There is currently an inflection point in the markets, which provides corporations with opportunity to collectively look at making changes that will regain investor confidence in the markets.
With such a complex market that is moving at a rapid pace, investors are facing a wide array of new and complicated products with features and risks. Consequently, investors are hesitant to return to the market, said Richard Ketchum, chairman and CEO of Financial Industry Regulatory Authority.
"So how do we rebuild investor confidence in a market that is so complex and volatile? The answer, I believe, lies in doing a better job of anticipating problems before they occur—both on the regulatory side and on the firm compliance side," Ketchum explained.
He added, "I want to address how we can help investors learn how to make thoughtful, knowledgeable decisions about their investments and better understand and manage the risk they take on."
For instance, by the end of the year, FINRA plans to begin its next phase of the risk-based exam program.
Instead of using a standard set of exam questions and prescriptive review steps, staff involved in the pilot arrives at an exam armed with more firm-specific data, which has been uploaded from the firm and analyzed before the exam.
Additionally, changes will occur in their membership application program.
"Keeping up with computerized trading and market structure changes is a never-ending challenge for FINRA and other regulators. And while we may not be able to prevent a technology failure from occurring, our job as a regulator is to implement programs to minimize the impact of a failure and head off widespread market disruption," Kethcum stated.