Overlay Logo

FINRA Issues 2023 Report on Exam and Risk Monitoring Program

Ross Marlin
Ross Marlin
Director, BD Compliance

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  • Fixed Income – Fair Pricing  —  includes incorrect determination of prevailing market price, outdated mark-up/mark-down grids, failure to consider the impact of mark-up on yield to maturity, and unreasonable supervision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.

2023 Report on FINRA’s Examination and Risk Monitoring Program
More from the blog