B-Ds Optimistic Finra Will Change Its Stance On CARDS

Independent broker-dealers may be making some headway with the FInancial Industry Regulatory Authority in getting the regulator to modify its controversial Comprehensive Automated Risk Data System proposal.
 
The CARDS project would collect customer account and suitability information, and create a database for automated oversight and early identification of industry risks.
 
Among other issues, the Financial Services Institute and other industry interests have raised questions about how CARDS would collect and standardize suitability data, which would be paired with trade and position data.
 
A Finra official on Tuesday told attendees at FSI’s annual conference in San Antonio, Texas, that Finra will not be standardizing suitability data in CARDS.
 
“We’re willing to take those [suitability profiles] the way firms keep them today,” said Susan Axelrod, Finra executive vice president of regulation.
 
Suitability data from new-account forms varies among firms and lacks full context needed to  make suitability determinations, FSI said in a December comment letter.
 
“Firms are really afraid that Finra will use [CARDS] to second guess” broker-dealers’ own compliance departments, said Robin Traxler, FSI vice president of regulatory affairs, at the conference.