FINRA published today its Regulatory and Examination Priorities Letter for 2017. In many instances, FINRA includes brief observations about common weaknesses they observed during prior year’s exams. Firms are advised to use this letter to identify priorities applicable to their business and to strengthen their compliance, supervisory and risk management controls to protect investors, the markets and themselves.

FINRA has enhanced its risk-based surveillance and examination programs … to apply a nationally consistent approach to identify and focus on material conduct at firms based on our assessment of specified sales practice, financial, operational and market-integrity risks. This approach has improved our understanding of each firm’s business, permitting us to better tailor examinations and other regulatory responses to conduct that poses the greatest threats to investors or the market.

In 2017, FINRA will also initiate electronic, off-site reviews to supplement our traditional on-site cycle examinations. This program will enable FINRA to review selected areas, typically those covered in this letter, without going on site to the firm. Instead, FINRA will make targeted and limited information requests to firms and then analyze responses off site. We will conduct these off-site exams only on a select group of firms that are not currently scheduled for a cycle exam in 2017.

And now, FINRA’S REGULATORY AND EXAMINATION PRIORITIES FOR 2017

• High-risk and Recidivist Brokers
• Sales Practices

                Senior Investors

                Product Suitability and Concentration

                Excessive and Short-term Trading of Long-term Products

                Outside Business Activities and Private Securities Transactions

                Social Media and Electronic Communications Retention and Supervision

• Financial Risks

                Liquidity Risk

                Financial Risk Management

                Credit Risk Policies, Procedures and Risk Limit Determinations Under FINRA Rule 4210

• Operational Risks

                Cybersecurity

                Supervisory Controls Testing

                Customer Protection/Segregation of Client Assets

                Regulation SHO – Close Out and Easy to Borrow

                Anti-Money Laundering and Suspicious Activity Monitoring

                Municipal Advisor Registration

• Market Integrity

                Manipulation

                Best Execution

                Audit Trail Reporting Early Remediation Initiative and Expansion

                Tick Size Pilot

                Market Access Rule

                Trading Examinations

                Fixed Income Securities Surveillance Program