FINRA ADMITS CORONA VIRUS MIGHT AFFECT OVERSIGHT OF TRADERS
Brokerage firms all across the US are getting a break from their principal regulator as the spreading Covid-19 pandemic has been causing significant headaches across Wall Street.
On Monday, The Financial Industry Regulatory Authority (FINRA) said that it would give firms greater flexibility in administering agents working remotely and in migrating staff to transitory areas. The regulator also said it would consider granting increases for firms that need more opportunity to react to requests and document cutoff times or examinations.
The direction from FINRA is the most recent move by regulators to manage a mounting health emergency that is behind the steepest worldwide markets selloff in over 10 years. On its website, FINRA said that banks may need to change policies for regulating traders who are moved to remote workplaces or telecommuting due to the spreading of the virus. The moderator said it would give impermanent “regulatory relief to member firms from some requirements.”
In addition to more versatility for agents working remotely, FINRA further said that firms should consider the increased risk of cybersecurity issues, including making sure that virtual private networks are secure. According to FINRA, protecting investors means protecting their information, too. The FINRA Small Firm Cybersecurity Checklist encourages small firms in establishing a cybersecurity program to:
Identify and assess cybersecurity threats;
Protect assets from cyber intrusions;
Detect when their systems and assets have been compromised;
Plan for the response when a compromise occurs; and
Implement a plan to recover lost, stolen or unavailable assets.
Suspension of some requirements to update registration forms.
You must be registered with FINRA if you’re involved in the securities business of a firm, which includes salespersons, branch managers, department supervisors, partners, officers and directors. You are required to pass qualification exams to exhibit competence in your precise securities activities. Also, Broker-dealer firms must register a Form BD amendment and/or a Continuing Membership Application (CMA) depending on the type of registration information that requires updating. However, some of the requirements- mostly physical requirements will be suspended until further notice.
Firms should review their business continuity plans (BCP).
BCP procedures must be reasonably drafted so the firm can meet its existing duties to clients. A firm must reveal to its customers how its BCP addresses the potentials of significant business disruption and how the firms plan on reacting to events of several scopes. This BCP disclosure must be in writing to customers when they create their account, posted on the firm's website if they maintain one and sent to customers upon request. The BCP also must be made available always to FINRA staff if requested.
