Source: https://www.sec.gov/rules/other/33-8418.htm
Timestamp: 2019-04-25 13:48:19+00:00

Document:
Paragraph 6(b)(5) of the Securities Act requires the Commission to make an annual adjustment to the fee rate applicable under paragraph 6(b) of the Securities Act in each of the fiscal years 2003 through 2011.7 In those same fiscal years, paragraphs 13(e)(5) and 14(g)(5) of the Exchange Act require the Commission to adjust the fee rates under Sections 13(e) and 14(g) to a rate that is equal to the rate that is applicable under Section 6(b). In other words, the annual adjustment to the fee rate under Section 6(b) of the Securities Act also sets the annual adjustment to the fee rates under Sections 13(e) and 14(g) of the Exchange Act.
Paragraph 6(b)(5) sets forth the method for determining the annual adjustment to the fee rate under Section 6(b) for fiscal year 2005. Specifically, the Commission must adjust the fee rate under Section 6(b) to a "rate that, when applied to the baseline estimate of the aggregate maximum offering prices for [fiscal year 2005], is reasonably likely to produce aggregate fee collections under [Section 6(b)] that are equal to the target offsetting collection amount for [fiscal year 2005]." That is, the adjusted rate is determined by dividing the "target offsetting collection amount" for fiscal year 2005 by the "baseline estimate of the aggregate maximum offering prices" for fiscal year 2005.
Paragraph 6(b)(11)(A) specifies that the "target offsetting collection amount" for fiscal year 2005 is $570,000,000.8 Paragraph 6(b)(11)(B) defines the "baseline estimate of the aggregate maximum offering price" for fiscal year 2005 as "the baseline estimate of the aggregate maximum offering price at which securities are proposed to be offered pursuant to registration statements filed with the Commission during [fiscal year 2005] as determined by the Commission, after consultation with the Congressional Budget Office and the Office of Management and Budget . . . ."
To make the baseline estimate of the aggregate maximum offering price for fiscal year 2005, the Commission is using the same methodology it developed in consultation with the Congressional Budget Office ("CBO") and Office of Management and Budget ("OMB") to project aggregate offering price for purposes of the fiscal year 2004 annual adjustment. Using this methodology, the Commission determines the "baseline estimate of the aggregate maximum offering price" for fiscal year 2005 to be $4,842,692,718,337.9 Based on this estimate, the Commission calculates the annual adjustment for fiscal 2005 to be $117.70 per million. This adjusted fee rate applies to Section 6(b) of the Securities Act, as well as to Sections 13(e) and 14(g) of the Exchange Act.
Paragraph 31(j)(1) specifies the method for determining the annual adjustment for fiscal year 2005. Specifically, 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 [fiscal year 2005], is reasonably likely to produce aggregate fee collections under [Section 31] (including assessments collected under [Section 31(d)]) that are equal to the target offsetting collection amount for [fiscal year 2005]."
Paragraph 31(l)(1) specifies that the "target offsetting collection amount" for fiscal year 2005 is $1,220,000,000.12 Paragraph 31(l)(2) defines the "baseline estimate of the aggregate dollar amount of sales" as "the baseline estimate of the aggregate dollar amount of sales of securities . . . 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 [fiscal year 2005] as determined by the Commission, after consultation with the Congressional Budget Office and the Office of Management and Budget . . . ."
Subparagraph 31(j)(4)(A) of the Exchange Act provides that the fiscal year 2005 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, 2004, or thirty days after the date on which a regular appropriation to the Commission for fiscal year 2005 is enacted.
IT IS FURTHER ORDERED that the fee rates applicable under Sections 31(b) and (c) of the Exchange Act shall be $32.90 per million effective on the later of October 1, 2004, or thirty days after the date on which a regular appropriation to the Commission for fiscal year 2005 is enacted.
1 15 U.S.C. § 77f(b).
2 15 U.S.C. § 78m(e).
3 15 U.S.C. § 78n(g).
4 15 U.S.C. §§ 78ee(b) and (c). In addition, Section 31(d) of the Exchange Act requires the Commission to collect assessments from national securities exchanges and national securities associations for round turn transactions on security futures. 15 U.S.C. § 78ee(d).
5 Pub. L. No. 107-123, 115 Stat. 2390 (2002).
6 See 15 U.S.C. §§ 77f(b)(5), 77f(b)(6), 78m(e)(5), 78m(e)(6), 78n(g)(5), 78n(g)(6), 78ee(j)(1), and 78ee(j)(3). Paragraph 31(j)(2) of the Exchange Act, 15 U.S.C. § 78ee(j)(2), also requires the Commission, in specified circumstances, to make a mid-year adjustment to the fee rates under Sections 31(b) and (c) of the Exchange Act in fiscal years 2002 through 2011.
7 The annual adjustments are designed to adjust the fee rate in a given fiscal year so that, when applied to the aggregate maximum offering price at which securities are proposed to be offered for the fiscal year, it is reasonably likely to produce total fee collections under Section 6(b) equal to the "target offsetting collection amount" specified in Section 6(b)(11)(A) for that fiscal year.
8 Congress determined the target offsetting collection amounts by applying reduced fee rates to the CBO's January 2001 projections of the aggregate maximum offering prices for fiscal years 2002 through 2011. In any fiscal year through fiscal year 2011, the annual adjustment mechanism will result in additional fee rate reductions if the CBO's January 2001 projection of the aggregate maximum offering prices for the fiscal year proves to be too low, and fee rate increases if the CBO's January 2001 projection of the aggregate maximum offering prices for the fiscal year proves to be too high.
9 Appendix A explains how we determined the "baseline estimate of the aggregate maximum offering price" for fiscal year 2005 using our methodology, and then shows the purely arithmetical process of calculating the fiscal year 2005 annual adjustment based on that estimate. The appendix includes the data used by the Commission in making its "baseline estimate of the aggregate maximum offering price" for fiscal year 2005.
10 Order Making Fiscal 2004 Mid-Year Adjustment to the Fee Rates Applicable Under Sections 31(b) and (c) of the Securities Exchange Act of 1934, Rel. No. 34-49332 (February 27, 2004), 69 F.R 10278 (March 4, 2004).
11 The annual adjustments, as well as the mid-year adjustments required in specified circumstances under paragraph 31(j)(2) in fiscal years 2002 through 2011, are designed to adjust the fee rates in a given fiscal year so that, when applied to the aggregate dollar volume of sales for the fiscal year, they are reasonably likely to produce total fee collections under Section 31 equal to the "target offsetting collection amount" specified in Section 31(l)(1) for that fiscal year.
12 Congress determined the target offsetting collection amounts by applying reduced fee rates to the CBO's January 2001 projections of dollar volume for fiscal years 2002 through 2011. In any fiscal year through fiscal year 2011, the annual and, in specified circumstances, mid-year adjustment mechanisms will result in additional fee rate reductions if the CBO's January 2001 projection of dollar volume for the fiscal year proves to be too low, and fee rate increases if the CBO's January 2001 projection of dollar volume for the fiscal year proves to be too high.
13 Appendix B explains how we determined the "baseline estimate of the aggregate dollar amount of sales" for fiscal year 2005 using our methodology, and then shows the purely arithmetical process of calculating the fiscal year 2005 annual adjustment based on that estimate. The appendix also includes the data used by the Commission in making its "baseline estimate of the aggregate dollar amount of sales" for fiscal year 2005.
14 The calculation of the adjusted fee rate assumes that the current fee rate of $23.40 per million will apply through October 31st due to the operation of the effective date provision contained in subparagraph 31(j)(4)(A) of the Exchange Act.
15 15 U.S.C. § 77f(b)(8)(A).
16 15 U.S.C. §§ 78m(e)(8)(A) and 78n(g)(8)(A).
17 15 U.S.C. §§ 77f(b), 78m(e), 78n(g), and 78ee(j).

References: § 77
 § 78
 § 78
 § 78
 § 78
 § 77