On January 9, FINRA
released a
report on regulatory oversight titled “2024 FINRA Annual Regulatory Oversight Report.” The report integrates FINRA’s regulatory operations programs as a source of information for firms to strengthen their compliance standards. The report outlines new topics, including Crypto Asset Developments, OTC Quotations in Fixed Income Securities, Advertised Volume, and the Market Access Rule.
With respect to Crypto Asset Developments, the report focuses on surveillance themes and effective practices including best practices for due diligence. On the topic of OTC Quotations in Fixed Income Securities, the report highlights amendments to the rules governing publication of quotations by broker-dealers in a quotation medium. Further, with respect to Advertised Volume, FINRA highlights Rule 5210, which prohibits member firms from publishing transactions that are not believed to be a bona fide purchase or sale of a security.
The report notes that the SEC’s Market Access Rule prohibits firms that provide market access from “jeopardiz[ing] their own financial condition.” Findings include insufficient controls and failure to consider additional data. Effective practices include pre-trade fixed-income financial controls and soft blocks, among others. The report also covers several other topics including Cybersecurity, AML Fraud and Sanctions, Reg BI and Form CRS, and Consolidated Audit Trail.
