What is FINRA?

The Financial Industry Regulatory Authority (FINRA) is a regulatory body that oversees brokerage firms and financial professionals. Its main goal is to establish rules and standards that protect investors and promote fair and transparent functioning of financial markets. Adhering to FINRA regulations is extremely important for financial institutions as it helps maintain investor confidence, uphold ethical business practices, and avoid regulatory penalties.

Why Adopt FINRA?

Adopting FINRA regulations is crucial for financial institutions to meet investor expectations, follow ethical business practices, and avoid penalties. Implementing FINRA-compliant policies through Open Policy Agent (OPA) is essential in meeting these requirements.

How does OPA help you comply with FINRA?

1. Flexibility in Policy Enforcement:

FINRA compliance demands a nuanced approach to policy enforcement, covering a wide spectrum of areas including recordkeeping, communication surveillance, data protection, and more. OPA, renowned for its flexible and extensible policy language, enables financial companies to tailor policies precisely to meet the intricacies of FINRA regulations. This adaptability ensures that policies can evolve with changing regulatory requirements, providing a dynamic and future-proof foundation for compliance.

• Dynamically check communication content against FINRA guidelines
• Ensure that sensitive information is not being transmitted

2. Uniform Policy Enforcement Across Platforms:

Financial institutions often operate in complex, multi-platform environments. OPA's ability to enforce policies uniformly across diverse systems and services is a significant advantage for financial companies complying with FINRA. This ensures consistency in policy application, reducing the risk of discrepancies and fostering a unified approach to compliance management.

• Integrate into various communication channels, trading platforms, and data repositories.
• Ensure consistent enforcement of rules across diverse systems with a single, unified policy.

3. Real-time Monitoring and Enforcement:

OPA empowers financial firms to implement real-time policy monitoring and enforcement, aligning with FINRA's emphasis on proactive surveillance. Whether it's monitoring communication channels for potential market abuses or ensuring timely trade reporting, OPA enables organizations to automate compliance checks, minimizing the risk of manual errors and enhancing the effectiveness of regulatory adherence.

• OPA can continuously monitor in real-time, validating each transaction against FINRA rules.
• OPA can trigger an immediate alert upon violation, allowing for prompt intervention and remediation.

4. Auditable Compliance:

OPA's built-in auditing and logging capabilities facilitate the creation of comprehensive audit trails, a critical requirement for FINRA compliance. Financial companies can leverage OPA to record policy decisions, actions taken in response to incidents, and other relevant information. This not only aids in meeting FINRA's audit trail requirements but also provides valuable insights for internal reviews and continuous improvement.

• OPA's logging capabilities can be utilized to create detailed audit trails.
• For instance, when a trade is executed, OPA can log the specific policies that were applied, the decision outcome, and any actions taken.

5. Efficient Policy Updates and Adaptability:

FINRA regulations are subject to updates and amendments, requiring financial companies to stay agile in their compliance efforts. OPA's programmable nature enables swift and efficient updates to policies, ensuring that financial institutions can seamlessly adapt to changes in regulatory requirements. This agility is a key asset for companies aiming not just to meet current FINRA standards but to stay ahead of evolving compliance expectations.

• When FINRA introduces new reporting requirements, the organization can update OPA policies accordingly.
• For instance, a new policy can be quickly implemented to validate the format of a recently mandated data field in trade reports.

6. Integration with Existing Systems:

Financial companies often have established IT infrastructures. OPA's ability to integrate with existing systems and workflows streamlines the adoption process. This integration ensures a smoother transition to a policy enforcement framework that aligns with FINRA regulations, minimizing disruptions to ongoing operations.

• OPA can complement existing systems by validating against FINRA rules before they are executed, ensuring compliance without requiring a complete overhaul of existing systems.

Styra Sample FINRA compliant Policies

1. Communication Surveillance:

This policy checks if communication content complies with FINRA guidelines.

2. Trade Reporting and Monitoring:

This policy ensures that a trade report adheres to FINRA requirements.

3. Recordkeeping and Supervision:

This policy ensures proper recordkeeping for compliance purposes.

What to do next

• Familiarize yourself with FINRA guidelines
• Determine if your organization is exempt from any specific requirements
• Evaluate your existing ICT procedures and identify where compliance is needed
• Assess contracts with service providers and evaluate necessary changes to align with FINRA requirements
• Regularly monitor developments with FINRA