FINRA Plans Fee Hike as Early as Next Year

By Melanie Waddell

News May 24, 2021 at 03:34 PM

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The Financial Industry Regulatory Authority plans to gradually raise regulatory fees between 2022 and 2024, the broker-dealer self-regulator states in its newly released budget.

This year marks the eighth consecutive year that FINRA has not increased fees, FINRA's budget states; "as a result, FINRA has drawn down approximately $700 million from its reserves since 2010."

The budget's intro notes FINRA's previous plan that was filed with and published for comment by the Securities and Exchange Commission in 2020 "pursuant to which FINRA will continue to draw down excess reserves over the next four years," and will begin to gradually increase regulatory fees between 2022 and 2024.

"This delayed phase-in period for increasing fees is intended to provide time for member firms to plan accordingly and will be enabled through the continued use of our excess reserves," according to FINRA CEO Robert Cook and FINRA Chairwoman Eileen Murray.

2021 Net Loss

FINRA expects to report a loss for 2021, with a potential drawdown of its reserves of about $187.5 million.

However, in practice, FINRA's actual net income or loss — to be reflected in its 2021 Annual Financial Report to be published in June — "will ultimately include fines, investment returns and other accounting adjustments (including consolidated subsidiaries such as the FINRA Investor Education Foundation and FINRA CAT, LLC)," FINRA states.

Where the Money Goes

FINRA plans to spend $327.5 million on member supervision; $175.9 million on market regulation; $113.9 million on enforcement; $77.5 million on credentialing, registration, education and disclosure; and $47.1 million on dispute resolution.

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