FINRA Regulatory Notice 13-42: Proposal to Develop Comprehensive Automated Risk Data System (with Lofchie Comment)

FINRA requested comments on a concept proposal to develop a new Comprehensive Automated Risk Data System ("CARDS"). CARDS would be a rule-based program that would allow FINRA to collect on a standardized, automated and regular basis, account information, as well as account activity and security identification information that a firm maintains as part of its books and records.

Lofchie Comment: This looks like a significant technology build and expansion of regulatory reach (described in the proposals as "a broad ranging initiative supporting a comprehensive approach to supervising firms"). That said, according to the notice, FINRA has "tested the feasibility" of the proposed CARDS system with two major clearing firms and believes that it could be implemented "through a phased approach over a reasonable period of time." Firms should focus closely on this concept release, which looks as if it might require expenditure in IT resources at a time when firms are not making much money and are devoting IT resources to compliance with all of the other new requirements.

See: FINRA Regulatory Notice 13-24; Press Release.