What Is FINRA | Espresso Labs

FINRA (Financial Industry Regulatory Authority) is the largest independent regulator for all securities firms doing business in the United States. It oversees more than 3,400 broker-dealer firms and approximately 630,000 registered securities representatives, operating under the oversight of the Securities and Exchange Commission (SEC).

The Short Answer

FINRA is a self-regulatory organization (SRO) that writes and enforces rules governing the conduct, operations, and technology practices of broker-dealers and their employees. Unlike federal laws such as GLBA or HIPAA, FINRA compliance is enforced through a private regulatory body with the authority to fine, suspend, or bar firms and individuals who violate its rules.

From a cybersecurity standpoint, FINRA does not have a single comprehensive cybersecurity regulation. Instead, it enforces cybersecurity requirements through a combination of its own rules (particularly Rule 4370 on business continuity, Rule 3110 on supervision, and Rule 17a-4 on records), SEC regulations, and ongoing examination and guidance.

What FINRA Regulates

FINRA regulates broker-dealers across several key areas relevant to cybersecurity and compliance:

Business Continuity Planning (Rule 4370)

Every FINRA member firm must maintain a written Business Continuity Plan (BCP) that addresses how the firm will respond to significant business disruptions — including cybersecurity incidents. The BCP must cover data backup and recovery, mission-critical systems, financial and operational assessments, and customer communications during disruptions.

Supervision (Rule 3110)

Firms must establish and maintain a supervisory system that includes written supervisory procedures (WSPs) for all activities, including technology and cybersecurity practices. Examiners regularly review whether firms’ WSPs adequately address cyber risk.

Records and Recordkeeping (Rules 17a-3, 17a-4)

Broker-dealers must maintain and preserve specific business records in formats that are resistant to alteration — including electronic communications, trade records, and customer account information. Cybersecurity controls that protect the integrity and availability of these records are a direct compliance requirement.

Cybersecurity Examinations

FINRA conducts routine examinations of member firms and regularly publishes examination priorities that include cybersecurity. Key areas examiners evaluate include:

Governance and risk management frameworks
Technical controls (MFA, encryption, patching, access controls)
Vendor and third-party risk management
Incident detection and response capabilities
Branch office security
Customer data protection practices

FINRA’s Cybersecurity Guidance

FINRA has published several key resources that effectively establish cybersecurity expectations for member firms:

Report on Cybersecurity Practices — outlines core controls FINRA expects firms to have in place
Regulatory Notice 11-39 — guidance on business continuity planning for technology disruptions
Regulatory Notice 15-09 — comprehensive cybersecurity guidance including governance, controls, and incident response
Annual Examination Priorities Letters — identify specific cybersecurity topics examiners will focus on each year

How Espresso Labs Helps

Espresso Labs delivers the technical controls and documentation that FINRA examiners look for — MFA, encryption, access management, patch management, incident response, vendor oversight, and written supervisory procedures for cyber risk — as a continuously managed service. We keep your firm examination-ready year-round without requiring a dedicated compliance team.