Order Making Fiscal 2008 Mid-Year Adjustment to the Fee Rates Applicable Under Sections 31(b) and (c) of the Securities Exchange Act of 1934, 12228-12233 [E8-4335]

Download as PDF 12228 Federal Register / Vol. 73, No. 45 / Thursday, March 6, 2008 / Notices Applicant’s Address: 300 Pacific Coast Hwy., Suite 305, Huntington Beach, CA 92648. Keeley Small Cap Value Fund, Inc. [File No. 811–7760] Summary: Applicant seeks an order declaring that it has ceased to be an investment company. On December 31, 2007, applicant transferred its assets to Keeley Small Cap Value Fund, a series of Keeley Funds, Inc., based on net asset value. Expenses of $25,600 incurred in connection with the reorganization were paid by applicant. Filing Date: The application was filed on January 25, 2008. Applicant’s Address: 401 South LaSalle, Suite 1201, Chicago, IL 60605. [File No. 811–8957] Summary: Applicant, a master fund in a master-feeder structure, seeks an order declaring that it has ceased to be an investment company. On December 31, 2007, applicant made a liquidating distribution to Highland Floating Rate Fund, its feeder fund and sole shareholder. Expenses of approximately $5,000 incurred in connection with the liquidation were paid by applicant. Filing Date: The application was filed on February 6, 2008. Applicant’s Address: c/o Highland Capital Management, L.P., Two Galleria Tower, 13455 Noel Rd., Suite 800, Dallas, TX 75240. High Income Master Portfolio LLC [File No. 811–21690] Summary: Applicant seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. Filing Date: The application was filed on January 29, 2008. Applicant’s Address: c/o Highland Capital Management, L.P., Two Galleria Tower, 13455 Noel Rd., Suite 800, Dallas, TX 75240. Dreyfus Massachusetts Tax Exempt Bond Fund mstockstill on PROD1PC66 with NOTICES [File No. 811–4271] Summary: Applicant seeks an order declaring that it has ceased to be an investment company. On October 20, 2004, applicant transferred its assets to the Massachusetts Series of Dreyfus Premier State Municipal Bond Fund, based on net asset value. Expenses of $66,440 incurred in connection with the reorganization were paid by The 16:57 Mar 05, 2008 Jkt 214001 offsetting collection amount’’ specified in Section 31(l)(1) for that fiscal year.6 For fiscal 2008, the target offsetting collection amount is $892,000,000.7 For the Commission, by the Division of Investment Management, pursuant to delegated authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E8–4257 Filed 3–5–08; 8:45 am] Under section 31(j)(2) of the Exchange Act, the Commission must make a midyear adjustment to the fee rates under Sections 31(b) and (c) in fiscal year 2008 if it determines, based on the actual aggregate dollar volume of sales during the first five months of the fiscal year, that the baseline estimate ($78,732,152,559,457) is reasonably likely to be 10% (or more) greater or less than the actual aggregate dollar volume of sales for fiscal 2008.8 To make this determination, the Commission must estimate the actual aggregate dollar volume of sales for fiscal 2008. Based on data provided by the national securities exchanges and the national securities association that are subject to section 31,9 the actual aggregate dollar volume of sales during the first four months of fiscal 2008 was $27,185,458,106,162.10 Using these data and a methodology for estimating the aggregate dollar amount of sales for the remainder of fiscal 2008 (developed after consultation with the Congressional Budget Office and the OMB),11 the Commission estimates that the aggregate dollar amount of sales for the remainder of fiscal 2008 to be $71,539,094,586,685. Thus, the Commission estimates that the actual aggregate dollar volume of sales for all of fiscal 2008 will be $98,724,552,692,847. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57407/February 29, 2008] Highland Floating Rate Limited Liability Company VerDate Aug<31>2005 Dreyfus Corporation, applicant’s investment adviser. Filing Date: The application was filed on January 30, 2008. Applicant’s Address: c/o The Dreyfus Corporation, 200 Park Ave., New York, NY 10166. Order Making Fiscal 2008 Mid-Year Adjustment to the Fee Rates Applicable Under Sections 31(b) and (c) of the Securities Exchange Act of 1934 I. Background Section 31 of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) requires each national securities exchange and national securities association to pay transaction fees to the Commission.1 Specifically, section 31(b) requires each national securities exchange to pay to the Commission fees based on the aggregate dollar amount of sales of certain securities transacted on the exchange.2 Section 31(c) requires each national securities association to pay to the Commission fees based on the aggregate dollar amount of sales of certain securities transacted by or through any member of the association other than on an exchange.3 Sections 31(j)(1) and (3) require the Commission to make annual adjustments to the fee rates applicable under sections 31(b) and (c) for each of the fiscal years 2003 through 2011, and one final adjustment to fix the fee rates for fiscal year 2012 and beyond.4 Section 31(j)(2) requires the Commission, in certain circumstances, to make a mid-year adjustment to the fee rates in fiscal 2002 through fiscal 2011.5 The annual and mid-year adjustments are designed to adjust the fee rates in a given fiscal year so that, when applied to the aggregate dollar volume of sales for the fiscal year, they are reasonably likely to produce total fee collections under section 31 equal to the ‘‘target 1 15 U.S.C. 78ee. U.S.C. 78ee(b). 3 15 U.S.C. 78ee(c). 4 15 U.S.C. 78ee(j)(1) and (j)(3). 5 15 U.S.C. 78ee(j)(2). 2 15 PO 00000 Frm 00159 Fmt 4703 Sfmt 4703 II. Determination of the Need for a MidYear Adjustment in Fiscal 2008 6 15 U.S.C. 78ee(l)(1). 7 Id. 8 The amount $78,732,152,559,457 is the baseline estimate of the aggregate dollar amount of sales for fiscal year 2008 calculated by the Commission in its Order Making Fiscal 2008 Annual Adjustments to the Fee Rates Applicable Under Section 6(b) of the Securities Act of 1933 and Sections 13(e), 14(g), 31(b) and 31(c) of the Securities Exchange Act of 1934, Rel. No. 33–8794 (April 30, 2007), 72 FR 25809 (May 7, 2007). 9 The Financial Industry Regulatory Authority (‘‘FINRA’’) and each exchange is required to file a monthly report on Form R31 containing dollar volume data on sales of securities subject to Section 31. The report is due on the 10th business day following the month for which the exchange or association provides dollar volume data. 10 Although Section 31(j)(2) indicates that the Commission should determine the actual aggregate dollar volume of sales for fiscal 2008 ‘‘based on the actual aggregate dollar volume of sales during the first 5 months of such fiscal year,’’ data are only available for the first four months of the fiscal year as of the date the Commission is required to issue this order, i.e., March 1, 2008. Dollar volume data on sales of securities subject to Section 31 for February 2008 will not be available from the exchanges and FINRA for several weeks. 11 See Appendix A. E:\FR\FM\06MRN1.SGM 06MRN1 Federal Register / Vol. 73, No. 45 / Thursday, March 6, 2008 / Notices Because the baseline estimate of $78,732,152,559,457 is more than 10% less than the $98,724,552,692,847 estimated actual aggregate dollar volume of sales for fiscal 2008, section 31(j)(2) of the Exchange Act requires the Commission to issue an order adjusting the fee rates under sections 31(b) and (c). mstockstill on PROD1PC66 with NOTICES III. Calculation of the Uniform Adjusted Rate Section 31(j)(2) specifies the method for determining the mid-year adjustment for fiscal 2008. Specifically, the Commission must adjust the rates under sections 31(b) and (c) to a ‘‘uniform adjusted rate that, when applied to the revised estimate of the aggregate dollar amount of sales for the remainder of [fiscal 2008], is reasonably likely to produce aggregate fee collections under section 31 (including fees collected during such 5-month period and assessments collected under [Section 31(d)]) that are equal to [$892,000,000].’’ 12 In other words, the uniform adjusted rate is determined by subtracting fees collected prior to the effective date of the new rate and assessments collected under section 31(d) during all of fiscal 2008 from $892,000,000, which is the target offsetting collection amount for fiscal 2008. That difference is then divided by the revised estimate of the aggregate dollar volume of sales for the remainder of the fiscal year following the effective date of the new rate. The Commission estimates that it will collect $581,546,346 in fees for the period prior to the effective date of the mid-year adjustment 13 and $32,475 in 12 15 U.S.C. 78ee(j)(2). The term ‘‘fees collected’’ is not defined in Section 31. Because national securities exchanges and national securities associations are not required to pay the first installment of Section 31 fees for fiscal 2008 until March 15, the Commission will not ‘‘collect’’ any fees in the first five months of fiscal 2008. See 15 U.S.C. 78ee(e). However, the Commission believes that, for purposes of calculating the mid-year adjustment, Congress, by stating in Section 31(j)(2) that the ‘‘uniform adjusted rate * * * is reasonably likely to produce aggregate fee collections under Section 31 * * * that are equal to [$892,000,000],’’ intended the Commission to include the fees that the Commission will collect based on transactions in the six months before the effective date of the mid-year adjustment. 13 This calculation is based on applying a fee rate of $15.30 per million to the aggregate dollar volume of sales of securities subject to Section 31 through January 24, 2008, and a rate of $11.00 for the period from January 25, 2008 to March 31, 2008. Because the Commission’s regular appropriation for fiscal year 2008 was not enacted prior to the end of fiscal year 2007, Exchange Act Section 31(k), the ‘‘Lapse of Appropriation’’ provision, required that the fee rate in use at the end of fiscal year 2007, $15.30 per million, remain in effect until 30 days after the appropriation was enacted. See also Order Making Fiscal 2008 Annual Adjustments to the Fee Rates Applicable Under Section 6(b) of the Securities Act VerDate Aug<31>2005 16:57 Mar 05, 2008 Jkt 214001 assessments on round turn transactions in security futures products during all of fiscal 2008. Using the methodology referenced in Part II above, the Commission estimates that the aggregate dollar volume of sales for the remainder of fiscal 2008 following the effective date of the new rate will be $55,740,439,070,059. Based on these estimates, the uniform adjusted rate is $5.60 per million of the aggregate dollar amount of sales of securities.14 The Commission recognizes that this fee rate is lower than the current fee rate of $11.00 per million. The new fee rate is established by the statutory mid-year adjustment mechanism and is a direct consequence of more recent information on the dollar amount of sales of securities. The aggregate dollar amount of sales of securities subject to section 31 fees is illustrated in Appendix A. IV. Effective Date of the Uniform Adjusted Rate Section 31(j)(4)(B) of the Exchange Act provides that a mid-year adjustment shall take effect on April 1 of the fiscal year in which such rate applies. Therefore, the exchanges and the national securities association that are subject to section 31 fees must pay fees under sections 31(b) and (c) at the uniform adjusted rate of $5.60 per million for sales of securities transacted on April 1, 2008, and thereafter until the annual adjustment for fiscal 2009 is effective.15 V. Conclusion Accordingly, pursuant to section 31 of the Exchange Act,16 It is hereby ordered that each of the fee rates under sections 31(b) and (c) of the Exchange Act shall be $5.60 per $1,000,000 of the aggregate dollar amount of sales of securities subject to these sections effective April 1, 2008. of 1933 and Sections 13(e), 14(g), 31(b) and 31(c) of the Securities Exchange Act of 1934, Rel. No. 33– 8794 (April 30, 2007), 72 FR 25809 (May 7, 2007). The Commission’s regular appropriation for fiscal year 2008 was enacted on December 26, 2007, and the $11.00 per million rate went into effect 30 days later, by operation of the statute. See Exchange Act Section 31(j)(4)(A)(ii). 14 The calculation is as follows: ($892,000,000¥$581,546,346¥$32,475)/ $55,740,439,070,059 = $0.0000055690. Round this result to the seventh decimal point, yielding a rate of $5.60 per million. 15 Section 31(j)(1) and Section 31(g) of the Exchange Act require the Commission to issue an order no later than April 30, 2008, adjusting the fee rates applicable under Sections 31(b) and (c) for fiscal 2009. These fee rates for fiscal 2009 will be effective on the later of October 1, 2008 or thirty days after the enactment of the Commission’s regular appropriation for fiscal 2009. 16 15 U.S.C. 78ee. PO 00000 Frm 00160 Fmt 4703 Sfmt 4703 12229 By the Commission. Nancy M. Morris, Secretary. Appendix A A. Baseline Estimate of the Aggregate Dollar Amount of Sales First, calculate the average daily dollar amount of sales (ADS) for each month in the sample (January 1998– January 2008). The data obtained from the exchanges and FINRA are presented in Table A. The monthly aggregate dollar amount of sales from all exchanges and FINRA is contained in column C. Next, calculate the change in the natural logarithm of ADS from monthto-month. The average monthly change in the logarithm of ADS over the entire sample is 0.017 and the standard deviation 0.124. Assume the monthly percentage change in ADS follows a random walk. The expected monthly percentage growth rate of ADS is 2.5 percent. Now, use the expected monthly percentage growth rate to forecast total dollar volume. For example, one can use the ADS for January 2008 ($380,797,961,013) to forecast ADS for February 2008 ($390,166,745,447 = $380,797,961,013 × 1.025).17 Multiply by the number of trading days in February 2008 (20) to obtain a forecast of the total dollar volume for the month ($7,803,334,908,936). Repeat the method to generate forecasts for subsequent months. The forecasts for total dollar volume are in column G of Table A. The following is a more formal (mathematical) description of the procedure: 1. Divide each month’s total dollar volume (column C) by the number of trading days in that month (column B) to obtain the average daily dollar volume (ADS, column D). 2. For each month t, calculate the change in ADS from the previous month as Dt = log (ADSt / ADSt-1), where log (x) denotes the natural logarithm of x. 3. Calculate the mean and standard deviation of the series {D1, D2, * * * , D120}. These are given by µ = 0.017 and s = 0.124, respectively. 4. Assume that the natural logarithm of ADS follows a random walk, so that Ds and Dt are statistically independent for any two months s and t. 5. Under the assumption that Dt is normally distributed, the expected value of ADSt /ADSt-1 is given by exp (µ + s2), or on average ADSt = 1.025 × ADSt-1. 17 The value 1.025 has been rounded. All computations are done with the unrounded value. E:\FR\FM\06MRN1.SGM 06MRN1 12230 Federal Register / Vol. 73, No. 45 / Thursday, March 6, 2008 / Notices mstockstill on PROD1PC66 with NOTICES 6. For February 2008, this gives a forecast ADS of 1.025 × $380,797,961,013 = $390,166,745,447. Multiply this figure by the 20 trading days in February 2008 to obtain a total dollar volume forecast of $7,803,334,908,936. 7. For March 2008, multiply the February 2008 ADS forecast by 1.025 to obtain a forecast ADS of $399,766,030,385. Multiply this figure by the 20 trading days in March 2008 to obtain a total dollar volume forecast of $7,995,320,607,691. 8. Repeat this procedure for subsequent months. VerDate Aug<31>2005 16:57 Mar 05, 2008 Jkt 214001 B. Using the Forecasts From A to Calculate the New Fee Rate 1. Determine the aggregate dollar volume of sales between 10/1/07 and 1/ 24/08 to be $25,283,975,749,096. Multiply this amount by the fee rate of $15.3 per million dollars in sales during this period and get $386,844,829 in actual fees collected during 10/1/07 and 1/24/08. Determine the actual and projected aggregate dollar volume of sales between 1/25/08 and 3/31/08 to be $17,700,137,873,692. Multiply this amount by the fee rate of $11.00 per million dollars in sales during this period and get an estimate of $194,701,517 in actual and projected fees collected during 1/25/08 and 3/31/ 08. PO 00000 Frm 00161 Fmt 4703 Sfmt 4703 2. Estimate the amount of assessments on security futures products collected during 10/1/07 and 9/30/08 to be $32,475 by summing the amounts collected through January of $8,747 with projections of a 2.5% monthly increase in subsequent months. 3. Determine the projected aggregate dollar volume of sales between 4/1/08 and 9/30/08 to be $55,740,439,070,059. 4. The rate necessary to collect the target $892,000,000 in fee revenues is then calculated as: ($892,000,000 ¥ $386,844,829 ¥ $194,701,517 ¥ $32,475) ÷ $55,740,439,070,059 = 0.0000055690. 5. Round the result to the seventh decimal point, yielding a rate of 0.0000056 (or $5.60 per million). BILLING CODE 8011–01–P E:\FR\FM\06MRN1.SGM 06MRN1 VerDate Aug<31>2005 16:57 Mar 05, 2008 Jkt 214001 PO 00000 Frm 00162 Fmt 4703 Sfmt 4725 E:\FR\FM\06MRN1.SGM 06MRN1 12231 EN06MR08.000</GPH> mstockstill on PROD1PC66 with NOTICES Federal Register / Vol. 73, No. 45 / Thursday, March 6, 2008 / Notices VerDate Aug<31>2005 Federal Register / Vol. 73, No. 45 / Thursday, March 6, 2008 / Notices 16:57 Mar 05, 2008 Jkt 214001 PO 00000 Frm 00163 Fmt 4703 Sfmt 4725 E:\FR\FM\06MRN1.SGM 06MRN1 EN06MR08.001</GPH> mstockstill on PROD1PC66 with NOTICES 12232 Federal Register / Vol. 73, No. 45 / Thursday, March 6, 2008 / Notices BILLING CODE 8011–01–C SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57401; File No. SR–Amex– 2008–12] Self-Regulatory Organizations; American Stock Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 2 Thereto, Relating to the Exchange’s Options Fee Cap Pilot Program for Dividend Strategies, Merger Spreads, and Short Stock Interest Spreads February 29, 2008. mstockstill on PROD1PC66 with NOTICES Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 20, 2008, the American Stock Exchange, LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. On February 21, 2008, the Exchange filed Amendment No. 1 to the proposal. The Exchange withdrew Amendment No. 1 on February 22, 2008, and submitted Amendment No. 2 on February 27, 2008.3 Amex has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A),4 and Rule 19b–4(f)(2) thereunder,5 which renders 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Amendment No. 2 deleted the references in the original filing to the retroactive application of the Fee Cap Pilot Program from February 1, 2008 through February 19, 2008. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b–4(f)(2). 2 17 VerDate Aug<31>2005 16:57 Mar 05, 2008 Jkt 214001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Amex proposes to extend the Fee Cap Pilot Program for dividend strategies, merger spreads, and short stock interest spreads (the ‘‘Fee Cap Program’’) until February 1, 2009. The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and http:// www.amex.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Amex included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposal. The text of these statements may be examined at the places specified in Item IV below. Amex has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to extend the current Fee Cap Program from February 19, 2008 through February 1, 2009. The current Fee Cap Program expired on February 1, 2008. The Fee Cap Program provides that specialists, registered options traders, non-member market makers, firms, and member and non-member broker-dealers PO 00000 Frm 00164 Fmt 4703 Sfmt 4703 option transaction, comparison and floor brokerage fees are limited to an aggregate fee of $100 for all dividend strategies, merger spreads, and short stock interest spreads executed on the same trading day in the same option class.6 Additionally, such fees are also limited to $12,500 per month per initiating firm. To date, the Exchange believes that the current Fee Cap Program has been beneficial, and submits that an extension through February 1, 2009 is warranted. The Exchange asserts that the Fee Cap Program may increase the trading opportunities for members and provide additional business opportunities for the Exchange. Accordingly, the proposal seeks to extend the pilot through February 1, 2009. 2. Statutory Basis The Exchange submits that the proposed fee change is consistent with Section 6(b)(4) of the Act 7 regarding the equitable allocation of reasonable dues, fees, and other charges among exchange members and other persons using exchange facilities. The Exchange believes that the proposed extension of the current Fee Cap Program is beneficial to market participants by providing additional trading opportunities at an efficient cost. B. Self-Regulatory Organization’s Statement on Burden on Competition Amex does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 6 These fees are charged only to Exchange members. 7 15 U.S.C. 78f(b)(4). E:\FR\FM\06MRN1.SGM 06MRN1 EN06MR08.002</GPH> the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 2, from interested persons. [FR Doc. E8–4335 Filed 3–5–08; 8:45 am] 12233

Agencies

[Federal Register Volume 73, Number 45 (Thursday, March 6, 2008)]
[Notices]
[Pages 12228-12233]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-4335]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57407/February 29, 2008]


Order Making Fiscal 2008 Mid-Year Adjustment to the Fee Rates 
Applicable Under Sections 31(b) and (c) of the Securities Exchange Act 
of 1934

I. Background

    Section 31 of the Securities Exchange Act of 1934 (``Exchange 
Act'') requires each national securities exchange and national 
securities association to pay transaction fees to the Commission.\1\ 
Specifically, section 31(b) requires each national securities exchange 
to pay to the Commission fees based on the aggregate dollar amount of 
sales of certain securities transacted on the exchange.\2\ Section 
31(c) requires each national securities association to pay to the 
Commission fees based on the aggregate dollar amount of sales of 
certain securities transacted by or through any member of the 
association other than on an exchange.\3\
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    \1\ 15 U.S.C. 78ee.
    \2\ 15 U.S.C. 78ee(b).
    \3\ 15 U.S.C. 78ee(c).
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    Sections 31(j)(1) and (3) require the Commission to make annual 
adjustments to the fee rates applicable under sections 31(b) and (c) 
for each of the fiscal years 2003 through 2011, and one final 
adjustment to fix the fee rates for fiscal year 2012 and beyond.\4\ 
Section 31(j)(2) requires the Commission, in certain circumstances, to 
make a mid-year adjustment to the fee rates in fiscal 2002 through 
fiscal 2011.\5\ The annual and mid-year adjustments are designed to 
adjust the fee rates in a given fiscal year so that, when applied to 
the aggregate dollar volume of sales for the fiscal year, they are 
reasonably likely to produce total fee collections under section 31 
equal to the ``target offsetting collection amount'' specified in 
Section 31(l)(1) for that fiscal year.\6\ For fiscal 2008, the target 
offsetting collection amount is $892,000,000.\7\
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    \4\ 15 U.S.C. 78ee(j)(1) and (j)(3).
    \5\ 15 U.S.C. 78ee(j)(2).
    \6\ 15 U.S.C. 78ee(l)(1).
    \7\ Id.
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II. Determination of the Need for a Mid-Year Adjustment in Fiscal 2008

    Under section 31(j)(2) of the Exchange Act, the Commission must 
make a mid-year adjustment to the fee rates under Sections 31(b) and 
(c) in fiscal year 2008 if it determines, based on the actual aggregate 
dollar volume of sales during the first five months of the fiscal year, 
that the baseline estimate ($78,732,152,559,457) is reasonably likely 
to be 10% (or more) greater or less than the actual aggregate dollar 
volume of sales for fiscal 2008.\8\ To make this determination, the 
Commission must estimate the actual aggregate dollar volume of sales 
for fiscal 2008.
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    \8\ The amount $78,732,152,559,457 is the baseline estimate of 
the aggregate dollar amount of sales for fiscal year 2008 calculated 
by the Commission in its Order Making Fiscal 2008 Annual Adjustments 
to the Fee Rates Applicable Under Section 6(b) of the Securities Act 
of 1933 and Sections 13(e), 14(g), 31(b) and 31(c) of the Securities 
Exchange Act of 1934, Rel. No. 33-8794 (April 30, 2007), 72 FR 25809 
(May 7, 2007).
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    Based on data provided by the national securities exchanges and the 
national securities association that are subject to section 31,\9\ the 
actual aggregate dollar volume of sales during the first four months of 
fiscal 2008 was $27,185,458,106,162.\10\ Using these data and a 
methodology for estimating the aggregate dollar amount of sales for the 
remainder of fiscal 2008 (developed after consultation with the 
Congressional Budget Office and the OMB),\11\ the Commission estimates 
that the aggregate dollar amount of sales for the remainder of fiscal 
2008 to be $71,539,094,586,685. Thus, the Commission estimates that the 
actual aggregate dollar volume of sales for all of fiscal 2008 will be 
$98,724,552,692,847.
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    \9\ The Financial Industry Regulatory Authority (``FINRA'') and 
each exchange is required to file a monthly report on Form R31 
containing dollar volume data on sales of securities subject to 
Section 31. The report is due on the 10th business day following the 
month for which the exchange or association provides dollar volume 
data.
    \10\ Although Section 31(j)(2) indicates that the Commission 
should determine the actual aggregate dollar volume of sales for 
fiscal 2008 ``based on the actual aggregate dollar volume of sales 
during the first 5 months of such fiscal year,'' data are only 
available for the first four months of the fiscal year as of the 
date the Commission is required to issue this order, i.e., March 1, 
2008. Dollar volume data on sales of securities subject to Section 
31 for February 2008 will not be available from the exchanges and 
FINRA for several weeks.
    \11\ See Appendix A.

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[[Page 12229]]

    Because the baseline estimate of $78,732,152,559,457 is more than 
10% less than the $98,724,552,692,847 estimated actual aggregate dollar 
volume of sales for fiscal 2008, section 31(j)(2) of the Exchange Act 
requires the Commission to issue an order adjusting the fee rates under 
sections 31(b) and (c).

III. Calculation of the Uniform Adjusted Rate

    Section 31(j)(2) specifies the method for determining the mid-year 
adjustment for fiscal 2008. Specifically, the Commission must adjust 
the rates under sections 31(b) and (c) to a ``uniform adjusted rate 
that, when applied to the revised estimate of the aggregate dollar 
amount of sales for the remainder of [fiscal 2008], is reasonably 
likely to produce aggregate fee collections under section 31 (including 
fees collected during such 5-month period and assessments collected 
under [Section 31(d)]) that are equal to [$892,000,000].'' \12\ In 
other words, the uniform adjusted rate is determined by subtracting 
fees collected prior to the effective date of the new rate and 
assessments collected under section 31(d) during all of fiscal 2008 
from $892,000,000, which is the target offsetting collection amount for 
fiscal 2008. That difference is then divided by the revised estimate of 
the aggregate dollar volume of sales for the remainder of the fiscal 
year following the effective date of the new rate.
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    \12\ 15 U.S.C. 78ee(j)(2). The term ``fees collected'' is not 
defined in Section 31. Because national securities exchanges and 
national securities associations are not required to pay the first 
installment of Section 31 fees for fiscal 2008 until March 15, the 
Commission will not ``collect'' any fees in the first five months of 
fiscal 2008. See 15 U.S.C. 78ee(e). However, the Commission believes 
that, for purposes of calculating the mid-year adjustment, Congress, 
by stating in Section 31(j)(2) that the ``uniform adjusted rate * * 
* is reasonably likely to produce aggregate fee collections under 
Section 31 * * * that are equal to [$892,000,000],'' intended the 
Commission to include the fees that the Commission will collect 
based on transactions in the six months before the effective date of 
the mid-year adjustment.
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    The Commission estimates that it will collect $581,546,346 in fees 
for the period prior to the effective date of the mid-year adjustment 
\13\ and $32,475 in assessments on round turn transactions in security 
futures products during all of fiscal 2008. Using the methodology 
referenced in Part II above, the Commission estimates that the 
aggregate dollar volume of sales for the remainder of fiscal 2008 
following the effective date of the new rate will be 
$55,740,439,070,059. Based on these estimates, the uniform adjusted 
rate is $5.60 per million of the aggregate dollar amount of sales of 
securities.\14\
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    \13\ This calculation is based on applying a fee rate of $15.30 
per million to the aggregate dollar volume of sales of securities 
subject to Section 31 through January 24, 2008, and a rate of $11.00 
for the period from January 25, 2008 to March 31, 2008. Because the 
Commission's regular appropriation for fiscal year 2008 was not 
enacted prior to the end of fiscal year 2007, Exchange Act Section 
31(k), the ``Lapse of Appropriation'' provision, required that the 
fee rate in use at the end of fiscal year 2007, $15.30 per million, 
remain in effect until 30 days after the appropriation was enacted. 
See also Order Making Fiscal 2008 Annual Adjustments to the Fee 
Rates Applicable Under Section 6(b) of the Securities Act of 1933 
and Sections 13(e), 14(g), 31(b) and 31(c) of the Securities 
Exchange Act of 1934, Rel. No. 33-8794 (April 30, 2007), 72 FR 25809 
(May 7, 2007). The Commission's regular appropriation for fiscal 
year 2008 was enacted on December 26, 2007, and the $11.00 per 
million rate went into effect 30 days later, by operation of the 
statute. See Exchange Act Section 31(j)(4)(A)(ii).
    \14\ The calculation is as follows: ($892,000,000-$581,546,346-
$32,475)/ $55,740,439,070,059 = $0.0000055690. Round this result to 
the seventh decimal point, yielding a rate of $5.60 per million.
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    The Commission recognizes that this fee rate is lower than the 
current fee rate of $11.00 per million. The new fee rate is established 
by the statutory mid-year adjustment mechanism and is a direct 
consequence of more recent information on the dollar amount of sales of 
securities. The aggregate dollar amount of sales of securities subject 
to section 31 fees is illustrated in Appendix A.

IV. Effective Date of the Uniform Adjusted Rate

    Section 31(j)(4)(B) of the Exchange Act provides that a mid-year 
adjustment shall take effect on April 1 of the fiscal year in which 
such rate applies. Therefore, the exchanges and the national securities 
association that are subject to section 31 fees must pay fees under 
sections 31(b) and (c) at the uniform adjusted rate of $5.60 per 
million for sales of securities transacted on April 1, 2008, and 
thereafter until the annual adjustment for fiscal 2009 is 
effective.\15\
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    \15\ Section 31(j)(1) and Section 31(g) of the Exchange Act 
require the Commission to issue an order no later than April 30, 
2008, adjusting the fee rates applicable under Sections 31(b) and 
(c) for fiscal 2009. These fee rates for fiscal 2009 will be 
effective on the later of October 1, 2008 or thirty days after the 
enactment of the Commission's regular appropriation for fiscal 2009.
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V. Conclusion

    Accordingly, pursuant to section 31 of the Exchange Act,\16\ It is 
hereby ordered that each of the fee rates under sections 31(b) and (c) 
of the Exchange Act shall be $5.60 per $1,000,000 of the aggregate 
dollar amount of sales of securities subject to these sections 
effective April 1, 2008.
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    \16\ 15 U.S.C. 78ee.

    By the Commission.
Nancy M. Morris,
Secretary.

Appendix A

A. Baseline Estimate of the Aggregate Dollar Amount of Sales

    First, calculate the average daily dollar amount of sales (ADS) for 
each month in the sample (January 1998-January 2008). The data obtained 
from the exchanges and FINRA are presented in Table A. The monthly 
aggregate dollar amount of sales from all exchanges and FINRA is 
contained in column C.
    Next, calculate the change in the natural logarithm of ADS from 
month-to-month. The average monthly change in the logarithm of ADS over 
the entire sample is 0.017 and the standard deviation 0.124. Assume the 
monthly percentage change in ADS follows a random walk. The expected 
monthly percentage growth rate of ADS is 2.5 percent.
    Now, use the expected monthly percentage growth rate to forecast 
total dollar volume. For example, one can use the ADS for January 2008 
($380,797,961,013) to forecast ADS for February 2008 ($390,166,745,447 
= $380,797,961,013 x 1.025).\17\ Multiply by the number of trading days 
in February 2008 (20) to obtain a forecast of the total dollar volume 
for the month ($7,803,334,908,936). Repeat the method to generate 
forecasts for subsequent months.
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    \17\ The value 1.025 has been rounded. All computations are done 
with the unrounded value.
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    The forecasts for total dollar volume are in column G of Table A. 
The following is a more formal (mathematical) description of the 
procedure:
    1. Divide each month's total dollar volume (column C) by the number 
of trading days in that month (column B) to obtain the average daily 
dollar volume (ADS, column D).
    2. For each month t, calculate the change in ADS from the previous 
month as [Delta]t = log (ADSt / 
ADSt-1), where log (x) denotes the natural logarithm of x.
    3. Calculate the mean and standard deviation of the series 
{[Delta]1, [Delta]2, * * * , 
[Delta]120{time} . These are given by [mu] = 0.017 and 
[sigma] = 0.124, respectively.
    4. Assume that the natural logarithm of ADS follows a random walk, 
so that [Delta]s and [Delta]t are statistically 
independent for any two months s and t.
    5. Under the assumption that [Delta]t is normally 
distributed, the expected value of ADSt /ADSt-1 
is given by exp ([mu] + [sigma]\2\), or on average ADSt = 
1.025 x ADSt-1.

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    6. For February 2008, this gives a forecast ADS of 1.025 x 
$380,797,961,013 = $390,166,745,447. Multiply this figure by the 20 
trading days in February 2008 to obtain a total dollar volume forecast 
of $7,803,334,908,936.
    7. For March 2008, multiply the February 2008 ADS forecast by 1.025 
to obtain a forecast ADS of $399,766,030,385. Multiply this figure by 
the 20 trading days in March 2008 to obtain a total dollar volume 
forecast of $7,995,320,607,691.
    8. Repeat this procedure for subsequent months.

B. Using the Forecasts From A to Calculate the New Fee Rate

    1. Determine the aggregate dollar volume of sales between 10/1/07 
and 1/24/08 to be $25,283,975,749,096. Multiply this amount by the fee 
rate of $15.3 per million dollars in sales during this period and get 
$386,844,829 in actual fees collected during 10/1/07 and 1/24/08. 
Determine the actual and projected aggregate dollar volume of sales 
between 1/25/08 and 3/31/08 to be $17,700,137,873,692. Multiply this 
amount by the fee rate of $11.00 per million dollars in sales during 
this period and get an estimate of $194,701,517 in actual and projected 
fees collected during 1/25/08 and 3/31/08.
    2. Estimate the amount of assessments on security futures products 
collected during 10/1/07 and 9/30/08 to be $32,475 by summing the 
amounts collected through January of $8,747 with projections of a 2.5% 
monthly increase in subsequent months.
    3. Determine the projected aggregate dollar volume of sales between 
4/1/08 and 9/30/08 to be $55,740,439,070,059.
    4. The rate necessary to collect the target $892,000,000 in fee 
revenues is then calculated as: ($892,000,000 - $386,844,829 - 
$194,701,517 - $32,475) / $55,740,439,070,059 = 0.0000055690.
    5. Round the result to the seventh decimal point, yielding a rate 
of 0.0000056 (or $5.60 per million).
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[FR Doc. E8-4335 Filed 3-5-08; 8:45 am]
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