[Federal Register Volume 84, Number 168 (Thursday, August 29, 2019)]
[Notices]
[Pages 45601-45606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18618]
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SECURITIES AND EXCHANGE COMMISSION
[Release Nos. 33-10675; 34-86750/August 23, 2019]
Order Making Fiscal Year 2020 Annual Adjustments to Registration
Fee Rates
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 specified proxy solicitations and statements in corporate
control transactions.\3\ These provisions require the Commission to
make annual adjustments to the applicable fee rates.
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\1\ 15 U.S.C. 77f(b).
\2\ 15 U.S.C. 78m(e).
\3\ 15 U.S.C. 78n(g).
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II. Fiscal Year 2020 Annual Adjustment to Fee Rates
Section 6(b)(2) of the Securities Act requires the Commission to
make an annual adjustment to the fee rate applicable under Section
6(b).\4\ 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.\5\
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\4\ 15 U.S.C. 77f(b)(2). 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 fee collection amount'' specified in Section 6(b)(6)(A) for
that fiscal year.
\5\ 15 U.S.C. 78m(e)(4) and 15 U.S.C. 78n(g)(4).
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Section 6(b)(2) sets forth the method for determining the annual
adjustment to the fee rate under Section 6(b) for fiscal year 2020.
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 2020], is reasonably
likely to produce aggregate fee collections under [Section 6(b)] that
are equal to the target fee collection amount for [fiscal year 2020].''
That is, the adjusted rate is determined by dividing the ``target fee
collection amount'' for fiscal year 2020 by the ``baseline estimate of
the aggregate maximum offering prices'' for fiscal year 2020.
Section 6(b)(6)(A) specifies that the ``target fee collection
amount'' for fiscal year 2020 is $705,000,000. Section 6(b)(6)(B)
defines the ``baseline estimate of the aggregate maximum offering
prices'' for fiscal year 2020 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 2020] 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 2020, the Commission is using a methodology that
has been used in prior fiscal years and that was developed in
consultation with the Congressional Budget Office and Office of
Management and Budget.\6\ Using this methodology, the Commission
determines the ``baseline estimate of the aggregate maximum offering
price'' for fiscal year 2020 to be $5,429,883,452,897. Based on this
estimate, the Commission calculates the fee rate for fiscal 2020 to be
$129.80 per million. This adjusted fee rate applies to Section 6(b) of
the Securities Act, as well as to Sections 13(e) and 14(g) of the
Exchange Act.
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\6\ Appendix A explains how we determined the ``baseline
estimate of the aggregate maximum offering price'' for fiscal year
2020 using our methodology, and then shows the arithmetical process
of calculating the fiscal year 2020 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 2020.
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III. Effective Dates of the Annual Adjustments
The fiscal year 2020 annual adjustments to the fee rates applicable
under Section 6(b) of the Securities Act and Sections 13(e) and 14(g)
of the Exchange Act will be effective on October 1, 2019.\7\
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\7\ 15 U.S.C. 77f(b)(4), 15 U.S.C. 78m(e)(6) and 15 U.S.C.
78n(g)(6).
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IV. Conclusion
Accordingly, pursuant to Section 6(b) of the Securities Act and
Sections 13(e) and 14(g) of the Exchange Act,\8\
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\8\ 15 U.S.C. 77f(b), 78m(e) and 78n(g).
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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 $129.80 per million effective on October 1, 2019.
[[Page 45602]]
By the Commission.
Jill M. Peterson,
Assistant Secretary.
Appendix A
Congress has 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 Commission 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 2020, 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 July 2019, 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 2020
First, calculate the aggregate maximum offering prices (AMOP)
for each month in the sample (July 2009-July 2019). Next, calculate
the percentage change in the AMOP from month to month.
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 July 2009 to July 2019.
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
[Delta]t = log(AAMOPt)-
log(AAMOPt-1). This approximates the percentage change.
5. Estimate the first order moving average model
[Delta]t = [alpha] + [beta]et-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
[Delta]t. The forecast error is expressed as
et = [Delta]t-[alpha]-[beta]et-1.
The model can be estimated using standard commercially available
software. Using least squares, the estimated parameter values are
[alpha] = 0.00585851 and [beta] = 0.88811274.
6. For the month of August 2019 forecast
[Delta]t = 8/2019 = [alpha] +
[beta]et = 7/2019. For all subsequent months, forecast
[Delta]t = [alpha].
7. Calculate forecasts of log(AAMOP). For example, the forecast
of log(AAMOP) for October 2019 is given by
FLAAMOPt = 10/2019 = log(AAMOPt = 7/2019) +
[Delta]t = 8/2019 + [Delta]t = 9/2019 +
[Delta]t = 10/2019.
8. Under the assumption that et is normally
distributed, the n-step ahead forecast of AAMOP is given by
exp(FLAAMOPt + [sigma]n\2\/2), where
[sigma]n denotes the standard error of the n-step ahead
forecast.
9. For October 2019, this gives a forecast AAMOP of $20.703
billion (Column I), and a forecast AMOP of $476.161 billion (Column
J).
10. Iterate this process through September 2020 to obtain a
baseline estimate of the aggregate maximum offering prices for
fiscal year 2020 of $5,429,883,452,897.
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 10/01/19 and 9/30/20 to be
$5,429,883,452,897.
2. The rate necessary to collect the target $705,000,000 in fee
revenues set by Congress is then calculated as: $705,000,000 /
$5,429,883,452,897 = 0.000129837.
3. Round the result to the seventh decimal point, yielding a
rate of 0.0001298 (or $129.80 per million).
Table A--Estimation of Baseline of Aggregate Maximum Offering Prices
[Fee rate calculation]
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a. Baseline estimate of the aggregate maximum offering 5,429,883
prices, 10/01/19 to 09/30/20 ($Millions)...............
b. Implied fee rate ($705 Million/a).................... $129.80
------------------------------------------------------------------------
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Average
daily Forecast
Number of Aggregate aggregate aggregate
trading maximum max. Log (change Forecast Standard Forecast maximum
Month days in offering offering log(AAMOP) in AAMOP) log(AAMOP) error AAMOP, in offering
month prices, in prices $millions prices, in
$millions (AAMOP) in $millions
$millions
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)
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Jul-09............................. 22 185,187 8,418 22.854 ........... ........... ........... ........... ...........
Aug-09............................. 21 192,726 9,177 22.940 0.086 ........... ........... ........... ...........
Sep-09............................. 21 189,224 9,011 22.922 -0.018 ........... ........... ........... ...........
Oct-09............................. 22 215,720 9,805 23.006 0.085 ........... ........... ........... ...........
Nov-09............................. 20 248,353 12,418 23.242 0.236 ........... ........... ........... ...........
Dec-09............................. 22 340,464 15,476 23.463 0.220 ........... ........... ........... ...........
Jan-10............................. 19 173,235 9,118 22.933 -0.529 ........... ........... ........... ...........
Feb-10............................. 19 209,963 11,051 23.126 0.192 ........... ........... ........... ...........
Mar-10............................. 23 432,934 18,823 23.658 0.533 ........... ........... ........... ...........
Apr-10............................. 21 280,188 13,342 23.314 -0.344 ........... ........... ........... ...........
May-10............................. 20 278,611 13,931 23.357 0.043 ........... ........... ........... ...........
Jun-10............................. 22 364,251 16,557 23.530 0.173 ........... ........... ........... ...........
Jul-10............................. 21 171,191 8,152 22.822 -0.709 ........... ........... ........... ...........
Aug-10............................. 22 240,793 10,945 23.116 0.295 ........... ........... ........... ...........
Sep-10............................. 21 260,783 12,418 23.242 0.126 ........... ........... ........... ...........
Oct-10............................. 21 214,988 10,238 23.049 -0.193 ........... ........... ........... ...........
Nov-10............................. 21 340,112 16,196 23.508 0.459 ........... ........... ........... ...........
Dec-10............................. 22 297,992 13,545 23.329 -0.179 ........... ........... ........... ...........
Jan-11............................. 20 233,668 11,683 23.181 -0.148 ........... ........... ........... ...........
Feb-11............................. 19 252,785 13,304 23.311 0.130 ........... ........... ........... ...........
Mar-11............................. 23 595,198 25,878 23.977 0.665 ........... ........... ........... ...........
[[Page 45603]]
Apr-11............................. 20 236,355 11,818 23.193 -0.784 ........... ........... ........... ...........
May-11............................. 21 319,053 15,193 23.444 0.251 ........... ........... ........... ...........
Jun-11............................. 22 359,727 16,351 23.518 0.073 ........... ........... ........... ...........
Jul-11............................. 20 215,391 10,770 23.100 -0.418 ........... ........... ........... ...........
Aug-11............................. 23 179,870 7,820 22.780 -0.320 ........... ........... ........... ...........
Sep-11............................. 21 168,005 8,000 22.803 0.023 ........... ........... ........... ...........
Oct-11............................. 21 181,452 8,641 22.880 0.077 ........... ........... ........... ...........
Nov-11............................. 21 256,418 12,210 23.226 0.346 ........... ........... ........... ...........
Dec-11............................. 21 237,652 11,317 23.150 -0.076 ........... ........... ........... ...........
Jan-12............................. 20 276,965 13,848 23.351 0.202 ........... ........... ........... ...........
Feb-12............................. 20 228,419 11,421 23.159 -0.193 ........... ........... ........... ...........
Mar-12............................. 22 430,806 19,582 23.698 0.539 ........... ........... ........... ...........
Apr-12............................. 20 173,626 8,681 22.884 -0.813 ........... ........... ........... ...........
May-12............................. 22 414,122 18,824 23.658 0.774 ........... ........... ........... ...........
Jun-12............................. 21 272,218 12,963 23.285 -0.373 ........... ........... ........... ...........
Jul-12............................. 21 170,462 8,117 22.817 -0.468 ........... ........... ........... ...........
Aug-12............................. 23 295,472 12,847 23.276 0.459 ........... ........... ........... ...........
Sep-12............................. 19 331,295 17,437 23.582 0.305 ........... ........... ........... ...........
Oct-12............................. 21 137,562 6,551 22.603 -0.979 ........... ........... ........... ...........
Nov-12............................. 21 221,521 10,549 23.079 0.476 ........... ........... ........... ...........
Dec-12............................. 20 321,602 16,080 23.501 0.422 ........... ........... ........... ...........
Jan-13............................. 21 368,488 17,547 23.588 0.087 ........... ........... ........... ...........
Feb-13............................. 19 252,148 13,271 23.309 -0.279 ........... ........... ........... ...........
Mar-13............................. 20 533,440 26,672 24.007 0.698 ........... ........... ........... ...........
Apr-13............................. 22 235,779 10,717 23.095 -0.912 ........... ........... ........... ...........
May-13............................. 22 382,950 17,407 23.580 0.485 ........... ........... ........... ...........
Jun-13............................. 20 480,624 24,031 23.903 0.322 ........... ........... ........... ...........
Jul-13............................. 22 263,869 11,994 23.208 -0.695 ........... ........... ........... ...........
Aug-13............................. 22 253,305 11,514 23.167 -0.041 ........... ........... ........... ...........
Sep-13............................. 20 267,923 13,396 23.318 0.151 ........... ........... ........... ...........
Oct-13............................. 23 293,847 12,776 23.271 -0.047 ........... ........... ........... ...........
Nov-13............................. 20 326,257 16,313 23.515 0.244 ........... ........... ........... ...........
Dec-13............................. 21 358,169 17,056 23.560 0.045 ........... ........... ........... ...........
Jan-14............................. 21 369,067 17,575 23.590 0.030 ........... ........... ........... ...........
Feb-14............................. 19 298,376 15,704 23.477 -0.113 ........... ........... ........... ...........
Mar-14............................. 21 564,840 26,897 24.015 0.538 ........... ........... ........... ...........
Apr-14............................. 21 263,401 12,543 23.252 -0.763 ........... ........... ........... ...........
May-14............................. 21 403,700 19,224 23.679 0.427 ........... ........... ........... ...........
Jun-14............................. 21 423,075 20,146 23.726 0.047 ........... ........... ........... ...........
Jul-14............................. 22 373,811 16,991 23.556 -0.170 ........... ........... ........... ...........
Aug-14............................. 21 405,017 19,287 23.683 0.127 ........... ........... ........... ...........
Sep-14............................. 21 409,349 19,493 23.693 0.011 ........... ........... ........... ...........
Oct-14............................. 23 338,832 14,732 23.413 -0.280 ........... ........... ........... ...........
Nov-14............................. 19 386,898 20,363 23.737 0.324 ........... ........... ........... ...........
Dec-14............................. 22 370,760 16,853 23.548 -0.189 ........... ........... ........... ...........
Jan-15............................. 20 394,127 19,706 23.704 0.156 ........... ........... ........... ...........
Feb-15............................. 19 466,138 24,534 23.923 0.219 ........... ........... ........... ...........
Mar-15............................. 22 753,747 34,261 24.257 0.334 ........... ........... ........... ...........
Apr-15............................. 21 356,560 16,979 23.555 -0.702 ........... ........... ........... ...........
May-15............................. 20 478,591 23,930 23.898 0.343 ........... ........... ........... ...........
Jun-15............................. 22 446,102 20,277 23.733 -0.166 ........... ........... ........... ...........
Jul-15............................. 22 402,062 18,276 23.629 -0.104 ........... ........... ........... ...........
Aug-15............................. 21 334,746 15,940 23.492 -0.137 ........... ........... ........... ...........
Sep-15............................. 21 289,872 13,803 23.348 -0.144 ........... ........... ........... ...........
Oct-15............................. 22 300,276 13,649 23.337 -0.011 ........... ........... ........... ...........
Nov-15............................. 20 409,690 20,485 23.743 0.406 ........... ........... ........... ...........
Dec-15............................. 22 308,569 14,026 23.364 -0.379 ........... ........... ........... ...........
Jan-16............................. 19 457,411 24,074 23.904 0.540 ........... ........... ........... ...........
Feb-16............................. 20 554,343 27,717 24.045 0.141 ........... ........... ........... ...........
Mar-16............................. 22 900,301 40,923 24.435 0.390 ........... ........... ........... ...........
Apr-16............................. 21 250,716 11,939 23.203 -1.232 ........... ........... ........... ...........
May-16............................. 21 409,992 19,523 23.695 0.492 ........... ........... ........... ...........
Jun-16............................. 22 321,219 14,601 23.404 -0.291 ........... ........... ........... ...........
Jul-16............................. 20 289,671 14,484 23.396 -0.008 ........... ........... ........... ...........
Aug-16............................. 23 352,068 15,307 23.452 0.055 ........... ........... ........... ...........
Sep-16............................. 21 326,116 15,529 23.466 0.014 ........... ........... ........... ...........
Oct-16............................. 21 266,115 12,672 23.263 -0.203 ........... ........... ........... ...........
Nov-16............................. 21 443,034 21,097 23.772 0.510 ........... ........... ........... ...........
Dec-16............................. 21 310,614 14,791 23.417 -0.355 ........... ........... ........... ...........
Jan-17............................. 20 503,030 25,152 23.948 0.531 ........... ........... ........... ...........
Feb-17............................. 19 255,815 13,464 23.323 -0.625 ........... ........... ........... ...........
Mar-17............................. 23 723,870 31,473 24.172 0.849 ........... ........... ........... ...........
Apr-17............................. 19 255,275 13,436 23.321 -0.851 ........... ........... ........... ...........
May-17............................. 22 569,965 25,908 23.978 0.657 ........... ........... ........... ...........
Jun-17............................. 22 445,081 20,231 23.730 -0.247 ........... ........... ........... ...........
[[Page 45604]]
Jul-17............................. 20 291,167 14,558 23.401 -0.329 ........... ........... ........... ...........
Aug-17............................. 23 263,981 11,477 23.164 -0.238 ........... ........... ........... ...........
Sep-17............................. 20 372,705 18,635 23.648 0.485 ........... ........... ........... ...........
Oct-17............................. 22 173,749 7,898 22.790 -0.858 ........... ........... ........... ...........
Nov-17............................. 21 377,262 17,965 23.612 0.822 ........... ........... ........... ...........
Dec-17............................. 20 281,126 14,056 23.366 -0.245 ........... ........... ........... ...........
Jan-18............................. 21 593,025 28,239 24.064 0.698 ........... ........... ........... ...........
Feb-18............................. 19 353,182 18,589 23.646 -0.418 ........... ........... ........... ...........
Mar-18............................. 21 685,784 32,656 24.209 0.563 ........... ........... ........... ...........
Apr-18............................. 21 367,569 17,503 23.586 -0.624 ........... ........... ........... ...........
May-18............................. 22 543,840 24,720 23.931 0.345 ........... ........... ........... ...........
Jun-18............................. 21 477,967 22,760 23.848 -0.083 ........... ........... ........... ...........
Jul-18............................. 21 327,710 15,605 23.471 -0.377 ........... ........... ........... ...........
Aug-18............................. 23 347,239 15,097 23.438 -0.033 ........... ........... ........... ...........
Sep-18............................. 19 259,874 13,678 23.339 -0.099 ........... ........... ........... ...........
Oct-18............................. 23 300,814 13,079 23.294 -0.045 ........... ........... ........... ...........
Nov-18............................. 21 447,767 21,322 23.783 0.489 ........... ........... ........... ...........
Dec-18............................. 19 276,130 14,533 23.400 -0.383 ........... ........... ........... ...........
Jan-19............................. 21 495,624 23,601 23.885 0.485 ........... ........... ........... ...........
Feb-19............................. 19 372,166 19,588 23.698 -0.186 ........... ........... ........... ...........
Mar-19............................. 21 604,813 28,801 24.084 0.385 ........... ........... ........... ...........
Apr-19............................. 21 267,737 12,749 23.269 -0.815 ........... ........... ........... ...........
May-19............................. 22 476,892 21,677 23.800 0.531 ........... ........... ........... ...........
Jun-19............................. 20 399,178 19,959 23.717 -0.083 ........... ........... ........... ...........
Jul-19............................. 22 359,438 16,338 23.517 -0.200 ........... ........... ........... ...........
Aug-19............................. 22 ........... ........... ........... ........... 23.689 0.320 20,435 449,575
Sep-19............................. 20 ........... ........... ........... ........... 23.695 0.322 20,568 411,370
Oct-19............................. 23 ........... ........... ........... ........... 23.701 0.324 20,703 476,161
Nov-19............................. 20 ........... ........... ........... ........... 23.707 0.326 20,838 416,753
Dec-19............................. 21 ........... ........... ........... ........... 23.713 0.328 20,974 440,445
Jan-20............................. 21 ........... ........... ........... ........... 23.719 0.330 21,110 443,317
Feb-20............................. 19 ........... ........... ........... ........... 23.724 0.332 21,248 403,713
Mar-20............................. 22 ........... ........... ........... ........... 23.730 0.334 21,387 470,505
Apr-20............................. 21 ........... ........... ........... ........... 23.736 0.336 21,526 452,048
May-20............................. 20 ........... ........... ........... ........... 23.742 0.338 21,666 433,330
Jun-20............................. 22 ........... ........... ........... ........... 23.748 0.340 21,808 479,772
Jul-20............................. 22 ........... ........... ........... ........... 23.754 0.342 21,950 482,901
Aug-20............................. 21 ........... ........... ........... ........... 23.760 0.344 22,093 463,957
Sep-20............................. 21 ........... ........... ........... ........... 23.765 0.345 22,237 466,983
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[GRAPHIC] [TIFF OMITTED] TN29AU19.015
[[Page 45606]]
[FR Doc. 2019-18618 Filed 8-28-19; 8:45 am]
BILLING CODE 8011-01-P