(a) Recovery of cost of services. FINRA shall, in accordance with this section, collect member regulatory fees that are designed to recover the costs to FINRA of the supervision and regulation of members, including performing examinations, financial monitoring, and policy, rulemaking, interpretive, and enforcement activities. FINRA shall periodically review these revenues in conjunction with these costs to determine the applicable rate. FINRA shall publish notices of the fees and adjustments to the assessment rates applicable under this section.
(b) Each member shall be assessed a Trading Activity Fee for the sale of covered securities.
(1) Covered Securities. For purposes of the rule, covered securities shall mean:
(A) All exchange registered securities wherever executed (except debt securities that are not TRACE-Eligible Securities);
(B) All other equity securities traded otherwise than on an exchange;
(C) All security futures wherever executed;
(D) All "TRACE-Eligible Securities" wherever executed, provided that the transaction also is a "Reportable TRACE Transaction," as these terms are defined in
Rule 6710; and
(E) All municipal securities subject to MSRB reporting requirements.
(2) Transactions exempt from the fee. The following shall be exempt from the Trading Activity Fee:
(A) Transactions in securities offered pursuant to an effective registration statement under the Securities Act of 1933 (except transactions in put or call options issued by the Options Clearing Corporation) or offered in accordance with an exemption from registration afforded by Section 3(a) or 3(b) thereof, or a rule thereunder;
(B) Transactions by an issuer not involving any public offering within the meaning of Section 4(2) of the Securities Act of 1933 (except any "Reportable TRACE Transaction");
(C) The purchase or sale of securities pursuant to and in consummation of a tender or exchange offer;
(D) The purchase or sale of securities upon the exercise of a warrant or right (except a put or call), or upon the conversion of a convertible security;
(E) Transactions that are executed outside the United States and are not reported, or required to be reported, to a transaction reporting association as defined in SEC Rule 600(b)(81) and any approved plan filed in accordance with SEC Rule 11Aa3-1 or SEC Rule 601;
(F) Proprietary transactions by a firm that is a member of both FINRA and a national securities exchange, effected in its capacity as an exchange specialist or market maker, that are subject to Securities Exchange Act of 1934, Section 11(a) and Rule 11a1-1(T)(a) thereunder; however this exemption does not apply to other transactions permitted by Section 11(a) such as bona fide arbitrage or hedge transactions;
(G) Transactions by a firm that is a floor based broker and that is a member of both FINRA and a national securities exchange provided that the floor based broker qualifies for exemption from FINRA membership under Exchange Act Rule 15b9-1;
(H) Transactions in conventional options;
(I) Transactions in options and futures involving narrow and broad based indexes;
(J) Transactions in security futures held in futures accounts;
(K) Proprietary transactions in TRACE-Eligible Securities by a firm that is a member of both FINRA and a national securities exchange and that are effected in the firm's capacity as an exchange specialist or exchange market maker;
(L) Transactions in U.S. Treasury Securities, as that term is defined in Rule 6710; and
(M) Transactions by a proprietary trading firm effected on a national securities exchange of which the proprietary trading firm is a member. For purposes of this subparagraph (M), a “proprietary trading firm” is a member that (i) trades exclusively its own capital; (ii) does not have “customers,” which shall include any person, other than a broker or dealer, with whom the member engages, or within the past six months has engaged, in securities activities; and (iii) conducts all trading through the firm’s accounts by traders that are owners of, employees of, or contractors to the firm, or employees of an affiliate of the firm.
FINRA may exempt other securities and transactions as it deems appropriate.
(3) Fee Rates*
(A) Each member shall pay to FINRA a fee per share for each sale of a covered equity security.
(B) Each member shall pay to FINRA a fee per contract for each sale of an option.
(C) Each member shall pay to FINRA a fee for each round turn transaction (treated as including one purchase and one sale of a contract of sale for future delivery) of a security future.
(D) Each member shall pay to FINRA a fee per bond for each sale of a covered TRACE-Eligible Security (other than an Asset-Backed Security, as that term is defined in
Rule 6710) and/or municipal security.
(E) Each member shall pay to FINRA a fee based on the reported value of the sale of an Asset-Backed Security, as that term is defined in
Rule 6710.
(4) Reporting of Transactions. Members shall report to FINRA the aggregate share, bond, contract, and/or round turn volume of sales of covered securities in a manner as prescribed by FINRA from time to time.
(c) Subject to paragraph (d), each member shall pay an annual Gross Income Assessment equal to the greater of:
(1) the total of:
(A) $1,200.00 on annual gross revenue up to $1 million;
(B) 0.1732% of annual gross revenue greater than $1 million up to $25 million;
(C) 0.3705% of annual gross revenue greater than $25 million up to $50 million;
(D) 0.0738% of annual gross revenue greater than $50 million up to $100 million;
(E) 0.0520% of annual gross revenue greater than $100 million up to $5 billion;
(F) 0.0566% of annual gross revenue greater than $5 billion up to $25 billion; and
(G) 0.1219% of annual gross revenue greater than $25 billion; or
(2) The average Gross Income Assessment from the preceding three calendar years, to be determined by adding the Gross Income Assessment calculation pursuant to paragraph (c)(1) to the actual Gross Income Assessment in the preceding two calendar years, then dividing by three.
The rate structure set forth in paragraph (c)(1) will be implemented over a three year period beginning in 2008 in such manner as specified by FINRA.
For the purpose of paragraph (c)(1), each member is to report annual gross revenue as defined in Section 2 of this Schedule for the preceding calendar year.
(d) Notwithstanding paragraph (c)(2), a member whose annual gross revenue does not exceed $25 million shall pay an annual Gross Income Assessment equal to amount set forth in paragraphs (c)(1).
(e) Each member shall pay an annual Personnel Assessment equal to:
(1) $210.00 per principal and each representative up to five principals and representatives as defined below;
(2) $200.00 per principal and each representative for six principals and representatives up to twenty-five principals and representatives as defined below; or
(3) $190.00 per principal and each representative for twenty-six or more principals and representatives as defined below.
A principal or representative is defined as a principal or representative in the member's organization who is registered with FINRA as of December 31st of the prior fiscal year.
* Trading Activity Fee rates are as follows: Each member shall pay to FINRA: (1) $0.000166 per share for each sale of a covered equity security, with a maximum charge of $8.30 per trade; (2) $0.00279 per contract for each sale of an option; (3) $0.00011 per contract for each round turn transaction of a security future, provided there is a minimum charge of $0.014 per round turn transaction; (4) $0.00105 per bond for each sale of a covered TRACE-Eligible Security (other than an Asset-Backed Security) and/or municipal security, with a maximum charge of $1.05 per trade; and (5) $0.00000105 times the value, as reported to TRACE, of a sale of an Asset-Backed Security, with a maximum charge of $1.05 per trade. In addition, if the execution price for a covered security is less than the Trading Activity Fee rate ($0.000166 for covered equity securities, $0.00279 for covered option contracts, or $0.014 for a security future) on a per share, per contract, or round turn transaction basis then no fee will be assessed.
