FINRA's Technology Transformation Examined

Michael Volpe

After spending a decade in finance, Michael Volpe has been a freelance investigative journalist since 2009. His work has been published locally in the Chicago Reader, Chicago Crusader, Chicago Heights Patch, and New City. Nationally, Volpe's work has appeared in a wide variety of publications including the Washington Examiner, the Daily Caller, Crime Magazine, the Southern Christian Leadership Conference Newsletter, and Counter Punch. Volpe has been recognized by whistleblowers as leading the charge in getting their stories out. His first book Prosecutors Gone Wild was published in October 2012, his second book The Definitive Dossier of PTSD in Whistleblowers was published in February 2013 and his third book Bullied to Death was published in August 2015.

FINRA Financial Industry Regulatory Authority

FINRA’s Technology Transformation Examined

June 14, 2019

The world is going digital and FINRA, the Financial Industry Regulatory Authority, is moving proactively in that direction.

The latest FINRA podcast, Unscripted, had as guests, Ivy Ho the Vice President of Technology and FINRA and Jen Duran, the Director of Digital Experience at FINRA, as guests.

Ivy Ho
Ivy Ho

The two discussed the FINRA digital initiative called Digital Experience Transformation (DXT).

DEX is a four-year project they noted which focuses on seven areas: Simplified User Experience, Flexibility and Automation, Efficiency, Self-Service, Proactive Compliance, and Collaboration.

“DXT is a multi-year initiative to transform the digital interaction between the industry and FINRA. So, the scope of the project consists of a set of technology solutions that transforms our externally phasing applications through a four-year initiative. The goal of the initiative is to address a significant opportunity for the membership to reduce their compliance costs as well a more proactive and effective compliance program.” Ho said.

Ho said FINRA’s dialogue with member firms identified several areas where technology could be strengthened.

“There are two key themes that come up consistently,” Ho said, “the first is the need for more integrated tools so that they can have a more holistic view of what they need to do so they can stay compliant with FINRA rules and the second one is that the industry is increasing leveraging technology and advanced analytics to proactively manage compliance programs, to be more data driven.” Ho noted.

She noted further that they need access to advanced analytics from FINRA data “more flexibly”, by this means not in reports but digitally. Data is available digitally in a very limited way by FINRA currently; one goal is to make more data available digitally.

DXT is running at the same time another FINRA transformation called the Central Registration and Depository (CRD) transformation.

FINRA Unscripted had a podcast on that in March 2019.

The CRD is “a multi-year project that will reimagine the CRD system into a modernized platform that features a simpler and more streamlined experience for all users, providing firms with a more flexible and efficient way to get their compliance work done. For additional information and updates regarding CRD Transformation,” according to its website.

As the old system was being transformed into the new system, Duran noted that there will be some similarities to the DXT transformation.

“We learned a lot by watching the CRD transformation over the past year, in terms of how the systems ran in parallel, so the new and old are running together: how users are interacting with both of those.” Duran said.

Ho said that the DXT would be incremental with the third quarter of 2019 introducing some new technology and systems but like with CRD, many of the old systems will continue to run as technology is introduced “incrementally.”

FINRA is a self-regulatory organization (SRO). It was created in 2007 when the regulatory arms of the NYSE and the NASD merged.

Ho and Duran said the DXT relied on speaking with member firms, of all sizes, to get their input on their technology needs.

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