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Top 3 Best Practices for FINRA Compliance


FINRA (Financial Industry Regulatory Authority) is a non-governmental agency that provides regulatory services for the financial industry. FINRA regulates over 4200 brokerage firms and oversees the stock market and securities industry. FINRA focuses on areas that financial services firms should consider when identifying opportunities to improve their compliance, supervisory and risk management programs. The areas of focus include fraud, high-risk firms and brokers, operational and financial risks, sales practice risks and market integrity. Fraud continues to be a major focus area for FINRA. It has reported hundreds of potential insider trading and fraudulent activities to the U.S. Securities and Exchange Commission (SEC) that involved individuals or entities outside of its jurisdiction.


FINRA provides important regulatory oversight that keeps the U.S. markets safe and fair. In cases of non-compliance, FINRA can shut down and/or heavily fine any firm or brokerage found guilty of wrongdoing. Even Organizations who are compliant may find FINRA examinations extremely stressful. FINRA compliance is essential for keeping your firm and clients safe and can be intuitive  than ever by some of these key best practices.


1)     Adopting an Automated approach

Using a Technology based document management system is one of the best ways to stay compliant with FINRA as it is paperless, resulting in increased efficiency and security, making regulatory Compliance hassle-free. An automated approach  also assists  audits by FINRA go by quickly and efficiently. A major part of FINRA testing is taking a look at a firm’s books and records to make sure they are current and accurate. By having all the records they will want access to available in a centralized platform, electronically, easily, and quickly, audits can become much more simple and go by much faster.


2)     Robust Policy management which includes Archiving, Tracking and Monitoring

The retention of records is another area where Companies could potentially run the risk of non-compliance with FINRA and SEC regulations. The recordkeeping requirements of FINRA are very stringent, and it is important for practice owners to fully understand, and comply with, all applicable regulations.


When implementing or updating any policy, it is important for practice owners to fully understand the recordkeeping requirements FINRA has implemented.


3)     Using an Integrated Risk Management Approach & Conducting Regular Risk Assessments

FINRA mentions in its Report on Cybersecurity Practices that “A sound governance framework with strong leadership is essential,”. Organizations should develop their SEC, NFA FINRA cyber security policies using an integrated risk management approach. Because the threat environment is continually changing, organizations must perform risk assessments on a regular basis to ensure that their technical controls and SEC, NFA FINRA cyber security policies and procedures are up to date.


Staying compliant with FINRA and SEC regulations is challenging, but following the best practices outlined above is certainly a good start. At Confident Governance, our mission is to assist Companies worldwide be truly Confident in their Risk, Compliance and Governance initiatives. Using the latest in Emerging Technologies like Artificial Intelligence, Big Data Analytics and Cloud Computing, the Governance platform offers Transparency and Real time Reporting to the Board and the C-Suite into the critical Business Processes. All of this into an Agile, Mobile, Secure and Scalable platform to assist Risk, Governance and Compliance officers to govern their Processes Anytime, Anywhere and on Any device with intuitiveness, which has been our mission to propel Companies towards Growth, Sustainability and increasing Revenues.


Let’s stay connected for Governance best practices for 2019 and beyond!


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