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John Turney
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Foreign Exchange Infrastructure: Yesterday, Today and Tomorrow

In this exclusive to Traders Magazine, John Turney, Global Head of Outsourced FX at Northern Trust, discusses the evolution of the fx infrastructure and what is to come.

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July 31, 2000

Transaction Fee Reduction Still Hot

By William Hoffman

It may be a long shot, but leaders in the trading community say they will make one last push this year to reduce Section 31 fees.

That's even though the 106th Congress is almost over.

"Section 31 is still one of our major initiatives," acknowledged Lee Korins, president of the Security Traders Association.

George R. Kramer, vice president and general counsel for the Securities Industry Association added, "We obviously would have preferred if [fee relief were approved] earlier in the session...but I don't think it's too late" for action.

Specifically, he said Congress could still pass, and President Clinton could sign into law, S. 2107, the Competitive Market Supervision Act.

The bill, passed by the Senate Banking, Housing and Urban Affairs Committee, would reduce the total amount of fees collected on stock transactions subject to Section 31. These fees finance the Securities and Exchange Commission but raise well in excess of the agency's budget.

Last year, the agency collected almost $2 billion in fees though its budget was less than $400 million.

Sen. Phil Gramm (R-TX), banking committee chairman, Sen. Rod Grams (R- MN), chairman of the Subcommittee on Securities, and Sen. Charles Schumer (D-NY), minority member, were among the 14 sponsors of the bill.

Hurdle Ahead

There's at least one hurdle, said Dan Crowley, vice president for governmental affairs at the National Association of Securities Dealers. Gramm's S. 2107 has no counterpart in the House of Representatives, he noted.

"On behalf of all investors, I strongly urge the House of Representatives to take similar action," said Korins in a statement. The bill also includes a pay parity' provision. That would bring SEC attorneys' and accountants' salaries up to the level enjoyed by regulators at the Federal Deposit Insurance Corp., the Federal Reserve Board, and others.

Retaining Talent

NASD supports pay parity, Crowley said. "The industry requires expertise, which is valuable, so there needs to be some compensation" to attract and keep skilled help, he said. But House Republicans may propose bringing other federal regulators' salaries down to the SEC level, rather than bringing SEC salaries up, he said. That could scuttle the whole bill-including Section 31 fee relief.

Section 31 fee reduction, an item on traders agenda for several years running, is just one of the issues securities professionals should be watching as the 106th Congress enters the home stretch.