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Tim Quast
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We're All HFTs Now

In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

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May 31, 2002

More Section 31(a) Relief? Don't Count on It

By Gregory Bresiger

Enjoy what you have because more tax relief is not on the way.

Traders, many of whom were somewhat disappointed earlier this year by the actual reduction in Section 31(a) fees, should not expect another reduction.

They should be happy with the some 25 percent reduction in the stock transaction charge, which was signed into law a few months ago. That was the message from a member of Congress and various trading industry officials.

An Improvement

"It's clearly an improvement over what was there and maybe over time there will be another cut, but in the short term it would be difficult to get more," according to Vito Fossella (R-N.Y.), a key member of Congress and one of the leaders last year in the movement to reduce Section 31(a) fees.

Nevertheless, STA officials agreed that a number of their members had expected a much bigger cut in the fee, possibly closer to 50 percent.

The fee, which has been used to fund the costs of the SEC, had been generating about six times the SEC's budget before the cut, STA officials said. With the cut, it has been reduced to about two and a half times the agency's budget, but there are no immediate plans to drop the rate some more, STA officials said.

"Clearly, when the reduction was approved we were not focused on the formula that would be used to actually reduce the tax," said John Giesea, president of the STA.

"We're fortunate with what we got because now we know that the federal deficit is going higher and higher," he added.