Momtchil Pojarliev
Traders Magazine Online News

Some Like It Hedged

BNP Asset Management's Pojarliev discusses a variety of options to address foreign currency exposures. Although there is no single best-practice solution for addressing foreign currency exposures, institutional investors have three main choices, he says.

Traders Poll

Amid changes in builder, do you think the CAT project will be completed by 2020?

Free Site Registration

August 31, 2001

Section 31(a) Still in Limbo

By Gregory Bresiger

See you after Labor Day. That's what trading industry Congressional lobbyists are thinking about their biggest legislative priority.

Congress adjourned and went home for the summer without putting the finishing touches on the Section 31(a) reform bill, but securities industry sources are still confident that the tax relief measure, which would reduce a transaction fee, will easily pass when lawmakers return this fall.

"It will be on the top of the agenda when they get back after Labor Day. We have been promised that," according to a spokesman for the Securities Industry Association, one of a group of organizations that is pushing for a cut in what the industry complains is a pesky tax, which is designed to fund the costs of regulating markets. However, in its current form, it raises about five or six times more money than is needed. The overflow goes into the Treasury to be spent on any government program.

SIA officials say their Section 31(a) reform bill will be a Congressional slam-dunk. "There is no active opposition to these bills," the SIA spokesman added.

Well, maybe. But officials of the securities industry, which has been burned several times over the past few years in its unsuccessful attempts to reform Section 31(a), are not assuming that there is no chance that the measure will run into any last minute roadblocks.

A possible roadblock is that the Senate is now controlled by Democrats, the party that was in the minority when the latest Section 31(a) reform legislation was introduced last winter. Could any Democrats be having second thoughts about a bill that some of them might grumble is a boon for the rich? Nasdaq officials were obviously trying to head off any possibility of that when they recently sent a letter to the new leaders of the Senate.

"The chief executive officer of the Nasdaq Stock Market, Hardwick Simmons, today praised Senate Democratic leaders for their commitment to promptly consider the Investor and Capital Markets Fee Relief Act (H.R. 1088) when Congress returns from its August recess," according to the Nasdaq statement.

The Security Traders Association also continues to push the Senate to put the finishing touches on the legislation. The STA said it is still very optimistic, citing a statement about HR 1088 by Senate Majority Leader Tom Daschle: "The legislation is long overdue. Fee reductions can free up new investment capital that can help spur the economy at a time when it needs a boost."

The measure, and a companion bill in the Senate, SB 143, have had overwhelming approval whenever either one has come to a vote. The House bill passed on a 404-22 vote this summer. However, there are slight "technical" differences between the House and Senate versions of the Section 31(a) reform bill that must be adjusted. Nevertheless, lobbyists are predicting that the bill will finally make it into law sometime this fall.