The number of brokerages that Finra regulates fell last year while the total number of registered representatives increased, according to statistics released Thursday by the broker-dealer self-regulator.
The Finra 2023 Industry Snapshot also shows that the aggregate net income in the brokerage industry fell substantially in 2022 compared to 2021. The Financial Industry Regulatory Authority Inc. publishes annually the report on the brokerage firms, reps and market activity under its jurisdiction. The document looks back on the previous year.
The number of brokerage firms that Finra oversees fell for the fourth-straight year in 2022 to a total of 3,378. That’s down from 3,607 in 2018. But the number of reps increased to 620,882 in 2022, up from 612,435 in 2021. But the rep total was down from 2018, when Finra recorded 629,475 reps.
Reps were about evenly split on registration types, with 308,565 registered only as brokers and 312,317 registered both as a broker and investment advisor representative.
The Finra regulatory landscape is dominated by small firms, which are defined as those with one to 150 reps. There were 3,021 small firms in 2022, down from 3,048 in 2021. The number of large firms — those with 500 or more reps — grew to 165 in 2022, up from 161 in 2021. There were 192 midsize firms — those with 151 to 499 reps — in 2022 compared to 185 in 2021.
Large firms employed 524,075 reps, or 82.3% of the total number, in 2022. Midsize firms employed 50,886, or 8%, while small firms employed 62,076, or 9.7%.
Brokerages of all size suffered financially during the market downturn last year, according to the Finra report. Finra-registered firms obtained a pretax net income of $42.3 billion in 2022, down sharply from $91.6 billion in 2021 and $77.3 billion in 2020.
Total revenues fell to $350.5 billion in 2022 from $398.5 billion in 2021. Total expenses roseto $308.2 billion in 2022 from $306.9 billion in 2021.
This year’s report added new data, including customer margin debt and options trading activity and demographic changes among the rep population.
“The 2023 Snapshot maintains Finra’s commitment to providing a data-driven view into the securities industry and its activities through the lens of regulatory reporting. We continue to add new data categories to the Industry Snapshot, increasing the transparency of and visibility into an evolving securities industry,” Jonathan Sokobin, Finra chief economist and executive vice president, said in a statement.
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