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Tips for a Successful 2024 Broker Dealer Compliance Program

By Kimberly Johnson, Senior Vice President

Not only have we reached the year 2024, but January is almost over! Like many broker-dealers, you are likely finishing up your 2023 regulatory obligations and shifting gears into tackling the new year. Making time to plan for a successful year is imperative to comprehensively achieving your firm’s goals and ensuring proper risk mitigation. Here are 5 tips to kick-start your 2024 Compliance Program.

  1. Establish, Memorialize and Track Goals
    Goals should be specific, measurable, achievable, relevant and timebound (SMART). Best practices often include Chief Compliance Officers (CCOs) aligning with firm leadership to understand priority business goals on an ongoing basis. Considering the firm’s goals, regulatory requirements, historical firm risks and SRO exam priorities, CCO’s draft Compliance Team Goals to comprehensively identify and mitigate risks specific to the firm’s business model. Individual performance goals should tie in with team goals issued by the CCO. Goals can be tracked during one-on-one meetings, team meetings and real-time feedback should be given to ensure all milestones are successfully met. Engaging compliance team members for feedback is critical not only to establishing effective goals but also aids in positive morale and empowers individuals to play an active role in driving their career trajectory.
  2. Develop a Compliance Checklist
    Create a Compliance Checklist that details all regulatory and firm obligations organized by daily, weekly, monthly, quarterly, and annual tasks. Utilize resources such as the FINRA and SEC websites to incorporate exam priority item processes into your scope. Be sure to include all responsibilities of the team so the checklist can be used to maintain performance consistency throughout the year.
  3. Create a Compliance Calendar
    A Compliance Calendar is a key planning tool to ensure regulatory deadlines are met. Select critical items from the Compliance Checklist created in step #2, carefully map out timeframes, and note the deadlines for each month on the calendar. Include upcoming rule changes, new rule implementation dates, audits and milestones from firm projects planned for the year. For example, each January FINRA requires member firms to confirm their contact persons in FINRA’s Firm Gateway. This task should be added to the calendar for early January. Similarly, there is an upcoming compliance date for a change to trade settlement (T+1) on May 28, 2024, that should be added to the calendar. Take time to carefully notate all critical requirements. Once the calendar has been created, review it frequently and update it as new initiatives present themselves. The time invested in creating this tool will pay dividends throughout the year.
  4. Review your Written Supervisory Procedures
    It’s critical to review your firm’s WSPs at least annually to ensure accuracy and comprehensiveness. Meet with business subject-matter experts to confirm accuracy of the content for each function, ensure procedures include any changes that have been made to existing regulations and new rules. Break the review down into small, digestible bites enables and assign a few sections per month. It is important to document and track all changes. If your firm does not have a version-control tool, make a note to manually save the previously published version, a redlined version and the newly approved, clean version should be saved in accordance with applicable recordkeeping requirements.
  5. Communication is Key
    I saved the best for last. Establishing a successful 2024 Compliance Program begins and ends with communication. The CCO communicates their recommendations for the annual plan to their team and receives feedback. Team feedback is discussed and, if warranted, incorporated into the plan. Regulatory changes, new rules and market events may trigger unexpected modifications to the plan. These updates, and any downstream impacts, must be effectively communicated to key stakeholders. Compliance, serving as the second line of defense, performs monitoring and testing of firm processes using a risk-based approach. Communications of findings and suggested enhancements to the firm’s subject-matter experts who act as the first line of defense is imperative to achieving a stellar supervision program. Compliance was never meant to operate in a silo. Stellar Compliance Programs have open lines of communications with the business to ensure they’re walking together in lockstep to achieving the firm’s goals.

For additional broker-dealer compliance tips on building end-to-end programs, identifying and mitigating regulatory risk, and more, follow me on LinkedIn. For weekly financial services, Operations, Legal, Compliance and Human Resources-related news articles, follow FiSolve on LinkedIn.

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