August 18, 2019

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Financial Industry Regulatory Authority, Inc (FINRA) Requests Comment on a Rule Proposal to Implement the Comprehensive Automated Risk Data System

In December 2013, the Financial Industry Regulatory Authority, Inc. released a concept proposal seeking comments on an initiative to implement the Comprehensive Automated Risk Data System (CARDS), which would be designed to collect information in a standardized format across all member firms. FINRA has now issued Regulatory Notice 14-37 in order to request comments on a proposed rule change that would implement CARDS.

The rule proposal reflects comments to the concept proposal. Under the proposed rule, CARDS would be implemented in two phases and would exclude from the required collection of information personally identifiable information (PII) for customers. The first phase would require approximately 200 carrying or clearing firms (i.e., firms that carry customer or non-customer accounts or clear transactions) to periodically submit, in an automated and standardized format, specific information that is part of their books and records relating to their securities accounts and the securities accounts for which they clear.

The information required to be submitted would include account profile information (excluding PII) and data relating to securities and account transactions and holdings and securities reference data, but would exclude information related to suitability. For all other securities accounts, the carrying or clearing firms would be required to submit these data elements as part of the first phase of CARDS. The second phase would require fully disclosed introducing firms to submit specified account profile-related data elements to FINRA. 

Click here for Regulatory Notice 14-37.

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About this Author

Ross Pazzol, Financial Institutions lawyer, Katten Muchin Law firm

Ross Pazzol’s practice encompasses a broad range of financial services matters. He focuses primarily on the regulation of broker-dealers, futures commission merchants, investment companies and hedge funds, clearinghouses and investment advisers.

Ross has significant experience in all aspects of exchange-traded and over-the-counter derivatives transactions as well as securities financing and lending arrangements, and assists clients in understanding the documentation issues and regulatory and credit considerations that arise in connection with...