State regulators continue to oppose Finra remote supervision pilot program
State securities regulators continue to resist Finra’s efforts to allow brokerages to conduct online supervision of branch offices.
The state regulators’ organization, the North American Securities Administrators Association, has been a consistent opponent of the Financial Industry Regulatory Authority’s proposal to establish a voluntary three-year pilot program for remote inspections.
The proposal, introduced last year, builds on a temporary remote-inspection rule that has been in place since November 2020, when most brokerages personnel were working from home due to the coronavirus pandemic. The temporary rule expires at the end of the year.
Finra modified the pilot program proposal over the course of several versions to strengthen risk assessment for participating firms in response to criticism from NASAA, the Public Investor Advocate Bar Association and others.
The changes haven’t assuaged state regulators.
“We have previously noted in comment letters that we appreciate Finra incorporating some of our suggestions, even as we have encouraged Finra to incorporate still more and the SEC to require them to do still more,” NASAA spokesperson Fred Baldassaro said in a statement Thursday. “We will continue to work with Finra.”
Earlier this week in her inaugural speech, new NASAA President Claire McHenry said it is state regulators’ “understanding of the importance of the role of supervision and compliance that has informed our comments to the SEC on Finra’s pilot on remote supervision.”
Finra filed the latest iteration of the proposal with the Securities and Exchange Commission earlier this year. The SEC, which must approve Finra rules, took public comments on the proposal in August.
In an Aug. 29 comment letter, former
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