SEC Cuts FY 2007 Registration and Transaction Fees

The Securities and Exchange Commission (SEC) announced last week that fees on securities transactions and registrations will be reduced by $1 billion in the fiscal year (FY) beginning October 1, 2006. Fees paid by issuers to register securities with the SEC will be reduced 71.3 percent. Fees applicable to most securities transactions will be reduced by 50.2 percent.

“This is terrific news for investors,” SEC Chairman Christopher Cox said in a prepared statement. “Even by Washington’s standards, a billion dollars is a lot of money. Money that ultimately would have come out of investors’ pockets can instead now go to retirement accounts, college savings plans, and other investment goals.”

The SEC sets registration and transaction fees according to the Investor and Capital Markets Fee Relief Act. The Act requires that the SEC make annual adjustments to the rates for fees paid under Section 6(b) of the Securities Act of 1933 and Sections 13(e), 14(g), and 31, of the Securities Exchange Act of 1934. The commission consulted with both the Congressional Budget Office and the Office of Management and Budget regarding the annual adjusts, as required by the statute. The fee reductions will not affect the amount of funding available to the Commission.

Effective October 1, 2006, or five days after the date on which the SEC receives its fiscal year 2007 regular appropriation, whichever date comes later, the Section 6(b) fee rate applicable to the registration of securities, the Section 13 (e) fee rate applicable to the repurchase of securities, and the Section 14(g) fee rates applicable to proxy solicitations and statements in corporate control transactions, will decrease to $30.70 per million from the current rate of $107.00 per million. The Section 3(b) rate is also the rate used to calculate the fees payable with the Annual Notice of Securities Sold Pursuant to Rule 24f-2 under the Investment Company Act of 1940.

In addition, effective October 1, 2006, or 30 days after the date on which the SEC receives its fiscal year 2007 regular appropriation, whichever date comes later, the Section 31 fee rate applicable to securities transactions on the exchanges and certain over-the-counter markets, will decrease to $15.30 per million from the current rate of $30.70 per million.

Pursuant to their rules, self-regulatory organizations collect from their members funds to offset the self-regulatory organizations’ Section 31 obligations. Additional information on the transition to the new Section 31 fee rate will be available shortly on the New York Stock Exchange (NYSE) and National Association of Securities Dealers (NASD) web sites. At the time of this writing, however, no additional information from the NYSE or NASD was available. http://www.nyse.com Questions regarding Section 31 fees may also be addressed to the Office of Interpretation and Guidance in the Commission’s Division of Market Regulation by calling (202) 551-5760 or e-mailing marketreg@sec.gov.


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