“Restoring Trust in the Securities Market”: FINRA’s Outlook on CARDS & Data Collection

On May 19, 2014, the Financial Industry Regulatory Authority’s (“FINRA’s”) Chairman and CEO Rick Ketchum made his opening remarks to the assembly of financial professionals at FINRA’s Annual Conference in Washington D.C. The centerpiece of Ketchum’s speech was “restoring trust in the securities market,” and how a “data-driven approach” – represented in systems such as the Risk Control Assessment (“RCA”), and especially in the Comprehensive Automated Risk Data System (“CARDS”) – is the greatest focus of FINRA’s ongoing market monitoring and examination efforts. This blog post will particularly address Ketchum’s comments on FINRA’s outlook for the CARDS system.

The proposed CARDS system, lauded by Ketchum as potentially the “most important investor protection” tool in data collection for risk-based regulatory programs, will seek to “collect information…in a standard format across all firms on a regular basis” once it launches in 2015. With CARDS facing considerable critiques in the past, including over 800 comment letters from those in the broker-dealer world with "security, cost and operational concerns”, Ketchum noted that FINRA recently reached out to firms to establish “working groups” which will provide more feedback on the proposed system. Ketchum also confirmed that CARDS will launch in stages, with the option to send CARDS data through a clearing firm. FINRA hopes that “CARDS enables a more focused, less arduous examination process and vastly improves the speed with which we can quickly intervene to protect investors”.

For further information on this and other related subjects, please contact us at info@corecls.com or (619) 278-0020.

GENERAL DISCLAIMER: Information contained within this blog does not create a business-client relationship, and none of the content of this blog can be deemed to be consultive business advice.