After 20 years supporting its member Broker-Dealers at FINRA, Chip Jones knows a thing or two about compliance. Here, after nearly a year with Global Relay as its Executive Vice President of Compliance, he talks about the future of regulation for the investment advisory sector, as well as gaining a different perspective since transitioning to the world of technology-focused solutions.
You joined Global Relay nearly a year ago after almost 20 years at FINRA. What attracted you to the company?During my time at FINRA overseeing Member Relations and Education, I thoroughly enjoyed helping broker-dealers comply with FINRA rules by creating resources and providing educational content to help ease the compliance burden. Moving over to Global Relay was really an extension of that goal, albeit with a for-profit company as opposed to an SRO. When I took early retirement from FINRA last year there was only one company I was interested in working with, and that was Global Relay.
I had come to know Global Relay’s Founder and CEO Warren Roy, and Shannon Rogers, our President and General Counsel, over the years and was impressed with what they had instilled in the organization. The company’s vision, industry-leading products, and unparalleled customer service made it the only choice for me. I am excited to be part of a company that continually reinvests in itself and builds its own technology to help firms master their compliance and supervision obligations in a dynamic electronic communications landscape.
How is life working for a commercial vendor as opposed to a regulator?
As I mentioned, helping firms continue to comply with securities laws and regulation specifically from the technology solution side was an exciting transition. Since joining I have seen first-hand the magnitude of what can be accomplished with the right technology, and beyond pure recordkeeping and compliance to help customers gain actionable insight from their data, especially as more data sources emerge. Global Relay’s roadmap primes financial firms exceptionally well for that trajectory.
What are the big challenges for broker-dealers generally as costs of compliance increase and industry consolidation continues?
Increasing regulatory arbitrage within the investment advisor industry is one of the biggest challenges in my opinion. Broker-dealers are saddled with a much higher level of regulatory scrutiny than investment advisors, and while rules for the latter are starting to tighten, the level of regulation broker-dealers are facing continues to grow.
In addition to the volume of regulatory requirements, there is also the frequency of exams by FINRA, the SEC and state regulators. FINRA examines every broker-dealer a minimum of every four years, and more frequently based on size and risk. On the flip side however, the SEC still maintains a list of investment advisors “yet to be examined.” In fact, the SEC’s 2021 Examination Priorities Report, regarding RIA exams stated that, “While the Division has made great strides to improve the coverage rate, the risks of diminished coverage, quality, and effectiveness are possible without further support. Ultimately, this trend is concerning and a focus for the Division of Examinations.” This regulatory arbitrage has also initiated another two trends; 1) Firms dropping their broker-dealer registration and becoming solely RIAs and 2) Broker-dealer consolidation, where smaller firms are associating with larger ones who can better withstand the regulatory and operations workload.
At the same time, the increasing volume and complexity of communications that has to be monitored has become a pressing issue for our customers as it directly affects their recordkeeping obligations. Technology solutions that help firms consolidate supervision across multiple platforms to keep pace with evolving requirements and maintain compliance will be key.
If you could start over and not be a regulator and compliance professional, what would you go into now?
The profession has not typically been one of those where you graduate from college and go: “Oh boy I can’t wait to be a securities regulator!” But an opportunity presented to me fresh out of college from the Virginia Division of Securities happened to pique my interest and the rest as they say is history. I have had a fantastic 34-year journey to this point and have made many friends along the way. Joining the team at Global Relay has enabled me to contribute valuable skills and insight that I know will shape how we continue to support our customers, and also be a part of Global Relay’s own growth journey.
But, if I could start over, I would have worked harder on my golf game in hope of being a professional golfer.
What’s next for Global Relay?
We recently launched our brand new website, which better reflects our capabilities across diverse compliance needs, as well as how we meet these with one, fully compliant end-to-end system. We call this Connect Collaborate Discover.
Artificial Intelligence (AI) is also a central tenet of Global Relay’s solution moving forward. We are now working with our customers to optimize AI where our models will help our customers identify common characteristics and patterns for those regulatory policies that are difficult to capture with lexicons alone.