PODCAST
Optimizing Efficiencies: An Update to FINRA’s MAP Transformation
FINRA oversees a diverse set of broker-dealer firms that make up a vibrant securities industry. But there's one thing all broker-dealer firms have in common. Every registered firm at one time or another must engage with FINRA's Membership Application Program, or MAP.
On this episode, Jante Turner, Senior Advisor and Head of Triage for FINRA's Membership Application Program speaks about how the MAP program kicked off a significant transformation in spring 2022, and where that initiative stands today.
Resources mentioned in this episode:
Episode 104: Streamlining FINRA's Gatekeeper Function
FINRA Information Notice 4/19/22 (FINRA Membership Application Program Transformation)
Continuing Membership Application Resources
FINRA Firm Grouping Conference
Email: MAP Group
Listen and subscribe to our podcast on Apple Podcasts, Google Podcasts, Spotify or wherever you listen to your podcasts. Below is a transcript of the episode. Transcripts are generated using a combination of speech recognition software and human editors and may contain errors. Please check the corresponding audio before quoting in print.
FULL TRANSCRIPT
00:01 - 000:25
Mike Rote: FINRA oversees a diverse set of broker-dealer firms that make up a vibrant securities industry. But there's one thing all broker-dealer firms have in common. Every registered firm at one time or another must engage with FINRA's Membership Application Program, or MAP. In this episode, we learn more about MAP and some of the recent enhancements to the program.
00:25 – 00:34
Intro Music
00:34: - 00:57
Mike Rote: Welcome to FINRA Unscripted. I'm your host, Mike Rote. I'm excited to welcome Jante Turner to the program. Jante is Senior Advisor and Head of Triage for FINRA's Membership Application Program. In the spring of 2022, the MAP program kicked off a significant transformation, and Jante is here to provide an update on that initiative. Jante, welcome to the program.
00:58 - 00:59
Jante Turner: Thank you for having me, Mike.
00:59 - 01:10
Mike Rote: Jante, we need to get something out of the way. While this may be your first time on FINRA Unscripted, this isn't exactly our first time recording a podcast together. Isn't that right?
01:10 - 01:28
Jante Turner: Oh, we have a long history of recording podcasts together. Prior to joining MAP, I was in the Office of General Counsel for about fifteen years, and during that time you and I had the privilege of recording the Quarterly Disciplinary Reviews for FINRA.
01:29 - 01:43
Mike Rote: So, you're here, as you mentioned, in a much different role. So, in case there's anyone out there who doesn't remember our series from ages ago, could you just tell us a little bit more about yourself, about your current role at FINRA, maybe even some more background about how you landed in MAP?
01:44 - 02:16
Jante Turner: Absolutely. So, in 2021, I joined MAP after leaving the Office of General Counsel. I wanted to interface with the membership in a different capacity than the disciplinary context. And being able to interact with the membership in the membership application process has been fantastic. You get to really work with the members as they navigate numerous different plans. You get to see the novel products that are out there. You get to see the innovation that's happening in the industry and it's just an exciting place to be in to work.
02:17 - 02:27
Mike Rote: I mentioned at the top the MAP transformation. But before we get into that, would you please remind the audience: What is FINRA's Membership Application Program?
02:28 - 02:55
Jante Turner: As the name suggests, we work in applications. And at some point, every FINRA firm interfaces with MAP, be it at the beginning as a prospective member firm filing the Form NMA for new membership; or if you want to change your business plan or your business operations or add business activities or business lines as an existing member, you would file a Continuing Member Application, or CMA, with us for that purpose.
02:56 - 03:23
Mike Rote: MAP is a very important program at FINRA, and one that performs an essential function in our industry. As mentioned in the spring of 2022, the MAP program kicked off a significant transformation, which was publicized in an Information Notice and also the topic of an episode of FINRA Unscripted with the head of MAP, Cindy Foster. What were the goals of the transformation? Was it to make it easier to become a broker-dealer firm?
03:23 - 04:31
Jante Turner: The goal isn't to make it easier. It is to make it more efficient. Ultimately, we do want firms to join the industry, but we want them to do so where they're still able to meet the high standards for a mission to ensure FINRA's ultimate goal of investor protection, and that they can comply with the industry rules and standards to operate in a compliant manner once they are in business within the industry. The MAP transformation is a multi-year, multi-phase initiative that facilitates the entry of a robust membership into the securities industry, and we can ensure that firms, once they are through the application process, that they're ready to operate in a manner that's compliant and successful for their business. The major goals of transformation include improving the applicant experience, for example, enhancing the speed to application decision, enhancing our understanding of firm groups and industry trends, and providing our MAP Analysts with tools and information needed to speed application decisions and ensure that we're making the right decisions in a consistent manner on an everyday basis.
04:31 - 04:37
Mike Rote: Those changes then, what would they mean that they would lead to as far as the process is concerned?
04:38 - 04:55
Jante Turner: Ultimately, those changes will lead to a more efficient and effective membership within FINRA, and that is the ultimate goal, to have member firms that are ready to interface with investors in a way that is compliant, that protects the investors and that protects the market.
04:55 - 05:05
Mike Rote: So, here we are eighteen months later. Where does that put us now? Would you say the transformation has achieved what you and your team have set out to accomplish?
05:06 - 06:44
Jante Turner: To suggest the transformation is one moment in time would not be accurate. The transformation is happening over multiple years in multiple phases, and while we've made significant progress, we acknowledge that there is so much more that we're looking forward to and that we're ready to embark on and continue to do. There are several initiatives, for example, that are still ongoing. And so, while I would say we're still within transformation, we're moving that transformation from the initial phases to the optimization phase.
And as part of that optimization process, MAP has expanded Triage and created an early firm meeting process. We've completed the alignment of the firm groups similar to our other colleagues in Risk Monitoring and Examinations. We now have a Retail firm group, a Capital Markets firm group and a Consolidated firm group consisting of firms from Diversified Carrying, Clearing and Trading execution firms. MAP also has a dedicated funding portal and fintech team, and they've created teams within each firm group to focus on digital assets. We've added 10 new Examiner positions and created and launched MAP Academy, which is a formal eight-week, assessment-based program for first-year examiners.
We're also in the midst of rolling out a number of guidance documents for both prospective and current firms. We're hiring three cryptocurrency specialists who will work across firm groups to support MAP and cryptocurrency and digital asset applications. And MAP is working to improve the application submission process by improving how firms interact with the New and Continuing Member Application forms themselves. So, we are very busy.
06:45 - 07:02
Mike Rote: So, for those out there looking to maybe start a broker-dealer firm or firms who are looking to make a change, as you mentioned, through the Continuing Membership Application process, what are some takeaways, in your experience, that would help firms navigate the process most efficiently?
07:03 - 08:59
Jante Turner: The key for MAP is the information and documents that we receive as part of the application process. And the more fulsome those responses can be, the better and the more efficient that the MAP staff can be at reaching an outcome. To that end, MAP has introduced a number of tools to assist firms in identifying the information and documents that will be needed for the applications that they're putting forth. A number of guidance documents, for example, we put forth documents, guidance related to funding portals and private placements. For prospective firms, we have new member application guidance. We also have fintech guidance. And for those firms that are introducing mobile applications or online platforms, we have guidance available for them as well.
Being able to assess the information that MAP will need on the front end to review the application will serve the firm well throughout the application process. Identifying the key parts of your business plan, how that is documented, how those written supervisory procedures work, making sure the personnel have the correct licensing, all those things factor in together to move the application seamlessly through the process. To the extent the firm has that information nailed down and can present that to MAP, all the better. Beyond just fulsome responses, timely responses are also key. Making sure that you meet those deadlines and timeframes that are set out by your MAP Analysts will ensure that the process keeps moving seamlessly as well. Ultimately, at the end of the day, it's a collaborative process between MAP and the firms to navigate the application process.
While we are here to ensure that firms can operate in a compliant manner, we also want to ensure that the firms have the systems, the operation, the personnel in place so that they too can be successful at meeting their business goals. It's a “both/and” situation between MAP and the firms; it's not an “either/or.”
09:00 - 09:27
Mike Rote: It sounds like you all want the firms to succeed by putting forth these different resources et-cetera and by streamlining your processes. So, that's great to hear. You mentioned some of this not too long ago—and that was crypto and fintech. We know the landscape is evolving, including with new assets and firm business models. Can you talk a bit more about what you are seeing related to that in your work in the Membership Application Program?
09:28 - 10:09
Jante Turner: Absolutely. Digital asset and fintech application volumes continue to increase. We see them more and more on a daily basis, particularly as it relates to the digital asset space. We have 28 firms approved to engage in digital asset securities business. Those include 10 firms who have been approved to engage in private placements involving digital asset securities, 10 firms approved to operate in Alternative Trading System—or ATS—for digital asset securities, seven firms have been approved to operate in ATS while engaging in private placements business for digital asset securities, and we've even approved our first special purpose broker-dealer charged with custody in digital asset securities.
10:10 - 10:12
Mike Rote: How about on the fintech side?
10:13 - 11:15
Jante Turner: We continue to experience growth in that area as well. We see firms putting forth applications related to mobile applications; both existing and prospective member firms are seeking approval for their online platforms, their mobile apps. We see a number of applications focused on finfluencers, which are applications that have a social investing component where an investor can track and copy another investor's trading activities. We've even seen applications putting forth more innovative products such as fractional shares, where they're seeking to offer fractional shares of securities products or using investment platforms that may offer securitized investments in collectibles and memorabilia like baseball cards, sneakers, music, art, anything you can imagine. We've also seen an increase in our Environmental, Social and Governance applications—our ESG applications—where we see firms focused on private placement activities that are based on socially responsible investments in trading portals that provide ESG information to investors.
11:16 - 11:20
Mike Rote: Okay, Jante, so a lot happening. Where do we go from here with MAP?
11:21 - 12:56
Jante Turner: There are so many things that we're looking forward to continuing to do in the future and that we're continuing to build on in MAP. For example, we're continuing to build out our MAP Academy. That's the program I talked about earlier that builds on the expertise of the analysts and new hires within MAP. We're holding quarterly roundtables with firms, which have been very popular. We've had waiting lists for them for months, and we continue to engage with the firms directly and through their representatives at this roundtable and in additional one-to-one conversations. We're always willing to engage the membership to get feedback about the process and look for opportunities to enhance and make the process more efficient for all. There's a number of initiatives that are still ongoing. We're continuing to work on our technology optimization, which will improve the application submission process and analyst workspace.
We're continuing to hone our MAP Analyst expertise by creating tools to facilitate the application management process. We have tools such as enhanced decision aids, standardized training, dashboards to manage applications, and we're also using analytics to identify areas where additional resources should be deployed. We're streamlining our application form submission processes as well, building more validations into the process, clarifying information needed through just-in-time guidance. While the application process remains rigorous, MAP's goal is to add efficiency to that process, and we continue to do so. Firms filing New Membership Applications will begin to see these improvements during the first quarter of next year, and changes to the CMA submission process will come later in 2024.
12:57 - 13:23
Mike Rote: Okay. Wow. Jante, a lot happening not only on the FINRA MAP side of things and to the application process that the firms will see, but also you touched upon resources. And I want to make sure for any firms out there listening that they know about the resources and where they can learn more. So, what other resources are available to firms if they need them?
13:24 - 14:03
Jante Turner: What a timely question, Mike. MAP has just rolled out a number of guidance documents on its Compliance Tools page and FINRA's new Member Firm Hub. Those guidance documents provide a number of resources to both prospective and current firms seeking to navigate the application process. I noted earlier that we have information on funding portals, private placements, mergers and acquisitions and things of that nature. There are going to be FAQs forthcoming and just a number of tools that will assist those firms seeking to interface with MAP. So, please check out the Compliance Tools page and new Member Firm Hub on a regular basis. They'll be updated consistently.
14:04 - 14:10
Mike Rote: So, not only have you already expanded the resources, but that expansion is ongoing and new resources are being added over time.
14:11 - 14:22
Jante Turner: Absolutely. It's an evolving industry. And so, we find that the resources that we need to provide to firms also need to be continually updated and evolve with the industry and the products that we're seeing.
14:22 - 14:27
Mike Rote: Where can firms hear more about MAP? How can they get in touch with you?
14:28 - 14:52
Jante Turner: Firms can reach us in a variety of methods. We are always available by phone. You can reach us through our dedicated email address, [email protected]. You can reach us through our Compliance Tools page where I noted all the guidance documents are located. You can reach us through the new Member Firm Hub, and we'll also be available in-person at FINRA's Firm Grouping Conference on October 9th and 10th in Kissimmee, Florida.
14:52 - 14:57
Mike Rote: Well, Jante, this has been an absolute joy for me. Thank you so much for being here.
14:58 - 15:00
Jante Turner: It's been a pleasure, Mike. Thank you so much for having me.
15:01 - 15:24
Mike Rote: Well, that's it for today's episode of FINRA Unscripted. Listeners, If you don't already, be sure to subscribe to FINRA wherever you listen to podcasts to stay up to date on all our latest episodes. Today's episode was produced by me, Mike Rote, engineered by John Williams and coordinated by Hannah Krobock. Thank you for listening to FINRA Unscripted. Until next time.
15:24 – 15:29
Outro Music
15:29 - 15:57
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