By: Alexandra Hughes, Fall 2015 Student Intern
FINRA (the Financial Industry Regulatory Authority) is made up of approximately 3,500 employees dedicated to safeguarding investors and regulating the securities industry. In pursuit of that that purpose, FINRA writes and enforces its own body of rules and regulations specifically designed to make sure the securities industry operates effectively and efficiently, but also fairly and honestly. Because FINRA is a not-for-profit organization authorized by Congress rather than an actual arm of the government, FINRA serves as a neutral and independent check on the securities industry. FINRA governs approximately 4,015 securities firms and approximately 642,980 brokers. These brokers must be licensed and registered by FINRA and are required to pass qualification exams and keep up with continuing education requirements. FINRA conducted more than 4,500 broker exams in 2015.
In addition to FINRA’s licensing rules, FINRA also sets a standard for conduct in the securities industry. FINRA’s Code contains the following categories:
- General Standards
- Member Application and Associated Person Registration
- Duties and Conflicts
- Supervision and Responsibilities Relating To Associated Persons
- Financial and Operational Rules
- Securities Offering and Trading Standards and Practices
- Quotations and Transaction Reporting Facilities
- Clearing, Transaction and Order Data Requirements, and Facility Charges
- Investigations and Sanctions
- Code of Procedure
- Code of Arbitration Procedure
- Uniform Practice Code
- Code of Arbitration Procedure for Customer Disputes
- Code of Arbitration Procedure for Industry Disputes
- Code of Mediation Procedure.
FINRA’s Customer Code governs arbitrations between investors and brokers and/or brokerage firms and FINRA’s Industry Code governs arbitrations between or among industry parties. When FINRA makes a new rule or amends a rule, and the Securities and Exchange Commission (SEC) approves the rule, FINRA notifies its members and investors by publishing a Regulatory Notice. To learn more about FINRA as a rule maker, visit www.finra.org.