In a revolutionary move for the industry, FINRA has launched a machine-readable rulebook initiative. Equipped with a newly created embedded taxonomy – a method of classifying and categorizing a hierarchy of key terms and concepts— the tool is programmed to ‘tag’ the 40 most frequently viewed FINRA rules.
The tool is designed to:
- enhance firms’ compliance efforts,
- reduce costs, and
- aid in risk management.
As part of the initiative, a rulebook search tool prototype, named FINRA Rulebook Search Tool (FIRST), has also been developed alongside the machine-readable rulebook. By using the ‘tagged’ taxonomy terms, the search tool will enhance the efficiency of identifying potentially relevant FINRA rules and their associated requirements. The tool is available through a user interface on FINRA’s website.
Additionally, FINRA is offering access to the taxonomy terms that have been tagged to each of the 40 rules through an Application Programming Interface (API) – a software that allows two applications to communicate and interact with each other. This feature enables member firms seeking to automate compliance functions to link the FINRA rule content and the taxonomy terms to their internal compliance policies and procedures, where appropriate.
Included in the 40 ‘tagged’ FINRA rules are:
- 2090 “Know Your Customer”
- 2111 “Suitability”
- 2210 “Communications with the Public” and
- 8312 “FINRA BrokerCheck Disclosure”
FINRA is seeking comment until Dec. 20 on the rulebook initiative including the development of the taxonomy, the enhanced search features available through FIRST, the content available through the API and any potential benefits or challenges associated with the overall user experience.
