Commentary

Tim Quast
Traders Magazine Online News

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.

Traders Poll

Are you in favor of a pilot program and examination of the rebate system by the SEC?




Free Site Registration

May 10, 2006

Looking Toward a Rate Cut

By Gregory Bresiger

A key federal tax on the trading industry could decline this summer.

The so-called "Section 31 fee," a transaction charge used to fund the cost of regulation, could drop by almost 40 percent, according to the estimates of the Security Traders Association.

That's because the Securities and Exchange Commission, which administers the fee, says its "targeted collection amount" will decline from $1.4 billion to $880 million beginning in its new fiscal year.

"If that targeted amount goes down by that much, then, unless something changes, it should result in a 39 percent rate cut," according to the figures we have been given," said John Giesea, president of the STA.

The Section 31 fee was recently kept at the rate of $30.70 per one million dollars, according to an announcement by the SEC. A 39% decline would put the rate at approximately $18.50. The new fiscal year begins for the federal government in July.

SEC officials also say the rate is fixed based on volume levels. However, a trading industry lobbyist privately said, "with the expected explosion in volume, once the NYSE becomes goes electronic this summer, we would expect that the rate would go down."

If the rate declines again, it would be the second time in the last four months. Back in December, the SEC announced the Section 31 fees were cut from $41.80 to $30.70 per million. (Traders Magazine, January).