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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Fairness in Securities
Transactions Act’’.
SEC. 2. IMMEDIATE FEE REDUCTION.
Section 31 of the Securities Exchange Act of 1934
(15 U.S.C. 78ee) is amended by striking ‘‘1/300 of one
percent’’ each place it appears and inserting ‘‘1/500 of one
percent’’.
SEC. 3. REVISION OF SECURITIES TRANSACTION FEE PRO-
VISIONS; ADDITIONAL FEE REDUCTIONS.
(a) POOLING AND ALLOCATION OF COLLECTIONS.—
Section 31 of the Securities Exchange Act of 1934 (15
U.S.C. 78ee) is further amended—
(1) in subsection (b)—
(A) by striking ‘‘Every’’ and inserting
‘‘Subject to subsection (i), each’’; and
(B) by striking the last sentence;
(2) by striking subsection (c);
(3) in subsection (d)—
(A) by striking paragraphs (2) and (3);
(B) by striking the following:
‘‘(d) OFF-EXCHANGE TRADES
OF LAST-SALE-RE-
PORTED SECURITIES.—
‘‘(1) COVERED TRANSACTIONS.—Each national
securities’’
and inserting the following:
‘‘(c) OFF-EXCHANGE TRADES OF EXCHANGE REG-
ISTERED AND LAST-SALE-REPORTED SECURITIES.—Sub-
ject to subsection (i), each national securities’’;
(C) by inserting ‘‘registered on a national
securities exchange or’’ after ‘‘security futures
products)’’;
(D) by striking ‘‘, excluding any sales for
which a fee is paid under subsection (c)’’;
(4) by redesignating subsections (e) through (h)
as subsections (d) through (g), respectively;
(5) in subsection (e) (as redesignated by para-
graph (4)), by striking ‘‘(b), (c), and (d)’’ and in-
serting ‘‘(b) and (c)’’; and
(6) by adding at the end the following new sub-
section:
‘‘(h) DEPOSIT OF FEES.—
‘‘(1) OFFSETTING
COLLECTIONS.—Fees col-
lected pursuant to subsections (b) and (c) for any
fiscal year—
‘‘(A) shall be deposited and credited as off-
setting collections to the account providing ap-
propriations to the Commission, except that the
amount so deposited and credited for fiscal
years 2007 through 2011 shall not exceed the
target offsetting collection amount for such fis-
cal year; and
‘‘(B) shall not be collected for any fiscal
year except to the extent provided in advance in
appropriation Acts.
‘‘(2) GENERAL REVENUES.—Fees collected pur-
suant to subsections (b) and (c) for fiscal years
2007 through 2011 in excess of the amount depos-
ited and credited as offsetting collections pursuant
to paragraph (1) for such fiscal year shall be depos-
ited and credited as general revenue of the Treasury.
No fees collected pursuant to such subsections for
fiscal years 2002 through 2006, fiscal year 2012, or
any succeeding fiscal year shall be deposited and
credited as general revenue of the Treasury.’’.
(b) ADDITIONAL REDUCTIONS OF FEES.—
(1) AMENDMENT.—Section 31 of the Securities
Exchange Act of 1934 (15 U.S.C. 78ee) is further
amended by adding after subsection (h) (as added
by subsection (a)(6)) the following new subsections:
‘‘(i) 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
that are equal to the sum of—
‘‘(A) 
the 
target 
offsetting 
collection
amount for such fiscal year; and
‘‘(B) the target general revenue amount
for such fiscal year.
‘‘(2) 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 aggre-
gate dollar amount of sales for fiscal year 2012, is
reasonably likely to produce aggregate fee collections
under this section in fiscal year 2012 equal to the
target offsetting collection amount for fiscal year
2011.
‘‘(3) LIMITATION
ON
RATE
ADJUSTMENT.—
Notwithstanding paragraphs (1) and (2), no ad-
justed rate established under this subsection for any
fiscal year shall exceed the rate that would otherwise
be applicable under subsections (b) and (c) for such
fiscal year.
‘‘(4) REVIEW AND EFFECTIVE DATE.—An ad-
justed rate prescribed under paragraph (1) or (2)
and published under subsection (g) shall not be sub-
ject to judicial review. Subject to subsections
(h)(1)(B) and (j), an adjusted rate prescribed under
paragraph (1) shall take effect on the first day of
the fiscal year to which such rate applies and an ad-
justed rate prescribed under paragraph (2) shall
take effect on the first day of fiscal year 2012.
‘‘(j) 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 fees (as offsetting collections) under subsections (b)
and (c) at the rate in effect during the preceding fiscal
year, until such a regular appropriation is enacted.
‘‘(k) DEFINITIONS.—For purposes of this section:
‘‘(1) 
TARGET
OFFSETTING
COLLECTION
AMOUNT.—The target offsetting collection amount is
an amount equal to—
‘‘(A) $976,000,000 for fiscal year 2002;
‘‘(B) $1,132,000,000 for fiscal year 2003;
‘‘(C) $1,370,000,000 for fiscal year 2004;
‘‘(D) $1,627,000,000 for fiscal year 2005;
‘‘(E) $1,913,000,000 for fiscal year 2006;
‘‘(F) $1,110,000,000 for fiscal year 2007;
‘‘(G) $1,144,000,000 for fiscal year 2008;
‘‘(H) $1,327,000,000 for fiscal year 2009;
‘‘(I) $1,523,000,000 for fiscal year 2010;
and
‘‘(J) $1,745,000,000 for fiscal year 2011.
‘‘(2) TARGET GENERAL REVENUE AMOUNT.—
The target general revenue amount is an amount
equal to—
‘‘(A) zero for each of the fiscal years 2002
through 2006;
‘‘(B) $463,000,000 for fiscal year 2007;
‘‘(C) $449,000,000 for fiscal year 2008;
‘‘(D) $500,000,000 for fiscal year 2009;
‘‘(E) $551,000,000 for fiscal year 2010;
and
‘‘(F) $614,000,000 for fiscal year 2011.
‘‘(3) 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, de-
bentures, other evidences of indebtedness, and secu-
rity futures products) to be transacted on each na-
tional securities exchange and by or through any
member of each national securities association (oth-
erwise than on a national securities exchange) dur-
ing such fiscal year as determined by the Congres-
sional Budget Office in making projections pursuant
to section 257 of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 and as contained
in the projection required to be made in March of
the preceding fiscal year.’’.
(2) CONFORMING AMENDMENT.—Section 31(g)
of such Act is amended by inserting before the pe-
riod at the end the following: ‘‘not later than April
30 of the fiscal year preceding the fiscal year to
which such rate applies’’.
SEC. 4. PAY PARITY PROVISIONS.
(a) SECURITIES AND EXCHANGE COMMISSION EM-
PLOYEES.—Section 4(b) of the Securities Exchange Act
of 1934 (15 U.S.C. 78d(b)) is amended—
(1) by striking paragraphs (1) and (2) and by
inserting the following:
‘‘(1) APPOINTMENT, COMPENSATION, AND BEN-
EFITS.—
‘‘(A) IN GENERAL.—The Commission may
appoint and fix the compensation of such offi-
cers, attorneys, economists, examiners, and
other employees as may be necessary for car-
rying out its functions under this Act.
‘‘(B) RATES OF PAY.—Rates of basic pay
for all employees of the Commission may be set
and adjusted by the Commission without regard
to the provisions of chapter 51 or subchapter
III of chapter 53 of title 5, United States Code.
‘‘(C) ADDITIONAL
COMPENSATION
AND
BENEFITS.—The Commission may provide addi-
tional compensation and benefits to employees
of the Commission if the same type of com-
pensation or benefits are then being provided by
any agency referred to under section 1206 of
the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 or, if not then
being provided, could be provided by such an
agency under applicable provisions of law, rule,
or regulation.
‘‘(2) INFORMATION; COMPARABILITY.—In es-
tablishing and adjusting schedules of compensation
and additional benefits for employees of the Com-
mission, which are to be determined solely by the
Commission 
under 
this 
subsection, 
the
Commission—
‘‘(A) shall consult with and inform the
heads of the agencies referred to under section
1206 of the Financial Institutions Reform, Re-
covery, and Enforcement Act of 1989;
‘‘(B) shall inform the Congress of such
compensation and benefits; and
‘‘(C) shall seek to maintain comparability
with such agencies regarding compensation and
benefits.’’.
(b) TECHNICAL AMENDMENTS.—
(1) Section 3132(a)(1) of title 5, United States
Code, is amended—
(A) in subparagraph (C), by striking ‘‘or’’
after the semicolon;
(B) in subparagraph (D), by inserting ‘or‘
after the semicolon; and
(C) by adding at the end of the following:
‘‘(E) the Securities and Exchange Commis-
sion.’’.
(2) Section 5373(a) of title 5, United States
Code, is amended—
(A) in paragraph (2), by striking ‘‘or’’
after the semicolon;
(B) in paragraph (3), by striking the pe-
riod and inserting ‘‘; or’’; and
(C) by adding at the end the following:
‘‘(4) section 4(b) of the Securities Exchange
Act of 1934.’’.
SEC. 5. EFFECTIVE DATES.
(a) FEE PROVISIONS.—The amendments made by
sections 2 and 3 of this Act shall take effect on October
1, 2001.
(b) PAY PARITY.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by section 4 shall
take effect on the date of enactment of this Act.
(2) EXCEPTION.—The amendments made by
section 4(b)(1) shall take effect as of such date as
the Securities and Exchange Commission shall (by
order published in the Federal Register) prescribe,
but in no event later than 1 year after the date of
enactment of this Act.
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