A recent conference in Washington, D.C. brought together two of the top leaders with the Securities and Exchange Commission and the Financial Industry Regulatory Authority for a discussion of various issues in the financial industry, reports InvestmentNews.
SEC commissioner Hester Peirce and FINRA President and CEO Robert Cook were among those interviewed at the Financial Services Institute’s (FSI) Capitol Hill Day by FSI President and CEO Dale Brown.
Among the topics they addressed was the importance of the partnership between their two agencies in regulating the nation’s financial markets. While the SEC and FINRA both have regulatory responsibility, FINRA is a self-regulatory organization (SRO) that primarily regulates brokerage firms and professionals while the SEC oversees the entire securities industry. Peirce discussed the need for the SEC to work in conjunction with SROs such as FINRA as well as state regulators. At the federal level, she said they must consider who is the right regulator for the various financial products, and at the state level, they are the “eyes and ears, but we need to do a better job working with these regulators,” she said.
Peirce said that the SEC had perhaps offloaded too much responsibility to FINRA. “We need to keep a pulse on the markets, so shouldn’t give everything to FINRA,” she said, noting that the SEC may have ceded too much responsibility around data, short selling, and certain aspects of regulatory work.
Cook said that SRO’s such as FINRA can help bring industry expertise to today’s complicated markets, saying “we do need a regulatory structure that has more industry voice.” He added, “SROs can run utilities, reporting systems, and arbitration, which the SEC doesn’t typically run.”
Cook also discussed the recently announced “FINRA Forward” initiatives that are aimed at empowering member compliance, addressing cybersecurity and fraud, and modernizing rules. “Are the rules getting in the way of running modern business?”, Cook said. “We don’t want to impose unnecessary burdens during our oversight activity.”
Peirce and Cook cited the goal of having more Americans involved in capital markets. The US markets “are the envy of the world,” and have good regulatory framework, Peirce said, while adding, “We would like to have full involvement by the public in our capital markets,” Peirce said.
Also discussed was the newly appointed Chair of the SEC, Paul Atkins. Addressing FINRA’s working relationship with Atkins, Cook said, “Some of his priorities and direction are exciting to us.” Under Atkins, Cook expects the SEC to modernize and thoughtfully tailor rules, as well as promote innovation, which may “trickle down” to FINRA. Asked what the industry can expect from Atkins, Peirce stated that he will be “very different. Atkins has a lot of experience. He’s familiar with lots of issues before us, such as market structure. Also, capital formation is back on the agenda: Why are there not as many companies going public?”
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