11.30.21
BISA Regulatory & Compliance Summit - Top 5 Takeaways
by: Kendra Cain (First Horizon) & Kate Ring (LPL Financial) with Carol Goulding (M&T Securities)
After a tumultuous almost-two years, the 2021 BISA Regulatory & Compliance Summit has proven that—amidst the uncertainty—the finance industry has made great discoveries and developed exciting changes. As BISA Education Committee Chairperson Carol Goulding stated, “The 2021 BISA Regulatory & Compliance Summit offered an opportunity for Compliance professionals to network and discuss the challenges they encounter in fulfilling their daily responsibilities as Compliance Officers. The insight gained from the SEC, FINRA and industry experts provided the knowledge to meet those challenges and the strength to embrace the ever changing regulatory world.”
If you missed some events from the Summit or were not able to participate, don’t worry. Check out the Top 5 Takeaways below to catch up to speed.
1) Peer Group Discussion
For most Compliance professionals, the Summit kicked off Tuesday with a peer group discussion. This is always a favorite of the conference attendees as it gives Compliance Professionals the platform to exchange ideas, best practices and strategies. The forum provided information based on real world and current experiences providing relevant and timely information that resonates with member firms.
2) Fireside Chat with SEC Commissioner Hester Peirce and Carlo di Florio
Wednesday’s schedule started out with a captivating session where participants were able to hear Commissioner Hester Peirce in person and gain insights into her thoughts on principles-based regulation. Her approach was relatable and well-received by Compliance Professionals. She covered several relevant topics such as CCO liability, encouraging firms to empower CCOs to hire sufficient resources and to ensure their voices are heard, even though they are not profit centers. As rules come out, more and more responsibilities are placed on CCOs, causing some Compliance Professionals to avoid the role. She stated her intentions are to elevate this discussion at the commissioner level to give them a perspective of what it is like to be in the CCO seat.
3) Crypto
Commissioner Peirce also touched on crypto, indicating “it’s here to stay” and highlighting Chair Gensler’s incredible knowledge in this area. While he has a fair amount of skepticism, the SEC has approved a futures-based ETF, which is attractive because the futures market is regulated. A turf war is anticipated among regulators as a new regulatory framework is crafted. We are seeing banking regulators as well as states wanting to be involved. Ultimately, Congress should determine who the right regulator is. In the meantime, Commissioner Peirce has released a safe harbor proposal related to token sales as security offerings. This proposal includes a three-year window to get out of the “securities sandbox” by providing token purchasers information and allowing them time to build networks. This proposal also shows how things are not stagnant and may evolve over time.
4) Regulatory Updates from FINRA & SEC
The panel of regulators from FINRA and SEC covered a variety of topics, but one of particular interest was Branch Office Inspections during a pandemic. FINRA’s Associate General Counsel, Regulatory, Regulatory Practice & Policy Sarah Kwak provided updates around the adoption of temporary remote inspections covering calendar year 2020 through June of 2022. Best practices were discussed, including firms updating their procedures to account for remote inspections with descriptions of methodologies, technologies used and risk-based systems to identify areas posing high risks. FINRA is continuing to review existing obligations under 3110(c), specifically the framework for how offices are defined and considering how inspection requirements will take place in locations like home offices.
5) The Washington Update
The Summit ended with a thought-provoking presentation by Andy Freidman, who engaged the audience with his overview and impact of the $1.2 trillion infrastructure economic stimulus and the proposed Build Back Better Plan, the largest expansion of social programs in the US that could potentially add an additional $1.7 trillion in spending. Andy gave insight on how tax changes may impact individuals, small business owners and corporations. He also provided information related to SECURE ACT 2.0, changes to IRA legislation and charitable contributions. His presentation ended with a warning to the audience to beware of the deficit and the amount we must borrow each year to close the gap and the potential serious effects to the economy that this poses. Andy’s presentation was extremely informative and well received by summit attendees.
As 2021 wraps up, there are many unknowns beyond the horizon of 2022. But as the Summit has shown, with uncertainty comes new plans and exciting developments. With the insight provided by industry experts and working together, the regulatory world is ready to take on any challenges that come its way.