Finra's big loss prompts move to raise fees

To help cover an operating loss, the Financial Industry Regulatory Authority Inc. plans to hike a number of user fees that it charges broker-dealers. “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,” Finra chief executive Richard Ketchum wrote in an e-mail to member firms last 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,” he wrote.

SUFFICIENT CAPITAL

The fee hikes would help “ensure that we are sufficiently capitalized to meet our regulatory responsibilities,” he wrote in the message. Mr. Ketchum didn't specify how much Finra lost last year. Finra spokeswoman Nancy Condon said that the amount won't be available until the organization files its audited results in the next few months. This year, Finra will be proposing fee hikes 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. [email protected]