The U.S. industry self-regulatory organization, the Financial Industry Regulatory Authority (FINRA), will be testing firms’ readiness to adopt new “best interest” standards.
In a letter setting out its compliance priorities for the coming year, FINRA said that it will initially focus on firms’ preparedness for the U.S. Securities and Exchange Commission’s (SEC) new best interest rules, known as Reg BI, “to gain an understanding of implementation challenges they face.”
After the new requirements kick in by June 30 of this year, FINRA will turn to reviewing firms’ compliance with Reg BI, and related SEC rules and guidance.
The SRO’s other priorities for the year include firms’ compliance with their best execution obligations, controls over direct market access, order routing disclosure and cybersecurity.
Additionally, FINRA said that it will continue to review compliance in critical areas, such as sales practice risks, insider trading and market manipulation.
One new feature of the annual priorities letter is lists of “practical considerations and questions that firms may use” to help firms assess their processes and best practices.