FINRA has stepped up its modernisation efforts this year through FINRA Forward, a programme designed to strengthen the organisation’s regulatory effectiveness in an era defined by fast-moving technological change.
The initiative focuses on updating rules, enhancing support for member-firm compliance, and improving defences against cybersecurity and fraud, claims Red Oak.
As part of this push, FINRA president and CEO Robert Cook recently confirmed the organisation’s commitment to embedding generative AI (GenAI) tools across its regulatory operations, drawing on the organisation’s extensive experience in automation and analytics.
FINRA is no stranger to artificial intelligence. The body oversees trading across a network of exchanges, alternative trading systems, and multiple additional venues. Its remit also includes cross-market surveillance on behalf of 26 self-regulatory organisations (SROs) covering 35 equities and options exchanges. The sheer complexity of these activities has long required sophisticated technology.
Cook said that “…it became impossible to rely on traditional spreadsheets or similar tools to analyse the relevant data. Thus, for years FINRA has by necessity been developing and employing AI to support its market oversight functions”. What once resembled a Sisyphean challenge has been transformed by automation, enabling systems to examine “hundreds of billions of market events generated each day in search of fraud, manipulation, or other misconduct that can harm investors and markets”.
In 2024, FINRA expanded its capabilities further with the launch of FILLIP, a large language model (LLM) powered chat tool. GenAI models process vast datasets to identify patterns, summarise content, and generate text-based outputs. According to FINRA, nearly 40% of staff use FILLIP each week for tasks including document analysis, drafting, comparative reviews, and risk assessments for member firms. The system can also evaluate data related to mutual funds and ETFs, supporting examination work linked to sales practices. These tools do not replace human expertise, but FINRA anticipates “many thousands of hours in annual efficiency gains from staff using the GenAI tools that are already deployed or in development, with more to come” as the organisation explores additional third-party solutions.
Alongside its internal developments, FINRA has continued to offer guidance to firms attempting to integrate GenAI responsibly. This includes Threat Intelligence Products (TIPs) sent directly to compliance teams, as well as ongoing engagement through outreach activities, roundtables, and conference sessions. FINRA has repeatedly emphasised that supervisory requirements under Rule 3110 remain unchanged regardless of the technology used. “A member firm must have a reasonably designed supervisory system tailored to its business. If a firm is using Gen AI tools as part of its supervisory system—for the review of electronic correspondence, for instance—its policies and procedures should address technology governance, including model risk management, data privacy and integrity, reliability and accuracy of the AI model.”
For FINRA, adopting AI is not simply a matter of efficiency but a response to the growing complexity and scale of market activity. But while the regulator continues to refine its own AI capabilities, many member firms are navigating a crowded marketplace of tools that vary significantly in quality and suitability. To successfully meet regulatory expectations, firms increasingly need technology built specifically for compliance—platforms that apply GenAI responsibly, unify disparate processes, and support a connected, future-ready oversight framework. In other words, firms need a compliance connectivity platform built with regulatory demands at its core.
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