Securities and Exchange Commission v. the Commission to Collect Fees From Issuers On the Registration of Securities, et al.

   
SECURITIES AND EXCHANGE COMMISSION  
[Release Nos. 33-8572; 34-51631 / April 28, 2005] 
 
Order Making Fiscal Year 2006 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 
 
I.         Background         
The Commission collects fees under various provisions of the securities laws.  
Section 6(b) of the Securities Act of 1933 (“Securities Act”) requires the Commission to 
collect fees from issuers on the registration of securities.
1
  Section 13(e) of the Securities 
Exchange Act of 1934 (“Exchange Act”) requires the Commission to collect fees on 
specified repurchases of securities.
2
  Section 14(g) of the Exchange Act requires the 
Commission to collect fees on proxy solicitations and statements in corporate control 
transactions.
3
  Finally, Sections 31(b) and (c) of the Exchange Act require national 
securities exchanges and national securities associations, respectively, to pay fees on 
transactions in specified securities to the Commission.
4
   
The Investor and Capital Markets Fee Relief Act (“Fee Relief Act”)
5
 amended 
Section 6(b) of the Securities Act and Sections 13(e), 14(g), and 31 of the Exchange Act 
to require the Commission to make annual adjustments to the fee rates applicable under 
                                                
 
1
  15 U.S.C. 77f(b). 
 
2
  15 U.S.C. 78m(e). 
 
3
  15 U.S.C. 78n(g). 
 
4
  15 U.S.C. 78ee(b) and (c).  In addition, Section 31(d) of the Exchange Act requires the 
Commission to collect assessments from national securities exchanges and national securities 
associations for round turn transactions on security futures.  15 U.S.C. 78ee(d). 
 
5
  Pub. L. No. 107-123, 115 Stat. 2390 (2002). 

  
2
these sections 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.
6
 
II. Fiscal Year 2006 Annual Adjustment to the Fee Rates Applicable under 
Section 6(b) of the Securities Act and Sections 13(e) and 14(g) of the 
Exchange Act 
 
 Section 6(b)(5) of the Securities Act requires the Commission to make an annual 
adjustment to the fee rate applicable under Section 6(b) of the Securities Act in each of 
the fiscal years 2003 through 2011.
7
  In those same fiscal years, Sections 13(e)(5) and 
14(g)(5) of the Exchange Act require the Commission to adjust the fee rates under 
Sections 13(e) and 14(g) to a rate that is equal to the rate that is applicable under Section 
6(b).  In other words, the annual adjustment to the fee rate under Section 6(b) of the 
Securities Act also sets the annual adjustment to the fee rates under Sections 13(e) and 
14(g) of the Exchange Act. 
Section 6(b)(5) sets forth the method for determining the annual adjustment to the 
fee rate under Section 6(b) for fiscal year 2006.  Specifically, the Commission must 
adjust the fee rate under Section 6(b) to a “rate that, when applied to the baseline estimate 
of the aggregate maximum offering prices for [fiscal year 2006], is reasonably likely to 
produce aggregate fee collections under [Section 6(b)] that are equal to the target 
offsetting collection amount for [fiscal year 2006].”  That is, the adjusted rate is 
                                                
 
6
  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. 
 
7
  The annual adjustments are designed to adjust the fee rate in a given fiscal year so that, when 
applied to the aggregate maximum offering price at which securities are proposed to be offered for 
the fiscal year, it is reasonably likely to produce total fee collections under Section 6(b) equal to 
the “target offsetting collection amount” specified in Section 6(b)(11)(A) for that fiscal year. 
 

  
3
determined by dividing the “target offsetting collection amount” for fiscal year 2006 by 
the “baseline estimate of the aggregate maximum offering prices” for fiscal year 2006. 
 Section 6(b)(11)(A) specifies that the “target offsetting collection amount” for 
fiscal year 2006 is $689,000,000.
8
  Section 6(b)(11)(B) defines the “baseline estimate of 
the aggregate maximum offering price” for fiscal year 2006 as “the baseline estimate of 
the aggregate maximum offering price at which securities are proposed to be offered 
pursuant to registration statements filed with the Commission during [fiscal year 2006] 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 maximum offering price for fiscal 
year 2006, the Commission is using the same methodology it developed in consultation 
with the Congressional Budget Office (“CBO”) and Office of Management and Budget 
(“OMB”)  to project aggregate offering price for purposes of the fiscal year 2005 annual 
adjustment.  Using this methodology, the Commission determines the “baseline estimate 
of the aggregate maximum offering price” for fiscal year 2006 to be 
$6,437,675,847,178.
9
  Based on this estimate, the Commission calculates the annual 
adjustment for fiscal 2006 to be $107.00 per million.  This adjusted fee rate applies to 
                                                
 
8
  Congress determined the target offsetting collection amounts by applying reduced fee rates to the 
CBO’s January 2001 projections of the aggregate maximum offering prices for fiscal years 2002 
through 2011.  In any fiscal year through fiscal year 2011, the annual adjustment mechanism will 
result in additional fee rate reductions if the CBO’s January 2001 projection of the aggregate 
maximum offering prices for the fiscal year proves to be too low, and fee rate increases if the 
CBO’s January 2001 projection of the aggregate maximum offering prices for the fiscal year 
proves to be too high. 
 
9
  Appendix A explains how we determined the “baseline estimate of the aggregate maximum 
offering price” for fiscal year 2006 using our methodology, and then shows the purely arithmetical 
process of calculating the fiscal year 2006 annual adjustment based on that estimate.  The 
appendix includes the data used by the Commission in making its “baseline estimate of the 
aggregate maximum offering price” for fiscal year 2006. 
 

  
4
Section 6(b) of the Securities Act, as well as to Sections 13(e) and 14(g) of the Exchange 
Act.  
III. Fiscal Year 2006 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)(2), 
which currently is $41.80 per million of the aggregate dollar amount of sales of specified 
securities transacted on the exchange.
10
  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.
11
   
Section 31(j)(1) specifies the method for determining the annual adjustment for 
fiscal year 2006.  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 2006], is reasonably likely to produce 
aggregate fee collections under [Section 31] (including assessments collected under 
                                                
 
10
  Order Making Fiscal 2005 Mid-Year Adjustment to the Fee Rates Applicable Under Sections 
31(b) and (c) of the Securities Exchange Act of 1934, Rel. No. 34-51277 (February 28, 2005), 70 
FR 10695 (March 4, 2005). 
 
11
  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. 
 

  
5
[Section 31(d)]) that are equal to the target offsetting collection amount for [fiscal year 
2006].”   
Section 31(l)(1) specifies that the “target offsetting collection amount” for fiscal 
year 2006 is $1,435,000,000.
12
  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 2006] 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 2006, 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.
13
  
Using this methodology, the Commission calculates the baseline estimate of the 
aggregate dollar amount of sales for fiscal year 2006 to be $45,554,892,611,953.  Based 
on this estimate, and an estimated collection of $110,180 in assessments on securities 
                                                
 
12
  Congress determined the target offsetting collection amounts by applying reduced fee rates to the 
CBO’s January 2001 projections of dollar volume for fiscal years 2002 through 2011.  In any 
fiscal year through fiscal year 2011, the annual and, in specified circumstances, mid-year 
adjustment mechanisms will result in additional fee rate reductions if the CBO’s January 2001 
projection of dollar volume for the fiscal year proves to be too low, and fee rate increases if the 
CBO’s January 2001 projection of dollar volume for the fiscal year proves to be too high. 
 
13
  Appendix B explains how we determined the “baseline estimate of the aggregate dollar amount of 
sales” for fiscal year 2006 using our methodology, and then shows the purely arithmetical process 
of calculating the fiscal year 2006 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 2006.   
 

  
6
futures transactions under Section 31(d) in fiscal year 2006, the uniform adjusted rate is 
$30.70 per million.
14
 
IV. Effective Dates of the Annual Adjustments 
 Section 6(b)(8)(A) of the Securities Act provides that the fiscal year 2006 annual 
adjustment to the fee rate applicable under Section 6(b) of the Securities Act shall take 
effect on the later of October 1, 2005, or five days after the date on which a regular 
appropriation to the Commission for fiscal year 2006 is enacted.
15
  Section 13(e)(8)(A) 
and 14(g)(8)(A) of the Exchange Act provide for the same effective date for the annual 
adjustments to the fee rates applicable under Sections 13(e) and 14(g) of the Exchange 
Act.
16
 
 Section 31(j)(4)(A) of the Exchange Act provides that the fiscal year 2006 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, 2005, or thirty days after the date on which a 
regular appropriation to the Commission for fiscal year 2006 is enacted.   
V.        Conclusion        
Accordingly, pursuant to Section 6(b) of the Securities Act and Sections 13(e), 
14(g) and 31 of the Exchange Act,
17
  
IT IS HEREBY ORDERED that the fee rates applicable under Section 6(b) of the 
Securities Act and Sections 13(e) and 14(g) of the Exchange Act shall be $107.00 per 
                                                
 
14
  The calculation of the adjusted fee rate assumes that the current fee rate of $41.80 per million will 
apply through October 31st due to the operation of the effective date provision contained in 
Section 31(j)(4)(A) of the Exchange Act. 
 
15
  15 U.S.C. 77f(b)(8)(A). 
 
16
  15 U.S.C. 78m(e)(8)(A) and 78n(g)(8)(A). 
 
17
  15 U.S.C. 77f(b), 78m(e), 78n(g), and 78ee(j). 

  
7
million effective on the later of October 1, 2005, or five days after the date on which a 
regular appropriation to the Commission for fiscal year 2006 is enacted; and 
IT IS FURTHER ORDERED that the fee rates applicable under Sections 31(b) 
and (c) of the Exchange Act shall be $30.70 per million effective on the later of October 
1, 2005, or thirty days after the date on which a regular appropriation to the Commission 
for fiscal year 2006 is enacted. 
 
By the Commission.  
 
J. Lynn Taylor  
Assistant Secretary 

  
8
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 issuers based on the value of their registrations.  This appendix provides the 
formula for determining such fees, which the Commission adjusts annually.  Congress 
has mandated that the Commission determine these fees based on the “aggregate 
maximum offering prices,” which measures the aggregate dollar amount of securities 
registered with the SEC over the course of the year.  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 aggregate maximum offering prices.  As a percentage, the fee rate 
equals the ratio of the target amounts of monies to the projected aggregate maximum 
offering prices. 
For 2006, the Commission has estimated the aggregate maximum offering prices 
by projecting forward the trend established in the previous decade.  More specifically, an 
ARIMA model was used to forecast the value of the aggregate maximum offering prices 
for months subsequent to March 2005, the last month for which the Commission has data 
on the aggregate maximum offering prices.     
The following sections describe this process in detail. 
A. Baseline estimate of the aggregate maximum offering prices for fiscal year 2006. 
First, calculate the aggregate maximum offering prices (AMOP) for each month 
in the sample (March 1995 - March 2005).  Next, calculate the percentage change in the 
AMOP from month-to-month.   
 

  
9
Model the monthly percentage change in AMOP as a first order moving average 
process.  The moving average approach allows one to model the effect that an 
exceptionally high (or low) observation of AMOP tends to be followed by a more 
“typical” value of AMOP. 
Use the estimated moving average model to forecast the monthly percent change 
in AMOP.  These percent changes can then be applied to obtain forecasts of the total 
dollar value of registrations.  The following is a more formal (mathematical) description 
of the procedure: 
1. Begin with the monthly data for AMOP.  The sample spans ten years, from March 
1995 to March 2005.  There are 3 months in the sample for which the data are omitted 
because of the impact of extraordinary events (e.g., the 1995 government shutdown). 
2. Divide each month’s AMOP (column C) by the number of trading days in that month 
(column B) to obtain the average daily AMOP (AAMOP, column D). 
3. For each month t, the natural logarithm of AAMOP is reported in column E. 
4. Calculate the change in log(AAMOP) from the previous month as            
∆
t
 = log (AAMOP
t
) – log(AAMOP
t-1
).  This approximates the percentage change. 
5. Estimate the first order moving average model ∆
t
 = α + βe
t-1
 + e
t
, where e
t
 denotes the 
forecast error for month t.  The forecast error is simply the difference between the 
one-month ahead forecast and the actual realization of ∆
t
.  The forecast error is 
expressed as e
t
 = ∆
t
 – α – βe
t-1
.  The model can be estimated using standard 

  
10
commercially available software such as SAS or Eviews.  Using least squares, the 
estimated parameter values are α=0.01275 and β=−0.74504. 
6. For the month of April 2005, forecast ∆
t = 4/05
 = α + βe
t = 3/05
.  For all subsequent 
months, forecast ∆
t
 = α. 
7. Calculate forecasts of log(AAMOP).  For example, the forecast of log(AAMOP) for 
June 2005 is given by FLAAMOP
 t = 6/05
 = log(AAMOP
 t = 3/05
) + ∆
 t = 4/05
 +∆
 t = 5/05
 +   
∆
 t = 6/05
. 
8. Under the assumption that e
t
 is normally distributed, the n-step ahead forecast of 
AAMOP is given by exp(FLAAMOP
t
 + σ
n
2
/2), where σ
n
 denotes the standard error 
of the n-step ahead forecast.  
9. For June 2005, this gives a forecast AAMOP of $22.0 Billion (Column I), and a 
forecast AMOP of $484.0 Billion (Column J). 
10. Iterate this process through September 2006 to obtain a baseline estimate of the 
aggregate maximum offering prices for fiscal year 2006 of $6,437,675,847,178. 
B. Using the forecasts from A to calculate the new fee rate. 
1. Using the data from Table A, estimate the aggregate maximum offering prices 
between 10/1/05 and 9/30/06 to be $6,437,675,847,178. 
2. The rate necessary to collect the target $689,000,000 in fee revenues set by Congress 
is then calculated as:  $689,000,000 ÷ $ 6,437,675,847,178 = 0.00010703 (or $107.00 
per million.). 

  
11
Table A. Estimation of baseline of aggregate maximum offering prices .Fee rate calculation.a. Baseline estimate of the aggregate maximum offering prices, 10/1/05 to 9/30/06 ($Millions)
6,437,676
b. Implied fee rate ($689 Million / a)
$107.00
Data
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
(J)
Month
# of Trading Days 
in Month
Aggregate 
Maximum Offering 
Prices, in $Millions
Average Daily 
Aggregate Max. 
Offering Prices 
(AAMOP) in 
$Millions
log(AAMOP)
Change in 
AAMOP
Forecast 
log(AAMOP)
Standard Error
Forecast AAMOP, 
in $Millions
Forecast 
Aggregate 
Maximum Offering 
Prices, in $Millions
Mar-95
23
91,561
3,981
22.105
Apr-95
19
62,518
3,290
21.914
-0.190
May-95
22
106,333
4,833
22.299
0.385
Jun-95
22
117,557
5,344
22.399
0.100
Jul-95
20
65,127
3,256
21.904
-0.495
Aug-95
23
124,662
5,420
22.413
0.510
Sep-95
20
131,774
6,589
22.609
0.195
Oct-95
22
132,141
6,006
22.516
-0.093
Nov-95
21
110,646
5,269
22.385
-0.131
Dec-95
20
Jan-96
22
Feb-96
20
Mar-96
21
117,780
5,609
22.448
Apr-96
21
158,005
7,524
22.741
0.294
May-96
22
142,452
6,475
22.591
-0.150
Jun-96
20
122,598
6,130
22.536
-0.055
Jul-96
22
113,637
5,165
22.365
-0.171
Aug-96
22
128,154
5,825
22.485
0.120
Sep-96
20
108,763
5,438
22.417
-0.069
Oct-96
23
171,507
7,457
22.732
0.316
Nov-96
20
164,574
8,229
22.831
0.098
Dec-96
21
214,241
10,202
23.046
0.215
Jan-97
22
136,615
6,210
22.549
-0.496
Feb-97
19
317,624
16,717
23.540
0.990
Mar-97
20
140,809
7,040
22.675
-0.865
Apr-97
22
182,657
8,303
22.840
0.165
May-97
21
163,702
7,795
22.777
-0.063

  
12
Data
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
(J)
Month
# of Trading Days 
in Month
Aggregate 
Maximum Offering 
Prices, in $Millions
Average Daily 
Aggregate Max. 
Offering Prices 
(AAMOP) in 
$Millions
log(AAMOP)
Change in 
AAMOP
Forecast 
log(AAMOP)
Standard Error
Forecast AAMOP, 
in $Millions
Forecast 
Aggregate 
Maximum Offering 
Prices, in $Millions
Jun-97
21
162,111
7,720
22.767
-0.010
Jul-97
22
168,007
7,637
22.756
-0.011
Aug-97
21
153,705
7,319
22.714
-0.042
Sep-97
21
179,559
8,550
22.869
0.155
Oct-97
23
260,719
11,336
23.151
0.282
Nov-97
19
219,618
11,559
23.171
0.020
Dec-97
22
228,605
10,391
23.064
-0.106
Jan-98
20
228,030
11,402
23.157
0.093
Feb-98
19
250,266
13,172
23.301
0.144
Mar-98
22
378,185
17,190
23.568
0.266
Apr-98
21
242,310
11,539
23.169
-0.399
May-98
20
298,454
14,923
23.426
0.257
Jun-98
22
328,994
14,954
23.428
0.002
Jul-98
22
272,957
12,407
23.242
-0.187
Aug-98
21
392,104
18,672
23.650
0.409
Sep-98
21
325,144
15,483
23.463
-0.187
Oct-98
22
139,786
6,354
22.572
-0.891
Nov-98
20
269,065
13,453
23.322
0.750
Dec-98
22
248,596
11,300
23.148
-0.174
Jan-99
19
253,448
13,339
23.314
0.166
Feb-99
19
217,433
11,444
23.161
-0.153
Mar-99
23
415,145
18,050
23.616
0.456
Apr-99
21
431,280
20,537
23.746
0.129
May-99
20
229,082
11,454
23.162
-0.584
Jun-99
22
367,943
16,725
23.540
0.379
Jul-99
21
332,623
15,839
23.486
-0.054
Aug-99
22
240,157
10,916
23.114
-0.372
Sep-99
21
236,011
11,239
23.143
0.029
Oct-99
21
216,883
10,328
23.058
-0.085
Nov-99
21
372,582
17,742
23.599
0.541
Dec-99
22
319,846
14,538
23.400
-0.199

  
13
Data
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
(J)
Month
# of Trading Days 
in Month
Aggregate 
Maximum Offering 
Prices, in $Millions
Average Daily 
Aggregate Max. 
Offering Prices 
(AAMOP) in 
$Millions
log(AAMOP)
Change in 
AAMOP
Forecast 
log(AAMOP)
Standard Error
Forecast AAMOP, 
in $Millions
Forecast 
Aggregate 
Maximum Offering 
Prices, in $Millions
Jan-00
20
282,165
14,108
23.370
-0.030
Feb-00
20
665,367
33,268
24.228
0.858
Mar-00
23
550,107
23,918
23.898
-0.330
Apr-00
19
244,510
12,869
23.278
-0.620
May-00
22
269,774
12,262
23.230
-0.048
Jun-00
22
406,409
18,473
23.640
0.410
Jul-00
20
230,894
11,545
23.169
-0.470
Aug-00
23
257,797
11,209
23.140
-0.030
Sep-00
20
332,120
16,606
23.533
0.393
Oct-00
22
362,493
16,477
23.525
-0.008
Nov-00
21
317,653
15,126
23.440
-0.086
Dec-00
20
246,006
12,300
23.233
-0.207
Jan-01
21
462,726
22,035
23.816
0.583
Feb-01
19
388,304
20,437
23.741
-0.075
Mar-01
22
523,443
23,793
23.893
0.152
Apr-01
20
289,212
14,461
23.395
-0.498
May-01
22
274,298
12,468
23.246
-0.148
Jun-01
21
348,268
16,584
23.532
0.285
Jul-01
21
264,590
12,600
23.257
-0.275
Aug-01
23
245,591
10,678
23.091
-0.165
Sep-01
15
178,524
11,902
23.200
0.108
Oct-01
23
260,719
11,336
23.151
-0.049
Nov-01
21
286,199
13,629
23.335
0.184
Dec-01
20
395,230
19,762
23.707
0.372
Jan-02
21
401,290
19,109
23.673
-0.034
Feb-02
19
476,837
25,097
23.946
0.273
Mar-02
20
380,160
19,008
23.668
-0.278
Apr-02
22
282,947
12,861
23.277
-0.391
May-02
22
215,645
9,802
23.006
-0.272
Jun-02
20
277,757
13,888
23.354
0.348
Jul-02
22
208,638
9,484
22.973
-0.381

  
14
Data
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
(J)
Month
# of Trading Days 
in Month
Aggregate 
Maximum Offering 
Prices, in $Millions
Average Daily 
Aggregate Max. 
Offering Prices 
(AAMOP) in 
$Millions
log(AAMOP)
Change in 
AAMOP
Forecast 
log(AAMOP)
Standard Error
Forecast AAMOP, 
in $Millions
Forecast 
Aggregate 
Maximum Offering 
Prices, in $Millions
Aug-02
22
265,750
12,080
23.215
0.242
Sep-02
20
109,565
5,478
22.424
-0.791
Oct-02
23
179,374
7,799
22.777
0.353
Nov-02
20
243,590
12,179
23.223
0.446
Dec-02
21
212,838
10,135
23.039
-0.184
Jan-03
21
201,839
9,611
22.986
-0.053
Feb-03
19
144,642
7,613
22.753
-0.233
Mar-03
21
444,331
21,159
23.775
1.022
Apr-03
21
142,373
6,780
22.637
-1.138
May-03
21
328,792
15,657
23.474
0.837
Jun-03
21
281,580
13,409
23.319
-0.155
Jul-03
22
304,383
13,836
23.351
0.031
Aug-03
21
328,351
15,636
23.473
0.122
Sep-03
21
459,563
21,884
23.809
0.336
Oct-03
23
285,039
12,393
23.240
-0.569
Nov-03
19
257,779
13,567
23.331
0.091
Dec-03
22
244,998
11,136
23.133
-0.197
Jan-04
20
369,784
18,489
23.640
0.507
Feb-04
19
221,517
11,659
23.179
-0.461
Mar-04
23
448,543
19,502
23.694
0.514
Apr-04
21
260,029
12,382
23.240
-0.454
May-04
20
227,239
11,362
23.154
-0.086
Jun-04
21
370,668
17,651
23.594
0.441
Jul-04
21
305,519
14,549
23.401
-0.193
Aug-04
22
179,688
8,168
22.823
-0.577
Sep-04
21
357,007
17,000
23.556
0.733
Oct-04
21
254,489
12,119
23.218
-0.338
Nov-04
21
363,406
17,305
23.574
0.356
Dec-04
22
570,918
25,951
23.979
0.405
Jan-05
20
375,484
18,774
23.656
-0.324
Feb-05
19
338,922
17,838
23.605
-0.051
Mar-05
22
590,862
26,857
24.014
0.409

  
15
Data
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
(J)
Month
# of Trading Days 
in Month
Aggregate 
Maximum Offering 
Prices, in $Millions
Average Daily 
Aggregate Max. 
Offering Prices 
(AAMOP) in 
$Millions
log(AAMOP)
Change in 
AAMOP
Forecast 
log(AAMOP)
Standard Error
Forecast AAMOP, 
in $Millions
Forecast 
Aggregate 
Maximum Offering 
Prices, in $Millions
Apr-05
21
23.733
0.314
21,309
447,484
May-05
21
23.746
0.324
21,651
454,676
Jun-05
22
23.759
0.333
21,999
483,982
Jul-05
20
23.771
0.343
22,353
447,055
Aug-05
23
23.784
0.352
22,712
522,377
Sep-05
21
23.797
0.361
23,077
484,618
Oct-05
21
23.810
0.370
23,448
492,407
Nov-05
21
23.822
0.378
23,825
500,321
Dec-05
21
23.835
0.387
24,208
508,362
Jan-06
20
23.848
0.395
24,597
491,936
Feb-06
19
23.861
0.403
24,992
474,850
Mar-06
23
23.873
0.411
25,394
584,057
Apr-06
19
23.886
0.418
25,802
490,236
May-06
22
23.899
0.426
26,217
576,765
Jun-06
22
23.912
0.433
26,638
586,035
Jul-06
20
23.924
0.441
27,066
541,321
Aug-06
23
23.937
0.448
27,501
632,525
Sep-06
20
23.950
0.455
27,943
558,862
 

  
16
Figure A 
Aggregate Maximum Offering Prices Subject to Securities Act Section 6(b)
(Dashed Line Indicates Forecast Values)
$0
$100$200$300$400$500$600$700
Mar-95
Mar-96
Mar-97
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Dollar Value,
$Billions
October 2005

 
17
APPENDIX B 
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.
18
 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 2006, 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 2005, 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 2006. 
First, calculate the average daily dollar amount of sales (ADS) for each month in the 
sample (March 1995 - March 2005).  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 0.015 and the standard 
deviation 0.117.  Assuming the monthly percentage change in ADS follows a random walk, 
                                                
 
18
  Congress requires that the Commission make a mid-year adjustment to the fee rate if 4 months into the 
fiscal year it determines that its forecasts of aggregate dollar volume are reasonably likely to be off by 10% 
or more. 

 
18
calculating the expected monthly percentage growth rate for the full sample is straightforward.  
The expected monthly percentage growth rate of ADS is 2.3 percent.   
Now, use the expected monthly percentage growth rate to forecast total dollar volume.  
For example, one can use the ADS for March 2005 ($136,873,904,911) to forecast ADS for 
April 2005 ($139,958,043,570 = $136,873,904,911  x 1.023)
 19
.  Multiply by the number of 
trading days in April 2005 (21) to obtain a forecast of the total dollar volume for the month 
($2,939,118,914,973).  Repeat the method to generate forecasts for subsequent months. 
The forecasts for total dollar volume are in column G of Table B.  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           
∆
t
 = log (ADS
t
 / ADS
t-1
), where log (x) denotes the natural logarithm of x. 
3. Calculate the mean and standard deviation of the series {∆
1
, ∆
2
, ... , ∆
120
}.  These are given 
by μ = 0.015 and σ = 0.117, respectively. 
4. Assume that the natural logarithm of ADS follows a random walk, so that ∆
s
 and ∆
t
 are 
statistically independent for any two months s and t.  
5. Under the assumption that ∆
t
 is normally distributed, the expected value of ADS
t
 /ADS
t-1
 is 
given by exp (μ + σ
2
/2), or on average ADS
t
 = 1.023 × ADS
t-1
. 
                                                
 
19
  The value 1.023 has been rounded.  All computations are done with the unrounded value. 

 
19
6. For April 2005, this gives a forecast ADS of 1.023 × $136,873,904,911 = $139,958,043,570. 
Multiply this figure by the 21 trading days in April 2005 to obtain a total dollar volume 
forecast of $2,939,118,914,973. 
7. For May 2005, multiply the April 2005 ADS forecast by 1.023 to obtain a forecast ADS of 
$143,111,676,201.  Multiply this figure by the 21 trading days in May 2005 to obtain a total 
dollar volume forecast of $3,005,345,200,226. 
8. Repeat this procedure for subsequent months. 
B. Using the forecasts from A to calculate the new fee rate. 
1. Use Table B to estimate fees collected for the period 10/1/05 through 10/31/05.  The 
projected aggregate dollar amount of sales for this period is $3,359,544,441,122.  Projected 
fee collections at the current fee rate of 0.0000418 are $140,428,958. 
2. Estimate the amount of assessments on securities futures products collected during 10/1/05 
and 9/30/06 to be $110,180 by projecting a 2.3% monthly increase from a base of $6,889 in 
March 2005. 
3. Subtract the amounts $140,428,958 and $110,180 from the target offsetting collection 
amount set by Congress of $1,435,000,000 leaving $1,294,460,862 to be collected on dollar 
volume for the period 11/1/05 through 9/30/06. 
4. Use Table B to estimate dollar volume for the period 11/1/05 through 9/30/06.  The estimate 
is $42,195,348,170,831.  Finally, compute the fee rate required to produce the additional 
$1,294,460,862 in revenue.  This rate is $1,294,460,862 divided by $42,195,348,170,831 or 
0.0000306778. 

 
20
 
5. Consistent with the system requirements of the exchanges and the NASD, round the result to 
the seventh decimal point, yielding a rate of .0000307 (or $30.70 per million). 

 
21
Table B. Estimation of baseline of the aggregate dollar amount of sales.
Fee rate calculation.
a. Baseline estimate of the aggregate dollar amount of sales, 10/1/05 to 10/31/05 ($Millions)3,359,544
b. Baseline estimate of the aggregate dollar amount of sales, 11/1/05 to 9/30/06 ($Millions)42,195,348
c. Estimated collections in assessments on securities futures products in FY 2006 ($Millions)0.110
d. Implied fee rate (($1,435,000,000 - 0.0000418*a - c) /b)$30.7
Data
(A)(B)(C)(D)(E)(F)(G)
Month
# of Trading Days in 
Month
Aggregate Dollar 
Amount of Sales
Average Daily Dollar 
Amount of Sales 
(ADS)
Change in LN of ADSForecast ADS
Forecast Aggregate 
Dollar Amount of 
Sales
Mar-9523491,872,609,71821,385,765,640-
Apr-9519435,327,633,81822,911,980,7270.069
May-9522531,855,060,37924,175,230,0170.054
Jun-9522574,332,213,60926,106,009,7100.077
Jul-9520576,049,335,83128,802,466,7920.098
Aug-9523570,638,726,06024,810,379,394-0.149
Sep-9520578,133,939,67628,906,696,9840.153
Oct-9522642,190,178,03529,190,462,6380.010
Nov-9521596,424,550,56528,401,169,075-0.027
Dec-9520624,610,441,03731,230,522,0520.095
Jan-9622687,599,091,85431,254,504,1750.001
Feb-9620687,232,471,27334,361,623,5640.095
Mar-9621714,836,120,09334,039,815,243-0.009
Apr-9621704,410,318,02233,543,348,477-0.015
May-9622768,379,507,48934,926,341,2500.040
Jun-9620631,098,780,22331,554,939,011-0.102
Jul-9622688,428,728,38431,292,214,927-0.008
Aug-9622570,109,772,03625,914,080,547-0.189
Sep-9620617,243,881,68830,862,194,0840.175
Oct-9623764,269,441,45433,229,106,1500.074
Nov-9620748,494,700,41937,424,735,0210.119
Dec-9621764,479,496,75336,403,785,560-0.028
Jan-9722957,432,637,58643,519,665,3450.179
Feb-9719837,174,183,44644,061,799,1290.012
Mar-9720839,192,728,78841,959,636,439-0.049
Apr-9722862,799,213,31539,218,146,060-0.068
May-9721925,733,852,64744,082,564,4120.117
Jun-9721930,409,085,85944,305,194,5650.005
Jul-97221,085,682,706,89849,349,213,9500.108
Aug-97211,031,344,138,75149,111,625,655-0.005
Sep-97211,036,460,244,60249,355,249,7430.005
Oct-97231,329,653,432,71857,811,018,8140.158
Nov-9719926,017,878,58748,737,783,084-0.171
Dec-97221,046,220,806,19947,555,491,191-0.025
Jan-98201,037,925,292,90251,896,264,6450.087
Feb-98191,081,705,333,39656,931,859,6520.093
Mar-98221,259,994,685,46757,272,485,7030.006
Apr-98211,298,494,359,25361,833,064,7260.077
May-98201,110,221,658,99555,511,082,950-0.108
Jun-98221,243,779,791,91356,535,445,0870.018
Jul-98221,399,011,433,74863,591,428,8070.118
Aug-98211,307,501,463,44262,261,974,450-0.021
Sep-98211,352,428,235,08364,401,344,5280.034
Oct-98221,460,835,397,59866,401,608,9820.031
Nov-98201,298,403,768,06564,920,188,403-0.023
Dec-98221,442,697,787,30665,577,172,1500.010
Jan-99191,884,555,055,91099,187,108,2060.414
Feb-99191,656,058,202,76587,160,958,040-0.129
Mar-99231,908,967,664,07482,998,594,090-0.049
Apr-99212,177,601,770,622103,695,322,4110.223
May-99201,784,400,906,98789,220,045,349-0.150
 
 

 
22
Data
(A)(B)(C)(D)(E)(F)(G)
Month
# of Trading Days in 
Month
Aggregate Dollar 
Amount of Sales
Average Daily Dollar 
Amount of Sales 
(ADS)
Change in LN of ADSForecast ADS
Forecast Aggregate 
Dollar Amount of 
Sales
Jun-99221,697,339,227,50377,151,783,068-0.145
Jul-99211,767,035,098,98684,144,528,5230.087
Aug-99221,692,907,150,72676,950,325,033-0.089
Sep-99211,730,505,881,17882,405,041,9610.068
Oct-99212,017,474,765,54296,070,226,9310.153
Nov-99212,348,374,009,334111,827,333,7780.152
Dec-99222,686,788,531,991122,126,751,4540.088
Jan-00203,057,831,397,113152,891,569,8560.225
Feb-00202,973,119,888,063148,655,994,403-0.028
Mar-00234,135,152,366,234179,789,233,3150.190
Apr-00193,174,694,525,687167,089,185,562-0.073
May-00222,649,273,207,318120,421,509,424-0.328
Jun-00222,883,513,997,781131,068,818,0810.085
Jul-00202,804,753,395,361140,237,669,7680.068
Aug-00232,720,788,395,832118,295,147,645-0.170
Sep-00202,930,188,809,012146,509,440,4510.214
Oct-00223,485,926,307,727158,451,195,8060.078
Nov-00212,795,778,876,887133,132,327,471-0.174
Dec-00202,809,917,349,851140,495,867,4930.054
Jan-01213,143,501,125,244149,690,529,7740.063
Feb-01192,372,420,523,286124,864,238,068-0.181
Mar-01222,554,419,085,113116,109,958,414-0.073
Apr-01202,324,349,507,745116,217,475,3870.001
May-01222,353,179,388,303106,962,699,468-0.083
Jun-01212,111,922,113,236100,567,719,678-0.062
Jul-01212,004,384,034,55495,446,858,788-0.052
Aug-01231,803,565,337,79578,415,884,252-0.197
Sep-01151,573,484,946,383104,898,996,4260.291
Oct-01232,147,238,873,04493,358,211,871-0.117
Nov-01211,939,427,217,51892,353,677,025-0.011
Dec-01201,921,098,738,11396,054,936,9060.039
Jan-02212,149,243,312,432102,344,919,6400.063
Feb-02191,928,830,595,585101,517,399,768-0.008
Mar-02202,002,216,374,514100,110,818,726-0.014
Apr-02222,062,101,866,50693,731,903,023-0.066
May-02221,985,859,756,55790,266,352,571-0.038
Jun-02201,882,185,380,60994,109,269,0300.042
Jul-02222,349,564,490,189106,798,385,9180.126
Aug-02221,793,429,904,07981,519,541,095-0.270
Sep-02201,518,944,367,20475,947,218,360-0.071
Oct-02232,127,874,947,97292,516,302,0860.197
Nov-02201,780,816,458,12289,040,822,906-0.038
Dec-02211,561,092,215,64674,337,724,555-0.180
Jan-03211,723,698,830,41482,080,896,6860.099
Feb-03191,411,722,405,35774,301,179,229-0.100
Mar-03211,699,581,267,71880,932,441,3200.085
Apr-03211,759,751,025,27983,797,667,8700.035
May-03211,871,390,985,67889,113,856,4610.062
Jun-03212,122,225,077,345101,058,337,0160.126
Jul-03222,100,812,973,95695,491,498,816-0.057
Aug-03211,766,527,686,22484,120,366,011-0.127
Sep-03212,063,584,421,93998,265,924,8540.155
Oct-03232,331,850,083,022101,384,786,2180.031
Nov-03191,903,726,129,859100,196,112,098-0.012
Dec-03222,066,530,151,38393,933,188,699-0.065
Jan-04202,390,942,905,678119,547,145,2840.241
Feb-04192,177,765,594,701114,619,241,826-0.042

 
23
Data
(A)(B)(C)(D)(E)(F)(G)
Month
# of Trading Days in 
Month
Aggregate Dollar 
Amount of Sales
Average Daily Dollar 
Amount of Sales 
(ADS)
Change in LN of ADSForecast ADS
Forecast Aggregate 
Dollar Amount of 
Sales
Mar-04232,609,443,903,115113,454,082,744-0.010
Apr-04212,411,279,535,948114,822,835,0450.012
May-04202,253,135,847,669112,656,792,383-0.019
Jun-04212,106,449,803,404100,307,133,495-0.116
Jul-04212,203,895,014,681104,947,381,6510.045
Aug-04222,027,596,448,41192,163,474,928-0.130
Sep-04211,987,600,524,43694,647,644,0210.027
Oct-04212,407,510,766,755114,643,369,8450.192
Nov-04212,569,603,672,744122,362,079,6540.065
Dec-04222,665,401,027,431121,154,592,156-0.010
Jan-05202,568,660,178,458128,433,008,9230.058
Feb-05192,518,328,348,671132,543,597,2980.032
Mar-05223,011,225,908,037136,873,904,9110.032
Apr-0521139,958,043,5702,939,118,914,973
May-0521143,111,676,2013,005,345,200,226
Jun-0522146,336,368,6913,219,400,111,197
Jul-0520149,633,722,2092,992,674,444,186
Aug-0523153,005,374,0063,519,123,602,138
Sep-0521156,452,998,2223,285,512,962,655
Oct-0521159,978,306,7203,359,544,441,122
Nov-0521163,583,049,9383,435,244,048,695
Dec-0521167,269,017,7543,512,649,372,828
Jan-0620171,038,040,3773,420,760,807,544
Feb-0619174,891,989,2573,322,947,795,890
Mar-0623178,832,778,0124,113,153,894,277
Apr-0619182,862,363,3783,474,384,904,185
May-0622186,982,746,1834,113,620,416,029
Jun-0622191,195,972,3384,206,311,391,444
Jul-0620195,504,133,8553,910,082,677,106
Aug-0623199,909,369,8844,597,915,507,330
Sep-0620204,413,867,7754,088,277,355,503
 

 
24
Figure B.
Aggregate Dollar Amount of Sales Subject to Exchange Act Sections 31(b) and 31(c)
1
Methodology Developed in Consultation With OMB and CBO
(Dashed Line Indicates Forecast Values)
$
$500
$1,000$1,500$2,000$2,500$3,000$3,500$4,000$4,500$5,000
Mar-95
Mar-96
Mar-97
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Dollar Value,
$Billions
1
Forecasted line is not smooth because the 
number of trading days varies by month.
October 2005
 

SECURITIES AND EXCHANGE COMMISSION  

[Release Nos. 33-8572; 34-51631 / April 28, 2005] 
 
Order Making Fiscal Year 2006 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 
 
I. Background 

The Commission collects fees under various provisions of the securities laws.  

Section 6(b) of the Securities Act of 1933 (“Securities Act”) requires the Commission to 

collect fees from issuers on the registration of securities.1  Section 13(e) of the Securities 

Exchange Act of 1934 (“Exchange Act”) requires the Commission to collect fees on 

specified repurchases of securities.2  Section 14(g) of the Exchange Act requires the 

Commission to collect fees on proxy solicitations and statements in corporate control 

transactions.3  Finally, Sections 31(b) and (c) of the Exchange Act require national 

securities exchanges and national securities associations, respectively, to pay fees on 

transactions in specified securities to the Commission.4   

The Investor and Capital Markets Fee Relief Act (“Fee Relief Act”)5 amended 

Section 6(b) of the Securities Act and Sections 13(e), 14(g), and 31 of the Exchange Act 

to require the Commission to make annual adjustments to the fee rates applicable under 

                                                 
1  15 U.S.C. 77f(b). 
 
2  15 U.S.C. 78m(e). 
 
3  15 U.S.C. 78n(g). 
 
4  15 U.S.C. 78ee(b) and (c).  In addition, Section 31(d) of the Exchange Act requires the 

Commission to collect assessments from national securities exchanges and national securities 
associations for round turn transactions on security futures.  15 U.S.C. 78ee(d). 

 
5  Pub. L. No. 107-123, 115 Stat. 2390 (2002). 



  2

these sections 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.6 

II. Fiscal Year 2006 Annual Adjustment to the Fee Rates Applicable under 
Section 6(b) of the Securities Act and Sections 13(e) and 14(g) of the 
Exchange Act 

 
 Section 6(b)(5) of the Securities Act requires the Commission to make an annual 

adjustment to the fee rate applicable under Section 6(b) of the Securities Act in each of 

the fiscal years 2003 through 2011.7  In those same fiscal years, Sections 13(e)(5) and 

14(g)(5) of the Exchange Act require the Commission to adjust the fee rates under 

Sections 13(e) and 14(g) to a rate that is equal to the rate that is applicable under Section 

6(b).  In other words, the annual adjustment to the fee rate under Section 6(b) of the 

Securities Act also sets the annual adjustment to the fee rates under Sections 13(e) and 

14(g) of the Exchange Act. 

Section 6(b)(5) sets forth the method for determining the annual adjustment to the 

fee rate under Section 6(b) for fiscal year 2006.  Specifically, the Commission must 

adjust the fee rate under Section 6(b) to a “rate that, when applied to the baseline estimate 

of the aggregate maximum offering prices for [fiscal year 2006], is reasonably likely to 

produce aggregate fee collections under [Section 6(b)] that are equal to the target 

offsetting collection amount for [fiscal year 2006].”  That is, the adjusted rate is 

                                                 
6  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. 

 
7  The annual adjustments are designed to adjust the fee rate in a given fiscal year so that, when 

applied to the aggregate maximum offering price at which securities are proposed to be offered for 
the fiscal year, it is reasonably likely to produce total fee collections under Section 6(b) equal to 
the “target offsetting collection amount” specified in Section 6(b)(11)(A) for that fiscal year. 

 



  3

determined by dividing the “target offsetting collection amount” for fiscal year 2006 by 

the “baseline estimate of the aggregate maximum offering prices” for fiscal year 2006. 

 Section 6(b)(11)(A) specifies that the “target offsetting collection amount” for 

fiscal year 2006 is $689,000,000.8  Section 6(b)(11)(B) defines the “baseline estimate of 

the aggregate maximum offering price” for fiscal year 2006 as “the baseline estimate of 

the aggregate maximum offering price at which securities are proposed to be offered 

pursuant to registration statements filed with the Commission during [fiscal year 2006] 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 maximum offering price for fiscal 

year 2006, the Commission is using the same methodology it developed in consultation 

with the Congressional Budget Office (“CBO”) and Office of Management and Budget 

(“OMB”)  to project aggregate offering price for purposes of the fiscal year 2005 annual 

adjustment.  Using this methodology, the Commission determines the “baseline estimate 

of the aggregate maximum offering price” for fiscal year 2006 to be 

$6,437,675,847,178.9  Based on this estimate, the Commission calculates the annual 

adjustment for fiscal 2006 to be $107.00 per million.  This adjusted fee rate applies to 

                                                 
8  Congress determined the target offsetting collection amounts by applying reduced fee rates to the 

CBO’s January 2001 projections of the aggregate maximum offering prices for fiscal years 2002 
through 2011.  In any fiscal year through fiscal year 2011, the annual adjustment mechanism will 
result in additional fee rate reductions if the CBO’s January 2001 projection of the aggregate 
maximum offering prices for the fiscal year proves to be too low, and fee rate increases if the 
CBO’s January 2001 projection of the aggregate maximum offering prices for the fiscal year 
proves to be too high. 

 
9  Appendix A explains how we determined the “baseline estimate of the aggregate maximum 

offering price” for fiscal year 2006 using our methodology, and then shows the purely arithmetical 
process of calculating the fiscal year 2006 annual adjustment based on that estimate.  The 
appendix includes the data used by the Commission in making its “baseline estimate of the 
aggregate maximum offering price” for fiscal year 2006. 

 



  4

Section 6(b) of the Securities Act, as well as to Sections 13(e) and 14(g) of the Exchange 

Act.  

III. Fiscal Year 2006 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)(2), 

which currently is $41.80 per million of the aggregate dollar amount of sales of specified 

securities transacted on the exchange.10  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 2011.11   

Section 31(j)(1) specifies the method for determining the annual adjustment for 

fiscal year 2006.  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 2006], is reasonably likely to produce 

aggregate fee collections under [Section 31] (including assessments collected under 

                                                 
10  Order Making Fiscal 2005 Mid-Year Adjustment to the Fee Rates Applicable Under Sections 

31(b) and (c) of the Securities Exchange Act of 1934, Rel. No. 34-51277 (February 28, 2005), 70 
FR 10695 (March 4, 2005). 

 
11  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. 

 



  5

[Section 31(d)]) that are equal to the target offsetting collection amount for [fiscal year 

2006].”   

Section 31(l)(1) specifies that the “target offsetting collection amount” for fiscal 

year 2006 is $1,435,000,000.12  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 2006] 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 2006, 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.13  

Using this methodology, the Commission calculates the baseline estimate of the 

aggregate dollar amount of sales for fiscal year 2006 to be $45,554,892,611,953.  Based 

on this estimate, and an estimated collection of $110,180 in assessments on securities 

                                                 
12  Congress determined the target offsetting collection amounts by applying reduced fee rates to the 

CBO’s January 2001 projections of dollar volume for fiscal years 2002 through 2011.  In any 
fiscal year through fiscal year 2011, the annual and, in specified circumstances, mid-year 
adjustment mechanisms will result in additional fee rate reductions if the CBO’s January 2001 
projection of dollar volume for the fiscal year proves to be too low, and fee rate increases if the 
CBO’s January 2001 projection of dollar volume for the fiscal year proves to be too high. 

 
13  Appendix B explains how we determined the “baseline estimate of the aggregate dollar amount of 

sales” for fiscal year 2006 using our methodology, and then shows the purely arithmetical process 
of calculating the fiscal year 2006 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 2006.   

 



  6

futures transactions under Section 31(d) in fiscal year 2006, the uniform adjusted rate is 

$30.70 per million.14 

IV. Effective Dates of the Annual Adjustments 

 Section 6(b)(8)(A) of the Securities Act provides that the fiscal year 2006 annual 

adjustment to the fee rate applicable under Section 6(b) of the Securities Act shall take 

effect on the later of October 1, 2005, or five days after the date on which a regular 

appropriation to the Commission for fiscal year 2006 is enacted.15  Section 13(e)(8)(A) 

and 14(g)(8)(A) of the Exchange Act provide for the same effective date for the annual 

adjustments to the fee rates applicable under Sections 13(e) and 14(g) of the Exchange 

Act.16 

 Section 31(j)(4)(A) of the Exchange Act provides that the fiscal year 2006 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, 2005, or thirty days after the date on which a 

regular appropriation to the Commission for fiscal year 2006 is enacted.   

V. Conclusion 

Accordingly, pursuant to Section 6(b) of the Securities Act and Sections 13(e), 

14(g) and 31 of the Exchange Act,17  

IT IS HEREBY ORDERED that the fee rates applicable under Section 6(b) of the 

Securities Act and Sections 13(e) and 14(g) of the Exchange Act shall be $107.00 per 

                                                 
14  The calculation of the adjusted fee rate assumes that the current fee rate of $41.80 per million will 

apply through October 31st due to the operation of the effective date provision contained in 
Section 31(j)(4)(A) of the Exchange Act. 

 
15  15 U.S.C. 77f(b)(8)(A). 
 
16  15 U.S.C. 78m(e)(8)(A) and 78n(g)(8)(A). 
 
17  15 U.S.C. 77f(b), 78m(e), 78n(g), and 78ee(j). 



  7

million effective on the later of October 1, 2005, or five days after the date on which a 

regular appropriation to the Commission for fiscal year 2006 is enacted; and 

IT IS FURTHER ORDERED that the fee rates applicable under Sections 31(b) 

and (c) of the Exchange Act shall be $30.70 per million effective on the later of October 

1, 2005, or thirty days after the date on which a regular appropriation to the Commission 

for fiscal year 2006 is enacted. 

 

By the Commission.  

 

J. Lynn Taylor  
Assistant Secretary 



  8

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 issuers based on the value of their registrations.  This appendix provides the 

formula for determining such fees, which the Commission adjusts annually.  Congress 

has mandated that the Commission determine these fees based on the “aggregate 

maximum offering prices,” which measures the aggregate dollar amount of securities 

registered with the SEC over the course of the year.  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 aggregate maximum offering prices.  As a percentage, the fee rate 

equals the ratio of the target amounts of monies to the projected aggregate maximum 

offering prices. 

For 2006, the Commission has estimated the aggregate maximum offering prices 

by projecting forward the trend established in the previous decade.  More specifically, an 

ARIMA model was used to forecast the value of the aggregate maximum offering prices 

for months subsequent to March 2005, the last month for which the Commission has data 

on the aggregate maximum offering prices.     

The following sections describe this process in detail. 

A. Baseline estimate of the aggregate maximum offering prices for fiscal year 2006. 

First, calculate the aggregate maximum offering prices (AMOP) for each month 

in the sample (March 1995 - March 2005).  Next, calculate the percentage change in the 

AMOP from month-to-month.   

 



  9

Model the monthly percentage change in AMOP as a first order moving average 

process.  The moving average approach allows one to model the effect that an 

exceptionally high (or low) observation of AMOP tends to be followed by a more 

“typical” value of AMOP. 

Use the estimated moving average model to forecast the monthly percent change 

in AMOP.  These percent changes can then be applied to obtain forecasts of the total 

dollar value of registrations.  The following is a more formal (mathematical) description 

of the procedure: 

1. Begin with the monthly data for AMOP.  The sample spans ten years, from March 

1995 to March 2005.  There are 3 months in the sample for which the data are omitted 

because of the impact of extraordinary events (e.g., the 1995 government shutdown). 

2. Divide each month’s AMOP (column C) by the number of trading days in that month 

(column B) to obtain the average daily AMOP (AAMOP, column D). 

3. For each month t, the natural logarithm of AAMOP is reported in column E. 

4. Calculate the change in log(AAMOP) from the previous month as            

∆t = log (AAMOPt) – log(AAMOPt-1).  This approximates the percentage change. 

5. Estimate the first order moving average model ∆t = α + βet-1 + et, where et denotes the 

forecast error for month t.  The forecast error is simply the difference between the 

one-month ahead forecast and the actual realization of ∆t.  The forecast error is 

expressed as et = ∆t – α – βet-1.  The model can be estimated using standard 



  10

commercially available software such as SAS or Eviews.  Using least squares, the 

estimated parameter values are α=0.01275 and β=−0.74504. 

6. For the month of April 2005, forecast ∆t = 4/05 = α + βet = 3/05.  For all subsequent 

months, forecast ∆t = α. 

7. Calculate forecasts of log(AAMOP).  For example, the forecast of log(AAMOP) for 

June 2005 is given by FLAAMOP t = 6/05 = log(AAMOP t = 3/05) + ∆ t = 4/05 +∆ t = 5/05 +   

∆ t = 6/05. 

8. Under the assumption that et is normally distributed, the n-step ahead forecast of 

AAMOP is given by exp(FLAAMOPt + σn
2/2), where σn denotes the standard error 

of the n-step ahead forecast.  

9. For June 2005, this gives a forecast AAMOP of $22.0 Billion (Column I), and a 

forecast AMOP of $484.0 Billion (Column J). 

10. Iterate this process through September 2006 to obtain a baseline estimate of the 

aggregate maximum offering prices for fiscal year 2006 of $6,437,675,847,178. 

B. Using the forecasts from A to calculate the new fee rate. 

1. Using the data from Table A, estimate the aggregate maximum offering prices 

between 10/1/05 and 9/30/06 to be $6,437,675,847,178. 

2. The rate necessary to collect the target $689,000,000 in fee revenues set by Congress 

is then calculated as:  $689,000,000 ÷ $ 6,437,675,847,178 = 0.00010703 (or $107.00 

per million.). 



  11

Table A. Estimation of baseline of aggregate maximum offering prices .

Fee rate calculation.
a. Baseline estimate of the aggregate maximum offering prices, 10/1/05 to 9/30/06 ($Millions) 6,437,676
b. Implied fee rate ($689 Million / a) $107.00

Data
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)

Month # of Trading Days 
in Month

Aggregate 
Maximum Offering 
Prices, in $Millions

Average Daily 
Aggregate Max. 
Offering Prices 

(AAMOP) in 
$Millions

log(AAMOP) Change in 
AAMOP

Forecast 
log(AAMOP) Standard Error Forecast AAMOP, 

in $Millions

Forecast 
Aggregate 

Maximum Offering 
Prices, in $Millions

Mar-95 23 91,561 3,981 22.105
Apr-95 19 62,518 3,290 21.914 -0.190
May-95 22 106,333 4,833 22.299 0.385
Jun-95 22 117,557 5,344 22.399 0.100
Jul-95 20 65,127 3,256 21.904 -0.495
Aug-95 23 124,662 5,420 22.413 0.510
Sep-95 20 131,774 6,589 22.609 0.195
Oct-95 22 132,141 6,006 22.516 -0.093
Nov-95 21 110,646 5,269 22.385 -0.131
Dec-95 20
Jan-96 22
Feb-96 20
Mar-96 21 117,780 5,609 22.448
Apr-96 21 158,005 7,524 22.741 0.294
May-96 22 142,452 6,475 22.591 -0.150
Jun-96 20 122,598 6,130 22.536 -0.055
Jul-96 22 113,637 5,165 22.365 -0.171
Aug-96 22 128,154 5,825 22.485 0.120
Sep-96 20 108,763 5,438 22.417 -0.069
Oct-96 23 171,507 7,457 22.732 0.316
Nov-96 20 164,574 8,229 22.831 0.098
Dec-96 21 214,241 10,202 23.046 0.215
Jan-97 22 136,615 6,210 22.549 -0.496
Feb-97 19 317,624 16,717 23.540 0.990
Mar-97 20 140,809 7,040 22.675 -0.865
Apr-97 22 182,657 8,303 22.840 0.165
May-97 21 163,702 7,795 22.777 -0.063



  12

Data
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)

Month # of Trading Days 
in Month

Aggregate 
Maximum Offering 
Prices, in $Millions

Average Daily 
Aggregate Max. 
Offering Prices 

(AAMOP) in 
$Millions

log(AAMOP) Change in 
AAMOP

Forecast 
log(AAMOP) Standard Error Forecast AAMOP, 

in $Millions

Forecast 
Aggregate 

Maximum Offering 
Prices, in $Millions

Jun-97 21 162,111 7,720 22.767 -0.010
Jul-97 22 168,007 7,637 22.756 -0.011
Aug-97 21 153,705 7,319 22.714 -0.042
Sep-97 21 179,559 8,550 22.869 0.155
Oct-97 23 260,719 11,336 23.151 0.282
Nov-97 19 219,618 11,559 23.171 0.020
Dec-97 22 228,605 10,391 23.064 -0.106
Jan-98 20 228,030 11,402 23.157 0.093
Feb-98 19 250,266 13,172 23.301 0.144
Mar-98 22 378,185 17,190 23.568 0.266
Apr-98 21 242,310 11,539 23.169 -0.399
May-98 20 298,454 14,923 23.426 0.257
Jun-98 22 328,994 14,954 23.428 0.002
Jul-98 22 272,957 12,407 23.242 -0.187
Aug-98 21 392,104 18,672 23.650 0.409
Sep-98 21 325,144 15,483 23.463 -0.187
Oct-98 22 139,786 6,354 22.572 -0.891
Nov-98 20 269,065 13,453 23.322 0.750
Dec-98 22 248,596 11,300 23.148 -0.174
Jan-99 19 253,448 13,339 23.314 0.166
Feb-99 19 217,433 11,444 23.161 -0.153
Mar-99 23 415,145 18,050 23.616 0.456
Apr-99 21 431,280 20,537 23.746 0.129
May-99 20 229,082 11,454 23.162 -0.584
Jun-99 22 367,943 16,725 23.540 0.379
Jul-99 21 332,623 15,839 23.486 -0.054
Aug-99 22 240,157 10,916 23.114 -0.372
Sep-99 21 236,011 11,239 23.143 0.029
Oct-99 21 216,883 10,328 23.058 -0.085
Nov-99 21 372,582 17,742 23.599 0.541
Dec-99 22 319,846 14,538 23.400 -0.199



  13

Data
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)

Month # of Trading Days 
in Month

Aggregate 
Maximum Offering 
Prices, in $Millions

Average Daily 
Aggregate Max. 
Offering Prices 

(AAMOP) in 
$Millions

log(AAMOP) Change in 
AAMOP

Forecast 
log(AAMOP) Standard Error Forecast AAMOP, 

in $Millions

Forecast 
Aggregate 

Maximum Offering 
Prices, in $Millions

Jan-00 20 282,165 14,108 23.370 -0.030
Feb-00 20 665,367 33,268 24.228 0.858
Mar-00 23 550,107 23,918 23.898 -0.330
Apr-00 19 244,510 12,869 23.278 -0.620
May-00 22 269,774 12,262 23.230 -0.048
Jun-00 22 406,409 18,473 23.640 0.410
Jul-00 20 230,894 11,545 23.169 -0.470
Aug-00 23 257,797 11,209 23.140 -0.030
Sep-00 20 332,120 16,606 23.533 0.393
Oct-00 22 362,493 16,477 23.525 -0.008
Nov-00 21 317,653 15,126 23.440 -0.086
Dec-00 20 246,006 12,300 23.233 -0.207
Jan-01 21 462,726 22,035 23.816 0.583
Feb-01 19 388,304 20,437 23.741 -0.075
Mar-01 22 523,443 23,793 23.893 0.152
Apr-01 20 289,212 14,461 23.395 -0.498
May-01 22 274,298 12,468 23.246 -0.148
Jun-01 21 348,268 16,584 23.532 0.285
Jul-01 21 264,590 12,600 23.257 -0.275
Aug-01 23 245,591 10,678 23.091 -0.165
Sep-01 15 178,524 11,902 23.200 0.108
Oct-01 23 260,719 11,336 23.151 -0.049
Nov-01 21 286,199 13,629 23.335 0.184
Dec-01 20 395,230 19,762 23.707 0.372
Jan-02 21 401,290 19,109 23.673 -0.034
Feb-02 19 476,837 25,097 23.946 0.273
Mar-02 20 380,160 19,008 23.668 -0.278
Apr-02 22 282,947 12,861 23.277 -0.391
May-02 22 215,645 9,802 23.006 -0.272
Jun-02 20 277,757 13,888 23.354 0.348
Jul-02 22 208,638 9,484 22.973 -0.381



  14

Data
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)

Month # of Trading Days 
in Month

Aggregate 
Maximum Offering 
Prices, in $Millions

Average Daily 
Aggregate Max. 
Offering Prices 

(AAMOP) in 
$Millions

log(AAMOP) Change in 
AAMOP

Forecast 
log(AAMOP) Standard Error Forecast AAMOP, 

in $Millions

Forecast 
Aggregate 

Maximum Offering 
Prices, in $Millions

Aug-02 22 265,750 12,080 23.215 0.242
Sep-02 20 109,565 5,478 22.424 -0.791
Oct-02 23 179,374 7,799 22.777 0.353
Nov-02 20 243,590 12,179 23.223 0.446
Dec-02 21 212,838 10,135 23.039 -0.184
Jan-03 21 201,839 9,611 22.986 -0.053
Feb-03 19 144,642 7,613 22.753 -0.233
Mar-03 21 444,331 21,159 23.775 1.022
Apr-03 21 142,373 6,780 22.637 -1.138
May-03 21 328,792 15,657 23.474 0.837
Jun-03 21 281,580 13,409 23.319 -0.155
Jul-03 22 304,383 13,836 23.351 0.031
Aug-03 21 328,351 15,636 23.473 0.122
Sep-03 21 459,563 21,884 23.809 0.336
Oct-03 23 285,039 12,393 23.240 -0.569
Nov-03 19 257,779 13,567 23.331 0.091
Dec-03 22 244,998 11,136 23.133 -0.197
Jan-04 20 369,784 18,489 23.640 0.507
Feb-04 19 221,517 11,659 23.179 -0.461
Mar-04 23 448,543 19,502 23.694 0.514
Apr-04 21 260,029 12,382 23.240 -0.454
May-04 20 227,239 11,362 23.154 -0.086
Jun-04 21 370,668 17,651 23.594 0.441
Jul-04 21 305,519 14,549 23.401 -0.193
Aug-04 22 179,688 8,168 22.823 -0.577
Sep-04 21 357,007 17,000 23.556 0.733
Oct-04 21 254,489 12,119 23.218 -0.338
Nov-04 21 363,406 17,305 23.574 0.356
Dec-04 22 570,918 25,951 23.979 0.405
Jan-05 20 375,484 18,774 23.656 -0.324
Feb-05 19 338,922 17,838 23.605 -0.051
Mar-05 22 590,862 26,857 24.014 0.409



  15

Data
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)

Month # of Trading Days 
in Month

Aggregate 
Maximum Offering 
Prices, in $Millions

Average Daily 
Aggregate Max. 
Offering Prices 

(AAMOP) in 
$Millions

log(AAMOP) Change in 
AAMOP

Forecast 
log(AAMOP) Standard Error Forecast AAMOP, 

in $Millions

Forecast 
Aggregate 

Maximum Offering 
Prices, in $Millions

Apr-05 21 23.733 0.314 21,309 447,484
May-05 21 23.746 0.324 21,651 454,676
Jun-05 22 23.759 0.333 21,999 483,982
Jul-05 20 23.771 0.343 22,353 447,055
Aug-05 23 23.784 0.352 22,712 522,377
Sep-05 21 23.797 0.361 23,077 484,618
Oct-05 21 23.810 0.370 23,448 492,407
Nov-05 21 23.822 0.378 23,825 500,321
Dec-05 21 23.835 0.387 24,208 508,362
Jan-06 20 23.848 0.395 24,597 491,936
Feb-06 19 23.861 0.403 24,992 474,850
Mar-06 23 23.873 0.411 25,394 584,057
Apr-06 19 23.886 0.418 25,802 490,236
May-06 22 23.899 0.426 26,217 576,765
Jun-06 22 23.912 0.433 26,638 586,035
Jul-06 20 23.924 0.441 27,066 541,321
Aug-06 23 23.937 0.448 27,501 632,525
Sep-06 20 23.950 0.455 27,943 558,862  



  16

Figure A 
Aggregate Maximum Offering Prices Subject to Securities Act Section 6(b)

(Dashed Line Indicates Forecast Values)

$0

$100

$200

$300

$400

$500

$600

$700

Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06

Dollar Value,
$Billions

O
ct

ob
er

 2
00

5



 17

APPENDIX B 

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.18 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 2006, 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 2005, 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 2006. 

First, calculate the average daily dollar amount of sales (ADS) for each month in the 

sample (March 1995 - March 2005).  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 0.015 and the standard 

deviation 0.117.  Assuming the monthly percentage change in ADS follows a random walk, 

                                                 
18  Congress requires that the Commission make a mid-year adjustment to the fee rate if 4 months into the 

fiscal year it determines that its forecasts of aggregate dollar volume are reasonably likely to be off by 10% 
or more. 



 18

calculating the expected monthly percentage growth rate for the full sample is straightforward.  

The expected monthly percentage growth rate of ADS is 2.3 percent.   

Now, use the expected monthly percentage growth rate to forecast total dollar volume.  

For example, one can use the ADS for March 2005 ($136,873,904,911) to forecast ADS for 

April 2005 ($139,958,043,570 = $136,873,904,911  x 1.023) 19.  Multiply by the number of 

trading days in April 2005 (21) to obtain a forecast of the total dollar volume for the month 

($2,939,118,914,973).  Repeat the method to generate forecasts for subsequent months. 

The forecasts for total dollar volume are in column G of Table B.  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           

∆t = log (ADSt / ADSt-1), where log (x) denotes the natural logarithm of x. 

3. Calculate the mean and standard deviation of the series {∆1, ∆2, … , ∆120}.  These are given 

by µ = 0.015 and σ = 0.117, respectively. 

4. Assume that the natural logarithm of ADS follows a random walk, so that ∆s and ∆t are 

statistically independent for any two months s and t.  

5. Under the assumption that ∆t is normally distributed, the expected value of ADSt /ADSt-1 is 

given by exp (µ + σ2/2), or on average ADSt = 1.023 × ADSt-1. 

                                                 
19  The value 1.023 has been rounded.  All computations are done with the unrounded value. 



 19

6. For April 2005, this gives a forecast ADS of 1.023 × $136,873,904,911 = $139,958,043,570. 

Multiply this figure by the 21 trading days in April 2005 to obtain a total dollar volume 

forecast of $2,939,118,914,973. 

7. For May 2005, multiply the April 2005 ADS forecast by 1.023 to obtain a forecast ADS of 

$143,111,676,201.  Multiply this figure by the 21 trading days in May 2005 to obtain a total 

dollar volume forecast of $3,005,345,200,226. 

8. Repeat this procedure for subsequent months. 

B. Using the forecasts from A to calculate the new fee rate. 

1. Use Table B to estimate fees collected for the period 10/1/05 through 10/31/05.  The 

projected aggregate dollar amount of sales for this period is $3,359,544,441,122.  Projected 

fee collections at the current fee rate of 0.0000418 are $140,428,958. 

2. Estimate the amount of assessments on securities futures products collected during 10/1/05 

and 9/30/06 to be $110,180 by projecting a 2.3% monthly increase from a base of $6,889 in 

March 2005. 

3. Subtract the amounts $140,428,958 and $110,180 from the target offsetting collection 

amount set by Congress of $1,435,000,000 leaving $1,294,460,862 to be collected on dollar 

volume for the period 11/1/05 through 9/30/06. 

4. Use Table B to estimate dollar volume for the period 11/1/05 through 9/30/06.  The estimate 

is $42,195,348,170,831.  Finally, compute the fee rate required to produce the additional 

$1,294,460,862 in revenue.  This rate is $1,294,460,862 divided by $42,195,348,170,831 or 

0.0000306778. 



 20

 

5. Consistent with the system requirements of the exchanges and the NASD, round the result to 

the seventh decimal point, yielding a rate of .0000307 (or $30.70 per million).21

Table B. Estimation of baseline of the aggregate dollar amount of sales.

Fee rate calculation.
a. Baseline estimate of the aggregate dollar amount of sales, 10/1/05 to 10/31/05 ($Millions) 3,359,544
b. Baseline estimate of the aggregate dollar amount of sales, 11/1/05 to 9/30/06 ($Millions) 42,195,348
c. Estimated collections in assessments on securities futures products in FY 2006 ($Millions) 0.110
d. Implied fee rate (($1,435,000,000 - 0.0000418*a - c) /b) $30.7

Data
(A) (B) (C) (D) (E) (F) (G)

Month # of Trading Days in 
Month

Aggregate Dollar 
Amount of Sales

Average Daily Dollar 
Amount of Sales 

(ADS)
Change in LN of ADS Forecast ADS

Forecast Aggregate 
Dollar Amount of 

Sales
Mar-95 23 491,872,609,718 21,385,765,640 -
Apr-95 19 435,327,633,818 22,911,980,727 0.069

May-95 22 531,855,060,379 24,175,230,017 0.054
Jun-95 22 574,332,213,609 26,106,009,710 0.077
Jul-95 20 576,049,335,831 28,802,466,792 0.098

Aug-95 23 570,638,726,060 24,810,379,394 -0.149
Sep-95 20 578,133,939,676 28,906,696,984 0.153
Oct-95 22 642,190,178,035 29,190,462,638 0.010
Nov-95 21 596,424,550,565 28,401,169,075 -0.027
Dec-95 20 624,610,441,037 31,230,522,052 0.095
Jan-96 22 687,599,091,854 31,254,504,175 0.001
Feb-96 20 687,232,471,273 34,361,623,564 0.095
Mar-96 21 714,836,120,093 34,039,815,243 -0.009
Apr-96 21 704,410,318,022 33,543,348,477 -0.015

May-96 22 768,379,507,489 34,926,341,250 0.040
Jun-96 20 631,098,780,223 31,554,939,011 -0.102
Jul-96 22 688,428,728,384 31,292,214,927 -0.008

Aug-96 22 570,109,772,036 25,914,080,547 -0.189
Sep-96 20 617,243,881,688 30,862,194,084 0.175
Oct-96 23 764,269,441,454 33,229,106,150 0.074
Nov-96 20 748,494,700,419 37,424,735,021 0.119
Dec-96 21 764,479,496,753 36,403,785,560 -0.028
Jan-97 22 957,432,637,586 43,519,665,345 0.179
Feb-97 19 837,174,183,446 44,061,799,129 0.012
Mar-97 20 839,192,728,788 41,959,636,439 -0.049
Apr-97 22 862,799,213,315 39,218,146,060 -0.068

May-97 21 925,733,852,647 44,082,564,412 0.117
Jun-97 21 930,409,085,859 44,305,194,565 0.005
Jul-97 22 1,085,682,706,898 49,349,213,950 0.108

Aug-97 21 1,031,344,138,751 49,111,625,655 -0.005
Sep-97 21 1,036,460,244,602 49,355,249,743 0.005
Oct-97 23 1,329,653,432,718 57,811,018,814 0.158
Nov-97 19 926,017,878,587 48,737,783,084 -0.171
Dec-97 22 1,046,220,806,199 47,555,491,191 -0.025
Jan-98 20 1,037,925,292,902 51,896,264,645 0.087
Feb-98 19 1,081,705,333,396 56,931,859,652 0.093
Mar-98 22 1,259,994,685,467 57,272,485,703 0.006
Apr-98 21 1,298,494,359,253 61,833,064,726 0.077

May-98 20 1,110,221,658,995 55,511,082,950 -0.108
Jun-98 22 1,243,779,791,913 56,535,445,087 0.018
Jul-98 22 1,399,011,433,748 63,591,428,807 0.118

Aug-98 21 1,307,501,463,442 62,261,974,450 -0.021
Sep-98 21 1,352,428,235,083 64,401,344,528 0.034
Oct-98 22 1,460,835,397,598 66,401,608,982 0.031
Nov-98 20 1,298,403,768,065 64,920,188,403 -0.023
Dec-98 22 1,442,697,787,306 65,577,172,150 0.010
Jan-99 19 1,884,555,055,910 99,187,108,206 0.414
Feb-99 19 1,656,058,202,765 87,160,958,040 -0.129
Mar-99 23 1,908,967,664,074 82,998,594,090 -0.049
Apr-99 21 2,177,601,770,622 103,695,322,411 0.223

May-99 20 1,784,400,906,987 89,220,045,349 -0.150  

 



 22

Data
(A) (B) (C) (D) (E) (F) (G)

Month # of Trading Days in 
Month

Aggregate Dollar 
Amount of Sales

Average Daily Dollar 
Amount of Sales 

(ADS)
Change in LN of ADS Forecast ADS

Forecast Aggregate 
Dollar Amount of 

Sales
Jun-99 22 1,697,339,227,503 77,151,783,068 -0.145
Jul-99 21 1,767,035,098,986 84,144,528,523 0.087

Aug-99 22 1,692,907,150,726 76,950,325,033 -0.089
Sep-99 21 1,730,505,881,178 82,405,041,961 0.068
Oct-99 21 2,017,474,765,542 96,070,226,931 0.153
Nov-99 21 2,348,374,009,334 111,827,333,778 0.152
Dec-99 22 2,686,788,531,991 122,126,751,454 0.088
Jan-00 20 3,057,831,397,113 152,891,569,856 0.225
Feb-00 20 2,973,119,888,063 148,655,994,403 -0.028
Mar-00 23 4,135,152,366,234 179,789,233,315 0.190
Apr-00 19 3,174,694,525,687 167,089,185,562 -0.073

May-00 22 2,649,273,207,318 120,421,509,424 -0.328
Jun-00 22 2,883,513,997,781 131,068,818,081 0.085
Jul-00 20 2,804,753,395,361 140,237,669,768 0.068

Aug-00 23 2,720,788,395,832 118,295,147,645 -0.170
Sep-00 20 2,930,188,809,012 146,509,440,451 0.214
Oct-00 22 3,485,926,307,727 158,451,195,806 0.078
Nov-00 21 2,795,778,876,887 133,132,327,471 -0.174
Dec-00 20 2,809,917,349,851 140,495,867,493 0.054
Jan-01 21 3,143,501,125,244 149,690,529,774 0.063
Feb-01 19 2,372,420,523,286 124,864,238,068 -0.181
Mar-01 22 2,554,419,085,113 116,109,958,414 -0.073
Apr-01 20 2,324,349,507,745 116,217,475,387 0.001

May-01 22 2,353,179,388,303 106,962,699,468 -0.083
Jun-01 21 2,111,922,113,236 100,567,719,678 -0.062
Jul-01 21 2,004,384,034,554 95,446,858,788 -0.052

Aug-01 23 1,803,565,337,795 78,415,884,252 -0.197
Sep-01 15 1,573,484,946,383 104,898,996,426 0.291
Oct-01 23 2,147,238,873,044 93,358,211,871 -0.117
Nov-01 21 1,939,427,217,518 92,353,677,025 -0.011
Dec-01 20 1,921,098,738,113 96,054,936,906 0.039
Jan-02 21 2,149,243,312,432 102,344,919,640 0.063
Feb-02 19 1,928,830,595,585 101,517,399,768 -0.008
Mar-02 20 2,002,216,374,514 100,110,818,726 -0.014
Apr-02 22 2,062,101,866,506 93,731,903,023 -0.066

May-02 22 1,985,859,756,557 90,266,352,571 -0.038
Jun-02 20 1,882,185,380,609 94,109,269,030 0.042
Jul-02 22 2,349,564,490,189 106,798,385,918 0.126

Aug-02 22 1,793,429,904,079 81,519,541,095 -0.270
Sep-02 20 1,518,944,367,204 75,947,218,360 -0.071
Oct-02 23 2,127,874,947,972 92,516,302,086 0.197
Nov-02 20 1,780,816,458,122 89,040,822,906 -0.038
Dec-02 21 1,561,092,215,646 74,337,724,555 -0.180
Jan-03 21 1,723,698,830,414 82,080,896,686 0.099
Feb-03 19 1,411,722,405,357 74,301,179,229 -0.100
Mar-03 21 1,699,581,267,718 80,932,441,320 0.085
Apr-03 21 1,759,751,025,279 83,797,667,870 0.035

May-03 21 1,871,390,985,678 89,113,856,461 0.062
Jun-03 21 2,122,225,077,345 101,058,337,016 0.126
Jul-03 22 2,100,812,973,956 95,491,498,816 -0.057

Aug-03 21 1,766,527,686,224 84,120,366,011 -0.127
Sep-03 21 2,063,584,421,939 98,265,924,854 0.155
Oct-03 23 2,331,850,083,022 101,384,786,218 0.031
Nov-03 19 1,903,726,129,859 100,196,112,098 -0.012
Dec-03 22 2,066,530,151,383 93,933,188,699 -0.065
Jan-04 20 2,390,942,905,678 119,547,145,284 0.241
Feb-04 19 2,177,765,594,701 114,619,241,826 -0.042



 23

Data
(A) (B) (C) (D) (E) (F) (G)

Month # of Trading Days in 
Month

Aggregate Dollar 
Amount of Sales

Average Daily Dollar 
Amount of Sales 

(ADS)
Change in LN of ADS Forecast ADS

Forecast Aggregate 
Dollar Amount of 

Sales
Mar-04 23 2,609,443,903,115 113,454,082,744 -0.010
Apr-04 21 2,411,279,535,948 114,822,835,045 0.012

May-04 20 2,253,135,847,669 112,656,792,383 -0.019
Jun-04 21 2,106,449,803,404 100,307,133,495 -0.116
Jul-04 21 2,203,895,014,681 104,947,381,651 0.045

Aug-04 22 2,027,596,448,411 92,163,474,928 -0.130
Sep-04 21 1,987,600,524,436 94,647,644,021 0.027
Oct-04 21 2,407,510,766,755 114,643,369,845 0.192
Nov-04 21 2,569,603,672,744 122,362,079,654 0.065
Dec-04 22 2,665,401,027,431 121,154,592,156 -0.010
Jan-05 20 2,568,660,178,458 128,433,008,923 0.058
Feb-05 19 2,518,328,348,671 132,543,597,298 0.032
Mar-05 22 3,011,225,908,037 136,873,904,911 0.032
Apr-05 21 139,958,043,570 2,939,118,914,973

May-05 21 143,111,676,201 3,005,345,200,226
Jun-05 22 146,336,368,691 3,219,400,111,197
Jul-05 20 149,633,722,209 2,992,674,444,186

Aug-05 23 153,005,374,006 3,519,123,602,138
Sep-05 21 156,452,998,222 3,285,512,962,655
Oct-05 21 159,978,306,720 3,359,544,441,122
Nov-05 21 163,583,049,938 3,435,244,048,695
Dec-05 21 167,269,017,754 3,512,649,372,828
Jan-06 20 171,038,040,377 3,420,760,807,544
Feb-06 19 174,891,989,257 3,322,947,795,890
Mar-06 23 178,832,778,012 4,113,153,894,277
Apr-06 19 182,862,363,378 3,474,384,904,185

May-06 22 186,982,746,183 4,113,620,416,029
Jun-06 22 191,195,972,338 4,206,311,391,444
Jul-06 20 195,504,133,855 3,910,082,677,106

Aug-06 23 199,909,369,884 4,597,915,507,330
Sep-06 20 204,413,867,775 4,088,277,355,503  



 24

Figure B.
Aggregate Dollar Amount of Sales Subject to Exchange Act Sections 31(b) and 31(c)1

Methodology Developed in Consultation With OMB and CBO
(Dashed Line Indicates Forecast Values)

$

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06

Dollar Value,
$Billions

1Forecasted line is not smooth because the number of trading days varies by month.

O
ct

ob
er

 2
00

5