FINRA or the Financial Industry Regulatory Authority, Inc. is a private company that acts as an SRO or self-regulatory organization. It is the successor to NASD or the National Association of Securities Dealers, Inc. Although often mistaken for a public or governmental agency, FINRA is in no way associated with the United States government. It is a private company in charge of regulating the market under contract with the trading markets and brokerage houses.
FINRA members are regulated through the application and adoption of rules, regulations and policies that govern the business conduct and ethics of its members. Usually advises the Securities and Exchange Commission. FINRA also facilitates binding arbitration services in which investors are forced to agree and agree, rather than file their disputes and complaints against Wall Street brokers and companies.
FINRA focuses on overseeing all security firms doing business with the public, providing professional training, facilitating testing and licensing of registrants, arbitration and mediation. In addition to market regulation by agreement for NASDAQ, New York Stock Exchange (NYSE), International Securities Exchange, American Stock Exchange and other public service companies, such as Trade Reporting Facilities, and other OTC operations.
FINRA was established through the consolidation of NYSE Regulation, Inc., New York Stock Exchange and NASD. The consolidation and merger was approved by the Securities and Exchange Commission and became effective on July 26, 2007.
NASD believes that the regulatory merger and consolidation will increase effective, consistent and efficient regulation of securities firms, allow securities firms to save on costs, and strengthen market integrity and investor protection.
NASD also stated that the additional benefits of FINRA are combining technologies, making the regulatory system more efficient, and allowing the organization of a single set of examiners and a set of rules with corresponding areas of expertise within a single self-regulatory organization.
With due regard to the merger, the consolidation of regulatory functions is also an important step in making the self-regulatory system not only more effective, but also more efficient in protecting investors. FINRA and the SEC will work closely with each other to get rid of unnecessary duplicative regulations, including strengthening and consolidating what have been two separate and different member rulebooks and compliance systems.
* FINRA Licensing and Regulatory Features *
FINRA controls the trading of corporate bonds, stocks, options, securities futures, with authority and control over the operation and activities of more than 5,100 brokerage houses, 173,000 branches and more than 676,000 registered representatives of securities firms. All companies that are not under the control of another SRO must be members of FINRA.
FINRA licenses individuals and admits and registers companies in the financial industry. It writes rules to manage its behavior, analyzes its compliance and is governed by the Securities and Exchange Commission to supervise and discipline registered member firms, as well as their representatives who do not adhere to federal securities law and rules and regulations. . by NASD.