FINRA Continues Focus on Broker-Dealer Liquidity Risk Management

22 September 2015
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Key takeaways

  • FINRA released Regulatory Notice 15-33 (the “Notice”) on broker-dealer liquidity management practices, based upon its examination of the liquidity stress planning practices of 43 firms.
  • The Notice comes at a time when the Basel Committee and U.S. banking regulators are keenly focused on liquidity risk, and the Notice demonstrates FINRA’s ongoing focus on liquidity risk management practices as they directly apply at the broker-dealer level, even if such firms already consider these issues as part of a larger banking organization.
  • FINRA derives its expectation for managing liquidity risk at the broker-dealer level from traditional financial responsibility rules and investor protection goals. Broker-dealers should expect FINRA to use the Notice to inform its examinations, and should consider whether their current practices are in line with those outlined in the Notice.