I

107TH CONGRESS

1ST SESSION H. R. 1311

To amend the Securities Exchange Act of 1934 to reduce fees on securities

transactions.

IN THE HOUSE OF REPRESENTATIVES

MARCH 29, 2001

Mr. LAFALCE (for himself, Mr. TOWNS, Mr. KANJORSKI, Mr. DINGELL, and

Mr. MARKEY) introduced the following bill; which was referred to the

Committee on Financial Services

A BILL

To amend the Securities Exchange Act of 1934 to reduce

fees on securities transactions.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Fairness in Securities

5 Transactions Act’’.

6 SEC. 2. IMMEDIATE FEE REDUCTION.

7 Section 31 of the Securities Exchange Act of 1934

8 (15 U.S.C. 78ee) is amended by striking ‘‘1/300 of one

9 percent’’ each place it appears and inserting ‘‘1/500 of one

10 percent’’.
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1 SEC. 3. REVISION OF SECURITIES TRANSACTION FEE PRO2 VISIONS; ADDITIONAL FEE REDUCTIONS.

3 (a) POOLING AND ALLOCATION OF COLLECTIONS.—

4 Section 31 of the Securities Exchange Act of 1934 (15

5 U.S.C. 78ee) is further amended—

6 (1) in subsection (b)—

7 (A) by striking ‘‘Every’’ and inserting

8 ‘‘Subject to subsection (i), each’’; and

9 (B) by striking the last sentence;

10 (2) by striking subsection (c);

11 (3) in subsection (d)—

12 (A) by striking paragraphs (2) and (3);

13 (B) by striking the following:

14 ‘‘(d) OFF-EXCHANGE TRADES OF LAST-SALE-RE15 PORTED SECURITIES.—

16 ‘‘(1) COVERED TRANSACTIONS.—Each national

17 securities’’

18 and inserting the following:

19 ‘‘(c) OFF-EXCHANGE TRADES OF EXCHANGE REG20 ISTERED AND LAST-SALE-REPORTED SECURITIES.—Sub21 ject to subsection (i), each national securities’’;

22 (C) by inserting ‘‘registered on a national

23 securities exchange or’’ after ‘‘security futures

24 products)’’;

25 (D) by striking ‘‘, excluding any sales for

26 which a fee is paid under subsection (c)’’;
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1 (4) by redesignating subsections (e) through (h)

2 as subsections (d) through (g), respectively;

3 (5) in subsection (e) (as redesignated by para4 graph (4)), by striking ‘‘(b), (c), and (d)’’ and in5 serting ‘‘(b) and (c)’’; and

6 (6) by adding at the end the following new sub7 section:

8 ‘‘(h) DEPOSIT OF FEES.—

9 ‘‘(1) OFFSETTING COLLECTIONS.—Fees col10 lected pursuant to subsections (b) and (c) for any

11 fiscal year—

12 ‘‘(A) shall be deposited and credited as off13 setting collections to the account providing ap14 propriations to the Commission, except that the

15 amount so deposited and credited for fiscal

16 years 2007 through 2011 shall not exceed the

17 target offsetting collection amount for such fis18 cal year; and

19 ‘‘(B) shall not be collected for any fiscal

20 year except to the extent provided in advance in

21 appropriation Acts.

22 ‘‘(2) GENERAL REVENUES.—Fees collected pur23 suant to subsections (b) and (c) for fiscal years

24 2007 through 2011 in excess of the amount depos25 ited and credited as offsetting collections pursuant
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1 to paragraph (1) for such fiscal year shall be depos2 ited and credited as general revenue of the Treasury.

3 No fees collected pursuant to such subsections for

4 fiscal years 2002 through 2006, fiscal year 2012, or

5 any succeeding fiscal year shall be deposited and

6 credited as general revenue of the Treasury.’’.

7 (b) ADDITIONAL REDUCTIONS OF FEES.—

8 (1) AMENDMENT.—Section 31 of the Securities

9 Exchange Act of 1934 (15 U.S.C. 78ee) is further

10 amended by adding after subsection (h) (as added

11 by subsection (a)(6)) the following new subsections:

12 ‘‘(i) RECAPTURE OF PROJECTION WINDFALLS FOR

13 FURTHER RATE REDUCTIONS.—

14 ‘‘(1) ANNUAL ADJUSTMENT.—For each of the

15 fiscal years 2003 through 2011, the Commission

16 shall by order adjust each of the rates applicable

17 under subsections (b) and (c) for such fiscal year to

18 a uniform adjusted rate that, when applied to the

19 baseline estimate of the aggregate dollar amount of

20 sales for such fiscal year, is reasonably likely to

21 produce aggregate fee collections under this section

22 that are equal to the sum of—

23 ‘‘(A) the target offsetting collection

24 amount for such fiscal year; and
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1 ‘‘(B) the target general revenue amount

2 for such fiscal year.

3 ‘‘(2) FINAL RATE ADJUSTMENT.—For fiscal

4 year 2012 and all of the succeeding fiscal years, the

5 Commission shall by order adjust each of the rates

6 applicable under subsections (b) and (c) for all of

7 such fiscal years to a uniform adjusted rate that,

8 when applied to the baseline estimate of the aggre9 gate dollar amount of sales for fiscal year 2012, is

10 reasonably likely to produce aggregate fee collections

11 under this section in fiscal year 2012 equal to the

12 target offsetting collection amount for fiscal year

13 2011.

14 ‘‘(3) LIMITATION ON RATE ADJUSTMENT.—

15 Notwithstanding paragraphs (1) and (2), no ad16 justed rate established under this subsection for any

17 fiscal year shall exceed the rate that would otherwise

18 be applicable under subsections (b) and (c) for such

19 fiscal year.

20 ‘‘(4) REVIEW AND EFFECTIVE DATE.—An ad21 justed rate prescribed under paragraph (1) or (2)

22 and published under subsection (g) shall not be sub23 ject to judicial review. Subject to subsections

24 (h)(1)(B) and (j), an adjusted rate prescribed under

25 paragraph (1) shall take effect on the first day of
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1 the fiscal year to which such rate applies and an ad2 justed rate prescribed under paragraph (2) shall

3 take effect on the first day of fiscal year 2012.

4 ‘‘(j) LAPSE OF APPROPRIATION.—If on the first day

5 of a fiscal year a regular appropriation to the Commission

6 has not been enacted, the Commission shall continue to

7 collect fees (as offsetting collections) under subsections (b)

8 and (c) at the rate in effect during the preceding fiscal

9 year, until such a regular appropriation is enacted.

10 ‘‘(k) DEFINITIONS.—For purposes of this section:

11 ‘‘(1) TARGET OFFSETTING COLLECTION

12 AMOUNT.—The target offsetting collection amount is

13 an amount equal to—

14 ‘‘(A) $976,000,000 for fiscal year 2002;

15 ‘‘(B) $1,132,000,000 for fiscal year 2003;

16 ‘‘(C) $1,370,000,000 for fiscal year 2004;

17 ‘‘(D) $1,627,000,000 for fiscal year 2005;

18 ‘‘(E) $1,913,000,000 for fiscal year 2006;

19 ‘‘(F) $1,110,000,000 for fiscal year 2007;

20 ‘‘(G) $1,144,000,000 for fiscal year 2008;

21 ‘‘(H) $1,327,000,000 for fiscal year 2009;

22 ‘‘(I) $1,523,000,000 for fiscal year 2010;

23 and

24 ‘‘(J) $1,745,000,000 for fiscal year 2011.
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1 ‘‘(2) TARGET GENERAL REVENUE AMOUNT.—

2 The target general revenue amount is an amount

3 equal to—

4 ‘‘(A) zero for each of the fiscal years 2002

5 through 2006;

6 ‘‘(B) $463,000,000 for fiscal year 2007;

7 ‘‘(C) $449,000,000 for fiscal year 2008;

8 ‘‘(D) $500,000,000 for fiscal year 2009;

9 ‘‘(E) $551,000,000 for fiscal year 2010;

10 and

11 ‘‘(F) $614,000,000 for fiscal year 2011.

12 ‘‘(3) BASELINE ESTIMATE OF THE AGGREGATE

13 DOLLAR AMOUNT OF SALES.—The baseline estimate

14 of the aggregate dollar amount of sales for any fiscal

15 year is the baseline estimate of the aggregate dollar

16 amount of sales of securities (other than bonds, de17 bentures, other evidences of indebtedness, and secu18 rity futures products) to be transacted on each na19 tional securities exchange and by or through any

20 member of each national securities association (oth21 erwise than on a national securities exchange) dur22 ing such fiscal year as determined by the Congres23 sional Budget Office in making projections pursuant

24 to section 257 of the Balanced Budget and Emer25 gency Deficit Control Act of 1985 and as contained
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1 in the projection required to be made in March of

2 the preceding fiscal year.’’.

3 (2) CONFORMING AMENDMENT.—Section 31(g)

4 of such Act is amended by inserting before the pe5 riod at the end the following: ‘‘not later than April

6 30 of the fiscal year preceding the fiscal year to

7 which such rate applies’’.

8 SEC. 4. PAY PARITY PROVISIONS.

9 (a) SECURITIES AND EXCHANGE COMMISSION EM10 PLOYEES.—Section 4(b) of the Securities Exchange Act

11 of 1934 (15 U.S.C. 78d(b)) is amended—

12 (1) by striking paragraphs (1) and (2) and by

13 inserting the following:

14 ‘‘(1) APPOINTMENT, COMPENSATION, AND BEN15 EFITS.—

16 ‘‘(A) IN GENERAL.—The Commission may

17 appoint and fix the compensation of such offi18 cers, attorneys, economists, examiners, and

19 other employees as may be necessary for car20 rying out its functions under this Act.

21 ‘‘(B) RATES OF PAY.—Rates of basic pay

22 for all employees of the Commission may be set

23 and adjusted by the Commission without regard

24 to the provisions of chapter 51 or subchapter

25 III of chapter 53 of title 5, United States Code.
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1 ‘‘(C) ADDITIONAL COMPENSATION AND

2 BENEFITS.—The Commission may provide addi3 tional compensation and benefits to employees

4 of the Commission if the same type of com5 pensation or benefits are then being provided by

6 any agency referred to under section 1206 of

7 the Financial Institutions Reform, Recovery,

8 and Enforcement Act of 1989 or, if not then

9 being provided, could be provided by such an

10 agency under applicable provisions of law, rule,

11 or regulation.

12 ‘‘(2) INFORMATION; COMPARABILITY.—In es13 tablishing and adjusting schedules of compensation

14 and additional benefits for employees of the Com15 mission, which are to be determined solely by the

16 Commission under this subsection, the

17 Commission—

18 ‘‘(A) shall consult with and inform the

19 heads of the agencies referred to under section

20 1206 of the Financial Institutions Reform, Re21 covery, and Enforcement Act of 1989;

22 ‘‘(B) shall inform the Congress of such

23 compensation and benefits; and
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1 ‘‘(C) shall seek to maintain comparability

2 with such agencies regarding compensation and

3 benefits.’’.

4 (b) TECHNICAL AMENDMENTS.—

5 (1) Section 3132(a)(1) of title 5, United States

6 Code, is amended—

7 (A) in subparagraph (C), by striking ‘‘or’’

8 after the semicolon;

9 (B) in subparagraph (D), by inserting ‘or‘

10 after the semicolon; and

11 (C) by adding at the end of the following:

12 ‘‘(E) the Securities and Exchange Commis13 sion.’’.

14 (2) Section 5373(a) of title 5, United States

15 Code, is amended—

16 (A) in paragraph (2), by striking ‘‘or’’

17 after the semicolon;

18 (B) in paragraph (3), by striking the pe19 riod and inserting ‘‘; or’’; and

20 (C) by adding at the end the following:

21 ‘‘(4) section 4(b) of the Securities Exchange

22 Act of 1934.’’.
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1 SEC. 5. EFFECTIVE DATES.

2 (a) FEE PROVISIONS.—The amendments made by

3 sections 2 and 3 of this Act shall take effect on October

4 1, 2001.

5 (b) PAY PARITY.—

6 (1) IN GENERAL.—Except as provided in para7 graph (2), the amendments made by section 4 shall

8 take effect on the date of enactment of this Act.

9 (2) EXCEPTION.—The amendments made by

10 section 4(b)(1) shall take effect as of such date as

11 the Securities and Exchange Commission shall (by

12 order published in the Federal Register) prescribe,

13 but in no event later than 1 year after the date of

14 enactment of this Act.

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