US FINRA 2023 priorities

On January 10, the Financial Industry Regulatory Authority, Inc. (FINRA) released its 2023 annual Report on Examination and Risk Monitoring Program (the Report). The Report distills findings from FINRA's regulatory operations programs, including Member Supervision, Market Regulation and Enforcement, to provide insight into FINRA's current regulatory focus and priorities.

The Report is intended to serve as a tool for member firms to strengthen their compliance programs as needed. Towards this end, for each topic covered, the Report identifies relevant rules; highlights key compliance related considerations; summarizes noteworthy findings or observations; outlines effective practices and identifies additional resources that may be helpful to member firms.

As stated in the news release announcing the Report's publication, while the Report includes a number of "perennially important topics," it also has been broadened by the addition of four new topics consisting of:

• Fixed Income – Fair Pricing
• Fractional Shares
• Regulation SHO
• Manipulative Trading

More generally, the topics covered by the Report are organized under five section headings consisting of:

• Financial Crimes
• Firm Operations
• Communications and Sales
• Market Integrity
• Financial Management

Of these, only the Financial Crimes heading is new. The Report states that its inclusion is intended to "highlight FINRA's increased focus on protecting investors and safeguarding market integrity against" the topics listed under this heading. Those topics consist of Anti-Money Laundering (AML), Fraud and Sanctions; Cybersecurity and Technological Governance and Manipulative Trading, which is a newly added topic.

While most of the covered topics are perennial concerns that have been addressed in prior Reports, the Report's coverage of even these topics frequently reflects new observations and considerations. As a result, FINRA member firms would likely benefit from a careful comparison of their current practices against all the relevant information identified in the Report, including topics covered in previous FINRA reports.