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 Securities and Exchange Commission [Release No. 34-74057/January 15, 2015]
 I. Background Section 31 of the Securities Exchange Act of 1934 (“Exchange Act”) requires each national securities exchange and national securities association to pay transaction fees to the Commission.[1]
                    
                     Specifically, Section 31(b) requires each national securities exchange to pay to the Commission fees based on the aggregate dollar amount of sales of certain securities (“covered sales”) transacted on the exchange.[2]
                    
                     Section 31(c) requires each national securities association to pay to the Commission fees based on the aggregate dollar amount of covered sales transacted by or through any member of the association other than on an exchange.[3] Section 31 of the Exchange Act requires the Commission to annually adjust the fee rates applicable under Sections 31(b) and (c) to a uniform adjusted rate.[4]
                    
                     Specifically, the Commission must adjust the fee rates to a uniform adjusted rate that is reasonably likely to produce aggregate fee collections (including assessments on security futures transactions) equal to the regular appropriation to the Commission for the applicable fiscal year.[5] The Commission is required to publish notice of the new fee rates under Section 31 not later than 30 days after the date on which an Act making a regular appropriation for the applicable fiscal year is enacted.[6]
                    
                     On December 16, 2014, the President signed the Consolidated and Further Continuing Appropriations Act, 2015, providing $1,500,000,000 in funds to the SEC for fiscal year 2015. II. Fiscal Year 2015 Annual Adjustment to the Fee Rate The new fee rate is determined by (1) subtracting the sum of fees estimated to be collected prior to the effective date of the new fee rate [7]
                    
                     and estimated assessments on security futures transactions to be collected under Section 31(d) of the Exchange Act for all of fiscal year 2015 [8]
                    
                     from an amount equal to the regular appropriation to the Commission for fiscal year 2015, and (2) dividing the difference by the estimated aggregate dollar amount of sales for the remainder of the fiscal year following the effective date of the new fee rate. The regular appropriation to the Commission for fiscal year 2015 is $1,500,000,000. The Commission estimates that it will collect $614,005,586 in fees for the period prior to the effective date of the new fee rate and $58,863 in assessments on round turn transactions in security futures products during all of fiscal year 2015.[9]
                    
                     Using a methodology for estimating the aggregate dollar amount of sales for the remainder of fiscal year 2015 (developed after consultation with the CBO and OMB), the Commission estimates that the aggregate dollar amount of covered sales for the remainder of fiscal year 2015 to be $48,121,838,283,138. As described above, the uniform adjusted rate is computed by dividing the residual fees to be collected of $885,935,551 by the estimate of the aggregate dollar amount of covered sales for the remainder of fiscal year 2015 of $48,121,838,283,138. This results in a uniform adjusted rate for fiscal year 2015 of $18.40 per million.[10] III. Effective Date of the Uniform Adjusted Rate Under Section 31(j)(4)(A) of the Exchange Act, the fiscal year 2015 annual adjustments to the fee rates applicable under Sections 31(b) and (c) of the Exchange Act shall take effect on the later of October 1, 2014, or 60 days after the date on which a regular appropriation to the Commission for fiscal year 2015 is enacted.[11]
                    
                     The regular appropriation to the Commission for fiscal year 2015 was enacted on December 16, 2014, and accordingly, the new fee rates applicable under Sections 31(b) and (c) of the Exchange Act will take effect on February 14, 2015. 
 
 IV. Conclusion Accordingly, pursuant to Section 31 of the Exchange Act, *It is hereby ordered*
                     that the fee rates applicable under Sections 31(b) and (c) of the Exchange Act shall be $18.40 per $1,000,000 effective on February 14, 2015. By the Commission. Brent J. Fields, Secretary.
 Appendix A This appendix provides the formula for determining the annual adjustment to the fee rates applicable under Sections 31(b) and (c) of the Exchange Act for fiscal year 2015. Section 31 of the Exchange Act requires the fee rates to be adjusted so that it is reasonably likely that the Commission will collect aggregate fees equal to its regular appropriation for fiscal year 2015. To make the adjustment, the Commission must project the aggregate dollar amount of covered sales of securities on the securities exchanges and certain over-the-counter markets over the course of the year. The fee rate equals the ratio of the Commission's regular appropriation for fiscal year 2015 (less the sum of fees to be collected during fiscal year 2015 prior to the effective date of the new fee rate and aggregate assessments on security futures transactions during all of fiscal year 2015) to the estimated aggregate dollar amount of covered sales for the remainder of the fiscal year following the effective date of the new fee rate. For 2015, the Commission has estimated the aggregate dollar amount of covered sales by projecting forward the trend established in the previous decade. More specifically, the dollar amount of covered sales was forecasted for months subsequent to November 2014, the last month for which the Commission has data on the dollar volume of covered sales.[12] The following sections describe this process in detail. A. Baseline Estimate of the Aggregate Dollar Amount of Covered Sales for Fiscal Year 2015. First, calculate the average daily dollar amount of covered sales (ADS) for each month in the sample (November 2004-November 2014). The monthly total dollar amount of covered sales (exchange plus certain over-the-counter markets) is presented in column C of Table A. Next, calculate the change in the natural logarithm of ADS from month to month. The average monthly percentage growth of ADS over the entire sample is 0.0068 and the standard deviation is 0.123. Assuming the monthly percentage change in ADS follows a random walk, calculating the expected monthly percentage growth rate for the full sample is straightforward. The expected monthly percentage growth rate of ADS is 1.44%. Now, use the expected monthly percentage growth rate to forecast total dollar volume. For example, one can use the ADS for November 2014 ($276,290,217,978) to forecast ADS for December 2014 ($280,278,562,848 = $276,290,217,978 × 1.0144).[13]
                        
                         Multiply by the number of trading days in December 2014 (22) to obtain a forecast of the total dollar volume for the month ($6,166,128,382,663). Repeat the method to generate forecasts for subsequent months. The forecasts for total dollar volume of covered sales are in column G of Table A. The following is a more formal (mathematical) description of the procedure: 1. Divide each month's total dollar volume (column C) by the number of trading days in that month (column B) to obtain the average daily dollar volume (ADS, column D). 2. For each month t, calculate the change in ADS from the previous month as  Δt
                         = log (ADSt
                        /ADSt−1), where log (x) denotes the natural logarithm of x. 3. Calculate the mean and standard deviation of the series {Δ1, Δ2, . . . , Δ120
                        }. These are given by μ = 0.0068 and σ = 0.123, respectively. 4. Assume that the natural logarithm of ADS follows a random walk, so that Δs
                         and Δt
                         are statistically independent for any two months s and t. 5. Under the assumption that Δt
                         is normally distributed, the expected value of ADSt
                        /ADSt−1
                         is given by exp (μ + σ2
                        /2), or on average ADSt
                         = 1.0144 × ADSt−1. 6. For December 2014, this gives a forecast ADS of 1.0144 × $276,290,217,978 = $280,278,562,848. Multiply this figure by the 22 trading days in December 2014 to obtain a total dollar volume forecast of $6,166,128,382,663. 7. For January 2015, multiply the December 2014 ADS forecast by 1.0144 to obtain a forecast ADS of $284,324,480,857. Multiply this figure by the 20 trading days in January 2015 to obtain a total dollar volume forecast of $5,686,489,617,137. 8. Repeat this procedure for subsequent months. B. Using the Forecasts From A To Calculate the New Fee Rate 1. Use Table A to estimate fees collected for the period 10/1/14 through 2/13/15. The projected aggregate dollar amount of covered sales for this period is $27,783,058,208,169. Actual and projected fee collections at the current fee rate of 0.0000221 are $614,005,586. 2. Estimate the amount of assessments on security futures products collected from 10/1/14 through 9/30/15 to be $58,863 by projecting a 1.44% monthly increase from a base of $4,707 in November 2014. 3. Subtract the amounts $614,005,586 and $58,863 from the target offsetting collection amount set by Congress of $1,500,000,000 leaving $885,935,551 to be collected on dollar volume for the period 2/14/15 through 9/30/15. 4. Use Table A to estimate dollar volume for the period 2/14/15 through 9/30/15. The estimate is $48,121,838,283,138. Finally, compute the fee rate required to produce the additional $885,935,551 in revenue. This rate is $885,935,551 divided by $48,121,838,283,138 or 0.00001841026. 5. Round the result to the seventh decimal point, yielding a rate of .0000184 (or $18.40 per million).  Data
                    ( print page 2980) Month
Number of trading days in month
Total dollar amount of sales
Average daily dollar amount of sales 
                             (ADS)
Change in natural 
                             logarithm of ADS
Forecast ADS
Forecast total dollar amount of sales(A)
(B)
(C)
(D)
(E)
(F)
(G)Nov-04
21
2,577,513,374,160
122,738,732,103
-Dec-04
22
2,673,532,981,863
121,524,226,448
−0.010Jan-05
20
2,581,847,200,448
129,092,360,022
0.060Feb-05
19
2,532,202,408,589
133,273,810,978
0.032Mar-05
22
3,030,474,897,226
137,748,858,965
0.033Apr-05
21
2,906,386,944,434
138,399,378,306
0.005May-05
21
2,697,414,503,460
128,448,309,689
−0.075Jun-05
22
2,825,962,273,624
128,452,830,619
0.000Jul-05
20
2,604,021,263,875
130,201,063,194
0.014Aug-05
23
2,846,115,585,965
123,744,155,912
−0.051Sep-05
21
3,009,640,645,370
143,316,221,208
0.147Oct-05
21
3,279,847,331,057
156,183,206,241
0.086Nov-05
21
3,163,453,821,548
150,640,658,169
−0.036Dec-05
21
3,090,212,715,561
147,152,986,455
−0.023Jan-06
20
3,573,372,724,766
178,668,636,238
0.194Feb-06
19
3,314,259,849,456
174,434,728,919
−0.024Mar-06
23
3,807,974,821,564
165,564,122,677
−0.052Apr-06
19
3,257,478,138,851
171,446,217,834
0.035May-06
22
4,206,447,844,451
191,202,174,748
0.109Jun-06
22
3,995,113,357,316
181,596,061,696
−0.052Jul-06
20
3,339,658,009,357
166,982,900,468
−0.084Aug-06
23
3,410,187,280,845
148,269,012,211
−0.119Sep-06
20
3,407,409,863,673
170,370,493,184
0.139Oct-06
22
3,980,070,216,912
180,912,282,587
0.060Nov-06
21
3,933,474,986,969
187,308,332,713
0.035Dec-06
20
3,715,146,848,695
185,757,342,435
−0.008Jan-07
20
4,263,986,570,973
213,199,328,549
0.138Feb-07
19
3,946,799,860,532
207,726,308,449
−0.026Mar-07
22
5,245,051,744,090
238,411,442,913
0.138Apr-07
20
4,274,665,072,437
213,733,253,622
−0.109May-07
22
5,172,568,357,522
235,116,743,524
0.095Jun-07
21
5,586,337,010,802
266,016,048,133
0.123Jul-07
21
5,938,330,480,139
282,777,641,911
0.061Aug-07
23
7,713,644,229,032
335,375,836,045
0.171Sep-07
19
4,805,676,596,099
252,930,347,163
−0.282Oct-07
23
6,499,651,716,225
282,593,552,879
0.111Nov-07
21
7,176,290,763,989
341,728,131,619
0.190Dec-07
20
5,512,903,594,564
275,645,179,728
−0.215Jan-08
21
7,997,242,071,529
380,821,051,025
0.323Feb-08
20
6,139,080,448,887
306,954,022,444
−0.216Mar-08
20
6,767,852,332,381
338,392,616,619
0.098Apr-08
22
6,150,017,772,735
279,546,262,397
−0.191May-08
21
6,080,169,766,807
289,531,893,657
0.035Jun-08
21
6,962,199,302,412
331,533,300,115
0.135Jul-08
22
8,104,256,787,805
368,375,308,537
0.105Aug-08
21
6,106,057,711,009
290,764,652,905
−0.237Sep-08
21
8,156,991,919,103
388,428,186,624
0.290Oct-08
23
8,644,538,213,244
375,849,487,532
−0.033Nov-08
19
5,727,998,341,833
301,473,596,939
−0.221Dec-08
22
5,176,041,317,640
235,274,605,347
−0.248Jan-09
20
4,670,249,433,806
233,512,471,690
−0.008Feb-09
19
4,771,470,184,048
251,130,009,687
0.073Mar-09
22
5,885,594,284,780
267,527,012,945
0.063Apr-09
21
5,123,665,205,517
243,984,057,406
−0.092May-09
20
5,086,717,129,965
254,335,856,498
0.042Jun-09
22
5,271,742,782,609
239,624,671,937
−0.060Jul-09
22
4,659,599,245,583
211,799,965,708
−0.123Aug-09
21
4,582,102,295,783
218,195,347,418
0.030Sep-09
21
4,929,155,364,888
234,721,684,042
0.073Oct-09
22
5,410,025,301,030
245,910,240,956
0.047Nov-09
20
4,770,928,103,032
238,546,405,152
−0.030Dec-09
22
4,688,555,303,171
213,116,150,144
−0.113Jan-10
19
4,661,793,708,648
245,357,563,613
0.141Feb-10
19
4,969,848,578,023
261,570,977,791
0.064Mar-10
23
5,563,529,823,621
241,892,601,027
−0.078Apr-10
21
5,546,445,874,917
264,116,470,234
0.088May-10
20
7,260,430,376,294
363,021,518,815
0.318Jun-10
22
6,124,776,349,285
278,398,924,967
−0.265Jul-10
21
5,058,242,097,334
240,868,671,302
−0.145Aug-10
22
4,765,828,263,463
216,628,557,430
−0.106( print page 2981)Sep-10
21
4,640,722,344,586
220,986,778,314
0.020Oct-10
21
5,138,411,712,272
244,686,272,013
0.102Nov-10
21
5,279,700,881,901
251,414,327,710
0.027Dec-10
22
4,998,574,681,208
227,207,940,055
−0.101Jan-11
20
5,043,391,121,345
252,169,556,067
0.104Feb-11
19
5,114,631,590,581
269,191,136,346
0.065Mar-11
23
6,499,355,385,307
282,580,668,926
0.049Apr-11
20
4,975,954,868,765
248,797,743,438
−0.127May-11
21
5,717,905,621,053
272,281,220,050
0.090Jun-11
22
5,820,079,494,414
264,549,067,928
−0.029Jul-11
20
5,189,681,899,635
259,484,094,982
−0.019Aug-11
23
8,720,566,877,109
379,155,081,613
0.379Sep-11
21
6,343,578,147,811
302,075,149,896
−0.227Oct-11
21
6,163,272,963,688
293,489,188,747
−0.029Nov-11
21
5,493,906,473,584
261,614,593,980
−0.115Dec-11
21
5,017,867,255,600
238,946,059,790
−0.091Jan-12
20
4,726,522,206,487
236,326,110,324
−0.011Feb-12
20
5,011,862,514,132
250,593,125,707
0.059Mar-12
22
5,638,847,967,025
256,311,271,228
0.023Apr-12
20
5,084,239,396,560
254,211,969,828
−0.008May-12
22
5,611,638,053,374
255,074,456,972
0.003Jun-12
21
5,121,896,896,362
243,899,852,208
−0.045Jul-12
21
4,567,519,314,374
217,500,919,732
−0.115Aug-12
23
4,621,597,884,730
200,939,038,467
−0.079Sep-12
19
4,598,499,962,682
242,026,313,825
0.186Oct-12
21
5,095,175,588,310
242,627,408,967
0.002Nov-12
21
4,547,882,974,292
216,565,855,919
−0.114Dec-12
20
4,744,922,754,360
237,246,137,718
0.091Jan-13
21
5,079,603,817,496
241,885,896,071
0.019Feb-13
19
4,800,663,527,089
252,666,501,426
0.044
—
—Mar-13
20
4,917,701,839,870
245,885,091,993
−0.027Apr-13
22
5,451,358,637,079
247,789,028,958
0.008May-13
22
5,681,788,831,869
258,263,128,721
0.041Jun-13
20
5,623,545,462,226
281,177,273,111
0.085Jul-13
22
5,083,861,509,754
231,084,614,080
−0.196Aug-13
22
4,925,611,193,095
223,891,417,868
−0.032Sep-13
20
4,959,197,626,713
247,959,881,336
0.102Oct-13
23
5,928,804,028,970
257,774,088,216
0.039Nov-13
20
5,182,024,612,049
259,101,230,602
0.005Dec-13
21
5,265,282,994,173
250,727,761,627
−0.033Jan-14
21
5,808,700,114,288
276,604,767,347
0.098Feb-14
19
6,018,926,931,054
316,785,627,950
0.136Mar-14
21
6,068,617,342,988
288,981,778,238
−0.092Apr-14
21
6,013,948,953,528
286,378,521,597
−0.009May-14
21
5,265,594,447,318
250,742,592,729
−0.133Jun-14
21
5,159,506,989,669
245,690,809,032
−0.020Jul-14
22
5,364,099,567,460
243,822,707,612
−0.008Aug-14
21
5,075,332,147,677
241,682,483,223
−0.009Sep-14
21
5,507,943,363,243
262,283,017,297
0.082Oct-14
23
7,796,638,035,879
338,984,262,430
0.257Nov-14
19
5,249,514,141,576
276,290,217,978
−0.205Dec-14
22



280,278,562,848
6,166,128,382,663Jan-15
20



284,324,480,857
5,686,489,617,137Feb-15
19



288,428,803,091
5,480,147,258,736Mar-15
22



292,592,372,637
6,437,032,198,017Apr-15
21



296,816,044,750
6,233,136,939,740May-15
20



301,100,687,030
6,022,013,740,599Jun-15
22



305,447,179,604
6,719,837,951,283Jul-15
22



309,856,415,301
6,816,841,136,632Aug-15
21



314,329,299,842
6,600,915,296,676Sep-15
21



318,866,752,018
6,696,201,792,368


# Footnotes

1.
    
                         15 U.S.C. 78ee. Back to Citation
 2.
    
                         15 U.S.C. 78ee(b). Back to Citation
 3.
    
                         15 U.S.C. 78ee(c). Back to Citation
 4.
    
                         In some circumstances, the SEC also must make a mid-year adjustment to the fee rates applicable under Sections 31(b) and (c). Back to Citation
 5.
    
                         15 U.S.C. 78ee(j)(1) (the Commission must adjust the rates under Sections 31(b) and (c) 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 [Section 31] (including assessments collected under [Section 31(d)]) that are equal to the regular appropriation to the Commission by Congress for such fiscal year.”). Back to Citation
 6.
    
                         15 U.S.C. 78ee(g). Back to Citation
 7.
    
                         The sum of fees to be collected prior to the effective date of the new fee rate is determined by applying the current fee rate to the dollar amount of covered sales prior to the effective date of the new fee rate. The exchanges and FINRA have provided data on the dollar amount of covered sales through November 30, 2014. To calculate the dollar amount of covered sales from that date to the effective date of the new fee rate, the Division is using the same methodology it developed in consultation with the Congressional Budget Office (“CBO”) and the Office of Management and Budget (“OMB”) to estimate the dollar amount of covered sales in prior fiscal years. An explanation of the methodology appears in Appendix A. Back to Citation
 8.
    
                         The Division is using the same methodology it has used previously to estimate assessments on security futures transactions to be collected in fiscal year 2015. An explanation of the methodology appears in Appendix A. Back to Citation
 9.
    
                         The estimate of fees to be collected prior to the effective date of the new fee rate is determined by applying the current fee rate to the dollar amount of covered sales prior to the effective date of the new fee rate. Back to Citation
 10.
    
                         Appendix A shows the purely arithmetic process of calculating the fiscal year 2015 annual adjustment. The appendix also includes the data used by the Commission in making this adjustment. Back to Citation
 11.
    
                         15 U.S.C. 78ee(j)(4)(A). Back to Citation
 12.
    
                             To determine the availability of data, the Commission compares the date of the appropriation with the date the transaction data are due from the exchanges (10 business days after the end of the month). If the business day following the date of the appropriation is equal to or subsequent to the date the data are due from the exchanges, the Commission uses these data. The appropriation was signed on December 16, 2014. The first business day after this date was December 17, 2014. Data for November were due from the exchanges on December 12. So the Commission used November 2014 and earlier data to forecast volume for December 2014 and later months. Back to Citation
 13.
    
                             The value 1.0144 has been rounded. All computations are done with the unrounded value. Back to Citation


BILLING CODE 8011-01-P [FR Doc. 2015-00858 Filed 1-20-15; 8:45 am] BILLING CODE 8011-01-C