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After a pause in regulatory fee hikes during the Covid-19 pandemic, the Investment Industry Regulatory Organization of Canada (IIROC) is raising fees this year.

In its latest annual report, the self-regulatory organization (SRO) said that fees for continuing activities will increase by 3.66% in fiscal 2022 (ending March 31, 2022) to fund its “work on strategic initiatives,” and amid higher costs generally.

The SRO said dealer regulation fees are going up by 3.5%; equities market regulation fees, by 4.34%; and debt market fees, by 2.5%.

The fee hikes come amid a projected 2.7% increase in total operating expenses in fiscal 2022, to $101 million.

The rising regulatory costs also come at a time when the Canadian Securities Administrators (CSA) have declared their intention to combine IIROC with the Mutual Fund Dealers Association of Canada to create a new industry SRO.

The CSA has yet to set out a timeline for the proposed reform. The consultation on its proposals ends Oct. 4.

Last year, IIROC kept fees flat amid the uncertainty of the Covid-19 pandemic.

And, despite this year’s increases, the SRO reported that its fees as a share of industry revenues and profits have continued to decline.

The SRO’s fees as a share of industry revenues will fall from about 34 basis points in 2018 to 27 basis points in fiscal 2022, it said.

“Fees as a percentage of industry profitability also continue to trend significantly lower,” it added, noting that, as a share of profits, fees are also down by about a third since 2018.

Over the past four years, the compound annual growth rate (CAGR) of total IIROC fees is 1.9%, compared with a 7.4% CAGR for industry revenue and 13.9% for profits.