Regulatory Roundup
Welcome to our Regulatory Roundup, written by Custodia’s Head of Regulatory Affairs & Compliance, Dr Nathalie Aubry-Stacey. Let’s take a look at the news you need to know from May 2024.
FINRA Statement to correct misinformation about the new residential supervisory location rule (22/05/2024)
FINRA’s new rules for evolving work models — hybrid and remote —provide member firms greater flexibility for their registered persons to work from home. FINRA’s new Residential Supervisory Location (RSL) Rule and Remote Inspections Pilot Program Rule are intended to provide member firms greater flexibility — not less — to allow eligible registered persons to work from home, following the expiration of temporary COVID-19 relief from existing requirements. The new rules provide a practical and balanced way for firms to meet their regulatory obligations, while protecting investors, and acknowledging the need for greater workplace flexibility.
FINRA Annual Conference confirms focus on off channel communications scrutiny (21 May 2024)
The FINRA Annual Conference was held in Washington, DC last week and here are some of the key takeaways –
– Focus remains on monitoring On-Channel and Off-Channel Communications
– AI Integration and being able to explain remains a challenge
More information: https://www.finra.org/events-training/conferences-events/2024-finra-annual-conference
FCA fined Citigroup Global Markets Limited £27.8m (22/05/2024)
Failures in the firm’s systems and controls led to US$1.4bn of equities being sold in European markets when they should not have been.
On 2 May 2022, a CGML trader had intended to sell a basket of equities to the value of US$58m. The trader made an inputting error while entering the basket in an order management system. This resulted in a basket to the value of US$444bn being created.
CGML controls blocked US$255bn of the basket progressing, but not the remaining US$189bn which was sent to a trading algorithm. The algorithm selected was designed to place portions of this total order to be sold in the market over the rest of the day.
More information: https://www.fca.org.uk/news/press-releases/fca-fines-cgml-27-million
FCA appeared in front of Treasury Committee amid ‘naming-and-shaming’ controversy (8/5/2024)
FCA bosses Ashley Alder and Nikhil Rathi, Chair and Chief Executive respectively, faced questions from MPs as part of the Committee’s ongoing scrutiny of the regulator’s work.
It comes amid a lively public debate on the regulator’s proposals to potentially publicise enforcement investigations while they are still underway, rather than after an outcome is reached as is the current process.
More Information: https://committees.parliament.uk/event/21537/formal-meeting-oral-evidence-session/
CFTC Chairman Behnam designates Ted Kaouk as the CFTC’s First Chief Artificial Intelligence Officer (1 May 2024)
CFTC Chairman Rostin Behnam announced the designation of Dr. Ted Kaouk as the agency’s first Chief Artificial Intelligence Officer. Dr. Kaouk served as the CFTC’s Chief Data Officer and Director of the Division of Data. In this newly expanded role as the CFTC’s Chief Data & Artificial Intelligence Officer, Dr. Kaouk will be responsible for leading the development of the CFTC’s enterprise data and artificial intelligence strategy to further integrate CFTC’s ongoing efforts to advance its data-driven capabilities.
More information: https://www.cftc.gov/PressRoom/PressReleases/8903-24
