FINRA released its first annual "Industry Snapshot," a publication containing year over year data on trading activity and statistics on FINRA-registered firms and representatives.

FINRA reported the following for 2017 as compared to 2016:

  • an increase in OTC market activity;
  • a decrease in the total number of National Market System ("NMS") stock shares that were traded, but an increase in the percentage of those shares that were reported as OTC;
  • an increase in Trade Reporting and Compliance Engine ("TRACE") activity for both securitized products and corporate and agency securities;
  • a decrease in the total number of FINRA-registered representatives;
  • an increase in the average number of FINRA-registered representatives per firm;
  • a decrease in the number of FINRA-registered firms and FINRA-registered firm branch offices; and
  • an increase in aggregate pretax net income for registered broker-dealer firms.

In addition, the report contains data on various other kinds of industry activity, including firm marketing and advertising, branch openings and closings, and the geographic distribution of firms.

Commentary / Steven Lofchie

The number of firms is down about 10% since 2014, with all of the losses concentrated in small firms. It would be good to learn the reasons why. Is it just that the business is moving to bigger firms, or are smaller broker-dealers converting to become investment advisers? If the latter, that would have significance for the SEC's consideration of Regulation Best Interest, as it would suggest that firms are moving away from the full-service brokerage model to providing likely higher cost advisory services.

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