Oyster Consulting Blog

At a time when new financial regulations seem to wait around every corner, having a crystal ball to see exactly what concerns and changes lie ahead would be extremely helpful! Sadly, there are no magical remedies to see the future. At Oyster, we spend countless hours reviewing regulatory information, industry changes and speaking with our friends to help our clients prepare for and protect their firm’s future by understanding how to comply with regulation and mitigate risk.  

One resource we use is FINRA’s Annual Regulatory and Examination Priorities Letter. Recently released on January 31, their 2012 letter provides a view into  some financial regulations that most interest FINRA this year. And for regulatory terms, that level of foresight provides some planning insight. 

FINANCIAL REGULATION DEVELOPMENTS

After reading the 2012 letter, we immediately noticed that the Regulatory Program Developments section is shorter and less change-riddled than in recent years. Rather than addressing Dodd-Frank implementation or new FINRA rules and departmental changes, this year’s developments focus on the Risk Control Assessment — a survey FINRA will use to better understand the “granular operational and risk data” that helps them determine each business model’s innate risk levels. You can expect to receive this survey in the first quarter. 

Along with the upcoming survey, this year’s letter addresses a number of examination priorities FINRA will focus on as they analyze members’ potential risky behavior. Over the next few weeks, we will highlight some of the critical priorities to address, including:

• Outsourcing
• Pricing of illiquid, hard-to-value securities
• 15c3-5
• High-Frequency Trading

 

In the meantime, if you have any questions about the letter or want to ensure you’re complying with all financial regulations, give me a call at 804.965.5403. I may not be able to exactly predict the future, and may not always be by my phone, but I will always call you back and provide practical advice for facing uncertain times. 

At Oyster Consulting, we help clients address a variety of regulatory compliance and operational requirements — and the laws often differ depending on whether we’re serving broker dealers, Registered Investment Advisors, hedge funds, private equity firms or mutual funds. Sometimes legislation impacts all of our clients. The new law out of Massachusetts is about to impact every financial institution that has customers living in the Bay State.

For the past few years, anyone with customers in Massachusetts has had to follow their state’s information security laws regarding confidential customer information, data in motion, data encryption and more — regardless of where the company is based. Starting March 1, however, a new law will require any third parties with confidential customer data to comply with the information security rules, too.

In other words, if you have customers in Massachusetts, you’d better be certain all of your third-party vendors — including offsite storage, outsourced operations, statement vendors, backup data, etc. — understand these regulatory compliance requirements. Whether you’re offshoring processes or outsourcing services, you and your organization could be legally liable for any potential information security breaches if you do not certify your vendors’ regulatory compliance.

As a third-party vendor, Oyster Consulting fully meets the Massachusetts standards, and we are working to help our clients ensure that their other relationships understand and abide by the information security laws, as well. If you’re unsure whether you and your vendors are in compliance, or you have questions on what they need to certify, don’t hesitate to call me at 804.965.5403. I may not always be by my phone, but I will always call you back.