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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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April 30, 2001

Fee Relief: Will It Happen?

By Gregory Bresiger

Relief may not be at hand for investors and the securities industry.

Section 31(a) reforms, which would reduce the taxes on securities transactions and which have been eagerly expected on Wall Street this year, may face a new stumbling block.

A bill enthusiastically backed by the securities industry, sponsored by Senate Banking Committee Chairman Phil Gramm (R-Texas) and with bi-partisan backing, easily passed the Senate in March, but a similar bill was about to be voted on in the House of Representatives as Traders Magazine went to press.

Different Version

So what's the problem? The House bill, at this writing, is slightly different from the Senate version and that could be a big problem. The House version doesn't contain the raises for Securities and Exchange Commission staffers, which would provide them with pay parity with other regulatory officials.

If the House accepts the Senate version and adds pay parity, then there is no problem in the bill passing, say securities industry lobbyists. But if it doesn't, which means the Section 31(a) relief bills don't match, then the two pieces of legislation must go to a Senate-House Conference Committee. Then Section 31(a) relief, which has not been the focus of political disputes, could become part of a Democrat-Republican partisan donnybrook.

"Democrats and Republicans will start arguing about how the Senate-House Committee should be comprised. For instance, Democrats want the conference committee to be evenly split while Republicans want control of the committee," according to James Spellman, a spokesman for the Securities Industry Association, which has been lobbying for Section 31(a) reduction along with the Security Traders Association.

Spellman says, if the legislation doesn't go to a conference committee, it will quickly pass and be signed into law by President George W. Bush. However, if it must go to conference, "it is very hard to say when it is going to be passed."

Legislative Goal

The trading industry has made Section 31 relief its prime legislative goal for several years. In the last several sessions of Congress something has always derailed the legislation, and trading professionals have been disappointed. This year sponsors have been the most hopeful because now it appears to be a non-partisan issue with the legislation having both Republican and Democratic sponsors.