From: Reuters/Financial Regulatory Forum
By Stuart Gittleman, Compliance Complete
The Financial Industry Regulatory Authority is developing a suite of “big data” information sources and analytics to improve regulatory oversight of securities firms, according to Carlo di Florio, FINRA’s chief risk officer and head of strategy.
Leveraging technology and analytics can make for a “unique moment in regulation [that lets regulators] see things they couldn’t have seen or understood as well before,” di Florio said at an event this week hosted by the Securities Industry and Financial Markets Association compliance and legal society.
Making better use of “big data,” an idea FINRA chief executive Rick Ketchum has been championing, can better focus FINRA’s resources by informing the regulatory process, di Florio said.
It can also pinpoint particular brokers, products and customer accounts that raise red flags for regulatory analysts, but the aim is not to use FINRA’s resources to identify potential deficiencies that firms would have been unlikely to find on their own in order to bring enforcement actions, di Florio said.
The tools can help drill down to individual brokers and customer accounts to identify individual instances of risks such as suitability and concentration risk, especially for seniors, private offerings and day-trading vehicles like certain ETFs.
Di Florio, who until last year headed the Securities and Exchange Commission Office of Compliance Inspections and Examinations, oversees four FINRA offices: risk, emerging regulatory issues, enterprise risk management (“ERM”) and strategy.
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