finra regulations

FINRA (Financial Industry Regulatory Authority) shared its annual regulatory and examination priority guidelines, focusing on the risk factors and possible fraud issues in 2014.

According to Richard G. Ketchum, FINRA’s Chairman and CEO in a recent statement, “FINRA’s examination priorities for 2014 provide the industry with a road map of issues that may be of risk to the investing public. By providing clear and detailed guidance to firms, we hope to not only support firms’ compliance efforts but also to alert firms to the issues we have identified as the most salient risks to investors and the integrity of our markets.”

The main factors that FINRA chose to address this year are the overall business conduct, financial and operational concerns, fraud and the priorities of the regulation.

In 2014, forex brokers are the main concern for FINRA. . “A small number of brokers have a pattern of complaints and disclosures for sales practice abuses and could harm investors as well as the reputation of the securities industry and financial markets,” the report warns.

Last year, FINRA came with the new program of “High Risk Broker”,  where a designated team work with brokers that has been marked as problematic and dangerous.

FINRA also worries about the security of the cyber space. It is becoming more and more difficult to control and secure the financial world online.

According to the FINRA letter, “Cybersecurity remains a priority for FINRA in 2014 given the issues reported across the financial services industry. In recent years, many of the national largest financial institutions were targets for disruptions through a range of different types of attacks.”

FINRA recommends brokers to review the way they keep their books and records, to make sure that the company has the proper experience and be prepared in accordance with US Generally Accepted Accounting Principles (GAAP).

 

Lastely,  forex brokers are asked to properly calculate and organize net capital and be clearly aware of the Net Capital Rule – created and enforced by the SEC. 

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