Order Making Fiscal Year 2012 Annual Adjustments to Section 31 Fee Rates, 26324-26331 [2011-10964]

Download as PDF emcdonald on DSK2BSOYB1PROD with NOTICES 26324 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Notices can obtain access to the document via the E-Filing system. A person filing electronically using the agency’s adjudicatory E-Filing system may seek assistance by contacting the NRC Meta System Help Desk through the ‘‘Contact Us’’ link located on the NRC Web site at http:// www.nrc.gov/site-help/esubmittals.html, by e-mail at MSHD.Resource@nrc.gov, or by a tollfree call at 866–672–7640. The NRC Meta System Help Desk is available between 8 a.m. and 8 p.m., Eastern Time, Monday through Friday, excluding government holidays. Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555– 0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, Sixteenth Floor, One White Flint North, 11555 Rockville Pike, Rockville, Maryland, 20852, Attention: Rulemaking and Adjudications Staff. Participants filing a document in this manner are responsible for serving the document on all other participants. Filing is considered complete by firstclass mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. 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With respect to copyrighted works, except for limited excerpts that serve the purpose of the adjudicatory filings and would VerDate Mar<15>2010 17:26 May 05, 2011 Jkt 223001 constitute a Fair Use application, participants are requested not to include copyrighted materials in their submission. Petitions for leave to intervene must be filed no later than 60 days from May 6, 2011. Non-timely filings will not be entertained absent a determination by the presiding officer that the petition or request should be granted or the contentions should be admitted, based on a balancing of the factors specified in 10 CFR 2.309(c)(1)(i)–(viii). Dated at Lisle, Illinois, this 13th day of April 2011. For the Nuclear Regulatory Commission. Christine Lipa, Chief, Materials Control, ISFSI, and Decommissioning Branch, Division of Nuclear Materials Safety, Region III. [FR Doc. 2011–11113 Filed 5–5–11; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64373/April 29, 2011] Order Making Fiscal Year 2012 Annual Adjustments to Section 31 Fee Rates 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 The Investor and Capital Markets Fee Relief Act (‘‘Fee Relief Act’’) 4 amended Section 31 of the Exchange Act to require the Commission to make annual adjustments to the fee rates applicable under this section for each of the fiscal years 2003 through 2011, and one final adjustment to fix the fee rates under these sections for fiscal year 2012 and beyond.5 1 15 U.S.C. 78ee. U.S.C. 78ee(b). 3 15 U.S.C. 78ee(c). 4 Public Law 107–123, 115 Stat. 2390 (2002). 5 See 15 U.S.C. 77f(b)(5), 77f(b)(6), 78m(e)(5), 78m(e)(6), 78n(g)(5), 78n(g)(6), 78ee(j)(1), and 78ee(j)(3). Section 31(j)(2) of the Exchange Act, 15 U.S.C. 78ee(j)(2), also requires the Commission, in 2 15 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 II. Fiscal Year 2012 Annual Adjustment to the Fee Rates Applicable Under Sections 31(b) and (c) of the Exchange Act Section 31(b) of the Exchange Act requires each national securities exchange to pay the Commission a fee at a rate, as adjusted by our order pursuant to Section 31(j)(1),6 which currently is $19.20 per million of the aggregate dollar amount of sales of specified securities transacted on the exchange. Similarly, Section 31(c) requires each national securities association to pay the Commission a fee at the same adjusted rate on the aggregate dollar amount of sales of specified securities transacted by or through any member of the association otherwise than on an exchange. Section 31(j)(1) requires 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 2011.7 Section 31(j)(3) requires the Commission to make one final adjustment for fiscal year 2012.8 Section 31(j)(3) specifies the method for determining the annual adjustment for fiscal year 2012. Specifically, the Commission must adjust the rates under Sections 31(b) and (c) to a ‘‘uniform adjusted rate that, when applied to the baseline estimate of the aggregate dollar amount of sales for fiscal year 2012, is reasonably likely to produce aggregate fee collections under [Section 31] in specified circumstances, to make a mid-year adjustment to the fee rates under Sections 31(b) and (c) of the Exchange Act in fiscal years 2002 through 2011. 6 Order Making Fiscal Year 2011 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. 33–9122 (April 29, 2010), 75 FR 24757 (May 5, 2010). 7 The annual adjustments, as well as the mid-year adjustments required in specified circumstances under Section 31(j)(2) in fiscal years 2002 through 2011, 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. 8 The final adjustment for fiscal year 2012 is designed to adjust the fee rate in 2012 and subsequent years so that, when applied to the aggregate dollar volume of sales for fiscal year 2012, it is reasonably like to produce total fee collections under Section 31 equal to the ‘‘target offsetting collection amount’’ for fiscal year 2011. Note, however, that Section 31 will be amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (‘‘Dodd-Frank Act’’) effective on the later of October 1, 2011 or the date of enactment of an Act making a regular appropriation to the Commission for fiscal year 2012. Once the amendments become effective, the Commission will be required to make a new adjustment to the fee rates under Section 31 for fiscal year 2012 and subsequent fiscal years. E:\FR\FM\06MYN1.SGM 06MYN1 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Notices fiscal year 2012 (including assessments collected under [Section 31(d)]) that are equal to the target offsetting collection amount for fiscal year 2011.’’ Section 31(l)(1) specifies that the ‘‘target offsetting collection amount’’ for fiscal year 2011 is $1,321,000,000. Section 31(l)(2) defines the ‘‘baseline estimate of the aggregate dollar amount of sales’’ as ‘‘the baseline estimate of the aggregate dollar amount of sales of securities * * * to be transacted on each national securities exchange and by or through any member of each national securities association (otherwise than on a national securities exchange) during fiscal year 2012 as determined by the Commission, after consultation with the Congressional Budget Office and the Office of Management and Budget . * * *’’ To make the baseline estimate of the aggregate dollar amount of sales for fiscal year 2012, the Commission is using the same methodology it developed in consultation with the CBO and OMB to project dollar volume for purposes of prior fee adjustments.9 Using this methodology, the Commission calculates the baseline estimate of the aggregate dollar amount of sales for fiscal year 2012 to be $85,673,432,736,834. Based on this estimate, and an estimated collection of $27,453 in assessments on security futures transactions under Section 31(d) in fiscal year 2012, the uniform adjusted rate for fiscal year 2012 is $15.10 per million.10 III. Effective Dates of the Annual Adjustments emcdonald on DSK2BSOYB1PROD with NOTICES Section 31(j)(4)(A) of the Exchange Act provides that the fiscal year 2012 annual adjustments to the fee rates applicable under Sections 31(b) and (c) of the Exchange Act shall take effect on the later of October 1, 2011, or 30 days after the date on which a regular appropriation to the Commission for fiscal year 2012 is enacted. It is important to note, however, that Section 991 of the Dodd-Frank Act amends Section 31 of the Exchange Act effective on the later of October 1, 2011 or the date of enactment of an Act 9 Appendix A explains how we determined the ‘‘baseline estimate of the aggregate dollar amount of sales’’ for fiscal year 2012 using our methodology, and then shows the purely arithmetical process of calculating the fiscal year 2012 annual adjustment based on that estimate. The appendix also includes the data used by the Commission in making its ‘‘baseline estimate of the aggregate dollar amount of sales’’ for fiscal year 2012. 10 The calculation of the adjusted fee rate assumes that the current fee rate of $19.20 per million will apply through October 31, 2012, due to the operation of the effective date provision contained in Section 31(j)(4)(A) of the Exchange Act. VerDate Mar<15>2010 17:26 May 05, 2011 Jkt 223001 making a regular appropriation to the Commission for fiscal year 2012. Once, the amendments become effective, new lapse in appropriations provisions will apply such that, if a regular appropriation to the Commission for fiscal year 2012 is not enacted on or before October 1, 2011, the new fee rates will not become effective until 60 days after the date such a regular appropriation is enacted. Moreover, once the amendments to Section 31 become effective, the Commission will be required to make a new adjustment to the fee rates under Section 31 for fiscal year 2012. The new fee rates will be determined no later than 30 days after the date on which an Act making a regular appropriation to the Commission for fiscal year 2012 is enacted,11 and they will become effective on the later of October 1, 2011 or 60 days after the date such a regular appropriation is enacted. As a result of these amendments, if a regular appropriation to the Commission for fiscal year 2012 is not enacted on or before October 1, 2011, the fee rate adjustments under this order will never become effective. Rather the fee rate adjustments for fiscal year 2012 will be determined in accordance with the amendments to Section 31 made by the Dodd-Frank Act and will become effective 60 days after the date such a regular appropriation is enacted. IV. Conclusion Accordingly, pursuant to Section 31 of the Exchange Act,12 It is hereby ordered that, if a regular appropriation to the Commission for fiscal year 2012 is enacted on or before October 1, 2011, the fee rates applicable under Sections 31(b) and (c) of the Exchange Act shall be $15.10 per million effective on the later of October 1, 2011, or 30 days after the date on which a regular appropriation to the Commission for fiscal year 2012 is enacted. By the Commission. Cathy H. Ahn, Deputy Secretary. Appendix A With the passage of the Investor and Capital Markets Relief Act, Congress has, among other things, established a target amount of monies to be collected from fees charged to investors based on 11 In the event an Act making a regular appropriation to the Commission for fiscal year 2012 is enacted more than 30 days prior to October 1, 2011, the Commission will need to defer making a new adjustment until October 1, 2011, because the amendments requiring the new adjustment will not be effective until that date. 12 15 U.S.C. 77f(b), 78m(e), 78n(g), and 78ee(j). PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 26325 the value of their transactions. This appendix provides the formula for determining such fees, which the Commission adjusts annually, and may adjust semi-annually.13 In order to maximize the likelihood that the amount of monies targeted by Congress will be collected, the fee rate must be set to reflect projected dollar transaction volume on the securities exchanges and certain over-the-counter markets over the course of the year. As a percentage, the fee rate equals the ratio of the target amounts of monies to the projected dollar transaction volume. For 2012, the Commission has estimated dollar transaction volume by projecting forward the trend established in the previous decade. More specifically, dollar transaction volume was forecasted for months subsequent to March 2011, the last month for which the Commission has data on transaction volume. The following sections describe this process in detail. A. Baseline Estimate of the Aggregate Dollar Amount of Sales for Fiscal Year 2012 First, calculate the average daily dollar amount of sales (ADS) for each month in the sample (March 2001— March 2011). The monthly aggregate dollar amount of sales (exchange plus certain over-the-counter markets) is presented in column C of Table B. Next, calculate the change in the natural logarithm of ADS from month to month. The average monthly percentage growth of ADS over the entire sample is 0.0074 and the standard deviation is 0.123. Assuming the monthly percentage change in ADS follows a random walk, calculating the expected monthly percentage growth rate for the full sample is straightforward. The expected monthly percentage growth rate of ADS is 1.5%. Now, use the expected monthly percentage growth rate to forecast total dollar volume. For example, one can use the ADS for March 2011 ($282,580,668,926) to forecast ADS for April 2011 ($286,849,029,708 = $282,580,668,926 × 1.015).14 Multiply by the number of trading days in April 2011 (20) to obtain a forecast of the total dollar volume for the month ($5,736,980,594,157). Repeat the 13 Congress requires that the Commission make a mid-year adjustment to the fee rate if four months into the fiscal year it determines that its forecasts of aggregate dollar volume are reasonably likely to be off by 10% or more. 14 The value 1.015 has been rounded. All computations are done with the unrounded value. E:\FR\FM\06MYN1.SGM 06MYN1 26326 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Notices emcdonald on DSK2BSOYB1PROD with NOTICES 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 = 0.0074 and s = 0.123, 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 VerDate Mar<15>2010 17:26 May 05, 2011 Jkt 223001 of ADSt/ADSt-1 is given by exp (μ + s2/ 2), or on average ADSt = 1.015 × ADSt-1. 6. For April 2011, this gives a forecast ADS of 1.015 × $282,580,668,926 = $286,849,029,708. Multiply this figure by the 20 trading days in April 2011 to obtain a total dollar volume forecast of $5,736,980,594,157. 7. For May 2011, multiply the April 2011 ADS forecast by 1.015 to obtain a forecast ADS of $291,181,863,773. Multiply this figure by the 21 trading days in May 2011 to obtain a total dollar volume forecast of $6,114,819,139,242. 8. Repeat this procedure for subsequent months. B. Using the Forecasts From A to Calculate the New Fee Rate 1. Use Table A to estimate fees collected for the period 10/1/11 through 10/31/11. The projected aggregate dollar amount of sales for this period is $6,590,802,501,369. Projected fee collections at the current fee rate of 0.0000192 are $126,543,408. PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 2. Estimate the amount of assessments on securities futures products collected during 10/1/11 and 9/30/12 to be $27,453 by projecting a 1.5% monthly increase from a base of $1,960 in March 2011. 3. Subtract the amounts $126,543,408 and $27,453 from the target offsetting collection amount set by Congress of $1,321,000,000 leaving $1,194,429,139 to be collected on dollar volume for the period 11/1/11 through 9/30/12. 4. Use Table A to estimate dollar volume for the period 11/1/11 through 9/30/12. The estimate is $79,082,630,235,466. Finally, compute the fee rate required to produce the additional $1,194,429,139 in revenue. This rate is $1,194,429,139 divided by $79,082,630,235,466 or 0.0000151036. 5. Round the result to the seventh decimal point, yielding a rate of .0000151 (or $15.10 per million). BILLING CODE 8011–01–P E:\FR\FM\06MYN1.SGM 06MYN1 VerDate Mar<15>2010 17:26 May 05, 2011 Jkt 223001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4725 E:\FR\FM\06MYN1.SGM 06MYN1 26327 EN06MY11.052</GPH> emcdonald on DSK2BSOYB1PROD with NOTICES Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Notices VerDate Mar<15>2010 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Notices 17:26 May 05, 2011 Jkt 223001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4725 E:\FR\FM\06MYN1.SGM 06MYN1 EN06MY11.053</GPH> emcdonald on DSK2BSOYB1PROD with NOTICES 26328 VerDate Mar<15>2010 17:26 May 05, 2011 Jkt 223001 PO 00000 Frm 00091 Fmt 4703 Sfmt 4725 E:\FR\FM\06MYN1.SGM 06MYN1 26329 EN06MY11.054</GPH> emcdonald on DSK2BSOYB1PROD with NOTICES Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Notices VerDate Mar<15>2010 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Notices 17:26 May 05, 2011 Jkt 223001 PO 00000 Frm 00092 Fmt 4703 Sfmt 9990 E:\FR\FM\06MYN1.SGM 06MYN1 EN06MY11.055</GPH> emcdonald on DSK2BSOYB1PROD with NOTICES 26330 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Notices SECURITIES AND EXCHANGE COMMISSION [FR Doc. 2011–10964 Filed 5–5–11; 8:45 am] BILLING CODE 8011–01–C [Release No. 34–64376; File No. SR–BATS– 2011–013] SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] Dijji Corp., Hydro Environmental Resources, Inc. (n/k/a EXIM Internet Group, Inc.), Hydrogen Power, Inc., and InsynQ, Inc.; Order of Suspension of Trading emcdonald on DSK2BSOYB1PROD with NOTICES May 4, 2011. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Dijji Corp. because it has not filed any periodic reports since the period ended December 31, 2005. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Hydro Environmental Resources, Inc. (n/k/a EXIM Internet Group, Inc.) because it has not filed any periodic reports since the period ended September 30, 2004. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Hydrogen Power, Inc. because it has not filed any periodic reports since the period ended September 30, 2007. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of InsynQ, Inc. because it has not filed any periodic reports since the period ended November 30, 2005. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the abovelisted companies is suspended for the period from 9:30 a.m. EDT on May 4, 2011 and terminating at 11:59 p.m. EDT on May 17, 2011. By the Commission. Jill M. Peterson, Assistant Secretary. Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Trading Hours of BATS Options for Certain Products May 2, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that, on April 26, 2011, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing with the Commission a proposal to amend the Rules applicable to the BATS options market (‘‘BATS Options’’) in order to allow certain products to trade on BATS Options until 4:15 p.m. Eastern Time. The text of the proposed rule change is available at the Exchange’s Web site at http://www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. [FR Doc. 2011–11187 Filed 5–4–11; 11:15 am] BILLING CODE 8011–01–P 1 15 2 17 VerDate Mar<15>2010 17:26 May 05, 2011 Jkt 223001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00093 Fmt 4703 Sfmt 4703 26331 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose BATS Options currently allows trading in options contracts from 9:30 a.m. to 4 p.m. Eastern Time. The purpose of the proposed rule change is to amend BATS Rules in order to allow trading on BATS Options to 4:15 p.m. Eastern Time for specified products. Specifically, the Exchange proposes to amend Rules 21.2 and 29.10 to extend to 4:15 p.m. Eastern Time the trading hours for option contracts on Fund Shares, as defined in Rule 19.3(i), option contracts on exchange-traded notes including Index-Linked Securities, as defined in Rule 19.3(l), and option contracts on broad-based indexes, as defined in Rule 29.1(j). The Exchange’s rules already permit listing of options on Fund Shares,3 IndexLinked Securities,4 and broad-based indices.5 However, the Exchange’s rules currently require trading in all products to end at 4 p.m. Eastern Time, whereas other options exchanges permit trading to occur until 4:15 p.m. Eastern Time for the three product types specified in this filing.6 In addition to the proposed amendments to Rules 21.2(a) and 29.10(a), for the avoidance of doubt, the Exchange proposes to amend its Rule 21.2(b), which states that the hours during which transactions in options on individual stocks shall correspond to the normal business days and hours for business set forth in the rules of the primary market trading the securities underlying such options. As proposed, Rule 21.2(b) will make clear that the products specified in Rule 21.2(a) will be available for trading until 4:15 p.m. Eastern Time, notwithstanding any other language in the Rule. The Exchange believes the proposed changes are necessary in order to ensure consistency in the trading of such products on BATS Options and other options exchanges. 2. Statutory Basis The Exchange believes that its proposal is consistent with the requirements of the Act and the rules 3 See BATS Rule 19.3(i), which sets forth the listing criteria for Fund Shares. 4 See BATS Rule 19.3(l), which sets forth the listing criteria for Index-Linked Securities. 5 Chapter XXIX governs the listing and trading of options on an index. In particular, Rule 29.3 sets forth the listing requirements for options on broadbased indices. 6 See e.g., Nasdaq Options Market (‘‘NOM’’) Chapter VI, Sec. 2 and NOM Chapter XIV, Sec. 10; see also ISE Rule 700(b)–(d). E:\FR\FM\06MYN1.SGM 06MYN1

Agencies

[Federal Register Volume 76, Number 88 (Friday, May 6, 2011)]
[Notices]
[Pages 26324-26331]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10964]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64373/April 29, 2011]


Order Making Fiscal Year 2012 Annual Adjustments to Section 31 
Fee Rates

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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    The Investor and Capital Markets Fee Relief Act (``Fee Relief 
Act'') \4\ amended Section 31 of the Exchange Act to require the 
Commission to make annual adjustments to the fee rates applicable under 
this section for each of the fiscal years 2003 through 2011, and one 
final adjustment to fix the fee rates under these sections for fiscal 
year 2012 and beyond.\5\
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    \4\ Public Law 107-123, 115 Stat. 2390 (2002).
    \5\ See 15 U.S.C. 77f(b)(5), 77f(b)(6), 78m(e)(5), 78m(e)(6), 
78n(g)(5), 78n(g)(6), 78ee(j)(1), and 78ee(j)(3). Section 31(j)(2) 
of the Exchange Act, 15 U.S.C. 78ee(j)(2), also requires the 
Commission, in specified circumstances, to make a mid-year 
adjustment to the fee rates under Sections 31(b) and (c) of the 
Exchange Act in fiscal years 2002 through 2011.
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II. Fiscal Year 2012 Annual Adjustment to the Fee Rates Applicable 
Under Sections 31(b) and (c) of the Exchange Act

    Section 31(b) of the Exchange Act requires each national securities 
exchange to pay the Commission a fee at a rate, as adjusted by our 
order pursuant to Section 31(j)(1),\6\ which currently is $19.20 per 
million of the aggregate dollar amount of sales of specified securities 
transacted on the exchange. Similarly, Section 31(c) requires each 
national securities association to pay the Commission a fee at the same 
adjusted rate on the aggregate dollar amount of sales of specified 
securities transacted by or through any member of the association 
otherwise than on an exchange. Section 31(j)(1) requires 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.\7\ 
Section 31(j)(3) requires the Commission to make one final adjustment 
for fiscal year 2012.\8\
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    \6\ Order Making Fiscal Year 2011 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. 33-9122 (April 29, 2010), 75 FR 24757 
(May 5, 2010).
    \7\ The annual adjustments, as well as the mid-year adjustments 
required in specified circumstances under Section 31(j)(2) in fiscal 
years 2002 through 2011, 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.
    \8\ The final adjustment for fiscal year 2012 is designed to 
adjust the fee rate in 2012 and subsequent years so that, when 
applied to the aggregate dollar volume of sales for fiscal year 
2012, it is reasonably like to produce total fee collections under 
Section 31 equal to the ``target offsetting collection amount'' for 
fiscal year 2011. Note, however, that Section 31 will be amended by 
the Dodd-Frank Wall Street Reform and Consumer Protection Act 
(``Dodd-Frank Act'') effective on the later of October 1, 2011 or 
the date of enactment of an Act making a regular appropriation to 
the Commission for fiscal year 2012. Once the amendments become 
effective, the Commission will be required to make a new adjustment 
to the fee rates under Section 31 for fiscal year 2012 and 
subsequent fiscal years.
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    Section 31(j)(3) specifies the method for determining the annual 
adjustment for fiscal year 2012. Specifically, the Commission must 
adjust the rates under Sections 31(b) and (c) to a ``uniform adjusted 
rate that, when applied to the baseline estimate of the aggregate 
dollar amount of sales for fiscal year 2012, is reasonably likely to 
produce aggregate fee collections under [Section 31] in

[[Page 26325]]

fiscal year 2012 (including assessments collected under [Section 
31(d)]) that are equal to the target offsetting collection amount for 
fiscal year 2011.''
    Section 31(l)(1) specifies that the ``target offsetting collection 
amount'' for fiscal year 2011 is $1,321,000,000. Section 31(l)(2) 
defines the ``baseline estimate of the aggregate dollar amount of 
sales'' as ``the baseline estimate of the aggregate dollar amount of 
sales of securities * * * to be transacted on each national securities 
exchange and by or through any member of each national securities 
association (otherwise than on a national securities exchange) during 
fiscal year 2012 as determined by the Commission, after consultation 
with the Congressional Budget Office and the Office of Management and 
Budget . * * *''
    To make the baseline estimate of the aggregate dollar amount of 
sales for fiscal year 2012, the Commission is using the same 
methodology it developed in consultation with the CBO and OMB to 
project dollar volume for purposes of prior fee adjustments.\9\ Using 
this methodology, the Commission calculates the baseline estimate of 
the aggregate dollar amount of sales for fiscal year 2012 to be 
$85,673,432,736,834. Based on this estimate, and an estimated 
collection of $27,453 in assessments on security futures transactions 
under Section 31(d) in fiscal year 2012, the uniform adjusted rate for 
fiscal year 2012 is $15.10 per million.\10\
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    \9\ Appendix A explains how we determined the ``baseline 
estimate of the aggregate dollar amount of sales'' for fiscal year 
2012 using our methodology, and then shows the purely arithmetical 
process of calculating the fiscal year 2012 annual adjustment based 
on that estimate. The appendix also includes the data used by the 
Commission in making its ``baseline estimate of the aggregate dollar 
amount of sales'' for fiscal year 2012.
    \10\ The calculation of the adjusted fee rate assumes that the 
current fee rate of $19.20 per million will apply through October 
31, 2012, due to the operation of the effective date provision 
contained in Section 31(j)(4)(A) of the Exchange Act.
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III. Effective Dates of the Annual Adjustments

    Section 31(j)(4)(A) of the Exchange Act provides that the fiscal 
year 2012 annual adjustments to the fee rates applicable under Sections 
31(b) and (c) of the Exchange Act shall take effect on the later of 
October 1, 2011, or 30 days after the date on which a regular 
appropriation to the Commission for fiscal year 2012 is enacted.
    It is important to note, however, that Section 991 of the Dodd-
Frank Act amends Section 31 of the Exchange Act effective on the later 
of October 1, 2011 or the date of enactment of an Act making a regular 
appropriation to the Commission for fiscal year 2012. Once, the 
amendments become effective, new lapse in appropriations provisions 
will apply such that, if a regular appropriation to the Commission for 
fiscal year 2012 is not enacted on or before October 1, 2011, the new 
fee rates will not become effective until 60 days after the date such a 
regular appropriation is enacted.
    Moreover, once the amendments to Section 31 become effective, the 
Commission will be required to make a new adjustment to the fee rates 
under Section 31 for fiscal year 2012. The new fee rates will be 
determined no later than 30 days after the date on which an Act making 
a regular appropriation to the Commission for fiscal year 2012 is 
enacted,\11\ and they will become effective on the later of October 1, 
2011 or 60 days after the date such a regular appropriation is enacted.
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    \11\ In the event an Act making a regular appropriation to the 
Commission for fiscal year 2012 is enacted more than 30 days prior 
to October 1, 2011, the Commission will need to defer making a new 
adjustment until October 1, 2011, because the amendments requiring 
the new adjustment will not be effective until that date.
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    As a result of these amendments, if a regular appropriation to the 
Commission for fiscal year 2012 is not enacted on or before October 1, 
2011, the fee rate adjustments under this order will never become 
effective. Rather the fee rate adjustments for fiscal year 2012 will be 
determined in accordance with the amendments to Section 31 made by the 
Dodd-Frank Act and will become effective 60 days after the date such a 
regular appropriation is enacted.

IV. Conclusion

    Accordingly, pursuant to Section 31 of the Exchange Act,\12\
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    \12\ 15 U.S.C. 77f(b), 78m(e), 78n(g), and 78ee(j).
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    It is hereby ordered that, if a regular appropriation to the 
Commission for fiscal year 2012 is enacted on or before October 1, 
2011, the fee rates applicable under Sections 31(b) and (c) of the 
Exchange Act shall be $15.10 per million effective on the later of 
October 1, 2011, or 30 days after the date on which a regular 
appropriation to the Commission for fiscal year 2012 is enacted.

    By the Commission.
Cathy H. Ahn,
Deputy Secretary.

Appendix A

    With the passage of the Investor and Capital Markets Relief Act, 
Congress has, among other things, established a target amount of monies 
to be collected from fees charged to investors based on the value of 
their transactions. This appendix provides the formula for determining 
such fees, which the Commission adjusts annually, and may adjust semi-
annually.\13\ In order to maximize the likelihood that the amount of 
monies targeted by Congress will be collected, the fee rate must be set 
to reflect projected dollar transaction volume on the securities 
exchanges and certain over-the-counter markets over the course of the 
year. As a percentage, the fee rate equals the ratio of the target 
amounts of monies to the projected dollar transaction volume.
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    \13\ Congress requires that the Commission make a mid-year 
adjustment to the fee rate if four months into the fiscal year it 
determines that its forecasts of aggregate dollar volume are 
reasonably likely to be off by 10% or more.
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    For 2012, the Commission has estimated dollar transaction volume by 
projecting forward the trend established in the previous decade. More 
specifically, dollar transaction volume was forecasted for months 
subsequent to March 2011, the last month for which the Commission has 
data on transaction volume.
    The following sections describe this process in detail.

A. Baseline Estimate of the Aggregate Dollar Amount of Sales for Fiscal 
Year 2012

    First, calculate the average daily dollar amount of sales (ADS) for 
each month in the sample (March 2001--March 2011). The monthly 
aggregate dollar amount of sales (exchange plus certain over-the-
counter markets) is presented in column C of Table B.
    Next, calculate the change in the natural logarithm of ADS from 
month to month. The average monthly percentage growth of ADS over the 
entire sample is 0.0074 and the standard deviation is 0.123. Assuming 
the monthly percentage change in ADS follows a random walk, calculating 
the expected monthly percentage growth rate for the full sample is 
straightforward. The expected monthly percentage growth rate of ADS is 
1.5%.
    Now, use the expected monthly percentage growth rate to forecast 
total dollar volume. For example, one can use the ADS for March 2011 
($282,580,668,926) to forecast ADS for April 2011 ($286,849,029,708 = 
$282,580,668,926 x 1.015).\14\ Multiply by the number of trading days 
in April 2011 (20) to obtain a forecast of the total dollar volume for 
the month ($5,736,980,594,157). Repeat the

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method to generate forecasts for subsequent months.
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    \14\ The value 1.015 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] = 0.0074 and 
[sigma] = 0.123, 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\/2), or on average ADSt = 
1.015 x ADSt-1.
    6. For April 2011, this gives a forecast ADS of 1.015 x 
$282,580,668,926 = $286,849,029,708. Multiply this figure by the 20 
trading days in April 2011 to obtain a total dollar volume forecast of 
$5,736,980,594,157.
    7. For May 2011, multiply the April 2011 ADS forecast by 1.015 to 
obtain a forecast ADS of $291,181,863,773. Multiply this figure by the 
21 trading days in May 2011 to obtain a total dollar volume forecast of 
$6,114,819,139,242.
    8. Repeat this procedure for subsequent months.

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

    1. Use Table A to estimate fees collected for the period 10/1/11 
through 10/31/11. The projected aggregate dollar amount of sales for 
this period is $6,590,802,501,369. Projected fee collections at the 
current fee rate of 0.0000192 are $126,543,408.
    2. Estimate the amount of assessments on securities futures 
products collected during 10/1/11 and 9/30/12 to be $27,453 by 
projecting a 1.5% monthly increase from a base of $1,960 in March 2011.
    3. Subtract the amounts $126,543,408 and $27,453 from the target 
offsetting collection amount set by Congress of $1,321,000,000 leaving 
$1,194,429,139 to be collected on dollar volume for the period 11/1/11 
through 9/30/12.
    4. Use Table A to estimate dollar volume for the period 11/1/11 
through 9/30/12. The estimate is $79,082,630,235,466. Finally, compute 
the fee rate required to produce the additional $1,194,429,139 in 
revenue. This rate is $1,194,429,139 divided by $79,082,630,235,466 or 
0.0000151036.
    5. Round the result to the seventh decimal point, yielding a rate 
of .0000151 (or $15.10 per million).
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[FR Doc. 2011-10964 Filed 5-5-11; 8:45 am]
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