Commentary

Elaine Wah

Modern Markets, Modern Metrics - A Blog By IEX

In this blog by IEX's Elaine Wah, the newest public exchange looks to refute public claims that the metrics it uses are designed to inflate its own volume numbers and mislead people.

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June 30, 2001

The House Goes Along With the STA Fee Plan

By Gregory Bresiger

Security Traders Association Lee Korins commended the U.S. House of Representatives for recently passing fee relief legislation on a 404-22 vote, saying Section 31(a)tax relief is now closer to becoming law than at anytime in the last four years

"Action by the Senate to coincide with the House Bill and then the president's signature are the only things left," Korins wrote in a letter to STA members. "We've come this far - we'll get it done," promised Korins.

It's been a long and - at times-frustrating journey for the STA's Section 31(a) reform efforts. Several times over the past four years, despite vigorous efforts, the fee relief package has gone down in flames either because of the opposition of the previous administration or because time ran out before Congress could act.

Bi-Partisan Support

This time, with bi-partisan support in Congress and an administration ready to sign the package into law, the STA has raised expectations that the pesky Section 31(a) fees can be reduced.

The fees, which have become de facto taxes, were supposed to merely fund the regulatory costs of the Securities and Exchange Commission. They are primarily levied as transaction charges on the sale of stocks, but today generate close to about a one and a half billion dollars in an annual windfall for the federal government.

"These charges cost investors more than $2.2 billion last year alone - six times more than the SEC's budget. The bill the House passed would save investors an estimated $14 billion in fees over the next decade," according to the Securities Industry Association, which has been lobbying with the STA to pass the tax relief package.

The bill has had bi-partisan support, which has led sponsors to claim that, even with the Senate changing leadership, the measure should still pass. The House version of Section 31(a) relief bill - there is also a Senate version of the same bill - includes a provision to establish higher pay for SEC professional staff members. That last provision, which was always in the Senate version, was thought by some to poise problems for the legislation, which was not originally in the House version.

When bills on the same topics pass in each house of Congress they must be sent to a House/Senate conference committee, where conferees attempt to hammer out a compromise.