| NEW YORK
NEW YORK May 22 An industry-funded watchdog is
beefing up its aging technology as it takes on broader oversight
of U.S. stock trading and seeks to manage both a new
surveillance program and data-collection system that will usher
in an era of big data on Wall Street.
The Financial Industry Regulatory Authority is preparing to
build the initial phases of a mammoth broker data-collection
system in 2015 known as the Comprehensive Automated Risk Data
System, or CARDS, pending approval from the U.S. Securities and
FINRA also is one of 10 bidders to run the consolidated
audit trail, or CAT, an industry-wide order-tracking system that
will replace an existing FINRA system. The SEC ordered the CAT
after it took months for regulators to reconstruct trading
during the "flash crash" in May 2010.
The number of people employed by FINRA in technology has
grown to about 1,100 from several hundred a few years ago as the
regulator won surveillance responsibilities away from the stock
exchanges and related efforts, said Steven Randich, chief
information officer at the agency.
The jump in FINRA's technology staffing comes after major
glitches that roiled trading on Wall Street, including the
bungled Facebook IPO and the sale of brokerage Knight Capital
after a trading loss of more than $460 million - both in 2012 -
and a three-hour trading halt on Nasdaq last year.
FINRA was not to blame for the incidents, but they put
technology front and center on Wall Street. The CAT is likely to
be the second-biggest data center after the National Security
Chairman and Chief Executive Officer Richard Ketchum said
FINRA has increased its technology staff the past three to four
years, both through new hires and converting contractors to
"We have completely overhauled our technology side," he told
reporters on Tuesday at FINRA's annual conference in Washington.
FINRA has been overhauling its tech team by aggressively
hiring people with expertise in cloud computing and managing
systems that store and process massive amounts of data, he said.
Ketchum pointed to the hiring a year ago of Randich, who
formerly worked at Citigroup Inc and Nasdaq OMX Group.
Randich acknowledged on Wednesday that FINRA's technology
has not been ideal. Technology was outsourced in the past, which
did not allow FINRA to control and manage it well, he said.
"It was a bad idea, and we suffered the consequences, which
is why we brought it in," Randich said on the sidelines of an
Inside Market Data conference in New York.
Randich said the scale and capacity of FINRA's existing
technology was constrained. It was also hampered because the
regulator interacted with securities firms as silos, or isolated
cases, which Randich expects to change.
"I'm trying to consolidate all of that, so that the firms
are dealing with FINRA in a much more automated (way), less
paper, less forms and more automatic transmissions," he said.
(Reporting by Herbert Lash and Suzanne Barlyn; Editing by Jan