Introduction
As a financial regulatory authority, FINRA or the Financial Industry Regulatory Authority plays a crucial role in monitoring and regulating the activities of companies and individuals involved in the securities industry. The organization is committed to ensuring that investors are protected from fraudulent activities and that the market operates in a fair and transparent manner.
What is FINRA?
FINRA is a non-governmental organization that is authorized by Congress to regulate and oversee the activities of broker-dealers, securities exchanges, and other participants in the securities industry. The organization is responsible for enforcing its own rules and regulations as well as those set by the Securities and Exchange Commission (SEC).
Why Was FINRA Created?
FINRA was created in 2007 as a result of the merger between the National Association of Securities Dealers (NASD) and the regulatory arm of the New York Stock Exchange (NYSE). The merger was aimed at creating a unified regulatory body that could better oversee the activities of the securities industry and protect investors from fraudulent activities.
What Does FINRA Do?
FINRA performs a wide range of functions, all aimed at ensuring that the securities industry operates in a fair and transparent manner. The organization’s core functions include:
Registration and Licensing
FINRA is responsible for registering and licensing broker-dealers, investment advisers, and other participants in the securities industry. The organization also maintains a database of registered individuals and firms, which is available to the public.
Enforcement
FINRA has the authority to investigate and enforce its own rules and regulations as well as those set by the SEC. The organization has the power to impose fines, suspend or revoke licenses, and issue cease-and-desist orders to firms and individuals who violate securities laws.
Education and Training
FINRA provides education and training programs to help individuals and firms in the securities industry understand the rules and regulations that govern their activities. The organization also provides resources to help investors make informed decisions about their investments.
Market Regulation
FINRA monitors the activities of securities exchanges and other market participants to ensure that the market operates in a fair and transparent manner. The organization also investigates potential market manipulation and other fraudulent activities.
Who Does FINRA Regulate?
FINRA regulates a wide range of participants in the securities industry, including:
Broker-Dealers
FINRA regulates broker-dealers, which are firms that buy and sell securities on behalf of clients. The organization ensures that broker-dealers comply with securities laws and regulations and that they operate in a fair and transparent manner.
Investment Advisers
FINRA also regulates investment advisers, which are firms that provide investment advice to clients. The organization ensures that investment advisers are registered and licensed and that they provide advice that is in the best interests of their clients.
Clearing Firms
Clearing firms are responsible for settling and clearing securities transactions. FINRA regulates clearing firms to ensure that they operate in a safe and sound manner and that they have adequate financial resources to meet their obligations.
Securities Exchanges
FINRA also regulates securities exchanges, which are the venues where securities are bought and sold. The organization ensures that securities exchanges operate in a fair and transparent manner and that they provide investors with access to accurate and timely information.
Conclusion
FINRA is a vital regulatory authority that plays a crucial role in monitoring and regulating the activities of the securities industry. The organization is committed to ensuring that investors are protected from fraudulent activities and that the market operates in a fair and transparent manner. By performing its core functions, FINRA helps to maintain the integrity of the securities industry and promote investor confidence.
