FINRA has requested approval from the SEC to increase member fees to address the costs of supervising the industry.
In the proposal, FINRA outlines a phased approach to fee increases between 2025 and 2029, ultimately aiming to boost its annual fee revenues by $450 million, with total fees growing at a compound annual rate of 5.3% over this period.
The rise in expenses is largely attributed to increased salaries and accelerated hiring to meet expanding enforcement mandates, as well as higher spending on technology, including cybersecurity and data storage, according to FINRA’s submission.
FINRA highlighted the anticipated fee increases in its annual report from July, noting a net operating loss of $119 million in 2023, double the $60 million loss from the previous year, as reported by industry media. The regulator also expects to record further annual losses at the close of this fiscal year.
The implementation of new SEC mandates, including Reg BI, has required “substantial investments,” stated FINRA.
The increases will apply to a range of fees, including membership, qualification exams, arbitration, and other services. Some fees, such as the routine branch fee, will increase for the first time since 2013.
Registration fees will rise in 2028. For example, firms will need to pay $175 to submit a file for transferring a hired broker’s license, compared to the current $125. The cost of filing a U5 termination notice will increase from $50 to $70, as estimated by AdvisorHub.
Firms with more than 500 brokers will face over $400,000 in additional fees by 2029, according to the proposal. Firms with 10 to 150 brokers will see their contributions rise by more than $4,000 over the next five years.
The last time FINRA proposed fee increases was in 2022, with a plan to fund its operations up to this year, resulting in a total increase of $225 million.
