There are many reasons for regulators to support broker-dealers performing required inspections of branch and other office locations remotely, including but not limited to:

• They are an effective means of inspection for lower-risk locations in an industry that has evolved dramatically since Rule 3110 was implemented;
• They allow firms to focus resources on higher-risk locations;
• The technological tools to conduct remote inspections are widely available and cost-effective for firms of all sizes and resources; and
• Firms can recruit and retain qualified inspection and supervisory staff only if they offer workplace flexibility.

The securities industry operates in a highly regulated environment with rules governing the registration and supervision of personnel including financial advisors, supervisors, investment bankers and traders as well as their office locations. These rules are decades-old and based on an industry and investors that relied on paper and in-person interactions. They do not consider technological investments made by the industry to their supervisory programs and customer experiences. SIFMA believes that regulators must work with the industry to update these rules and their related requirements.

To start, we believe that firms should be permitted to perform remote inspections of branch offices using a risk-based approach, which they were forced to do – and did so successfully – during the pandemic. We support the voluntary, three-year remote inspections pilot program proposed by FINRA in August 2022. We further support re-examining rules governing supervision, including the definitions of branch office and Office of Supervisory Jurisdictions, and inspection requirements for locations that do not engage in customer-facing activities.