Wall Street's industry-funded watchdog is developing a new rule that would require clearing firms to regularly provide it with data about brokerage transactions, U.S. regulators said on Tuesday.
The Financial Industry Regulatory Authority would use that information to conduct more robust examinations of the securities brokerage industry, said Richard Ketchum, the regulator's chairman and chief executive.
FINRA will unveil the plan in a draft proposal late this year or in January, said Ketchum, speaking at the Securities Industry and Financial Markets Association annual meeting.
Such a requirement could ultimately boost existing efforts at FINRA to amass and analyze data about brokerages in efforts to check up on their operations. FINRA, which oversees more than 4,190 brokerages and 635,000 brokers, regularly examines firms to see if they are complying with industry rules.
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In recent years, FINRA has been requesting increasing data from brokerage firms—everything from customers' account histories to procedures for supervising brokers—so that its examiners can conduct more targeted reviews when visiting firms in person.
The effort has led to more efficiency among examiners, the regulator has said, who can then target their in-person efforts where they are needed most, such as at some branch offices where risky practices among staff may be prevalent.
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Amassing even more data from clearing firms would bolster FINRA's efforts and ensure that examiners are even more well-versed in a firm's business, Ketchum said.