FINRA recently issued Regulatory Notice 20-16 providing firms with guidance on transitioning to a remote work environment and implementing remote supervisory practices. The Notice shares some common themes that the SRO has observed amongst firms of all sizes regarding steps being taken to transition their staff, associated persons, and supervisory policies and procedures to remain compliant with securities industry rules and regulations in this post COVID-19 remote working environment.
Topics that the Notice specifically discusses regarding firms’ efforts to transition to a remote work environment include:
- Assisting customers to navigate through the firm’s branch and office closures;
- Implementing remote work protocols to help facilitate the remote work transition;
- Providing additional support and communications to staff and associated persons to help them work remotely and to minimize the risk of engaging in conduct that violates the firm’s supervisory policies and procedures; and
- Increasing attention to protecting sensitive firm and customer information and cybersecurity.
The Notice also provides important guidance on how firms can remain compliant while supervising their business in a remote work environment, which include:
- Additional testing that each firm should conduct on their remote supervision capabilities;
- Offering updated guidance and resources to the firm’s supervisory personnel;
- Analyzing emerging risks, issues, and trends that each firm individually needs to address;
- Enhancing oversight techniques to adequately supervise and monitor the firm’s trading systems;
- Methods to supervise the firm’s associated persons’ communications with customers; and
- Adjustments to the firm’s branch inspection program to accommodate any new requirements for working remotely and travel restrictions.
While FINRA provides some information on practices firms may consider to remain complaint in this post COVID-19 remote working environment, it reminds firms that they are ultimately obligated to implement a reasonably designed supervisory system that is appropriate for their individual size and business model, and that any adjustments and modifications to their policies and procedures must be memorialized in writing.
For more information on FINRA’s updates and guidance related to Coronavirus Disease 2019 / COVID-19, click https://www.finra.org/rules-guidance/key-topics/covid-19
To access FINRA’s Regulatory Notice 20-16, click https://www.finra.org/rules-guidance/notices/20-16