Finra aims to hike fees due to 'significant loss'

Plans to boost, among others, advertising review charges and trading activity fees; increases up to 50%

Apr 24, 2012 @ 2:48 pm

By Dan Jamieson

The Financial Industry Regulatory Authority Inc. plans to hike a number of user fees it charges broker-dealers to help cover a "significant loss" from last year, said chief executive Richard Ketchum.

"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," Mr. Ketchum said in an e-mail to member firms Monday.

As a result, "we are proposing adjustments to a number of user-based fees, all of which have remained static for more than five years," Mr. Ketchum wrote.

The fee hikes would help "ensure that we are sufficiently capitalized to meet our regulatory responsibilities," he said in the message.

Mr. Ketchum didn't specify how much Finra lost last year. Finra spokeswoman Nancy Condon said the amount will not be available until the self-regulator files its audited results in the next few months.

For this year, Finra will be proposing a hike fees for advertising reviews, corporate financing and new-member applications, Mr. Ketchum told members.

In addition, a 25% increase in the trading activity fee will be proposed. For next year, Finra will propose an unspecified "regressive tiered rate" for branch office assessments, and hikes in various registration and disclosure fees.

Overall, the proposed hikes range from around 5% to 50%.

The fee hikes are needed despite $36 million in spending reductions that were implemented in Finra's 2012 budget, Mr. Ketchum said.

A new board-level pricing working group and Finra's small-firm advisory board have offered input on the changes, Mr. Ketchum added.

"None of us welcome fee increases, but we understand the rationale," said Mark Cresap, chairman of the small firm advisory board and president of Cresap Inc.

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