Momtchil Pojarliev
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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.

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November 1, 2002

Section 31(a) Rate Cut Put on Ice

By Gregory Bresiger

The expected Section 31 (a) transaction fee rate cut will not take place at least until mid-November and may be delayed beyond that date depending on funding for the U.S. Securities and Exchange Commission.

"The Section 31 fee rate applicable to securities transaction on the exchanges and Nasdaq also will remain at the current rate of $30.10 per million," the SEC announced in a statement reviewing its various regulatory fees as Traders Magazine went to press.

SEC Budget

"This is very disappointing," STA President John Giesea, told Traders Magazine. "We don't know when these fees will come down at this time." Revenue from the fee help to fund the budget of the Securities and Exchange Commission. The fee, as now set at about $30 per million dollars, will probably generate more revenue than needed to fund the SEC. The problem is that the rate cut is dependent on the SEC receiving its budget, which is caught up in congressional wrangling.

"Thirty days after the enactment of the Commission's regular appropriation, the fee rate for Exchange Act Section 31(a) transactions will be reduced to $25.20 as previously announced," according to the SEC. SEC officials said they have no discretion in the matter until they have a budget.

Meanwhile, STA is trying another strategy to speed up the rate cut. It asked the chairman of the U.S. House Financial Services Committee, Michael Oxley, to include the SEC's budget in the continuing budget resolution, which is expected to have precedence over other spending measures, a move, if successful, that would result in reduced Section 31(a) rates. Oxley, in a letter to Frank Wolf, chairman of the House Appropriations Subcommittee on Commerce, asked that the SEC appropriation be included in the resolution.

"Frank," Oxley wrote, "Congress intended for these fee rates to be adjusted each fiscal year to meet collection objectives outlined in the statute. Because it appears likely that the Commission's regular appropriations for fiscal year 2003 will be delayed, it is vitally important that the attached language be inserted in the Continuing Resolution to achieve this Congressional intent."