Commentary

Jared Dillian
Traders Magazine Online News

Was it Worth It?

In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

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February 1, 2001

Last Chance to Torpedo Section 31?

By Staff Reports

The Nasdaq transaction fees levied on the sale of stock account for an infinitesimal proportion of the total amount paid on the trade by a market maker or other investor.

But that tiny sum - 1/300th of one percent of the sell price - has had a profound effect on the politics of Wall Street and the financing of the Securities and Exchange Commission over the past six years.

Industry lobbyists, including the Security Traders Association, have tried unsuccessfully to have the so-called Section 31 fees reduced on Nasdaq transactions. They argue that they represent an excessive proportion of the overall fees collected on all stock trades because of Nasdaq's dealer structure. The lobbyists point out that the fees, designed to fund the SEC, bring in vastly more than is set aside for the regulator's annual budget.

Section 31 fees have generated a big yawn in journalistic circles. The story of their supposed coming elimination has been written dozens of times before - and then some.

Now, perhaps finally, the last chapter will be written. That was the word from Lee Korins, president of the Security Traders Association in an impassioned speech at the mid-winter conference of its Chicago affiliate.

The political climate is more favorable that ever before, he said. A Republican tax cutting President, George W. Bush, is in power. The committees with jurisdiction over the fees in both houses are headed by other taxcutting Republicans. The Office of Management and Budget, which is critical to the success of a favorable transaction fee package, is headed by a Republican. (Senate Banking Committee Chairman Sen. Phil Gramm (R-Texas) was introducing fee reduction legislation at press time.)

"Hopefully, we can get [a reduction in Section 31 fees] into the Bush budget which will be prepared over the next couple of months," Korins told attendees in Chicago. "If we don't win it this year, then very frankly, ladies and gentlemen, we are never going [anywhere]."