The Financial Industry Regulatory Authority (FINRA) plans to increase a number of broker-dealer fees this year and next in an effort to recoup a “significant loss” in revenue the BD regulator suffered in fiscal year 2011, Richard Ketchum, FINRA’s chairman and CEO, told BDs on April 23.
A week before Ketchum’s announcement, FINRA Board of Governors passed a number of rule proposals to increase several user-based fees, branch office and membership application fees, and the Trading Activity Fee.
Said Ketchum (left) in a letter to broker-dealers: “The broader economic downturn continues to affect trading volumes and industry revenues, which in turn has led to a decrease in FINRA’s revenues and resulted in a significant loss for fiscal year 2011.”
In light of this, Ketchum continued, “we have taken a hard look at spending across FINRA to be sure we are operating as effectively and efficiently as possible. This review has resulted in significant spending reductions of $36 million that were implemented as part of our 2012 budget. Cumulative savings from this effort will reach nearly $60 million by the end of 2013.”
Despite this effort, he said, “the cost of meeting our regulatory mandate is still expected to outpace our revenues.” With input from the Small Firm Advisory Board, Board of Governors and a new Board pricing working group, FINRA is proposing adjustments to a number of user-based fees, “all of which have remained static for more than five years—with many of them not being adjusted in the last 10 years,” Ketchum said. The proposed user fee adjustments “offer the fairest approach to modernizing FINRA’s revenue structure.”
Changes are also being proposed to branch office and membership application fees. “These adjustments reflect the expansion of these programs and are necessary to keep pace with the cost of conducting branch exams and application reviews,” he said.
In addition, FINRA is proposing to increase the Trading Activity Fee, “which we will adjust every six months (up or down), based on trading volumes,” Ketchum told BDs.
A FINRA spokesperson told AdvisorOne that the pricing proposals, which must be approved by the Securities and Exchange Commission, will affect BDs of all sizes.
FINRA’s 2012 Pricing Proposals Are as Follows:
For regular filings, increase the minimum fee from $100 to $125 per filing and maintain the fee of $10 per page over 10 pages. For expedited filings, increase the minimum fee from $500 to $600 per filing and increase the fee from $25 to $50 per page over 10 pages.
Corporate Financing Fees