Open jgavronsky opened 1 year ago
nicholasvitalo
commented
1 year ago Nick Vitalo from FINRA, again. Thank you again for your time, all. In case I was unclear earlier, the Special Notice includes specific questions on which FINRA is seeking comment - but we are equally interest in any other areas of feedback that folks may have.
alexk2021
commented
1 year ago Thank you. As noted, the comment period for the FINRA Rulebook Search Tool (FIRST) is open until February 21st. We'd also like to highlight two recent podcasts with:
jgavronsky
commented
1 year ago I would like to offer the following comments to the FINRA Notice and in response to the questions above.
Yes, while FINOS’s work is not directly linked to determining compliance with FINRA rules, I believe this is an extremely useful tool for the industry.
Yes, FIRST should be further expanded, to include more rules, as well as to compare and rationalize the resulting taxonomy with other taxonomies developed by vendors and market participants.
Having an API for digitized access is absolutely critical for efficient use of the rule book by market participants
Yes, absolutely. Open collaboration is the best way to:
1. Solicit input from the best experts across the industry 2. Deliver a comprehensive taxonomy and rule applicability model, which can be further extended to incorporate rules from other regulators and jurisdictions 3. Ensure adoption and use of the tool and its API 4. Reduce the cost burden borne by a single entity 5. Create transparency and equal access for market participants through a fully accessible digital platform 6. Enable the growth of innovative approaches and new businesses on the basis of this work
Yes, absolutely. FINOS would be very happy to continue to leverage our Open RegTech Strategic initiative, our community channels, and our experience in creating and nurturing open standards and open source projects to assist in any further steps that engage in collaborative discussions in the open and contributions to open-license repositories. Furthermore, we can continue to gather the industry practitioners to provide feedback and input on this work.
In addition to the above summary, I would like to offer the following thoughts to explain the reasoning behind some of my answers above.
Digitization of the regulatory rule books is essential for efficient and comprehensive oversight, and equally so for enabling safe market development and innovation. FINOS is convening participants from the financial services community who want to drive game-changing innovations in the practice of regulation through technology. We believe that digitization of regulations, and specifically authoring of regulations in “digital-first” form will significantly simplify the burden of compliance, increase precision and speed of compliance, and will materially cut the cost of compliance, all the while creating faster access to comprehensive information and enabling more nimble response times to market events. With this vision in mind, we recognize that the road to get to full digital-first model is a long one, and today we have many existing regulations which did not originate in digital form and whose automation (in some form) can bring great benefits to market participants. This is where continuation of the current industry (and FINRA’s) efforts around rule taxonomies can help significantly. Taxonomies will help in digitizing the current rule books, and will enable both regulators and market participants to navigate the regulations with greater speed and clarity. They will also pave the way for streamlined, common taxonomy models to become standards across the industry and eventually to enable issuance of regulations in digital-first form.
Harmonization or standardization of taxonomies is a natural next step for the industry, and the input and advice FINRA’s Taxonomy Working Group provided can deliver even greater impact across a bigger number of participants by inviting feedback and collaboration in the open. To this end, the open collaboration process and governance FINOS has established and practiced can be leveraged to continue convening industry participants and incorporate contributions from regulated entities of all sizes, as well as from RegTech vendors and technology providers.
There are several compelling reasons for FINRA to open source its rule book taxonomy and API, as well as to collaborate with industry participants and other regulators. A taxonomy which is developed openly under an open source license will promote collaboration with industry participants. By working together with market participants, FINRA can gain a deeper understanding of the challenges and opportunities facing the industry, as well as identify areas where regulation can be improved. This can lead to more effective and efficient regulation, as well as a more vibrant and innovative industry. Furthermore, increased transparency and accountability will help to promote better understanding of the regulations and rules that govern the securities industry, and can ultimately lead to a more efficient and effective marketplace.
Collaboration among regulators is also essential to ensure that the securities industry is regulated effectively and will help to avoid inconsistencies and overlaps in regulation, by providing a common platform for information sharing and analysis. In addition, open sourcing FINRA's rule book taxonomy and API will also directly drive innovation in financial technology by encouraging development of new and innovative solutions to the challenges facing the securities industry. This can help to drive growth and competitiveness in the industry, as well as promote the adoption of new technologies and best practices.
FINOS has a strong track record of convening the community to develop industry standards. For example, FINOS currently hosts the Financial Desktop Connectivity and Collaboration Standard (FDC3), which aims to standardize interaction and data exchange among financial desktop applications. FINOS recently launched the project for open development of the Common Data Model (CDM), which standardizes the definition of financial products and workflows. The FINOS Open RegTech strategic initiative is well suited to bring the community together around the development of a rule book taxonomy for FINRA, and eventually for other regulations. This initiative is focused on fostering innovation in the regulatory technology space, and provides a platform for collaboration and cooperation among stakeholders in the industry. Through this initiative, FINOS can bring together a diverse group of experts, including financial institutions, technology companies, regulators, and academics, to work on developing a comprehensive and accessible taxonomy for the FINRA rule book.
In conclusion, FINOS and its community are well positioned to facilitate the open collaboration that is necessary for FINRA to open source its rule book taxonomy and API. FINOS has a strong track record of convening the community to develop industry standards, and its Open RegTech initiative is best suited to bring the community together around the development of a rule book taxonomy for FINRA and other regulations. By leveraging the expertise and resources of the FINOS community, FINRA can help to promote transparency, accountability, and innovation in the securities industry.
I invite others in our community to offer thoughts and suggestions here, and we can host additional discussions during our upcoming SIG meetings.
FINRA needs your input (by February 21, 2023)
Dear Open RegTech community, As you know, FINRA has presented to this community about their new rule taxonomy tool called FIRST. They would like to receive comments from the community on any and all questions they have posed. Please take 5 minutes and send a response, if you are able. This will help FINRA decide how to proceed with this effort.
Alternatively, if you are pressed for time, we ask that you vote here, so FINOS can submit a collective response from this community. At a minimum, just give this issue a "thumbs-up" 👍 or a "thumbs-down" 👎 here.
Ideally, please consider also adding comments, here are some specific questions, but any comments are welcome:
Thank you!