Something's Coming From FINRA But I Don't Know What It Is

January 27, 2021

As heralded and trumpeted in the "Episode Notes" in "Revolutionizing the Digital Experience: Form U4 and FINRA Gateway" (FINRA Unscripted / January 26, 2021)

For the last couple of years, FINRA has been working to revolutionize the digital experience of firms, particularly when it comes to registration and disclosure. Now many of these changes have come to life through the new FINRA Gateway and a new Form U4 filing experience.

On this episode, we talk to Credentialing, Registration, Education and Disclosure's Noah Egorin and Technology's Claudia Holanda to hear about recent changes and what firms and registered reps alike can expect going forward as FINRA continues to iterate and improve the digital experience.

Something's Coming

Oh wow. Oh my. Oh gosh!!!

FINRA says that there is going to be a new Form U4 or, at least the form itself may not really be changing, but it will be more digitized and functional, and, well, you know, someone decided that the older, online document needed more bells and whistles, and then, when we log back onto the old, comfortable version, we find a new, unfamiliar version, and we can't quite figure out how to use the newer iteration, but, sure, over time, we get a handle on things, and after a lot of cursing and revised versions and updates, we figure out what we need to do, but we never quite understand why they futzed with something that was perfectly serviceable for a long time notwithstanding that they published an explanation that sort of seemed like it made sense, but for the fact that it doesn't but, hey, like I'm going to admit that I'm the only one befuddled by all the techy-sounding verbiage? 

All of which reminds me of those lyrics from that "West Side Story" tune "Something's Coming": 

Something's coming, something good, if I can wait
Something's coming, I don't know what it is
But it is gonna be great

And for the FINRA member community and its associated persons, something's coming in the form of a new but not actually new Form U4, and, even after listening about this newfangled form, I still don't know what it is but if you go by what FINRA's saying, well, gee it is gonna be great!

Unfortunately, when digitization is involved, we get buried under acronyms and all the alchemy by which large organizations transform a simple concept into something inexplicably more complex. As Nietzsche so aptly observed: "Every deep thinker is more afraid of being understood then of being misunderstood." 

And so, dear readers, let me cite some of the actual spoken words in the January 26th FINRA Unscripted podcast:

A Matter of Street CRED?

CRED is short for Credentialing, Registration, Education and Disclosure. It's the unit that many people probably formerly knew is RAD, or Registration and Disclosure. However, as our unit has evolved to include testing and continuing education programs, we felt it was important to rename the unit to really better represent the breadth of responsibility.

Bill Singer's Snarky Comment: CRED??? Someone actually thought we needed to change RAD to CRED?  Wow, like, dude, that's totally rad, even if it's no longer the '80s. Maybe FINRA should re-think the mere CRED thing and expand that acronym into something like the "Strategic Transitional Repositioning Efficiency Excellence Team for Credentialing, Registration, Education and Disclosure" or "STREET CRED."

It's New But Not Changed

[I]t's the same U4, it's a new filing experience. So, we always want to highlight that. It's really important to understand that the questions haven't changed on the form. The requirements of the form haven't changed. The guidance around the form hasn't changed. Just the way that FINRA collects that information has changed.

Bill Singer's Snarky Comment: Ummm . . . what? It's the "same" but it's "new" and nothing has actually "changed."  And FINRA wonders why so many member firms and associated persons have to pay the big bucks to hire lawyers like me?  Ya gotta love Wall Street regulation -- a whole podcast to tell us about a new form with the same old questions and guidance. Clearly, we all have very different ideas of what's old, what's new, and why FINRA is spending precious funds on some podcasts. I can't wait for the new podcast from my local grocery store explaining that they're going to be selling new apples, which will be picked from the same trees in the same orchards and are the same varietals but they're now going to be collected from the left rather than the right side of the trees. 

Are You Data Collection Experienced?

[W]hile we need to create those statutory forms, we don't have to let you interact with the form to create them. So, our ability to separate data collection or the data collection experience from the form itself creates those opportunities, which we hope to bring forward in future releases and updates to the filing experience. . . .

Bill Singer's Snarky Comment: Lemme explain this to you. They created statutory forms -- not mere forms but ones that are statutory, which, I'm guessing means that they look like "David" in the Galleria dell'Accademia, Florence, Italy, or "Liberty" in New York Harbor, or, that headless "Winged Victory of Samothrace" in the Louvre in Paris, France. Moreover, they've created those statutory forms so they "don't have to let you interact with the form to create them." Gee, that's nice but it might be nicer if I really understood why they don't want me to interact with the form.  Maybe if I ponder it for a while, I will grasp the point. Nah . . . didn't work. I pondered. I'm still lost. Among the things that are still tripping me up is the difference between FINRA's so-called ability to separate data collection from the data collection experience. The data collection experience? I thought they broke up when Jimi Hendrix left in 1967.

Classical Gas

[O]nce again, that would become available in parallel to the classic filing experience with a transition period to then retire the old functionality. But that'll happen over a period of time. And then you'll see the other forms come online behind that. . . .

Bill Singer's Snarky Comment: Somone's been inhaling the purple haze. The new, digital form will become available in "parallel to the classic filing experience." Not around it. Not near it. Not perpendicular to it. But, wow, man, groovy -- it's gonna be parallel to it. Think of a multiverse and a parallel FINRA universe. Think of classical gas.

The FINRA Mental-ity Case

A lot of the incremental change is driven by our mentality as an enterprise, not just from the CRD team. But once again, if we built in smaller chunks, we have time to fix things. We have time to introduce items to firms in smaller pieces so they can provide feedback. We have the ability to help firms adjust to those transitions as opposed to just dropping 21 years' worth of functionality. And then when you start adding in the rest of FINRA's applications, the Report Center, FOCUS, the form filing applications, it becomes a very big change when you're not just talking about building a new piece of software that works exactly the same. Firms have built procedures, operations, repeatable processes, testable operations based on the software we've built. And we need to give people a chance to adopt, change and make sure we're adding value along that path. So, if we do make a decision that doesn't create value for the firms, creates a burden, we have the ability to quickly address that.

Bill Singer's Snarky Comment: I betcha didn't know that FINRA had a "mentality." Oh yes, FINRA has an enterprise mentality, and it's built in smaller chunks. Smaller than what? Is smaller better? Apparently, those bite-sized chunks give the digital team time to fix things, which is good because if things break, we all know how long it takes for any enterprise mentality to fix the broken stuff. Otherwise, hell, FINRA would drop 21 years' worth of functionality into your laps and that's one helluva mess to try and clean up -- and that's not even addressing how you're going to explain that gooey mess in your pants when some FINRA examiner is doing an on-site examination and notes the 21-year-build-up in your lap. 

The Hard Stake

So, we haven't yet announced a date and it will take time. We don't want to just put a hard stake in the ground and say "this is the date" because we are being driven by the data that we receive and the feedback we receive. If we see adoption not occurring as quickly as we need to, we can move that time frame. If we see feedback that says you got it wrong or it really needs more to be able to really replace what we do because of this very good reason, we can do that. And similarly, what we found is if we set a date and something happens, the communication process for us to help the industry understand, "hey, we had to move that date," takes effort and time and people may miss it. So, we want to communicate in smaller chunks.

We don't want to say on a specific date it's going to happen because we want to be agile, we want to be flexible and want to be receptive to the industry's feedback, concerns and communication. And we've already done that once. We originally had a date for the U4, the industry's impact to COVID, it was said, "wait a minute, this is a really bad time for us to make that change." And we had the ability to change our path.

To be honest, originally, we were going to just hard switch that U4 one day. They said, "you know what, parallel is better," and we were able to take that feedback and move forward. And in some cases, if our software has flaws or bugs, we have the ability to adjust that. And those are all important factors as we decide hard dates, soft dates or whatever other dates we need to pick. But we will try to communicate sufficiently. We will try to, as much as possible, communicate the parallel time frames. At this point, we're trying to give at least 90 days before we shut any feature down and try to keep parallel nature running when possible.

Bill Singer's Snarky Comment: I always wondered what happened to that Dracula fellow but now I know. He's part of the STREET CRED team. Dracula is apparently on FINRA's payroll because someone at FINRA is putting a hard stake in the ground. 

Maybe I'm placing too much emphasis on the whole vampire stake thing. Maybe I should be focusing more on FINRA's promise to move the time frame. As Einstein and Steven Hawking would explain, however, moving time is a very tricky task because the space-time continuum doesn't like to have its parts moved, and when someone interferes with the continuum, it pushes back. That can get nasty. It can cause a black hole. It can cause a rift in the continuum. Which is why FINRA is not going to opt for the hard switch but the parallel one, and maybe that means a hard date or a soft date or the very rare whatever-other-date but at least FINRA will try to give you 90 days before shutting a feature down and altering the trajectory of life as we know it and the very fabric of the Universe, ours and the multiple others in the multiverse.