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Regulation and Compliance > Federal Regulation > FINRA

FINRA Chief to Testify in House

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The House Financial Services Capital Markets Subcommittee plans to hold an oversight hearing May 1 regarding the Financial Industry Regulatory Authority, which will likely probe the self-regulator’s controversial Comprehensive Automated Risk Data System, or CARDS.

Ketchum was scheduled to testify before the House Financial Services Committee in mid-March regarding the CARDS plan, but the hearing was postponed.

The controversial CARDS plan would be a rule-based program that would allow FINRA to collect — on a standardized, automated and regular basis — account information, as well as account activity and security identification information, from firms.

FINRA is “looking very closely at the right way to move forward on data analytics and pulling this information in,” Ketchum told ThinkAdvisor in a March 17 interview. “We’re not saying that we got it right with respect to the first proposal, and we’re in close conversations with the industry to identify their concerns. CARDS as it exists now is unlikely to move forward.”

That being said, in pursuing FINRA’s “key effort, which is to put ourselves in a position to more quickly address issues of serious sales practice [malfeasance] and fraud, we’re going to continue to use data analytics to do that. So there will be a continuing conversation, and from there we’ll decide what to propose.”

Ketchum said in moving forward, FINRA is “very sensitive” to cyber threats and “re-engineering risk” concerns that have been raised regarding the other CARDS proposals. “We’re not going to move forward with anything that has material risk,” he said.


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