Raymond James has included the race to zero commissions by brokerage firms as a business risk, but the firm believes the impact to its core operations will not be significant.

The move by several discount brokerages to eliminate trading commissions in October has found its way into Raymond James’ annual report in the risk factors section.

“Recently, certain competitors have reduced or eliminated commissions for self-directed trading, and we expect that others may follow suit. This trend will impact certain transaction-related fees we charge in PCG [Private Client Group], but at this time we do not expect the impact to be material,” the firm says in the filing.

Raymond James CEO Paul Reilly mentioned the race to zero issue during the firm’s fourth quarter fiscal year 2019 earnings call with analysts last month. Raymond James follows an October-to-September fiscal year calendar.

“We do not have a direct channel, so there’s no impact there. And on the advisory side of our business, we think this move actually really reflects the RIA custody segment catching up with the full-service segment,” Reilly said at the time. “We did announce that we will follow the e-brokers, but that impact is pretty small to the overall firm, around $6 to $7 million of annual transaction fees.”

Another risk mentioned in the SEC filing is the cost of compliance with the regulator’s Regulation Best Interest, which the firm says could impact its bottom line.

“The regulation will impose heightened standards on broker-dealers, and we anticipate incurring additional costs in order to review and modify our policies and procedures, as well as associated supervisory and compliance controls,” the firm says in the SEC filing.

Any rules proposed by states could mean additional implementation costs, the firm notes.

“Implementation of the new SEC regulations, as well as any new state rules that are adopted addressing similar matters, may negatively impact our results including the impact of increased costs related to compliance, legal, operations and information technology,” according to the filing.

Reilly has been very vocal against the introduction of fiduciary rules by individual states.

SEC Chairman Jay Clayton has acknowledged that the task of complying with Reg BI would be a heavy lift for broker-dealers, while others such as Sifma have admitted that it could turn out to be a costly process.