An irreverent Wall Street Blog
FINRA Taxonomy News Release Isn't Newsworthy
October 28, 2022
FINRA seems to think that Wall Street was awaiting with great anticipation the fabulous news that FINRA had launched a machine-readable rulebook initiative. If FINRA spent money and time on its embedded taxonomy search thing, fine, just plug it in, turn on the switch, and make sure it doesn't blow a fuse. Inexplicably, FINRA felt compelled to publish yet another news release. Ironically, what FINRA sent out wasn't much in the way of news and sure as hell didn't seem that important. These days, it's not enough for regulators to just do their jobs. They need a ticker tape parade in the form of a press release and follow-on podcasts and videos.
The FINRA Press Release
A few days ago, FINRA issued this News Release:
FINRA Launches Machine-Readable Rulebook InitiativeThe Technology is Designed to Enhance Firms' Compliance Efforts, Reduce Costs and Aid in Risk Management
A lot of folks stopped what they were doing and read the above Press Release. Why? Well, for one thing, it's a release from a Wall Street regulator, and, you know, you could be tested on this stuff and it could be a closed book exam.
Stop the Presses: FINRA Announces INITIATIVE!!!
Apparently, FINRA thinks it's a big news event when the regulator announces an initiative. Not sure if my heart can take the shock of such an amazing development in the annals of Wall Street and technology. I better sit down. Okay, that's better, and now that I'm sitting, I'm going to slowly read the second paragraph from the FINRA News Release:
FINRA developed the machine-readable rulebook through the creation of an embedded taxonomy -- a method of classifying and categorizing a hierarchy of key terms and concepts -- that was applied or "tagged" to the 40 most frequently viewed FINRA rules. The taxonomy allows users to apply an enhanced search feature to find specific content by starting with a broad topic and then narrowing down to more specific topics through sub-categories and combinations of multiple terms.
Oh my! There's a machine-readable rulebook. There's embedded taxonomy. There's a hierarchy of key terms and concepts.
The Bear Head On FINRA's Boardroom Wall?
Hmmm . . . a machine-readable rulebook? As in a machine writes the rules and my brokerage firm buys another machine that reads the rules? As in there are no humans involved and Wall Street becomes the next season of "Westworld"?
Okay, I'll bite: What the hell is an "embedded taxonomy?"
Is that what happens when you shoot a bear and mount its head on the wall of FINRA's Boardroom?
Are these machine-readable rulebooks and taxonomy things "news" --as in newsworthy, as in worth publishing a press release about? Notwithstanding FINRA's characterization to the contrary, there's nothing in the October 21st News Release that's even remotely news. What we got is a bureaucracy trying to make nothing sound like an impressive something.
SIDE BAR: For a trip down taxonomy memory lane, read: "FINRA's Innovation Outreach Initiative And Fifth Harmony Taxonomy As Utilized In Fintech AI" (BrokeAndBroker.com Blog / July 31, 2018)
https://www.brokeandbroker.com/4107/finra-harmonized-taxonomy/
FINRA Cracks the Elusive Multiple Terms Combo!!!
Does FINRA think that an owner of a small FINRA broker-dealer was awaiting some revelation about the top secret FINRA initiative involving a taxonomy with an enhanced search feature?
Does FINRA think that its News Release was greeted with excitement when Chief Compliance Officers learned that
- a searcher can start searching via a broad topic and
- narrow that broad topic down to more specific, albeit less-broad topics, and
- then reduce those less-broad topics to the ever-popular sub-categories?
The BrokeAndBroker.com Blogobtained previously unreleased video of
FINRA's top-secret
TAXONOMY INITIATIVE a/k/a The Combo:
Death of a FINRA Salesman
ACT ONE
SCENE ONE
Somewhere at a Small FINRA Member Firm
Murray is the CEO, FINOP, CCO, Director of International Sales, Toilet Paper Changer, and Fixer of the 20-year-old Fax Machine.Harriet is Murray's daughter, handles the brokerage firm's margin issues, and calms down some angry customers from time to time.
MURRAY: Hey, Harriet I can't make any sense out of this FINRA News Release. What the hell is a taxonomy?
HARRIET: Yeah, I read that too -- I got no idea. Maybe we should call Lenny our CPA and see if he knows?
MURRAY: Why do they keep sending us this stupid bull-shit? Don't they think we got nothing better to do with our time?
HARRIET: C'mon Dad. Calm down. Remember your blood pressure.
MURRAY: Don't tell me to calm down. And stop with the damn blood pressure thing all the time. FINRA drives me nuts. I'm sure some examiner is gonna write us up for not having a working taxonomy and then it's gonna cost me a few thousand dollars in fines, and then they'll want me to pay some consultant a few thousand bucks on top of that to create this taxonomy thing, which will sit in some cabinet along with those Written Supervisory Procedures we paid an arm and leg for.
HARRIET: Hold on, just give me a sec here to read some of this. Okay, here, this looks like an explanation. Let me read this to you from the FINRA News Release:
As part of this initiative, FINRA has created a prototype of a rulebook search tool-the FINRA Rulebook Search Tool™ (FIRST™). This enhanced search feature is designed to help users, including market participants and members of the public alike, to efficiently identify potentially relevant FINRA rules and their associated requirements using the taxonomy terms. FINRA has launched the FIRST search feature through a user interface on the FINRA website.
MURRAY: Is that English?
HARRIET: C'mon Dad, this looks serious. I don't think FINRA would have sent out a press release if it wasn't important. We better figure out what we need to do in order to update whatever FINRA wants us to do so that we're in compliance with this taxonomy initiative thing. You ever hear of a "prototype of a rulebook search tool?"
MURRAY: A prototype? You mean that little dog in the "Wizard of Oz?"
HARRIENT: No, that's Toto. I think the prototype has to do with us searching for some explanation about a FINRA rule.
MURRAY: You mean something different from just going on Google, typing in a search like "FINRA AND Margin" and then clicking on the appropriate FINRA Rule?
HARRIET: I'm not sure. Could be the same thing.
MURRAY: Sounds like it, no?
HARRIET: Yeah but the prototype thingy is being called the "FINRA Rulebook Search Tool" or "FIRST."
MURRAY: You know how I hate those acronyms. Always means it's nonsense. I got one for them: the "FINRA Universal Compliance Kit."
HARRIET: Yeah, you send that one into FINRA. I'm sure they'll love it. But seriously, Dad, let me read a little more of this release and, okay, I'm going to re-read this paragraph again, slowly, and see if it helps:
In addition, FINRA is offering access to the taxonomy terms that have been tagged to each of the 40 rules through an Application Programming Interface (API) -- a software intermediary that allows two applications to communicate and interact with each other. This feature can enable member firms seeking to automate compliance functions to link the FINRA rule content and the taxonomy terms to their internal compliance policies and procedures, where appropriate.
MURRAY: You okay, kid? All the color just drained out of your face.
HARRIET: I really don't understand any of this. I'm lost. I think we need to buy something called an API. I never heard of it but it sounds like it's expensive.
MURRAY: What the hell is an API?
HARRIET: They say it's a software intermediary and -- not sure what that is either -- but, lemme see here, this intermediary API thing supposedly allows two applications to communicate and interact with each other.
MURRAY: What do you mean two applications?
HARRIET: I guess like, computer applications . . . like those things on the iPhone that we push.
MURRAY: Then why can't I just use the iPhone? Why do I need to buy an API? Is that made in China or the USA?
HARRIET: Dad, I'm just telling you what FINRA is saying here. We're going to need to buy an API in order to . . . it says here, in order to efficiently identify potentially relevant FINRA rules and their associated requirements using the taxonomy terms.
MURRAY: Are they serious? Fifty years I've been in this business and now I can't even understand what a news release says. Move over, let me put my glasses on and see if I can make any sense out of it. Okay, it says there that:
The taxonomy applied to the FINRA rulebook is also made available through an API interface. APIs can facilitate how developers integrate new application components into their existing technology frameworks. Through the rulebook API on the FINRA API Platform, firms can ingest the rule content along with taxonomy terms applied to each of the 40 tagged FINRA rules. This would enable member firms to develop an integration that links the rule content and taxonomy terms to their internal compliance policies and procedures, where appropriate.
END SCENE
END ACT
END PLAY
END SMALL BROKERAGE FIRM