SIFMA C&L Society

The 2025 SIFMA C&L Annual Seminar wrapped up today in Austin, with the always-popular Ask FINRA panel discussion. Here are our notes from the discussion, which built upon FINRA president and CEO Robert Cook’s discussion yesterday. ?? Rule Modernization: Rules are powerful things if done well, and principles-based rules in particular stand the test of time. But, all must be maintained. FINRA has undertaken a broad review of its rulebook, with three Reg Notices on associated persons, outside activities, and capital formation due by May 12. Reg Notice 2025-07 is expected soon and will focus on the modern workplace. ?? Extended Trading Hours: As detailed in its Risk Disclosure, extended trading hours may carry risks including lower liquidity, wider spreads, and more. Additional risks may be incurred during overnight trading, when SIPs are not open. It will be critical for customers to understand the framework and contours. ?? Artificial Intelligence: FINRA is seeing both excitement and opportunity commensurate with activity. Current use cases can range from coding assistance to translation services (languages, but also voice to text), and mostly focus on AI’s capability to summarize information for analysts, compliance officers, and risk officers. Firms are proceeding cautiously as they explore client-facing use, with good governance processes essential. FINRA rules remain technology-neutral, and there is no plan at this time for specific AI rules. FINRA itself has been using AI in the surveillance space for years; now, it is exploring Gen AI for exams and risk monitoring, particularly as a recommendation engine for investor complaints. ?? Cybersecurity and Fraud: Firms must understand their entire ecosphere, with particular attention to third- and fourth-party vendor management. Do you have a backup? Is there a backup to the backup? FINRA is rolling out a series of tabletop exercises (TTX) for firms and encourages broad participation across an organization. On quantum computing, firms should look opportunistically for faster computing and reduced costs, but look closely at risks related to encryption. More information is in the 2025 FINRA Regulatory Oversight Report. Thanks to Andre Owens, Stephanie Dumont, Robert Colby, Greg A. Ruppert, and Nathaniel Stankard for their time and perspectives. Stay tuned for the full post-Seminar debrief from SIFMA Insights. Safe travels!

It's the final day of the #SIFMACL 2025 Annual Seminar in Austin! Yesterday, we heard from FINRA President and CEO Robert Cook, an esteemed panel of general counsels and chief legal officers, and partied with The Night Owls ?? Check out these highlights and get ready for the day ahead! Now in its 55th year, SIFMA’s C&L Annual Seminar is the preeminent meeting place for compliance and legal professionals in financial services. Thank you to all who have joined us - we've been inspired, challenged, and truly honored to share this time and these experiences with you. Learn more at https://bit.ly/4j9vzUd.

SIFMA EVP and General Counsel Saima Ahmed had the opportunity to sit down with FINRA President and CEO Robert Cook at the #SIFMACL 2025 Annual Seminar. These bullets highlight key themes from their conversation, including three of FINRA’s newest initiatives to? modernize rules and reduce unnecessary burdens, enhance FINRA’s support of member firm compliance, and expand cybersecurity and fraud prevention services. Initiative 1??: Modernizing the Rulebook - FINRA is taking a fresh look at which rules could be modernized. In particular, Cook noted that as part of FINRA's ongoing commitment to improvement, it is focused on capital formation and the modern workplace, including changing processes and communications for today’s world. Industry comments suggesting additional areas of focus are welcome. Initiative 2??: Enabling Member Firm Compliance - FINRA is exploring how it can create a feedback loop between regulatory programs and member firms to enable them to get in front of issues and manage compliance risks. FINRA is also examining ways to reduce unnecessary burdens on firms stemming from their examination, investigation, and oversight functions while maintaining investor protection. Initiative 3??: Partnering to Combat Fraud and Cyber Risk - Cyber risk and fraud are a huge problem, and it takes everyone-on-board to combat threats. FINRA will roll out new services, including creating an Intelligence Fusion Center that facilitates information sharing. Also of note: ?? The Regulatory Path for Crypto - Though the policies will be driven by the federal government and the SEC, FINRA is already working with the SEC’s crypto task force. Cook noted that he wants to forge a regulatory path forward but with an eye on standards for investor protections. ?? The CAT Needs Attention - Cook noted that he is – and has been – supportive of the SEC’s recent exemption from the requirement to report certain personally identifiable information (PII) to the Consolidated Audit Trail (CAT). However, he does not believe the agency went far enough, i.e. eliminate all PII and delete PII already reported. More here: https://bit.ly/4hKc9nq We'll be sending one more set of notes tomorrow, at the conclusion of the Seminar. Sign up to receive them in your inbox here! https://bit.ly/43Jr7XR

It's Day 3 at the #SIFMACL 2025 Annual Seminar! Yesterday, we heard from Acting SEC Chair Mark Uyeda, CFTC Commissioner Kristin Johnson, and leaders in enforcement, and did our part to Keep Austin Weird ?? Check out the highlights in this Day 2 Recap and stay tuned for today's notes from the Seminar floor! For more than 50 years, the SIFMA C&L Society Annual Seminar has been the preeminent gathering for compliance and legal professionals in financial services. Learn more about the Seminar here: https://bit.ly/4kV8hmF and the Society here: https://bit.ly/4ckhWPT

SIFMA Insights is in Austin for the 2025 #SIFMACL Annual Seminar. The Seminar opened with a discussion featuring U.S. Securities and Exchange Commission Acting Chairman Mark Uyeda. Given the significance of understanding the new SEC administration’s stance, today’s bullets are entirely dedicated to this topic. ?? The SEC's Rulemaking Blueprint ? Acting Chairman Uyeda first discussed his blueprint for rulemaking. Back in 2006, after losing several court challenges, the SEC underwent a deep dive review of their procedures. The result was an overhaul of the economic analysis process. ? Uyeda acknowledged that this rigorous process was lost over the last four years. They took shortcuts and their processes failed to meet appropriate standards for rulemaking, ending up with court challenges. ? Chairman Uyeda indicated that the agency needs to get back to a gold standard rulemaking process. This includes utilizing roundtables and requests for comment, such as they are currently doing around crypto. Uyeda indicated that, going forward, the agency need to perform advanced work before putting out rules. ?? The Importance of Operationalizing Regulations ? No matter how thorough your rulemaking process is, said Uyeda, unexpected operational issues will come into play. As a regulator, a rule is not finalized when it is published in the Federal Register. It is done when it is operationalized and achieves the outcome desired. ? This is relevant to the Treasury Clearing extension in particular. The extra time lets us look at issues like margin and foreign affiliates. Are they producing the outcomes we want? If not, what can we do about it? ? SIFMA president and CEO Kenneth E. Bentsen, Jr. gave an analogy to architects and enginers. A grand vision sometimes needs tweaks to be executed. And, a cost benefit analysis doesnt always capture all factors, no matter how thorough it is. ?? An Insatiable Appetite for Data ? Chairman Uyeda noted that, as a regulator, your appetite for data is insatiable. But there’s a cost to collecting data that must be considered. ? “There’s no free lunch here,” he said, noting that the agency must be sensitive to costs even if they don't hit as a line item on the agency's budget. See also, SIFMA Executive Vice President and General Counsel's opening remarks, A Different Posture Toward Regulation, Enforcement, and Rulemaking: https://bit.ly/41Y4xrW Stay tuned for more notes and highlights from the Seminar! You can sign up to receive them directly in your inbox here: https://bit.ly/4iWGD6S

Stay curious. Manage risk. Protect the investor. We were honored to host Kristin Johnson, Commissioner of the U.S. Commodity Futures Trading Commission for a conversation about her career at the #SIFMACL 2025 Annual Seminar. Thank you to Celeste Koeleveld of Clifford Chance for moderating the discussion!

"No matter how thorough your comment process and your rulemaking process is," said U.S. Securities and Exchange Commission Acting Chairman Mark Uyeda at the #SIFMACL Annual Seminar, "sometimes there are unexpected operational issues that come into play." "I think that's one of our obligations as a regulator. The rule doesn't end when we publish a final rule in the Federal Register. It ends when we have something that can be operationalized and it is achieving the outcomes that we desire."

Congratulations, Mary! It is with great pleasure that we present you with the 2025 #SIFMACL Rauschman Award. “Legal and compliance professionals play an essential role in protecting investors, ensuring market integrity, and fostering fair and efficient markets," said Mary Schapiro, Vice Chair for the Glasgow Financial Alliance for Net Zero (GFANZ) and Vice Chair of Global Public Policy, Special Advisor to the Founder and Chairman, Bloomberg. "Without strong legal frameworks and robust compliance practices, our financial system would lack the stability and confidence it requires to function effectively." "The professionals in this room are the first line of defense in ensuring that markets operate with integrity, that firms meet their regulatory obligations, and that investors can trust in the fairness of our system... Thank you again for this honor. I look forward to continuing to work together to uphold our shared values." Learn more about Mary, her illustrious career, and her efforts to advance the compliance and legal profession: https://bit.ly/4l1Mb1V

It's Day 2 at the #SIFMACL 2025 Annual Seminar! Still buzzing from our Sunday night receptions? Us, too! Catch yesterday's action in this recap video and get ready for a full day of education and networking ahead.

Welcome to Austin! The 2025 #SIFMACL is kicking off today and we are so excited to welcome you to this great city ?? If you are on-site, check your email for a complete guide to Day 1. Stop by the Registration Desk to pick up your badge and visit the Exhibit Hall for live music and welcome refreshments. Next, head on over to our First-Timer & Future Leaders Reception and then up to the rooftop for our Opening Night Reception, Bright Hues & Austin Views. We'll see you there! We'll be posting highlights here and on our event site: https://bit.ly/4bUHwL0 Stay tuned!