Grygo is chief content officer for FTF.
Without much fanfare, the Financial Industry Regulatory Authority (FINRA) announced earlier this month via an Information Notice that it had to raise certain fees controlled by the SEC by 59 percent.
“The fees that FINRA controls are staying flat,” a FINRA spokesperson tells FTF News.
“Effective April 16, 2019, the Section 31 fee rate applicable to specified securities transactions on the exchanges and in the over-the-counter [OTC] markets will increase from its current rate of $13.00 per million dollars in transactions to a new rate of $20.70 per million dollars in transactions,” according to the FINRA notice. By my calculation, that amounts to an increase of 59.23 percent.
Officials explain that the Exchange Act “requires the SEC to annually adjust the fee rates applicable under Section 31 and, in some circumstances, to make a mid-year adjustment, after consultation with the Congressional Budget Office [CBO] and the Office of Management and Budget [OMB].”
FINRA officials further explain that the self-regulatory organization (SRO) “obtains its Section 31 fees from member firms, in accordance with Section 3 of Schedule A to the By-Laws. Section 3 specifies that the amount assessed on firms will be determined periodically in accordance with Section 31 of the Exchange Act.”
The FINRA notice also notes that on March 12, 2019, the SEC announced that the rates would be increasing via its “Fee Rate Advisory #2 for Fiscal Year 2019,” but added that “the assessment on security futures transactions will remain unchanged at $0.0042 for each round turn transaction.”
The SEC advisory also notes that each SRO “will continue to pay the Commission a rate of $13.00 per million for covered sales occurring on charge dates through April 15, 2019.”
“The fee rate for fiscal year 2019 compares similarly to the fee rates in years prior to 2018,” according to the SEC. “As noted in the last advisory, the lower rate in 2018 was in part the result of a substantially higher dollar amount of covered sales.”
The SEC adds that “these adjustments do not directly affect the amount of funding available to the SEC.”
In an effort to facilitate dialogue, the SEC intends to “issue further notices on its website as appropriate to keep the public informed of developments relating to the effective dates of the fee rates under Section 31,” officials say. The SEC’s website is www.sec.gov
Officials add that the SEC’s Office of Interpretation and Guidance, part of the SEC’s Division of Trading and Markets, will make itself available for questions about Section 31 issues at + (202) 551-5777 or via email at tradingandmarkets@sec.gov.
Looking ahead, firms may need clarification such as the charge date being “the trade date, not the settlement date,” officials say. In fact, more information on the “charge date” can be investigated via Rule 31(a)(3) and Exchange Act Release No. 49928, which can be found here.
The full text of the FINRA notice can be found here.
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