Financial and Operational Impacts of Regulatory Compliance on the Austrian Securities Industry

Abstract

Regulatory compliance in the Austrian securities sector imposes fixed costs that affect market participants asymmetrically. Larger firms can absorb these burdens more efficiently through economies of scale, whereas smaller providers operate with tighter margins and face higher relative cost ratios. This study models profit as a function of revenue, operational costs, and regulatory burdens, including mandatory contributions to the Austrian Financial Market Authority and the Austrian Economic Chamber, administrative procedures, information technology systems, external consultancy, and expected sanctions. Empirical support is based on survey data from 53 licensed financial service providers and three expert assessments conducted in 2024 and 2025. Smaller firms report significantly higher compliance burdens in proportion to their revenue and indicate that administrative pressure influences their market participation. Many respondents allocate a substantial share of working time to regulatory tasks, indicating considerable operational strain. The imbalance between regulatory design and firm size contributes to market consolidation and a decline in provider diversity. Feedback highlights excessive documentation, procedural duplication, and limited responsiveness from supervisory institutions. International comparisons demonstrate the feasibility of proportional regulatory models and thresholds for small and medium-sized enterprises. The integration of quantitative modelling and empirical evidence provides a structured basis for assessing compliance costs and supports policy reforms focused on proportionality, administrative simplification, and effective supervision.