FINRA Examines RegTech

In a new report, FINRA examined the emergence and adoption of technology-based innovations for regulatory compliance ("RegTech") by broker-dealers. FINRA highlighted five areas where RegTech tools are being applied: (i) surveillance and monitoring, (ii) customer identification and AML compliance, (iii) regulatory intelligence, (iv) reporting and risk management, and (v) investor risk assessment.

FINRA reported that market participants are investing in RegTech tools that utilize cloud computing, big data analytics and machine learning to improve compliance efforts. FINRA stated that RegTech tools "allow a greater volume and variety of information to be readily reviewed," and that new technology is being leveraged to automate processes involved in (i) risk-data aggregation, (ii) risk metrics creation and monitoring, and (iii) regulatory reporting. According to the report, RegTech tools can provide firms with better risk management, fewer false alerts and