FINRA Requests Comment on Financial Technology Innovation in the Broker-Dealer Industry


On July 30, 2018, the Financial Industry Regulatory Authority (“FINRA“) published a Special Notice, in response to requests from the public, “seeking comments on how FINRA can support fintech development consistent with [its] mission.” In addition, FINRA requested “specific comment on certain fintech areas, including the provision of data aggregation services, supervisory processes concerning the use of artificial intelligence, and the development of a taxonomy-based machine-readable rulebook.”

The Special Notice recites a number of the steps FINRA has already taken to improve its understanding of how fintech is “transforming the securities industry and to provide information to investors and [its] members about these developments.” Among other things, the Special Notice references FINRA’s report: “Distributed Ledger Technology: Implications of Blockchain for the Securities Industry” (the “Report“).

The Report surveys some of the operations and regulatory considerations for broker-dealers seeking to be involved in the digital asset space. The Report leaves no doubt that broker-dealers that wish to organize and operate a platform for transactions in crypto-currency securities face many challenges that must be addressed with FINRA.

The Comment Period Expires on October 12, 2018.