Market Regulation Services Inc. has published its annual report for its fiscal 2007.

The regulator’s revenues exceeded its expenses by $1.16 million, for the year ended Feb. 28. Operating revenue was up to $22.1 million, up 9.3% from the prior year, and 1.7% higher than planned (due to disciplinary recoveries and interest income). Expenses increased 2.8% over the same period. However, this was below the expected increase of 10.4%.

In the year ahead, operating expenses are forecast to decline a bit, by 0.6%, to $20.8 million. Revenue is expected to slide 11% to $19.7 million; leaving the regulator with a deficit of $1.15 million for the year. Even so, it says that market regulation fees must increase 12%.

RS also continues to work on a proposed merger with the Investment Dealers Association of Canada. It reports that it has placed $1 million in a joint fund with the IDA to pay merger expenses. These expenses are expected to be covered 40% by RS and 60% by the IDA. The final cost of the merger has yet to be determined, it says. So far, $1.6 million has been spent on the merger, and another $200,000 has been authorized.