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January 18, 2018 at 05:00 AM
The Financial Industry Regulatory Authority on Thursday morning released its annual budget for the first time, stating that despite “revenue challenges,” FINRA will not increase member fees.
Projected revenue is flat for 2018, at about $822 million.
“FINRA is to be applauded for an unprecedented level of transparency into its budgeting process and financial challenges,” Brad Bennett, former FINRA enforcement chief who’s now a partner at Baker Botts in Washington, told ThinkAdvisor.
“The 2018 budget underscores the magnitude of the operational hurdles faced by FINRA and the need for significant belt tightening,” Bennett adds, pointing to the $136 million in reserves that FINRA is “committed to spend to make up for the revenue shortfall.”
The self-regulator’s 2018 budget “sends a clear signal that FINRA intends to wean itself off of its reliance on enforcement fines to bring its revenues in line with its expenses,” Bennett said.
“In my experience,” Bennett continued, “enforcement decisions were never driven by revenue considerations but rather by the merits and facts of the case before FINRA. However, the industry will surely appreciate the absolute visibility into how enforcement fines are spent.”
FINRA’s budget states that assets under management by member firms have increased, the number of registered representatives has remained largely constant and innovations in fintech and other areas present new challenges.
