What is the primary function of FINRA?

The primary function of the Financial Industry Regulatory Authority (FINRA) is to regulate member brokerage firms and exchange markets. This role involves ensuring that the securities industry operates fairly and honestly while protecting investors. FINRA establishes rules and guidelines for brokerage firms, oversees the conduct of its members, enforces compliance with federal securities laws, and ensures that the markets operate smoothly.

By regulating member firms, FINRA aims to promote transparency, protect investors from fraud and unethical practices, and maintain market integrity. This is essential for fostering public confidence in the financial markets.

The other options presented do not capture the wide-ranging regulatory responsibilities and functions that FINRA embraces. For instance, managing a stock exchange directly falls outside of FINRA's purview; instead, exchanges have their own regulatory frameworks for operation. Acting as a lender to brokerage firms or overseeing the trading of municipal bonds does not reflect the overarching regulatory role that FINRA plays in the broader context of the securities industry.