The U.S. Securities Industry Association has released a study that finds that industry compliance costs have nearly doubled in the past three years.

The study found that the cost of compliance has risen rapidly, nearly doubling in the past three years. It reached an estimated annual total of more than US$25 billion ($28.55 million) in 2005, up from US$13 billion in 2002.

A substantial portion of these increased costs were avoidable, it suggested. The SIA said that they reflect: duplication of examinations, regulations and supervisory actions; inconsistencies/ lack of harmonization in rules and regulations; ambiguity; and, delays in obtaining clear guidance; among other things.

It also indicated that the overwhelming bulk (93%) of total compliance costs were staffing-related. Meanwhile, out-of-pocket expenses and capital spending to meet compliance obligations increased rapidly, doubling or tripling in most cases.

“As a result of this study, we’d like to see greater regulatory efficiency – equally robust investor protections but at a lower cost. The industry is absolutely committed to compliance, but we hope this highlights the need for rules and regulations whose costs do not exceed their benefits,” says Marc Lackrtiz, president of the SIA.

The study revealed that restructuring parts of the NYSE and NASD to reduce regulatory duplication could result in significant cost savings. “Having two regulators is like having to fill out two sets of federal tax returns from two different countries, each with its own rules and requirements and each needing different tax advisors,” says Lackritz. “Our firms need one rulebook, one set of procedures, one set of examinations.”

“We’re not advocating regulatory roll-back here. In fact, re-writing existing guidelines would only increase costs. Instead, we hope that going forward this study influences how policymakers think about the rules they write,” adds Lackritz.