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Benefits of FINRA

On Behalf of | Oct 22, 2021 | FINRA |

FINRA stands for the Financial Industry Regulatory Authority. FINRA is an independent regulatory organization that is not part of the government. The job of FINRA is to provide industry oversight of finance and brokers without requiring the government to step in. It sets standards and manages rules for the industry as a whole.

What is FINRA for?

Like other industries in the US, trading and finance have their own trade organization that acts as a central repository of agreed standards, enforcement mechanisms, and arenas for negotiation. All financial trading of investments like stocks and bonds, as well as more advanced financial products, is overseen by FINRA. This makes FINRA enormously important, considering how the large part that finance plays in the world economy.

FINRA issues rules about new financial products or new ways to trade old products to make sure that banks and traders are not getting too risky or exotic and that they are trading on a level playing field without insider information or any other kind of illegal activity. FINRA takes a lot of the workload off the federal Securities and Exchange Commission, or SEC, which is the official federal agency in charge of finance.

FINRA helps the finance industry manage itself, keep risks at a reasonable level, and maintain control. Because finance is so large, it is not feasible for the federal government to do all of the regulatory work by themselves, which is why FINRA does a lot of it and also suggests new policies or point out problems in the industry that might cause a bigger concern in the near future.


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