FINRA Reviews Comments on Machine-Readable Rulebook

Access to the taxonomy terms that have been tagged to each of the 40 rules through an application programming interface (API) is also available online.

Atabaki noted that FINRA has applied the rulebook “to 40 rules, but those 40 rules account for a significant portion of the rules that users typically view. So, through a prototype, and limited in number, these particular tags that we’ve selected for these 40 rules will give us a broad insight at the way users are going to navigate our Rulebook.”

Comments will provide feedback on further development of the taxonomy terms, the use and design of the prototype search tool, the API system, and any potential benefits or challenges associated with the overall user experience, according to FINRA.

Once FINRA evaluates “all of the feedback that we have received, then we’re going to have to determine whether to apply the tags to the remaining FINRA Rules and how to do that,” Atabaki  said.

As FINRA stated last October, the 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.”

During the podcast, Haime Workie, head of FINRA’s Office of Financial Innovation, said that an analysis performed by FINRA’s Office of the Chief Economist found that “FINRA member firms of various sizes, business models, stand to gain from FINRA’s Machine-Readable Rulebook Initiative. By one estimate using a survey that was put out, there’s indications that there may be savings to the industry as much as 8% of the FINRA-related compliance costs. But just as importantly as the cost savings, there’s also the potential for a more efficient and effective compliance programs for firms as well.”