Recently, the Board of Directors of WSBA in collaboration with our members and Working Group chairs, was privileged to provide a response to the Financial Industry Regulatory Authority (FINRA) report on Distributed Ledger Technology: Implications of Blockchain for the Securities Industry, issued in January of 2017. The FINRA report focused on the use and implications of Distributed Ledger Technology (DLT) in the securities industry and sought comments by industry participants on any challenges associated with said use. The WSBA was proud to be one of the first organizations to respond to FINRA.
As many of you know, FINRA regulates all securities firms doing business in the United States and is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. An important mandate to be sure, and thus FINRA’s report and outreach represented in our minds an important step in the rapid evolution of DLT and blockchain technology in global financial markets.
The WSBA response highlighted some important themes, which I thought I’d briefly summarize below:
- WSBA agrees with the thrust of FINRA’s Report that ongoing industry “dialogue” regarding Blockchain and DLT is essential. Our organization stands ready to share members’ collective views concerning DLT with FINRA, both now and in the future.
- We believe DLT could go far to aid financial services and financial technology firms in ongoing efforts to enhance operational efficiencies in the interest of client and investor protection. WSBA is uniquely positioned to bring technology experts and non-tech senior executives together, and welcomes the opportunity to coordinate our broad activities with FINRA’s recommended comprehensive “governance” assessment of DLT.
- There is still a deep need for further industry knowledge regarding DLT, both from a technical as well as business strategy perspective. Collaborative discussions regarding governance as well as standards and practices are key, and with this in mind the WSBA has launched both an educational training track for members, as well as a specific governance/standard & practices working group.
- WSBA has offered the use of its trade group resources to FINRA in connection with assessing the impact of various DLT technology products on FINRA rules.
- A proposed WSBA Regulatory Initiative (which recently held a successful initial meeting with technology, risk and investment advisor professionals) is being designed to open up a meaningful exchange of ideas with FINRA as well as other Federal and State agencies.
In conclusion, we strongly believe that our efforts concerning blockchain and DLT are important to FINRA and other interested regulatory organizations. The WSBA truly looks forward to collaborating with industry and regulators so that we can all realize the long term benefits of this innovative and disruptive technology. As we’ve so often noted, the WSBA stands as a neutral, unbiased steward of education and cooperation between Wall Street firms and our mission is to guide and promote comprehensive adoption of distributed ledger technology across financial markets. We deeply believe that the FINRA outreach to industry and activities that will follow are key to this adoption, and WSBA is very proud to be part of it.
The full WSBA response is posted here on the publicly available FINRA website, as well as here on the WSBA website.