What is FINRA and What You Should Know About Them


FINRA or Financial Industry Regulatory Authority, Inc. is a private company operating as SRO or self-regulatory organization. It is the successor to the NASD or the National Association of Securities Dealers, Inc. Although often mistaken as an official or government agency, FINRA is not in any way associated with the US government. It is a private company responsible for monitoring the market under contract with trading markets and brokerage firms.

FINRA members are rules on enforcement and adoption of rules, regulations and policies governing the business conducts and ethics of its members. It usually provides advice to the Securities and Exchange Commission. FINRA also facilitates binding arbitration services where investors are forced to accept and adopt, further to their conflicts and complaints against brokers and Wall Street stock company.

FINRA is focused on monitoring all security companies that conduct business with the public, which provides professional training, facilitate testing and issue licenses to registered persons, arbitration and mediation. And market management under the agreement on NASDAQ, New York Stock Exchange (NYSE), the International Securities Exchange, American Stock Exchange, and other utilities industry, as Trade Reporting Facilities and other OTC activities.

FINRA was formed by the merger of NYSE Regulation, Inc., New York Stock Exchange and NASD. Consolidation and merger was approved by the Securities and Exchange Commission and became effective July 26, 2007.

NASD believes that the rules of mergers and consolidation will increase the effective, consistent, and efficient management of securities companies, allowing securities companies to save on costs and strengthen market integrity and investor protection.

NASD also stated that the additional benefit of FINRA is to combine technology, make the regulatory system more efficient and allow the organization of one group of examiners and regulate the corresponding areas of expertise within a single self-regulatory organization.

With respect to the merger, merger control is an important step towards the self-regulatory system not only more efficient, but also more effective in protecting investors. FINRA and the SEC will work closely with each other to get rid of unnecessary duplication of regulations, including the strengthening and deepening of what has been two separate and different enforcement mechanisms and State rule books.

* FINRA Regulation and Licensing Features *

FINRA controls the trade in corporate bonds, stocks, options, securities futures, with authority and control over the management and operations of the 5100 brokerage firms, 173,000 branch offices and over 676 000 registered representatives of securities firms. All companies that are not under the control of another SRO needs to be a member of FINRA.

FINRA licenses individuals and admits, and register a company in the financial industry. It writes the rules to give their behavior, analyzes them to go, and is regulated by the Securities and Exchange Commission to oversee and discipline registered member companies as well as their representatives that fail to follow the federal securities laws and the rules and regulations of the NASD.


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