their operations.

“It is important to periodically step back and hear broadly from our member firms, investors, and others about which parts of our rulebook should be re-examined,” Cook wrote. “It is also important for us to hear about non-Finra requirements applicable to member firms that may interact with Finra rules or programs, or otherwise impact member firms, in a manner that also merits our attention.”

Through several regulatory notices Finra is asking for public feedback on which rules need updating. They’re especially focused on:

• Rules related to capital formation (e.g., helping companies raise money).

• Rules related to modern workplace practices (e.g., remote work, digital operations).

They are keen to discover how rules could be modernized and made more effective, and what elements could be removed because they are outdated or unnecessary. Ultimately, a more flexible approach to Finra rules could be adopted along with ensuring that rules are fit for a modern, technology-driven era.

This rule modernization initiative will support our mission by establishing more efficient and effective standards that reflect the contemporary market, business, and technology environment, and that create opportunities for further innovation in financial services for the benefit of markets and investors,” concluded Cook.