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Regulation and Compliance > Federal Regulation > FINRA

5 Ways FINRA Will Spend Its Money This Year

By Melanie Waddell

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What You Need to Know

  • The regulator projects a 5% decline in revenue this year on declining corporate filings and trading volume.

The Financial Industry Regulatory Authority started implementing this year gradual fee increases in five areas — the Gross Income Assessment, trading activity, personnel assessment, registration and qualification exam fees, the broker-dealer self-regulator announced in its just-released 2022 budget.

As FINRA announced previously, starting this year fee increases are being phased in over a three-year period, with full implementation in 2024, to allow FINRA members sufficient time to plan for the fee increases.

FINRA said that it’s targeting the proposed fee increases to generate an additional $225 million annually once fully implemented. “This targeted revenue amount is calculated to bring FINRA’s revenues in line with its anticipated costs, based on FINRA’s projected revenue and costs.”

FINRA’s 2022 operating revenues are projected to be $1.09 million, a 5% decline from 2021, the regulator reported Monday.

“Our projection for 2022 reflects expected declines in corporate filings and in trading volume,” FINRA said.

FINRA states in the 2022 budget that it projects an increase in operating expenses during 2022 as it resumes “more normal activities, including increased travel, as well as higher compensation costs as we backfill vacancies and, where necessary, hire new staff to reflect the increased scope and challenges of our regulatory activities and responsibilities.”

FINRA also expects to have an operating loss in 2022, with a potential drawdown of reserves of about $164 million.

How does FINRA plan to spend its money?

  • $377.4 million, or 29%, on member supervision (which includes surveillance and examinations);
  • $201.0 million, or 16%, on market regulation;
  • $128 million, or 10%, on enforcement;
  • $86.8 million, or 7%, on credentialing, registration, education and disclosure; and
  • $51.4 million, or 4%, on dispute resolution.

Melanie Waddell

@Think_MelanieW

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