On January 10, 2023, FINRA published its 2023 Report on its Examination and Risk Monitoring Program, identifying key areas of focus for broker-dealer exams this year.  The Report covered 24 different topics related to core compliance responsibilities of broker-dealers and included four new focus areas: Manipulative Trading, Fixed Income – Fair Pricing, Fractional Shares, and Regulation SHO.

The Report included the following comments regarding the new risk areas:

• Manipulative Trading  —  includes inadequate written supervisory procedures, non-specific surveillance thresholds, and surveillance deficiencies
• Fixed Income – Fair Pricing  —  includes incorrect determination of prevailing market price, outdated mark-up/mark-down grids, failure to consider the impact of mark-up on yield to maturity, and unreasonable supervision
• Fractional Shares — includes reporting failures and inadequate supervisory systems and procedures
• Regulation SHO  — includes findings on non-bona fide market making and impermissible reuse of locates

The Report also introduced a new Financial Crimes section consisting of three topics — Cybersecurity and Technological Governance; Anti-Money Laundering, Fraud and Sanctions; and Manipulative Trading. Other key areas addressed by the Report include complex products; Reg BI and Form CRS; and mobile apps.