Providing Oversight to the Financial Industry Regulatory Authority

financialservices.house.gov

Cmte Financial Services (R)
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Providing Oversight to the Financial Industry Regulatory Authority

Washington, Sep 8 -

The Subcommittee on Capital Markets, Securities, and Investment held a hearing yesterday to provide oversight of the Financial Industry Regulatory Authority (FINRA), including its activities and policies as an independent, not-for-profit organization authorized by Congress to act as a self-regulatory organization (SRO) over the U.S. securities industry.

“As the primary regulatory authority for broker-dealers, FINRA plays an integral role in ensuring that capital markets are fair and efficient while protecting investors and other market participants. However, critics have noted that for the last decade, FINRA has engaged in mission creep and transformed itself from a traditional SRO into a quasi-governmental regulator more akin to a fifth branch of government, or a “deputy SEC.” said Subcommittee Chairman Bill Huizenga (R-MI). “Today, we welcome the testimony of Mr. Cook, which will give us an opportunity to examine the work that FINRA is doing to streamline and improve its operations, so as to better serve the broker-dealer community and its customers while ensuring market integrity and facilitating vibrant capital markets.”

Key Takeaways from the Hearing

Congress must make sure that FINRA, as a self-regulatory organization (SRO), remains accountable and transparent to those it regulates while being flexible to react and respond to changes in the market.

As an SRO, it is imperative FINRA incorporates member feedback, such as through FINRA360, to improve operations so it can better serve broker-dealers and their customers.

Topline Quotes from Witnesses

“FINRA is in the middle of a process of self-assessment and organizational improvement that will result in potentially transformational change. However, as we continue this exciting exercise, we will remain firmly focused on our core mission of protecting investors and market integrity while promoting vibrant capital markets. I look forward to working with Congress, other regulators, market participants, and the public to further these important goals.” – Robert Cook, President and CEO, Financial Industry Regulatory Authority