“There has been a decline,” Cook said at the event. “We have new broker-dealers coming in, but we have BDs leaving as well. That’s been happening for some time as well.”
Said Cook: “We have fewer leaving now than in the past, but we also have fewer entrants. We see the decline in the smaller BDs.”
While such a decline doesn’t have “a big impact on FINRA per se, it doesn’t affect our operations, but it does matter and is an area of concern…. part of the story is consolidation, smaller firms being absorbed,” Cook continued. “Does that mean the industry is contracting? Depends on how you slice and dice it.”
Cook reiterated similar comments that he made in July that he’s “worried” about the smaller pool of BDs. “I do think there’s a role for the smaller broker-dealers to play. They sometimes provide services to communities who otherwise might be underserved, and they sometimes provide access to capital markets, especially municipalities, that might otherwise be underserved. And small business is an engine of job growth and we should be thinking of this issue of wanting to promote that engine of job growth,” Cook said then.
Regulators, he continued, should look at the regulatory requirements and burdens on small firms.
“Are there things we can do to address those potentially through differentiation in our rules, or differentiation in the way we oversee firms, that will help create an environment where we can strike the right balance in terms of accommodating small firms and not compromising investor protection?”