FINRA Files to Raise Fees Starting in 2025

The Financial Industry Regulatory Authority has announced that broker-dealers of all sizes will face an annual fee increase over the next five years.

The median large firm will pay 5.4% more in annual fees, phased in gradually starting in 2025. The increase will help FINRA combat revenue challenges.

The median aggregate increase for large firms — those with 500 or more registered persons — by 2029 relative to today would be approximately $415,000, FINRA said in a blog post.

"Approximately three-quarters of these [large] firms would experience an annual increase between 4.0% and 6.9% between 2025 and 2029," FINRA said Tuesday. "Holding revenues constant at 2024 levels, total regulatory and use-based fees would increase from 0.18% to 0.23% of FOCUS reported revenues on average. This group includes 141 firms and represents 4.3% of all FINRA members."

FINRA has filed the proposed rule change with the Securities and Exchange Commission to be effective immediately upon SEC approval.

The proposed rule change will be phased in over a five-year period beginning on Jan. 1, 2025, with full implementation of all proposed fee changes by 2029.

Fee increases for midsize and small firms would be as follows:

• The median micro firm would anticipate an annual increase of 3.4%, translating to a dollar increase of $625.
• For other small firms, the median firm would anticipate an annual increase of 3.9%, translating to a dollar increase of approximately $4,135.
• The median midsize firm would anticipate a 5% annual increase, translating to a dollar increase of approximately $82,500.

“Taken together, the proposed rule change is projected to generate additional revenue of between $40 million and $160 million each year compared to the previous year from 2025 through 2029,” FINRA said.

Cumulatively, FINRA continued, the proposed rule change “would increase FINRA’s annual fee revenues by an estimated $450 million (once fully implemented in 2029) as compared to the annual fee revenues that would have existed in the absence of the proposed rule change,” according to the broker-dealer self-regulator. The plan “is calibrated to cover FINRA’s projected budget deficit and achieve a balanced budget by 2029.”

A minority of fees would go into effect in 2025, most fees implemented in 2026 or later, and several fees phased in over several years between 2025 and 2029, FINRA said.

“Thus, under the proposed rule change, FINRA would aim to collect more than 90% of the revenue it seeks to raise in 2026 or later,” FINRA said.

After implementing the planned adjustments, total revenue across all FINRA fees is projected to increase at a compounded annualized growth rate of 5.3% between 2025 and 2029.

Brad Bennett, former FINRA enforcement chief, told ThinkAdvisor Wednesday that the fee proposal is "reflective of the financial tightrope FINRA is trying to walk between continuing operating losses and the need to invest in the CAT [Consolidated Audit Trail] and other technology initiatives."