FINRA Files to Triple Gift Limit for Brokers to $300
In a move to account for inflation and be responsive to industry feedback, the Financial Industry Regulatory Authority has proposed an increase to the annual gift limit that brokers can give to clients. The new limit, which has been submitted to the U.S. Securities and Exchange Commission for approval, would raise the value to $300, up from the current $100.
This decision marks a significant jump from FINRA’s initial proposal in June to increase the limit to $250. The self-regulatory organization stated that it was persuaded by public comments suggesting a higher limit was needed to address future inflation and regional differences in the cost of living.
The $100 gifts rules, FINRA Rule 3220: Influencing or Rewarding Employees of Others, has been in place since 1992. It prohibits any member or person associated with a member, directly or indirectly, from giving anything of value – cash and non-cash – in excess of $100 per year to any person where such payment is in relation to the business of the recipient’s employer. The rule also requires members to keep separate records of all payments or gratuities in any amount known to the member. The rule seeks to avoid improprieties, such as conflicts of interest, that may arise when a member or an associated person gives items of value to an employee of another person, such as an institutional customer, vendor, or counterparty with the hope of strengthening the business relationship.
Since the 1992 limit, inflation has significantly eroded the gifts rules’ value over the past three decades. In its proposal, FINRA noted that if the average annual inflation rate since 1992 were applied to the original $100 limit, it would be worth nearly $295 in 2025.
FINRA believes that setting the new limit at $300 will effectively account for inflation for the next 10 years, reducing the need for frequent adjustments. While some industry groups, including the Financial Services Institute and Robinhood, had advocated for an even higher limit of $500, FINRA settled on $300 as a practical middle ground.
Going forward, FINRA has pledged to periodically review the gift limit to ensure it remains fair in a changing economic environment.
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