What Compliance Costs a Broker-Dealer, in the SEC's Own Numbers
Updated October 2026. First published September 2024. The original discussed one 2024 FINRA case; this version uses the SEC's published cost estimates instead.
Ask what compliance costs and you'll usually get a vendor survey, a consultant's estimate, or a fine from last month's headlines. A better source exists, and few operations teams read it. Under the Paperwork Reduction Act, the SEC estimates the hours and dollars each of its recordkeeping rules takes. It publishes the estimate in the Federal Register each time it renews the rule's approval with the Office of Management and Budget, which comes up every few years.
The latest notices for three operations rules came out in 2025.
The SEC's Estimates for Three Rules
| Rule | What it covers | SEC estimate | Source |
|---|---|---|---|
| Rule 17a-3 | Making the required books and records | About 9.8 million hours a year across 3,342 broker-dealers, plus about $138.9 million a year in costs such as postage, equipment, and systems development | Notice of July 30, 2025 |
| Rule 17a-4 | Preserving those records | 254 hours per broker-dealer per year, about 1,600 more hours for each of the 2,424 firms with retail customers, and about $5,000 a year in storage costs for the average firm | Notice of December 4, 2025 |
| Rule 17a-13 | The quarterly securities count and verification | 100 hours per broker-dealer per year on average, or 334,200 hours in total | Notice of August 13, 2025 |
The extra 17a-4 hours for retail firms come from one paragraph of the rule, 17a-4(e)(5), which covers keeping customer account record information for six years.
The SEC prices the 17a-4 hours at $78 an hour, its rate for a compliance clerk. That rate starts from SIFMA's 2013 office salary survey, adjusted for inflation, then multiplied by 2.93 to cover bonuses, firm size, benefits, and overhead. At $78, the base 17a-4 estimate comes to about $19,800 of staff time a year, plus $5,000 for storage.
Spread evenly, the 17a-3 figures come to about 2,900 hours and $41,500 in other costs per firm. No firm is the average, and that's the trouble with all three numbers.
Why the Averages Mislead
The 17a-13 notice says so itself. The staff estimate takes into account that more than half of the 3,342 firms "may spend little or no time" on the rule, because they don't do a public securities business or hold securities inventories. The 334,200 hours fall mostly on the rest. If the firms that do little really spend close to nothing, the firms that hold securities average 200 hours or more.
Even that figure blends very different firms. Take a carrying firm with a few positions and a self-clearing firm with a securities lending book and aged fails. The second one verifies every loan, borrow, repo, and fail open more than 30 days, every quarter, with each counterparty. Its hours look nothing like 100.
What the Estimates Leave Out
The Paperwork Reduction Act counts the time to make and keep the records a rule requires. Most of what an operations team would call the cost of compliance sits outside that count:
- Chasing counterparties. A 17a-13(b)(3) verification needs the other firm to answer, and so does a Letter of Free Funds. The follow-up on the ones that don't come back isn't in the 17a-13 figure. The letters are a Regulation T matter, and Regulation T is a Federal Reserve rule, so the work of sending and chasing them isn't in any SEC estimate.
- Producing records. Rule 17a-4(j) requires a firm to furnish records promptly when the SEC asks. The estimate prices keeping records, not hunting for them. Pulling a year of letters out of three shared mailboxes for an examiner is a cost the notice doesn't see.
- Fixing what an exam finds. Remediation, outside consultants, and retesting don't appear in any notice.
- Fines. FINRA ordered $99.6 million in fines and disgorgement in 2025. Our post on recent FINRA fines has the five-year figures.
The labor rate is the other gap. It's a clerk's rate built from 2013 salary data. If analysts and compliance officers do this work at your firm, price it at their loaded rate.
How to Use the Numbers
- List the rules your firm is subject to, and take the SEC's hour estimate for each one as a floor.
- Replace the average with your own counts: positions open more than 30 days at each quarter-end, letters sent and received per day, and exam and audit requests per year.
- Price the hours at your own loaded rate.
- Add the counterparty and production time the estimates leave out. This itemized example shows where those hours hide in a letter workflow.
- Compare the total with the cost of a tool or a service, including the cost lines in our build-or-buy post.
Each notice also asks for comments on "the accuracy of the SEC's estimate of the burden." OMB's current approval for Rule 17a-13 runs to January 31, 2029 (reginfo.gov), so the next renewal notice should appear before then. If your own numbers are far from the SEC's, the comment period on that notice is where to say so.
This post is for informational purposes only and does not constitute legal advice. For guidance on specific regulatory obligations, consult your counsel or compliance advisor.