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November 03, 2015 at 09:58 AM
The Financial Industry Regulatory Authority’s Comprehensive Automated Risk Data System proposal, or CARDS, “is not going any further,” but the self-regulator will continue to be “dedicated” to using data and “more advanced analytics to be a smarter, more efficient” regulator, Susan Axelrod, FINRA’s executive vice president of regulatory operations, said Tuesday.
Speaking during a question-and-answer session at the National Society of Compliance Professionals annual meeting at National Harbor, Maryland, just outside Washington, Axelrod said that data analytics has been “front and center” in FINRA CEO Richard Ketchum’s mind, and that “a lot more work will continu[e] in that space for years to come,” even after Ketchum departs next year.
Ketchum announced on Oct. 30 that he will retire in the second half of next year. Ketchum told lawmakers in May that the controversial CARDS plan was under review, and that it would not move forward until all the security concerns were addressed.
CARDS faced fierce backlash from financial services firms and lobbying groups like the Securities Industry and Financial Markets Association and the Financial Services Institute.
“We’re going to continue to use data to help inform our exams,” Axelrod told ThinkAdvisor in a separate interview after the Q&A. “So issues like looking into the dual reps … will continue to be front and center for us. But CARDS is not moving forward. We’re going to look at other ways [to collect data] through our exam methods.”
The “good thing is we get a lot of data today — systemically and also through exams,” Axelrod said during the Q&A. FINRA may ask for more information, for instance, when performing exam sweeps. “We’re thinking about things like that; I still firmly believe that [data collection] this is the path of the future, and that firms are being better about data analytics.”
Axelrod noted FINRA’s ongoing focus on risk-based exams, stating that FINRA and examiners are “much more focused on the business at hand—[looking at] new areas of [a firm’s] business, issues of financials and we require [examiners] to think differently. Changing that culture takes time, but we’re working on it.”
She noted FINRA’s 15 offices around the country that house the self-regulator’s district directors “who are there to hear the feedback” from firms, adding that FINRA is contemplating giving firms that it will examine the name and contact information for the “exam manager and contact director” so that the firm can get information from the examiner before she comes onsite.
