May 23, 2022

Volume XII, Number 143

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May 23, 2022

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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.

©2022 Katten Muchin Rosenman LLPNational Law Review, Volume IV, Number 276
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About this Author

Our Financial Services Practice advises a broad spectrum of domestic and international fund managers, trading advisors, banks, brokerages and proprietary trading firms in all aspects of exchange-traded and over-the-counter commodities, securities and derivatives transactions. We help clients find business-based solutions and make business-driven decisions that are in compliance with applicable regulatory requirements. Our lawyers have extensive experience in the financial markets and are fully attuned to the need to provide advice quickly and efficiently in light of the time-sensitive and...

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