The Financial Industry Regulatory Authority announced Thursday a multi-pronged plan to overhaul its registration and disclosure programs, including its Central Registration Depository — the “backbone” of BrokerCheck — with the first phase being a new WebCRD interface.
The new interface, which goes into effect on June 30, is one in a series of changes that FINRA plans to make to the CRD system in order to “increase the utility and efficiency of the registration and disclosure process for firms, investors and regulators, as well as to reduce compliance costs for firms.”
FINRA said that it expects those changes to be complete in 2021.
Brad Bennett, former head of FINRA’s enforcement division, told ThinkAdvisor Thursday that the initiative “will solidify BrokerCheck as the gold standard for disclosure on registered firms and representatives, and should provide significant efficiencies for FINRA’s member firms.”
WebCRD, Bennett explained, “is only accessible by firms and regulators as it is designed to facilitate the processing of form filings, fingerprints, qualification exams and continuing education.”
FINRA’s new WebCRD interface is designed “to give more immediate responses to firms about potential red flags in their submissions,” Bennett said.
The CRD is the central licensing and registration system that FINRA operates for the U.S. securities industry and its regulators and that “provides the backbone” of BrokerCheck, FINRA said.
“This important initiative will strengthen an essential function of the securities industry,” said Robert Cook, FINRA’s president and CEO, in a statement. “The transformation will allow FINRA to develop systems that help firms effectively maintain compliance programs and reduce compliance costs, while continuing to operate and enhance BrokerCheck as an essential tool for investors.”
FINRA notes that the broker-dealer self-regulator works closely with the Securities and Exchange Commission and the North American Securities Administrators Association on policy and program requirements for the disclosure systems.
“The CRD is an important tool for the financial services industry, regulators and investors,” said Joseph Borg, NASAA president and director of the Alabama Securities Commission, in a statement. “We applaud FINRA for undertaking this initiative to upgrade the system’s operations.”
Securities firms use the disclosure systems, FINRA states, to register and maintain the records of associated persons who operate within the securities industry, and investors use them — through BrokerCheck — to research the professional backgrounds of brokers and brokerage firms.
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