Securities and Exchange Commission Adjustment to Section 31 Fee Rate


January 28, 2004


NASD would like to notify its members that the Securities and Exchange Commission (SEC or Commission) has issued Fee Rate Advisory #7 for Fiscal Year 2004. Effective February 22, 2004, the revised Section 31 transaction fee rate will be $39.00 per million.


The Commission will announce the annual adjustment for fiscal year 2005 no later than April 30, 2004, effective Oct. 1, 2004 (or, if later, after the Commission's fiscal year 2005 appropriation is enacted). In addition, the Commission may be required to make a "mid-year" adjustment to the Section 31 fee rate, after consultation with the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB), which would be announced no later than March 1, 2004, effective April 1, 2004. The Commission will issue further notices as appropriate. This information will be posted on the SEC's Web site.


The Commission is required to adjust the filing and securities transaction fee rates on an annual basis, after consultation with CBO and OMB. A copy of the Commission's April 30, 2003, order regarding the fee rate adjustments for fiscal year 2004, including the calculation methodologies, is available at


Systems Changes


NASD members must make the necessary systems changes to be implemented for securities transactions starting February 22, 2004. In the event any member has difficulty implementing systems changes by that date, or if you have further questions about this Member Alert, please contact Rob Renner, NASD Director of Accounting Operations, at (240) 386-5303.


Calculation of Fees—Rounding


In calculating the new fee, one should multiply the aggregate dollar amount of sales of covered securities transacted by the fee rate (.000039), which will be truncated at the seventh place after the decimal point. The resulting figure should then be truncated at the fifth place after the decimal point and then rounded up to the next cent (if there is any remainder you should round up).