Trends in Broker-Dealer Regulatory Compliance and Technology: A Firm58 Study

Executive Summary

The Securities Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have clearly demonstrated that the regulatory environment is much stricter than that of years past. As proof of its commitment to enforcing the industry’s “failure to supervise” violations, the SEC filed 134 broker-dealer enforcement actions in 2012, a 19% increase from the year prior. Additionally, regulatory leadership has indicated the trend will continue through 2013 and beyond. As of July 15, the SEC brought charges against 157 entities and individuals.

To gauge sentiment around today’s regulations, what brokerages are doing to stay compliant, and their thoughts on surveillance technology, financial management software company Firm58 conducted a round table of broker-dealer compliance officers. Firm58 found that compliance officers, despite the industry’s historical reluctance to leverage third party systems, are keenly aware of today’s increased regulatory scrutiny and are thus becoming more amenable to cloud based solutions in order to reduce risk in the quickest time possible.