FINRA, on orders from the SEC, and as mandated by Dodd-Frank, would establish an accounting support fee to fund the annual budget of the Governmental Accounting Standards Board (GASB), then allocate such fees among FINRA member firms based on municipal securities transactions reported to the MSRB.  [See Regulatory Notice 11-28]  The mission of the GASB is “to establish and improve standards of state and local governmental accounting and financial reporting that will…result in useful information for users of financial reports…" 

SIFMA Objections.    SIFMA has problems with the proposed methodology for assessing the GASB Accounting Support Fee for the following reasons:

• Proposal is an unfair tax on broker dealers and municipal bond investors who should not be mandated to subsidize the entire expense of financially supporting GASB.
• There are many other end users of GASB’s accounting and financial reporting standards, such as non-debt issuing municipalities, financial advisors, banks, bank dealers, insurance companies, rating agencies, mutual funds, legislative/governmental staff, and taxpayer organizations that get a “free ride” under FINRA’s proposed methodology.
• Proposal provides a blank check for GASB - i.e., there's no direct or indirect independent budget oversight and no incentive for transparency or fiscal discipline.
• Many municipal bond obligors are not GASB reporting entities, but private non-profit corporations, and thus are subject to rules of The Financial Accounting Standards Board(“FASB”).  This proposal makes no distinction between bonds issued by GASB obligors, bonds issued by FASB obligors and bonds with obligors who follow neither set of standards. It would be inappropriate to tax transactions in bonds issued by obligors that do not utilize GASB standards.
• Any accounting support fee should be business model/operationally neutral, and FINRA’s proposal is not, because:  (i) not all trades reportable to the MSRB's Real-Time Transaction Reporting System involve customers;  (ii) as proposed, under certain circumstances multiple assessments will be due from a single purchase and sale;  (iii) supply chains that involve multiple dealer trades will also be more heavily impacted;  and, (iv) bank dealers’ municipal securities transactions are not covered by FINRA’s proposal, as they are not FINRA members.

Although broker dealers have a convenient established collection mechanism, such convenience does not outweigh the inequities listed above. 

Yes, FINRA is bound by the statutory provisions governing the GASB support fee.  However, SIFMA asks FINRA can make significant changes to the proposed fee, and still be in compliance with the statute.  Among other things, SIFMA offers a suggested Alternative Methodology.

For further details, go to:   [SIFMA Comment Letter, 8/1/11]