The Investors Exchange LLC, known as IEX, has filed a proposed rule change with the Securities and Exchange Commission to amend its fee schedule. This adjustment reflects updates to processing fees for the Central Registration Depository, or CRD, system administered by the Financial Industry Regulatory Authority, or FINRA. Filed on January 7, 2026, and effective immediately, the change replaces a flat $70 fee per registered person with a tiered structure based on the number of securities regulators each person is registered with. Published in the Federal Register on January 23, 2026, this development highlights ongoing efforts to align exchange fees with FINRA's regulatory framework, promoting consistency in the securities industry. It underscores the interplay between self-regulatory organizations and federal oversight, potentially affecting how exchanges manage compliance costs for their members.
Background on CRD and FINRA's Role
The CRD system serves as the central licensing and registration database for the U.S. securities industry, maintaining records of qualifications, employment history, and disciplinary actions for registered associated persons of broker-dealers. FINRA operates this system and collects related fees, including processing fees, from both its members and those of other exchanges like IEX that are not FINRA members. Historically, IEX's fee schedule included a flat $70 CRD processing fee per registered person for its non-FINRA members, as outlined in IEX Rule 15.110(a) and (c).
In 2024, FINRA revised its fee structure through a rule change approved by the SEC, as detailed in Securities Exchange Act Release No. 101696, published on November 27, 2024. This revision shifted from the flat fee to a tiered model effective January 1, 2026, aiming to better align fees with regulatory costs. FINRA justified the change by noting it would generate sufficient revenue to support its mission while correlating fees with cost drivers, such as the number of jurisdictions involved in a person's registration.
IEX, as a national securities exchange, relies on FINRA for certain regulatory functions, including CRD administration. Although IEX currently has no members that are not also FINRA members, the exchange is updating its schedule to maintain alignment and provide clarity for potential future non-FINRA members.
Key Details of the Proposed Rule Change
IEX's filing proposes replacing the $70 flat fee with tiers based on the number of securities regulators—excluding investment adviser representatives—with which a registered person is affiliated. The new structure is as follows: $70 for 1-5 regulators, $95 for 6-20, $110 for 21-40, and $125 for 41 or more. This mirrors FINRA's amendments exactly, ensuring that non-FINRA IEX members face the same fees as FINRA members for CRD processing.
The filing emphasizes that IEX does not collect or retain these fees; they are handled directly by FINRA. As stated in the proposal, 'The Exchange merely lists these CRD system processing fees on its Fee Schedule; it does not collect or retain these fees.' This pass-through approach maintains transparency while delegating fee administration to FINRA.
The rule change was filed under Section 19(b)(3)(A)(ii) of the Securities Exchange Act of 1934, allowing immediate effectiveness upon filing. It solicits public comments until February 13, 2026, after which the SEC could suspend or review the change if deemed necessary for investor protection or public interest.
Statutory Basis and Regulatory Justification
IEX asserts that the change complies with Section 6(b) of the Securities Exchange Act, particularly subsections promoting equitable allocation of reasonable fees and preventing unfair discrimination. The proposal argues the fees are reasonable because they match FINRA's structure, which was designed to cover CRD operational costs. As FINRA explained in its 2024 filing, the tiered model correlates with regulatory expenses, providing 'enough revenue to enable it to continue fulfilling its regulatory mission.'
On equity, IEX notes that the fees apply uniformly to all CRD users, regardless of FINRA membership, ensuring no discrimination. The filing states, 'The proposed fee applies equally to all IEX Members required to report information in the CRD system, and the proposed fee will result in the same regulatory fees being charged to all Members required to report information to CRD regardless of whether such Members are FINRA members.'
Regarding competition, IEX contends the change imposes no undue burden, as it simply aligns with FINRA's amendments and applies equally across the industry. No comments were received on the proposal prior to filing, and it does not alter competitive dynamics among exchanges or members.
Implications and Perspectives
From a short-term perspective, this adjustment ensures IEX's fee schedule remains current with FINRA's changes, avoiding discrepancies that could confuse members or regulators. For exchanges like IEX, it reinforces reliance on FINRA for back-office functions, potentially streamlining operations but also highlighting dependencies in the self-regulatory model.
Long-term, the tiered structure could influence how broker-dealers manage registrations across jurisdictions. Firms with personnel registered in many states might face higher costs, encouraging efficiency in compliance strategies. Perspectives vary: proponents, including FINRA, view it as a fair way to tie fees to workload, while critics might argue it adds complexity without proportional benefits. Investor advocates could see it as supporting robust oversight by funding CRD enhancements, whereas industry groups might push for fee caps to avoid burdening smaller firms.
Legal precedents, such as prior SEC approvals of FINRA fee adjustments, support this model. For instance, similar tiered fees have been upheld as consistent with the Act's goals of fair and efficient markets.
In summary, IEX's rule change aligns its operations with evolving regulatory fees, fostering consistency in securities registration. Potential next steps include SEC review of any public comments, which could lead to modifications. Ongoing debates may center on balancing regulatory funding with industry costs, especially as digital advancements reshape CRD's role. Challenges could arise if non-FINRA membership grows on IEX, testing the fee structure's practicality, while broader discussions on self-regulation might influence future adjustments.
