Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Section 31 -- Transaction Fees

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1. Recovery of cost of services
   
   The Commission shall, in accordance with this section, collect transaction fees and assessments that are designed to recover the costs to the Government of the supervision and regulation of securities markets and securities professionals, and costs related to such supervision and regulation, including enforcement activities, policy and rulemaking activities, administration, legal services, and international regulatory activities.
   
   
2. Exchange-traded securities
   
   Subject to subsection (j), each national securities exchange shall pay to the Commission a fee at a rate equal to $ 15 per $ 1,000,000 of the aggregate dollar amount of sales of securities (other than bonds, debentures, other evidences of indebtedness, security futures products, and options on securities indexes (excluding a narrow-based security index)) transacted on such national securities exchange.
   
   
3. Off-exchange trades of exchange registered and last-sale-reported securities
   
   Subject to subsection (j), each national securities association shall pay to the Commission a fee at a rate equal to $ 15 per $ 1,000,000 of the aggregate dollar amount of sales transacted by or through any member of such association otherwise than on a national securities exchange of securities (other than bonds, debentures, other evidences of indebtedness, security futures products, and options on securities indexes (excluding a narrow-based security index)) registered on a national securities exchange or subject to prompt last sale reporting pursuant to the rules of the Commission or a registered national securities association.
   
   
4. Assessments on security futures transactions
   
   Each national securities exchange and national securities association shall pay to the Commission an assessment equal to $0.009 for each round turn transaction (treated as including one purchase and one sale of a contract of sale for future delivery) on a security future traded on such national securities exchange or by or through any member of such association otherwise than on a national securities exchange, except that for fiscal year 2007 and each succeeding fiscal year such assessment shall be equal to $ 0.0042 for each such transaction..
   
   
5. Dates for payments
   
   The fees and assessments required by subsections (b), (c), and (d) of this section shall be paid--
   
   
   1. on or before March 15, with respect to transactions and sales occurring during the period beginning on the preceding September 1 and ending at the close of the preceding December 31; and
      
      
   2. on or before September 30, with respect to transactions and sales occurring during the period beginning on the preceding January 1 and ending at the close of the preceding August 31.
      
      
6. Exemptions
   
   The Commission, by rule, may exempt any sale of securities or any class of sales of securities from any fee or assessment imposed by this section, if the Commission finds that such exemption is consistent with the public interest, the equal regulation of markets and brokers and dealers, and the development of a national market system.
   
   
7. Publication
   
   The Commission shall publish in the Federal Register notices of the fee and assessment rates applicable under this section for each fiscal year not later than April 30 of the fiscal year preceding the fiscal year to which such rate applies, together with any estimates or projections on which such fees are based.
   
   
8. Pro rata application
   
   The rates per $ 1,000,000 required by this section shall be applied pro rata to amounts and balances of less than $ 1,000,000.
   
   
9. Deposit of Fees
   
   
   1. Offsetting collections
      
      Fees collected pursuant to subsections (b), (c), and (d) for any fiscal year--
      
      
      1. shall be deposited and credited as offsetting collections to the account providing appropriations to the Commission; and
         
         
      2. except as provided in subsection (k), shall not be collected for any fiscal year except to the extent provided in advance in appropriation Acts.
         
         
   2. General revenues prohibited
      
      No fees collected pursuant to subsections (b), (c), and (d) for fiscal year 2002 or any succeeding fiscal year shall be deposited and credited as general revenue of the Treasury.
      
      
   
   
10. Recapture of projection windfalls for further rate reductions
    
    
    1. Annual adjustment
       
       For each of the fiscal years 2003 through 2011, the Commission shall by order adjust each of the rates applicable under subsections (b) and (c) for such fiscal year to a uniform adjusted rate that, when applied to the baseline estimate of the aggregate dollar amount of sales for such fiscal year, is reasonably likely to produce aggregate fee collections under this section (including assessments collected under subsection (d)) that are equal to the target offsetting collection amount for such fiscal year.
       
       
    2. Mid-year adjustment
       
       For each of the fiscal years 2002 through 2011, the Commission shall determine, by March 1 of such fiscal year, whether, based on the actual aggregate dollar volume of sales during the first 5 months of such fiscal year, the baseline estimate of the aggregate dollar volume of sales used under paragraph (1) for such fiscal year (or $ 48,800,000,000,000 in the case of fiscal year 2002) is reasonably likely to be 10 percent (or more) greater or less than the actual aggregate dollar volume of sales for such fiscal year. If the Commission so determines, the Commission shall by order, no later than such March 1, adjust each of the rates applicable under subsections (b) and (c) for such fiscal year to a uniform adjusted rate that, when applied to the revised estimate of the aggregate dollar amount of sales for the remainder of such fiscal year, is reasonably likely to produce aggregate fee collections under this section (including fees collected during such 5-month period and assessments collected under subsection (d)) that are equal to the target offsetting collection amount for such fiscal year. In making such revised estimate, the Commission shall, after consultation with the Congressional Budget Office and the Office of Management and Budget, use the same methodology required by subsection (l)(2).
       
       
    3. Final rate adjustment
       
       For fiscal year 2012 and all of the succeeding fiscal years, the Commission shall by order adjust each of the rates applicable under subsections (b) and (c) for all of such fiscal years to a uniform adjusted rate that, when applied to the baseline estimate of the aggregate dollar amount of sales for fiscal year 2012, is reasonably likely to produce aggregate fee collections under this section in fiscal year 2012 (including assessments collected under subsection (d)) equal to the target offsetting collection amount for fiscal year 2011.
       
       
    4. Review and effective date
       
       In exercising its authority under this subsection, the Commission shall not be required to comply with the provisions of section 553 of title 5, United States Code. An adjusted rate prescribed under paragraph (1), (2), or (3) and published under subsection (g) shall not be subject to judicial review. Subject to subsections (i)(1)(B) and (k)--
       
       
       1. an adjusted rate prescribed under paragraph (1) shall take effect on the later of--
          
          
          1. the first day of the fiscal year to which such rate applies; or
             
             
          2. thirty days after the date on which a regular appropriation to the Commission for such fiscal year is enacted;
             
             
       2. an adjusted rate prescribed under paragraph (2) shall take effect on April 1 of the fiscal year to which such rate applies; and
          
          
       3. an adjusted rate prescribed under paragraph (3) shall take effect on the later of--
          
          
          1. the first day of fiscal year 2012; or
             
             
          2. thirty days after the date on which a regular appropriation to the Commission for fiscal year 2012 is enacted.
             
             
11. Lapse of appropriation
    
    If on the first day of a fiscal year a regular appropriation to the Commission has not been enacted, the Commission shall continue to collect (as offsetting collections) the fees and assessments under subsections (b), (c), and (d) at the rate in effect during the preceding fiscal year, until 30 days after the date such a regular appropriation is enacted.
    
    
12. Definitions
    
    For purposes of this section:
    
    
    1. Target offsetting collection amount
       
       The target offsetting collection amount for each of the fiscal years 2002 through 2011 is determined according to the following table:
       
       
       
       

       Fiscal year:	Target offsetting collection amount
       2002	$ 732,000,000
       2003	$ 849,000,000
       2004	$ 1,028,000,000
       2005	$ 1,220,000,000
       2006	$ 1,435,000,000
       2007	$ 881,000,000
       2008	$ 892,000,000
       2009	$ 1,023,000,000
       2010	$ 1,161,000,000
       2011	$ 1,321,000,000

       
       
       
       
    2. Baseline estimate of the aggregate dollar amount of sales
       
       The baseline estimate of the aggregate dollar amount of sales for any fiscal year is the baseline estimate of the aggregate dollar amount of sales of securities (other than bonds, debentures, other evidences of indebtedness, security futures products, and options on securities indexes (excluding a narrow-based security index)) to be transacted on each national securities exchange and by or through any member of each national securities association (otherwise than on a national securities exchange) during such fiscal year as determined by the Commission, after consultation with the Congressional Budget Office and the Office of Management and Budget, using the methodology required for making projections pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985.
       
       

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