FINRA to Upgrade Registration System

FINRA’s system for registering broker/dealers is getting an upgrade and moving into the 21st century. FINRA’s Central Registration and Depository (CRD) system is the central licensing and registration system for FINRA, all of the Securities and Exchange Commission, and even the fifty state financial regulators. The last time it was upgraded was in 1999 and an upgrade is on its way.

Derek Linden
Derek Linden

Derek Linden is FINRA’s[1] executive vice president of Registration & Disclosure and he was the latest guest on their podcast, Unscripted[2], where he spoke more about the upgrade.

Among other things, CRD allows clients and potential clients to research the background of their broker or potential brokers.

“Before CRD, if you wanted to register as a broker, you had to file an application with the NASD, FINRA’s predecessor, each state you wanted to be licensed in, and each other SRO (self-regulatory organization) or exchange you wanted to be registered in. The CRD system actually was started in the 1980s. It was a paper and pencil system with some automation “,Linden said.

He also mentioned that the CRD system became fully automated with the last upgrade in 1999 and one thing which the current upgrade will focus on is moving the stored data into a cloud system.

“This is an opportunity to use that technology (cloud) and those open architecture solutions to delivery an easier system for users to get their work done.” Linden said. According to Linden,The CRD upgrade was first announced in June 2018 and is a multi-year project,

“The transformation aims to increase the utility and efficiency of the registration and disclosure process for firms, investors and regulators, as well as to reduce compliance costs for firms. FINRA’s Board of Governors has approved moving forward with the project, which FINRA expects to complete in 2021.” FINRA said in a press release at the time.[3][4]

“This important initiative will strengthen an essential function of the securities industry,” said FINRA President and CEO Robert W. Cook in that initial press release. “The transformation will allow FINRA to develop systems that help firms effectively maintain compliance programs and reduce compliance costs, while continuing to operate and enhance BrokerCheck as an essential tool for investors.”

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