FILE PHOTO - A sign for the Financial Industry Regulatory Authority (FINRA) is seen outside the offices in New York's financial district July 22, 2015. REUTERS/Brendan McDermid

(Reuters) - Wall Street’s industry-funded watchdog on Thursday said it plans to be more transparent about its process for determining when a securities brokerage qualifies for a reduced penalty in exchange for so-called “extraordinary cooperation.”

The Financial Industry Regulatory Authority (FINRA) said settlements it reaches with brokerages for regulatory violations will include more explanation about why FINRA deemed the cooperation to be “extraordinary” and what type of credit the regulator applied to reduce the sanction.

The change, published in a regulatory notice, is the latest effort by a U.S. financial regulator to highlight cooperation programs, which they say are central to their enforcement efforts.

FINRA’s updated guidance comes as other U.S. financial regulators, including the Commodities Futures Trading Commission (CFTC), are ramping up their cooperation programs to enhance their enforcement efforts.

By offering reduced penalties to firms and individuals who self-report lapses and cooperate in probes, CFTC enforcement chief James McDonald has spurred executives to lead his team to other misconduct and offenders.

Brokerages that run afoul of FINRA regulations can qualify for leniency by bringing the misconduct to FINRA’s attention, voluntarily implementing corrective measures and giving “substantial assistance” to FINRA during its investigation, among other measures, FINRA said.

FINRA, which announced its “extraordinary cooperation” program in 2008, revised its guidance about the program on Thursday to clarify some questions that later arose in the industry after FINRA adopted additional rules.

Those rule changes, including one that requires brokerages to report conclusions about legal and conduct violations that surface during internal reviews, triggered questions about whether brokerages could still receive credit for self-reporting misconduct, the regulator said.