FINRA requested approval from the SEC to revise its rule relating to its Trading Activity Fee Rate for Transactions in Covered Equity Securities.  FINRA wishes to increase the TAF rates that were put into place as of 3/1/12. FINRA Funding. As you're probably aware, FINRA’s primary member regulatory pricing structure consists of three fees: the Personnel Assessment; the Gross Income Assessment; and the TAF.  They're used to fund FINRA’s regulatory activities, including examinations; financial monitoring; and FINRA’s policymaking, rulemaking, and enforcement activities. The TAF currently is generally assessed on ... the sale of:

• all exchange registered securities wherever executed (except debt securities that are not TRACE-Eligible Securities),
• OTC equity securities,
• security futures,
• TRACE-Eligible Securities (provided that the transaction is a Reportable TRACE Transaction), and
• all muni securities subject to MSRB reporting requirements.
• The rules governing the TAF include a list of transactions exempt from the TAF.

Current and Proposed New Rates. FINRA proposes to increase the fee rate by $0.000024 per share.  The current TAF rate for covered equity securities is $0.000095 per share for each sale of a covered equity security, with a maximum charge of $4.75 per trade, and has been in effect since 3/1/12.  The new proposed rate would be $0.000119 per share, with a new maximum per-transaction cap of $5.95 per trade.   Fluctuation in Rates - Why the Change? Because the TAF is based on trading volumes, FINRA’s revenues derived from the TAF are subject to the volatility of trading in the securities markets and, in particular, the equity markets. Declining share volume during the 3-months ended 2/29/12 indicate that share volumes are not holding to the level seen in 2011 as FINRA anticipated.  Given would indicate that, unless the fee rate is increased, FINRA will experience a shortfall. To stabilize revenue flows necessary to support FINRA’s regulatory mission in light of the decreased volume of trading in the equity markets, FINRA is proposing an increase to the TAF rate for covered equity securities from its current level to a higher one.  FINRA believes that increasing the TAF rate on these securities by $0.000024 per share is the minimum increase necessary to bring the revenue from the TAF to its needed levels to adequately fund FINRA’s member regulatory obligations. For further details, go to:  [FINRA Rule Filing 12-23, 5/2/12].