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Regulation and Compliance > Federal Regulation > FINRA

FINRA Developing Machine-Readable Rulebook

By Melanie Waddell

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The Financial Industry Regulatory Authority is developing a machine-readable rulebook to allow quick access to 40 of its most popularly searched rules.

FINRA’s machine-readable rulebook initiative “is designed to enhance firms’ compliance efforts, reduce costs, and aid in risk management by making the rulebook more easily accessible and by facilitating efforts to automate compliance functions,” FINRA said. “These improvements can, in turn, support investor protection and market integrity.”

The rulebook, according to FINRA, includes an embedded taxonomy — a method of classifying and categorizing a hierarchy of key terms and concepts — that has been applied to the 40 rules.

“Specifically, we applied, or ‘tagged,’ the taxonomy terms” that were developed to the 40 rules, FINRA said.

FINRA announced that it has also created a prototype of a rulebook search tool — the FINRA Rulebook Search Tool, or FIRST.

FINRA states that it is launching the FIRST search feature through a user interface on the FINRA website.

“In addition, FINRA is offering access to the taxonomy terms that have been tagged to each of the 40 rules through an Application Programming Interface (API),” the broker-dealer regulator said.

The 40 FINRA rules tagged as part of the initiative include 2090 — Know Your Customer; 2111 — Suitability; 2210 — Communications with the Public; 8312 — FINRA BrokerCheck Disclosure.

FINRA is seeking comment until Dec. 20 on the rulebook initiative, “including the development of the taxonomy, the enhanced search features available through FIRST, the content available through the API, and any potential benefits or challenges associated with the overall user experience,” the broker-dealer regulator said.

FINRA began exploring the potential benefits of a machine-readable rulebook, in part, through the prior issuance of a special notice on financial technology innovation in 2018.

Melanie Waddell

@Think_MelanieW

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