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Regulation and Compliance > Federal Regulation > FINRA

FINRA Delivered 'Unprecedented' Processing Volume in 2018

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The Financial Industry Regulatory Authority said Wednesday that “exceptional market volatility” helped the broker-dealer self-regulator generate an unprecedented amount of processing volume in 2018 — 66.7 billion electronic records per day, an 87.4% increase over the average daily volume in 2017.

FINRA’s “pioneering” cloud strategy allowed the regulator to handle the “record-setting” volume smoothly while continuing to perform vigorous regulatory oversight of securities trading.

FINRA’s “mission of protecting investors depends on our staying current with the market and continuously monitoring and analyzing for potential suspicious activity,” said Steve Randich, FINRA’s chief information officer, in a statement. “Cloud storage and processing responds instantly to elastic demand, providing our market-surveillance analysts with access to petabytes of data in seconds or minutes, even during periods of uninterrupted record-breaking activity.”

On a daily basis, FINRA receives order and trade data regarding 42,000 investment products from 17 securities exchanges, more than 60 alternative trading systems and almost 1,400 broker-dealer firms.

FINRA notes that it runs “almost 200 algorithmic ‘patterns’ to look for more than 300 potential threat scenarios including market manipulation, fraud, customer abuse, insider trading, abusive short selling, inaccurate trade reporting and other rule violations.”

Before implementing its cloud strategy, FINRA notes that it operated with a traditional data-center approach, in which capacity is limited to that of the servers in a data center.

“Had FINRA stayed with that approach, the volume from any one of the exceptional days of 2018 could have taken days to finish processing, an effect that would compound with heavy activity in succeeding days,” the regulator states. “As a self-regulatory organization, FINRA was able to make multi-year investments that supported this innovative regtech approach.”

FINRA’s recently released white paper outlines recent regtech developments in the securities industry and potential opportunities and implications these technologies may have for broker-dealers.

— Check out FINRA Releases 2019 Exam Priorities on ThinkAdvisor.


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