While rising regulatory costs are a persistent complaint in the brokerage industry, a new report from the U.S. Securities and Exchange Commission (SEC) shows industry assets are growing faster than regulatory fees.
In a paper, economists from the SEC’s division of economic and risk analysis examined the evolution of regulatory costs among U.S. broker-dealers against the backdrop of strong industry growth.
“While there has been significant consolidation in the number of registered broker-dealers in recent years, their combined assets have grown from approximately US$4.66 trillion in 2010 to approximately US$6.4 trillion in 2024,” the paper said.
Over that same period, regulatory costs as a share of total assets dropped across firms of all sizes.
Smaller firms (fewer than 150 reps) face higher relative regulatory costs, but average fees and expenses as a share of total assets declined from 2.5% in 2010 to 1.7% in 2024.
For mid-sized firms (151 to 500 reps), costs nearly halved, from 1.1% in 2010 to 0.6% in 2024. The largest firms (more than 500 reps) saw their fees fall from 0.6% of assets in 2010 to 0.3% in 2024.
The report also found regulatory fees are highly concentrated, with the top 1% of firms accounting for 79% of total fees — and the top 10% representing 96%.
“This measure of concentration in fees and expenses appears to have remained relatively stable and increased slightly,” the paper said.