The Financial Industry Regulatory Authority (FINRA) launched a machine-readable rulebook initiative designed to help member firms better search for data while enhancing compliance, reducing costs, and improving risk management.
The machine-readable rulebook was created through an embedded taxonomy—a method of classifying and categorizing a hierarchy of key terms and concepts tagged to the 40 most frequently viewed FINRA rules. As a result, the taxonomy allows users to apply an enhanced search feature to find specific content by starting with a broad topic and then narrowing down to more specific topics through sub-categories.
To assist in the process, FINRA has developed a prototype of a rulebook search tool—the FINRA Rulebook Search Tool, or FIRST. This enhanced search feature will help users to identify potentially relevant FINRA rules and their associated requirements using the taxonomy terms. Also, 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 intermediary that allows two applications to interact with each other.
“The securities industry is increasingly relying on technology to improve both internal operational functions as well as regulatory compliance. FINRA’s machine-readable rulebook initiative is designed to support these efforts by providing technology-based tools, allowing market participants to potentially enhance the effectiveness and efficiency of their compliance efforts and thereby support investor protection and market integrity,” Haimera Workie, vice president and head of FINRA’s Office of Financial Innovation, said.
The taxonomy applied to the FINRA rulebook is made available through FIRST using a browse functionality that allows users to explore the summary topics and detailed topics before selecting search terms. Users can expand and collapse the taxonomy as they browse. There is also a free text search function through which users can look for a specific term.
“We developed the taxonomy structure and the FIRST search tool to help all users more easily identify and search applicable rules regardless of their level of expertise,” Afshin Atabaki, special advisor and associate general counsel at FINRA, said. “Whether you are a seasoned securities law practitioner or a new investor, you are likely to find FIRST to be a valuable search tool.”
FINRA is soliciting comments on the initiatives — including on 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. The comment period runs through Dec. 20.