Grygo is the chief content officer for FTF & FTF News.
As the SEC very publicly takes on major matters such as its climate disclosure requirements — the fate of which is playing out in court and in Congress — the regulator has quietly moved ahead with an increase in the rate that securities exchanges and broker-dealers pay to be regulated by the commission.
“Starting on May 22, 2024, the fee rates applicable to most securities transactions will be set at $27.80 per million dollars,” according to the SEC.
This means that “each self-regulatory organization will continue to pay the Commission a rate of $8 per million for covered sales occurring on charge dates through May 21, 2024, and a rate of $27.80 per million for covered sales occurring on charge dates on or after May 22, 2024,” according to the announcement.
The fee rate impacts many players in the securities industry.
“The SEC fee is a small fee that exchanges and broker-dealers must pay the U.S. Treasury, to help offset the governmental costs associated with regulating the equities market,” according to the Investopedia website. “Most of the SEC fees are shouldered by broker-dealers, who, in turn, may pass the costs along to investors. … The fee is based on the volume of shares traded and applies to the sale of stocks, but not the purchase of stocks.”
This is the second fee rate advisory for fiscal year 2024.
“The SEC sets fiscal-year fee rates after the agency receives its full-year appropriation,” the regulator explains in bureaucratic legalese. “Until the new rate becomes effective, the existing rate stays in place. In fiscal year 2023, the fee rate was $8 per million, and that fee rate will stay in effect during the first eight months of FY 2024. Because the rate did not increase at the beginning of FY 2024, and because the SEC did not receive its full-year appropriation until March 2024, the fee rate for the remainder of the year increased to balance collections to the targeted collection amount.”
The budgeting woes for the SEC are a result of the ongoing fiscal and funding battles underway at the federal level.
So, belatedly, on March 23, 2024, President Biden “signed into law the Further Consolidated Appropriations Act, 2024, which includes total appropriations of $2,188,658,000 to the SEC for fiscal year 2024,” the SEC acknowledges.
Thus, “the assessment on security futures transactions will remain unchanged at $0.0042 for each round turn transaction,” according to the SEC. “The Commission determined these new rates in accordance with Section 31 of the Securities Exchange Act of 1934. These adjustments do not directly affect the amount of funding available to the SEC.”
If you need more information on the term “charge date,” the SEC is referring you to Rule 31(a)(3) and Exchange Act Release No. 49928 at http://www.sec.gov/rules/final/34-49928.htm .
In addition, the Office of Interpretation and Guidance in the SEC’s Division of Trading and Markets is available to answer questions at (202) 551-5777, or by email at tradingandmarkets@sec.gov.
The SEC will continue to issue more notices “as appropriate to keep the public informed of developments relating to fees under Section 31,” officials add.
The latest SEC document providing rich details can be found here: https://bit.ly/3Q6yKQ9
In any event, it would be interesting to one day know how much each set of participants in U.S. securities markets has actually been paying to be regulated and then to know what each group got for its money.
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