59–006 

114TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 114–505 

SECURITIES AND EXCHANGE COMMISSION 

OVERPAYMENT CREDIT ACT 

APRIL 19, 2016.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 1975] 

{Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 1975) to amend the Securities Exchange Act of 1934 to 

require the Securities Exchange Commission to refund or credit excess payments made to the Commission, having considered the 

same, report favorably thereon without amendment and recommend that the bill do pass. 

PURPOSE AND SUMMARY

Under Section 31 of the Securities Exchange Act of 1934 (’34 

Act), national securities exchanges and other self-regulatory organizations (collectively, SROs) owe proportional transaction fees to the 

Securities and Exchange Commission (SEC) for the cost of supervising and regulating such transactions. On April 22, 2015, Representatives Gregory Meeks and Randy Hultgren introduced H.R. 

1975, the ‘‘Securities and Exchange Commission Overpayment 

Credit Act,’’ which allows SROs to offset previous Section 31 overpayments against future Section 31 fees, under a 10-year statute 

of limitations. 

Some SROs have overpaid Section 31 fees out of an abundance 

of caution, rather than risk an enforcement action for underpayment. The SEC, however, has not refunded these overpayments; 

as it has interpreted the ’34 Act as not granting it the authority 

to refund any such overpaid fees. 


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1Letter from SEC Chair Mary Jo White to Chairman Jeb Hensarling (May 15, 2013). 

BACKGROUND AND NEED FOR LEGISLATION

Under Section 31 of the ’34 Act, SROs owe proportional transaction fees to the SEC for the cost of supervising and regulating 

such transactions. In 2008, the Chicago Stock Exchange discovered 

it had overpaid $154,048 for 2007 Section 31 fees. Similarly, in 

2014, NASDAQ discovered it had overpaid almost $750,000 for 

2013 Section 31 fees. These exchanges overpaid out of an abundance of caution, rather than risk an enforcement action for underpayment. 

The SEC, however, has not refunded these overpayments. The 

SEC has kept these overpayments because the SEC has interpreted 

the ’34 Act as not granting the SEC the authority to refund the 

overpayment of Section 31 fees. On May 15, 2013, in a letter to Financial Services Committee Chairman Hensarling, SEC Chair 

Mary Jo White included a series of legislative proposals, supported 

by her fellow Commissioners, for the Committee’s consideration, including a proposal to allow the SEC to refund Section 31 overpayments, 

In the letter, Chair White noted that, ‘‘We recommend that the 

Commission be permitted to effect refunds by allowing an SRO to 

offset previous Section 31 overpayments against future Section 31 

payments . . . This would clarify that the Commission has the authority to follow this approach to effect such refunds as an alternative to using appropriated funds.’’ 1

At an April 29, 2015 Capital Markets and Government Sponsored Enterprises Subcommittee hearing, Mr. Tom Quaadman of 

the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness testified that: 

Although the SEC makes at least annual adjustments to 

the Section 31 fee rate, entities need to do a fair bit of projecting what their responsibility will be for a given time 

period. SROs and the national exchanges are therefore 

caught in a bit of a Catch-22 when it comes to Section 31 

fees. If they underpay the required amount, they are subject to enforcement action by the SEC. If they overpay the 

amount, there is no way for them to be refunded or to have 

the overpayment amount credited against future payments. This legislation would provide a degree of certainty 

for SROs and exchanges by allowing such overpayments to 

be credited against future Section 31 responsibilities. Since 

these payments are often passed on to the investing public, 

allowing for such credits would ultimately benefit investors 

who trade in the public markets. 

HEARINGS

The Committee on Financial Services held a hearing on April 29, 

2015, titled ‘‘Legislative Proposals to Enhance Capital Formation 

and Reduce Regulatory Burdens,’’ at which this matter was examined. 


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COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

May 20, 2015, and ordered H.R. 1975 to be reported favorably to 

the House without amendment by a recorded vote of 57 yeas to 0 

nays (recorded vote no. FC–37), a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. An amendment offered by Representative Meeks was not agreed to by a recorded 

vote of 24 yeas to 33 nays (recorded vote no. FC–36). The second 

and final record vote in Committee was a motion by Chairman 

Hensarling to report the bill favorably to the House without 

amendment. That motion was agreed to by a recorded vote of 57 

yeas to 0 nays (recorded vote no. FC–37), a quorum being present. 


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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 1975 will remedy the SEC’s inability to provide refunds or credit for previous 

overpayments of Section 31 fees by statutorily obligating the SEC 

to allows the SROs to offset previous Section 31 overpayments 

against future Section 31 fees, under a 10-year statute of limitations. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, August 31, 2015. 

Hon. JEB HENSARLING, Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1975, the Securities and 

Exchange Commission Overpayment Credit Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

KEITH HALL. 

Enclosure. 


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H.R. 1975—Securities and Exchange Commission Overpayment 

Credit Act 

Summary: H.R. 1975 would require the Securities and Exchange 

Commission (SEC) to provide a credit to national securities exchanges that overpay fees and assessments to the agency by offsetting future payments by the affected exchanges. 

CBO estimates that enacting H.R. 1975 would increase direct 

spending by $12 million over the 2016–2025 period; therefore, payas-you-go procedures apply. Enacting H.R. 1975 would not affect 

revenues. 

Under current law, the SEC is authorized to collect fees to offset 

its annual appropriation; therefore, assuming appropriation action 

consistent with that authority, CBO estimates that implementing 

the bill would have a negligible effect on net discretionary spending. 

H.R. 1975 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would not affect 

the budgets of state, local, or tribal governments. 

If the SEC increases fees to offset the costs of implementing the 

bill, H.R. 1975 would increase the cost of an existing mandate on 

private entities required to pay those fees. Based on information 

from the SEC, CBO estimates that the incremental cost of the 

mandate, if any, would fall well below the annual threshold for private-sector mandates established in UMRA ($154 million in 2015, 

adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary effect of H.R. 1975 is shown in the following table. The costs 

of this legislation fall within budget function 370 (commerce and 

housing credit). 

By fiscal year, in millions of dollars— 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016– 

2020 

2016– 

2025 

CHANGES IN DIRECT SPENDING 

Estimated Budget Authority ........................ 7 1 1 1 1 1 1 1 1 1 9 12 

Estimated Outlays ......... 7 1 1 1 1 1 1 1 1 1 9 12 

Notes: Components may not sum to totals because of rounding. CBO estimates that implementing H.R. 1975 would have an insignificant effect on net discretionary costs. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

1975 will be enacted early in fiscal year 2016. 

Direct spending 

H.R. 1975 would require the SEC to reduce future fees and assessments paid by a national securities exchange by the amount of 

any overpayment of such fees that an exchange identifies within 10 

years of the overpayment. Current law requires the SEC to make 

periodic adjustments to the rates that associations and exchanges 

must pay, but does not have a current mechanism to compensate 

exchanges for the overpayments of fees and assessments. Lowering 

current collections by the amount of a previous overpayment would 

be similar to providing a refund, which would be considered direct 

spending. Based on information from the SEC, CBO estimates that 

enacting H.R. 1975 would increase direct spending by $12 million 

over the 2016–2025 period. That amount includes $6 million in 


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overpayments that have been identified by the agency over the past 

10 years plus an estimated $0.6 million per year in credits for overpayments over the 2016–2025 period. In fiscal year 2014, the SEC 

collected about $1.3 billion in fees that would be covered under 

H.R. 1975. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asyou-go procedures are shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1975 AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON FINANCIAL SERVICES ON MAY 20, 2015 

By fiscal year, in millions of dollars— 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2016– 

2020 

2016– 

2025 

NET INCREASE IN THE DEFICIT 

Statutory Pay-As-You-Go 

Impact ....................... 7 1 1 1 1 1 1 1 1 1 9 12 

Note: Components may not sum to totals because of rounding. 

Estimated impact on state, local, and tribal governments: H.R. 

1975 contains no intergovernmental mandates as defined in UMRA 

and would impose no costs on state, local, or tribal governments. 

Estimated impact on the private sector: If the SEC increases fees 

to offset the costs of implementing the bill, H.R. 1975 would increase the cost of an existing mandate on private entities (including national securities exchanges and associations) required to pay 

those fees. The amount of fees collected would depend on the level 

of future appropriations. Based on information from the SEC, CBO 

estimates that the incremental cost of the mandate, if any, would 

fall well below the annual threshold for private-sector mandates established in UMRA ($154 million in 2015, adjusted annually for inflation). 

Estimate prepared by: Federal Costs: Susan Willie; Impact on 

State, Local, and Tribal Governments: Melissa Merrell; Impact on 

the Private Sector: Logan Smith. 

Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 


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APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 1975 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), the 

Committee states that no provision of H.R. 1975 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included 

in any report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111–139, or a program 

related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), the 

Committee states that H.R. 1975 contains no directed rulemaking. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section cites H.R. 1975 as the ‘‘Securities and Exchange 

Commission Overpayment Credit Act.’’ 

Section 2. Refunding or crediting overpayment of Section 31 fees 

This section requires the SEC to allow SROs to offset previous 

Section 31 overpayments against future Section 31 fees, under a 

10-year statute of limitations. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

SECURITIES EXCHANGE ACT OF 1934 

* * * * * * * 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

SEC. 31. TRANSACTION FEES. 

(a) RECOVERY OF COSTS OF ANNUAL APPROPRIATION.—The Commission shall, in accordance with this section, collect transaction 


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fees and assessments that are designed to recover the costs to the 

Government of the annual appropriation to the Commission by 

Congress. 

(b) 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. 

(c) OFF-EXCHANGE TRADES OF EXCHANGE REGISTERED AND LASTSALE-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. 

(d) 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. 

(e) 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 25, 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. 

(f) 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. 

(g) PUBLICATION.—The Commission shall publish in the Federal 

Register notices of the fee or assessment rates applicable under 

this section for each fiscal year not later than 30 days after the 

date on which an Act making a regular appropriation to the Commission for such fiscal year is enacted, together with any estimates 

or projections on which such fees are based. 


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(h) 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. 

(i) DEPOSIT OF FEES.— (1) OFFSETTING COLLECTIONS.—Fees collected pursuant to 

subsections (b), (c), and (d) for any fiscal year— 

(A) shall be deposited and credited as offsetting collections to the account providing appropriations to the Commission; and 

(B) 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. 

(j) ADJUSTMENTS TO FEE RATES.— 

(1) ANNUAL ADJUSTMENT.—Subject to subsections (i)(1)(B) 

and (k), for each fiscal year, 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) of this section) that are 

equal to the regular appropriation to the Commission by Congress for such fiscal year. 

(2) MID-YEAR ADJUSTMENT.—Subject to subsections (i)(1)(B) 

and (k), for each fiscal year, 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 

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 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 five-month period and assessments collected under subsection (d) of this section) that are equal to the regular appropriation to the Commission by Congress 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). 

(3) REVIEW.—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) or (2) and published under subsection (g) shall not be subject to judicial review. 


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(4) EFFECTIVE DATE.— 

(A) ANNUAL ADJUSTMENT.—Subject to subsections 

(i)(1)(B) and (k), an adjusted rate prescribed under paragraph (1) shall take effect on the later of— 

(i) the first day of the fiscal year to which such rate 

applies; or 

(ii) 60 days after the date on which an Act making 

a regular appropriation to the Commission for such 

fiscal year is enacted. 

(B) MID-YEAR ADJUSTMENT.—An adjusted rate prescribed 

under paragraph (2) shall take effect on April 1 of the fiscal year to which such rate applies. 

(k) 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 60 days after 

the date such a regular appropriation is enacted. 

(l) 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. 

(m) TRANSMITTAL OF COMMISSION BUDGET REQUESTS.— 

(1) BUDGET REQUIRED.—For fiscal year 2012, and each fiscal 

year thereafter, the Commission shall prepare and submit a 

budget to the President. Whenever the Commission submits a 

budget estimate or request to the President or the Office of 

Management and Budget, the Commission shall concurrently 

transmit copies of the estimate or request to the Committee on 

Appropriations of the Senate, the Committee on Appropriations 

of the House of Representatives, the Committee on Banking, 

Housing, and Urban Affairs of the Senate, and the Committee 

on Financial Services of the House of Representatives. 

(2) SUBMISSION TO CONGRESS.—The President shall submit 

each budget submitted under paragraph (1) to Congress, in 

unaltered form, together with the annual budget for the Administration submitted by the President. 

(3) CONTENTS.—The Commission shall include in each budget submitted under paragraph (1)— 

(A) an itemization of the amount of funds necessary to 

carry out the functions of the Commission. 

(B) an amount to be designated as contingency funding 

to be used by the Commission to address unanticipated 

needs; and 


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(C) a designation of any activities of the Commission for 

which multi-year budget authority would be suitable. 

(n) OVERPAYMENT.—If a national securities exchange or national 

securities association pays to the Commission an amount in excess 

of fees and assessments due under this section and informs the 

Commission of such amount paid in excess within 10 years of the 

date of the payment, the Commission shall offset future fees and assessments due by such exchange or association in an amount equal 

to such excess amount. 

* * * * * * * 

Æ 


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