The USA has one of the biggest financial markets in the world, with several global financial hubs such as New York City and Chicago. Financial regulators in the USA are responsible for overseeing the fair operation of US financial markets, preventing market manipulation, discrimination, and financial crimes. There exist several financial regulators in the USA, and they have different objectives to fulfill and play distinct roles.
Among all the US financial regulators, SEC, CFTC, FINRA, and NFA are major regulatory bodies that oversee the USA’s securities market. Their regulatory processes include assessing the impacts of adopting innovative technologies and establishing rules to maintain communication compliance. They are continuously carrying out periodic monitoring of all financial institutions regulated by them and enforcement activities. These four regulators differ in many ways, from who controls them to what specific compliance they have established.
Financial Regulatory Authorities that Oversee the US Financial Institutions
The US financial regulators belong to the government or other independent organizations. For example, the Federal Reserve Board (FRB) supervises USA commercial banks. The Office of the Comptroller of the Currency (OCC) regulates and provides charters to U.S. banks. Another financial regulator is The Office of Thrift Supervision, funded exclusively by the institutions it controls.
The SEC, CFTC, FINRA, and NFA are primary regulatory bodies that govern the USA’s securities market. They operate to achieve a common goal of ensuring efficient market operations and boosting the confidence of consumers about the integrity of financial markets. These regulators can be divided further into independent federal agencies and Self-Regulatory Organizations (SRO) that have the power to set their standards and regulations. The SEC and CFTC are federal agencies that have delegated responsibilities to self-regulatory organizations, such as FINRA.
The Federal Agencies
Securities and Exchange Commission (SEC).
Established in 1934 through the Securities Exchange Act, SEC is one of the most powerful regulatory bodies that regulate the US securities market, including options markets and exchanges, electronic and stock exchanges, electronic securities markets, and investment advisors. In addition, it is the major regulatory authority that looks after the mobile compliance regulations of US financial institutions. The SEC regulations mandate that the financial firms comply with broker-dealer record-keeping compliance rules. Huge monetary and non-monetary penalties will be applied if they fail to adhere to those rules.
Commodity Futures Trading Commission (CFTC)
Established in 1974, the CFTC is an independent agency that regulates the derivatives markets in the USA. The regulated derivative markets include futures contracts, options, and swaps. The CFTC works toward preventing financial fraud and market manipulation and fostering efficient and competitive derivative markets. One of the major regulations of the CTFC includes the Dodd-Frank Act which helps to improve the financial stability of securities market.
Self-Regulatory Organizations (SRO)
The Financial Industry Regulatory Authority (FINRA)
FINRA was established after the National Association of Securities Dealers (NASD) in 2007 as an independent and non-profit organization. Its responsibility oversees the brokers and dealers of the USA under its mission to “safeguard the investing public against fraud and bad practices.” They have the authority for enforcement action against its rule breakers. It also regulates and licenses broker-dealers and directs securities professionals to pass specific testing to sell securities.
The National Futures Association (NFA)
NFA is one of the main regulatory bodies that govern the futures and derivatives markets in the U.S. This SRO is an established regulatory body by the CFTC. Its major responsibilities include protecting investors, maintaining the integrity of the derivatives markets, and ensuring all members meet mandatory compliance requirements.
The Difference between SEC, CFTC, FINRA, and NFA
|Agency Type||An independent federal agency||An independent federal agency||self-regulatory organization(SRO)||self-regulatory organization(SRO)|
|What do they regulate?||The securities market||The derivatives markets including
● Swaps markets
● Futures contracts
● Over The Counter (OTC) markets,
|Registered Brokers and Broker-dealers
|Futures and derivatives markets.|
Ensuring that the securities market operates in a fair and orderly manner.
Facilitating capital formation
Financial fraud prevention
Preventing market manipulation and other malpractices
Enforce rules for all registered broker-dealer firms and brokers
Encourage market transparency
Educate investors on established rules.
Financial fraud prevention
Prevent abuse in the futures markets
Enforcement actions against rule violations
Real-time market surveillance
Registering firms that do business with derivative markets
|Dependencies with other agencies||Oversees FINRA||Needs to be registered financial firms to be NFA members||Operates under the control of the SEC.||–|
|Communication Compliance Regulations||SEC Rules 17a-3 and 17a-4||Dodd-Frank act’s call recording regulations – CFTC requires companies related to the swaps market to record and archive audio communications including communications through email, telephone, voicemail, etc.||FINRA retention requirements – FINRA Rule 4511
Regulatory notice on social media usage and business communications
Remote work and supervision – Regulatory notice on communication compliance when working remotely
|NFA mobile compliance requirements
NFA call monitoring and text message recording requirements
How LeapXpert Helps To Comply With US Financial Regulations
The major US banking regulators SEC, FINRA, CFTC, and NFA have established various mobile compliance regulations mandating regulated firms to capture and archive work-related communications of every electronic medium including instant messaging solutions.
LeapXpert as a responsible business communications platform offers robust archiving, surveillance, and compliance options for financial firms to keeps track of work-related communications. Firms can integrate many popular communication platforms, including WhatsApp, WeChat, iMessage, Signal, LINE, Telegram, and Slack, and allow employees to use them securely and meeting compliance requirements like CFTC compliance and instance messaging compliance. In the background, the system maintains complete records of customer-employee communications by automatically monitoring, capturing, and archiving all messaging conversations between them.
With LeapXpert archivers, users do not need to worry about data security as the data are secretly stored, meeting the necessary data privacy standards. In addition, companies can enjoy the benefits of a full audit and monitoring dashboard that allows them to see the conversations that have breached communication compliance in real-time. Companies hast the flexibility to deploy the archiving solution based on their requirements such as on-premises, in a private cloud, as a managed private SaaS, or as a hybrid system.
SUBSCRIBE TO OUR NEWSLETTER
Useful tips and helpful information.
You can unsubscribe at any time - obviously!