Emerging trends such as apps that treat stock trading like a video game, and compliance with new retail investor conduct rules will be among the top priorities for the U.S. Financial Industry Regulatory Authority Inc. (FINRA) in the year ahead.
In a new report, the self-regulatory organization (SRO) sets out its compliance examination priorities for 2021.
At the top of its list is the U.S. Securities and Exchange Commission’s new conduct rules, known as regulation best interest (Reg BI).
This year, FINRA intends to expand the scope of its compliance reviews and testing involving Reg BI “to effect a more comprehensive review of firm processes, practices and conduct.”
At the same time, the SRO said it will scrutinize the gamification of trading as part of a broader examination of firms’ compliance with its rules governing communications with the public.
“We are increasingly focused on communications relating to certain new products, and how member firms supervise, comply with recordkeeping obligations, and address risks relating to new digital communication channels,” the report said.
“This focus includes risks associated with app-based platforms with interactive or ‘game-like’ features that are intended to influence customers, their related forms of marketing, and the appropriateness of the activity that they are approving clients to undertake through those platforms,” it said.
Among its other exam priorities, the SRO will also focus on compliance with consolidated audit trail requirements, cybersecurity risks and best execution obligations.
“This report is designed to give member firms a single, authoritative source that provides insights derived both from the last year’s examinations and risk assessments, and from where we have identified emerging issues for the coming year,” said Bari Havlik, executive vice-president of member supervision at FINRA, in a release.