The 2023 Report on FINRA’s Examination and Risk Monitoring Program (the Report) provides member firms with insight into findings from the recent oversight activities of FINRA’s Member Supervision, Market Regulation and Enforcement programs (collectively, regulatory operations programs). The Report reflects FINRA’s commitment to providing greater transparency to member firms and the public about our regulatory activities as well as the increasing integration among our regulatory operations programs. We hope that this integrated approach will also increase the Report’s utility for member firms as an information source they can use to strengthen their compliance programs. As a result, this year’s Report addresses a materially broader range of topics than in prior years (particularly in the Market Integrity section). Additionally, the Report introduces a new Financial Crimes section, consisting of three topics—Anti-Money Laundering (AML), Fraud and Sanctions; Cybersecurity and Technological Governance; and Manipulative Trading—that highlight FINRA’s increased focus on protecting investors and safeguarding market integrity against these ongoing threats. As in the prior two years, for each topic covered, the Report:
- identifies the relevant rule(s);
- highlights key considerations for member firms’ compliance programs 1 ;
- summarizes noteworthy findings or observations from recent oversight activities;
- outlines effective practices that FINRA observed through its oversight activities; and
- provides additional resources that may be helpful to member firms in reviewing their supervisory procedures and controls, and fulfilling their compliance obligations.
FINRA’s intent is that the Report be an up-to-date, evolving resource or library of information for member firms. To that end, the Report builds on the structure and content in the 2021 and 2022 Reports by adding new topics ( e.g ., Fixed Income Fair Pricing, Manipulative Trading) denoted NEW FOR 2023 and new material ( e.g. , findings, effective practices) to existing sections where appropriate. (New material in existing sections is in bold type.)
As always, FINRA welcomes feedback on how we can improve future publications of this Report. Please contact Steve Polansky, Senior Director, Member Supervision at (202) 728-8331 or by email ; or Rory Hatfield, Principal Research Analyst, Member Supervision at (240) 386-5487 or by email .
TABLE OF CONTENTS
- Financial Crimes NEW FOR 2023
- Firm Operations
- Consolidated Audit Trail (CAT)
- Best Execution
- Disclosure of Routing Information
- Fixed Income – Fair Pricing NEW FOR 2023
- Fractional Shares: Reporting and Order Handling NEW FOR 2023
- Regulation SHO – Bona Fide Market Making Exemptions and Reuse of Locates for Intraday Buy-to-Cover Trades NEW FOR 2023
- Financial Management
1 These considerations are intended to serve as a possible starting point in considering a firm’s compliance program related to a topic. Firms should review relevant rules to understand the full scope of their obligations.