SIFMA Objects to FINRA Proposal Regarding CARDS Concept Proposal (with Lofchie Comment)
SIFMA submitted comments to FINRA regarding the concept proposal to develop a Comprehensive Automated Risk Data System ("CARDS"). The Association stated it cannot support the CARDS proposal.
The CARDS proposal would allow FINRA to collect on a standardized, automated and regular basis, information relating to account ownership, account activity and security identification. SIFMA stated that the current proposal lacks information about required data elements, data standardization, other technical details regarding the reporting platform, transmission methods, an analysis of other current and proposed reporting requirements, and an explanation of how the data will be stored, protected and used. SIFMA explained that without more robust information about data elements, SIFMA cannot properly conduct a cost-benefit analysis of the proposal.
SIFMA further addressed numerous issues from FINRA Regulatory Notice 13-42, challenging whether or not FINRA will follow the normal notice-and-comment rulemaking process in adopting CARDS. Before adopting new reporting requirements, SIFMA encouraged FINRA to work with the SEC and other SROs to ensure that the new CARDS reporting will not be "duplicative or superfluous" including overlap with the consolidated audit trail ("CAT").
Lofchie Comment: Financial regulators should take a breather on adding more reporting requirements until the ones adopted in the past several years are implemented and are made to function properly. While the regulators are fond of touting the benefits of information they collect, the reporting requirements are excessive. The result is that they create costs wholly beyond any benefits that they provide. In this regard, it is notable that the CFTC is voluntarily undertaking a review of its record-keeping requirements and the SEC should do the same (starting with Form PF).
See: SIFMA Comment Letter.See also: FINRA Regulatory Notice 13-42: Proposal to Develop Comprehensive Automated Risk Data System (with Lofchie Comment) (December 23, 2013).