FINRA Issues Notice on the Transition to Remote Work and Remote Supervision (Infographic)

Contact Us

Contact Us

[contact-form-7 404 "Not Found"]

The COVID-19 pandemic has significantly changed the way securities industry conduct their day-to-day operations. Firms were required to transit most of their workforce to remote work environments and implement remote supervisory practices. FINRA released a regulatory notice to share common themes on the transition to remote work and remote supervision after a discussion with small, mid-size and large firms about the steps they have taken for the smooth transition to the new workstyle.

In the notice, FINRA talks about different practices that could be followed by securities firms, which would enhance the supervisory efforts and compliance programs of the firms, including text messaging compliance. FINRA also reminded firms that they must continue to implement a reasonably designed supervisory system that is appropriate for their size and business model. FINRA has also recommended that firms must memorialize in writing any adjustment that has been made to their policies and supervisory procedures as a result of the pandemic.

FINRA

  1. Transition to the remote work environment

In their discussions with FINRA firms shared the challenges faced by them in their transition to remote work environments, implementing their business continuity plans (BCPs), shutting down their offices and branches and supporting their customers with these changes.

It has been noted that firms that used web-based tools, electronic document management systems and cloud-based services and regularly tested their remote connectivity prowess, capacity, work processes and trading capabilities faced fewer transition bottlenecks in their remote work management and supervisory environment.

The discussion also revealed additional efforts by firms related to remote work and physical office space.

  • Customer assistance – Firms helped their customers in navigating closed branches by providing information on back-up contacts for the firm, branch or associated persons and representatives. They also had to redirect phone calls and voicemails to centralized systems.
  • Location monitoring and updated contact list – Firms implemented remote working protocols including asking remote staff to report their location to their managers and requiring approval before making changes in their remote location. Staff was also given updated contact information on their assigned point of contact on compliance, legal, operations and other departments.
  • Additional staff support – To facilitate working remotely and to minimize the risks of using personal or unapproved systems and technology to conduct business, firms communicated clear guidelines about the firm’s expectation on working from home, gave virtual training to prepare for upcoming regulatory obligations, made available new collaboration digital platforms and applications and gave additional training on the use of new technology and tools.
  • Increased focus on confidentiality and cybersecurity – Confidentiality and cybersecurity gained increased attention from the firms and they provided additional guidance on confidentiality obligations concerning customer information, maintaining private workspace when working from home, taking additional precautions when working near family members or roommates and if necessary, employees must consider whether the employment of family members or roommates working from home raise any conflict of interest and if so report it to the firm. Firms have also provided information and training on the possibilities of increased cyber fraud while working from home.
  1. Supervision in a remote working environment – During discussions with FINRA, firms had acknowledged the challenges they had to face on remote supervision. But they were relatively prepared to remotely supervise their associated persons using existing supervisory tools. Some firms took the following additional steps to address various supervisory concerns and compliance issues like text messaging compliance.
  • General supervision – On many occasions, firms prepared to meet their regulatory obligations in the remote work environment by conducting additional testing of their remote supervision capabilities weeks ahead of the lockdown orders from the state or local authorities.

Provided additional guidance to supervisors on the increased importance of supervision of remote working, scheduled daily or weekly meetings with senior leadership and supervisors, created continuously open chat rooms to raise and solve concerns on compliance, sent reminders to supervisors on ongoing regulatory responsibilities and created new electronic supervisory checklists with attestations and electronic affirmation via voting buttons.

Firms also analyzed areas where they received increased alerts, customer complaints and exception reports to identify emerging and potential risks. Firms requested continuous feedback from staff and supervisors on determining effective practices and lessons learned on remote working.

  • Trading supervision – Some firms enhanced their supervisory capabilities by taking several measures. Before allowing anyone to engage in remote trading, some firms implemented additional screening and supervisory requirements. It includes requiring traders to complete attestations stating that they understand and will comply with relevant policies and procedures, focusing on critical compliance topics relating to remote work, such as information barriers, voice recordings, mobile devices, privacy and recordkeeping requirements. Remote working increased the use of instant messaging apps like WhatsApp and WeChat for business transactions. Firms made strict measures to make sure that text messaging compliance was adequately followed.

 Implemented the process whereby senior management has to approve each trader to work remotely. They tested the trader’s remote trading capabilities with an assigned in-office partner. Firms started a procedure where a formal memo was submitted to senior management describing the remote work arrangement with traders’ information, including remote location and planned trading activities, and feedback from the pilot review. All supervisors were required to complete a special supervisory checklist and they were also required to maintain and update daily a contact list of all remote traders for senior management.

Supervisors were asked to increase the frequency of their review, changed the existing thresholds relating to certain trade reports and alerts to increase the scope of their surveillance. Firms also made use of new communication tools in an attempt to replicate the line of sight supervision. Scheduled daily rollcalls and multiple check-ins per day. Implemented additional central monitoring and review of all supervisory activities.

  • Supervision on communication with customers – Firms acknowledged additional risks in customer communication during remote working and introduced measures to reinforce that associated persons must use only firm-provided and approved communication systems and tools, including firm email, messaging platforms and phones with recording capabilities for traders who require voice recording compliance and text messaging compliance.

Firms made procedures that required traders to follow text messaging compliance and use recorded lines for all business-related communications. To monitor phone calls, firms also required staff who were not previously subject to the firm’s voice recording requirements to use phone applications that recorded their conversations.

They also increased the frequency of supervisory review of email communications and implemented additional keyword search functionalities to identity communication outside approved firm systems and tools. In some cases, firms also disabled chat features in communications tools, that would be subject to recordkeeping obligations and text messaging compliance of firms that they could not fulfill in the remote work environment.

  • Branch inspections – During the discussions with FINRA some firms also confirmed that they adjusted their branch inspection programs to accommodate the remote working environment and resorted to a temporary, fully remote inspection plan using video conferencing, electronic document review and other technological tools.

About TeleMessage

TeleMessage captures and retains mobile content, including mobile SMS messages, voice calls, and WeChat conversations from corporate or BYOD mobile phones to ensure compliance with various data protection regulations. The messages are securely and reliably retained within TeleMessage servers or forwarded to your choice archiving data storage vendor.

Our mobile archiving products securely record content from mobile carriers and mobile devices for various ownership models (BYOD, CYOD, and employer-issued). With our multiple archiving solutions, you can always find the right tools or blend for your requirements:

TeleMessage offers cross-carrier and international mobile text & calls archiving for corporate and BYOD phones. Visit our website at www.telemessage.com to learn more about our mobile archiving products.

Skip to content