FINRA Experiences Record Volume

Insurance oversight update
February 6, 2019
FINRA Gifting
February 20, 2019

2018 market volatility drives FINRA volume to new record

Exceptional market volatility generated an unprecedented amount of processing volume for FINRA in 2018. Was some of it yours?

It was a big year for market trades and for the Financial Industry Regulatory Authority (FINRA). In 2018, the Authority processed 66.7 billion electronic records per day, an 87.4 percent increase over the average daily volume in 2017.

This is not a story of bad actors acting badly. Rather, it is an acknowledgement by FINRA that technological changes enabled FINRA to manage sustained, high-volume activity “for days and even weeks at a time,” says CIO and Executive Vice President Steve Randich. Given FINRA’s mission, its success depends on “our staying current with the market and continuously monitoring and analyzing for potential suspicious activity. Cloud storage and processing responds instantly to elastic demand, providing our market-surveillance analysts with access to petabytes of data in seconds or minutes, even during periods of uninterrupted record-breaking activity.”

According to the Authority, FINRA receives order and trade data regarding 42,000 investment products from 17 securities exchanges, more than 60 alternative trading systems and almost 1,400 broker-dealer firms daily. It runs almost 200 algorithmic “patterns” to look for more than 300 potential threat scenarios including market manipulation, fraud, customer abuse, insider trading, abusive short selling, inaccurate trade reporting, and other rule violations.

2018 Volume Tops 2017 Activity by 87.4 Percent

 Year      Average Daily Records Processed (Billions)
2018 66.7
2017 35.6
2016 37.4
2015 42.3

If FINRA is in the cloud, what about you?

Here’s why FINRA says it moved to the cloud:

• Dynamic scalability was one of the key factors FINRA considered when it decided in 2014 to move 90 percent of its processing and storage work to the cloud by the end of 2016.
• Adoption of the cloud strategy has made it possible for FINRA to not only stay ahead of growing volume but also perform increasingly sophisticated surveillance across U.S. securities markets.
• Before implementing its cloud strategy, FINRA operated with a traditional data-center approach, in which capacity is limited to that of the servers in a data center. Had FINRA stayed with that approach, the volume from any one of the exceptional days of 2018 could have taken days to finish processing, an effect that would compound with heavy activity in succeeding days. As a self-regulatory organization, FINRA was able to make multi-year investments that supported this innovative regtech approach.
• Besides developing its advances in regtech, FINRA recently released a white paper outlining recent regtech developments in the securities industry and potential opportunities and implications these technologies may have for broker-dealers.

FINRA gave up the data-center approach to enhance vigilance

Moving to the cloud means FINRA can process more data faster and, more importantly, see red flags faster, and be even more demanding of you and your compliance team. Will you be ready? That’s where Patrina comes in. We’ve built our business based on helping organizations stay on the “straight and narrow” efficiently and cost-effectively. So, let’s talk. Call 212-233-1155 to ask about Patrina’s cost-effective, designated third-party services, our comprehensive 8-module compliance solution, and compliant data capture & file storage, and records archiving specifically designed for the financial services community. Be smart. Be covered.

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