FINRA CEO Testifies before House Financial Services Committee (with Lofchie Comment)

The House Financial Services Committee held a hearing titled, "Oversight of the Financial Industry Regulatory Authority," which examined FINRA's oversight of financial markets. FINRA CEO and Chairman Richard Ketchum was the sole witness at the hearing.

During the hearing, Mr. Ketchum stated that FINRA will not move forward with its Comprehensive Automated Risk Data System ("CARDS") proposal until it determined that concerns raised by market participants were addressed adequately.

SIFMA's Executive Vice President and General Counsel, Ira D. Hammerman, issued a statement commending FINRA for "recognizing the industry's concerns" regarding clients' sensitive information and the "burden of building yet another reporting system."

Lofchie Comment:Mr. Ketchum should be commended for taking a go-slow approach to the CARDS regulatory initiative given the reasonable concerns that have been raised with respect to it. There is nothing wrong with regulators proposing rules that meet opposition; the problem is when they don't listen to those opposing views that legitimately highlight problems. Mr. Ketchum's willingness to slow down on this issue is consistent with FINRA's ongoing effort to perform more economic analysis before it adopts new regulations, as discussed in the portion of his testimony titled "Rulemaking, Economic Analysis and Retrospective Rule Review." It is worth noting that Mr. Ketchum's written testimony provides a good description of FINRA's overall responsibilities."

See: Richard Ketchum's Testimony; House Financial Services Hearing Announcement; Hearing Memorandum; SIFMA Statement.