2021-18402. Order Making Fiscal Year 2022 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.

II. Fiscal Year 2022 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]

Section 6(b)(2) sets forth the method for determining the annual adjustment to the fee rate under Section 6(b) for fiscal year 2022. 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 2022], is reasonably likely to produce aggregate fee collections under [Section 6(b)] that are equal to the target fee collection amount for [fiscal year 2022].” That is, the adjusted rate is determined by dividing the “target fee collection amount” for fiscal year 2022 by the “baseline estimate of the aggregate maximum offering prices” for fiscal year 2022.

III. Target Fee Collection Amount for FY 2022

The statutory “target fee collection amount” for fiscal year 2021 and “each fiscal year thereafter” is “an amount that is equal to the target fee collection amount for the prior fiscal year, adjusted by the rate of inflation.” ^[6] The target fee collection amount for fiscal year 2021 was $709,554,300. To adjust the fiscal year 2021 target fee collection amount by the rate of inflation to determine the fiscal year 2022 target fee collection amount, the Commission has determined that it will use an approach similar to one that it uses to annually adjust civil monetary penalties by the rate of inflation.^[7] Under this approach, the Commission will use the year-over-year change, rounded to five decimal places, in the Consumer Price Index for All Urban Consumers (“CPI-U”), not seasonally adjusted, in calculating the target fee collection amount, which is then rounded to the nearest whole dollar. The calculation for the fiscal year 2022 target fee collection amount is described in more detail below.

The most recent CPI-U index value, not seasonally adjusted, available for use by the Commission at the time this fee rate update was prepared was for June 2021. This value is 271.696.^[8] The CPI-U index value, not seasonally adjusted, for June 2020 is 257.797.^[9] Dividing the June 2021 value by the June 2020 value and rounding to five decimal places yields a multiplier value of 1.05391. Multiplying the fiscal year 2021 target fee collection amount of $709,554,300 by the multiplier value of 1.05391 and rounding to the nearest whole dollar yields a fiscal year 2022 target fee collection amount of $747,806,372.

Section 6(b)(6)(B) defines the “baseline estimate of the aggregate maximum offering prices” for fiscal year 2022 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 2022] 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 prices for fiscal year 2022, the Commission is using the methodology it has used in prior fiscal years and that was developed in consultation with the Congressional Budget Office and OMB.^[10] Using this methodology, the Commission determines the “baseline estimate of the aggregate maximum offering price” for fiscal year 2022 to be $8,066,357,647,394. Based on this estimate and the fiscal year 2022 target fee collection amount, the Commission calculates the fee rate for fiscal 2022 to be $92.70 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.

IV. Effective Dates of the Annual Adjustments

The fiscal year 2022 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, 2021.^[11]

V. Conclusion

Accordingly, pursuant to Section 6(b) of the Securities Act and Sections 13(e) and 14(g) of the Exchange Act,^[12]

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 $92.70 per million effective on October 1, 2021.

By the Commission.

Vanessa Countryman,

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 2022, the Commission has estimated the aggregate maximum offering prices by projecting forward the trend established in the previous decade. More specifically, an auto-regressive integrated moving average (“ARIMA”) model was used to forecast the value of the aggregate maximum offering prices for months subsequent to July 2021, 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 2022

First, calculate the aggregate maximum offering prices (AMOP) for each month in the sample (July 2011-July 2021). 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] [ARIMA] 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 2011 to July 2021.

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 Δ_t = log (AAMOP_t)−log(AAMOP_t-1). This approximates the percentage change.

5. Estimate the first order moving average model Δ_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 Δ_t. The forecast error is expressed as e_t = Δ_t−α−βe_t-1. The model can be estimated using standard commercially available software. Using least squares, the estimated parameter values are α = 0.0079933991 and β = 0.9007307577.

6. For the month of August 2021 forecast Δ_{t = 8/2021} = α + βe_{t = 7/2021}. For all subsequent months, forecast Δ_t = α.

7. Calculate forecasts of log(AAMOP). For example, the forecast of log(AAMOP) for October 2021 is given by FLAAMOP_{t = 10/2021} = log(AAMOP_{t = 7/2021}) + Δ_{t = 8/2021} +Δ_{t = 9/2021} + Δ_{t = 10/2021}.

8. Under the assumption that e_t is normally distributed, the n-step ahead forecast of AAMOP is given by exp(FLAAMOP_t + σ_n²/2), where σ_n denotes the standard error of the n-step ahead forecast.

9. For October 2021, this gives a forecast AAMOP of $30.399 billion (Column I), and a forecast AMOP of $638.385 billion (Column J).

10. Iterate this process through September 2022 to obtain a baseline estimate of the aggregate maximum offering prices for fiscal year 2022 of $8,066,357,647,394.

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 10/01/21 and 9/30/22 to be $8,066,357,647,394.

2. The rate necessary to collect the target $747,806,372 in fee revenues required by Section 6(b) of the Securities Act is then calculated as: $747,806,372 ÷ $8,066,357,647,394 = 0.0000927068.

3. Round the result to the seventh decimal point, yielding a rate of 0.0000927 (or $92.70 per million).

Table A—Estimation of Baseline of Aggregate Maximum Offering Prices

[Fee rate calculation]

a. Baseline estimate of the aggregate maximum offering prices, 10/01/21 to 09/30/22 ($Millions)	8,066,358
b. Implied fee rate ($747,806,372 / a)	$92.70

Month	No. of trading days in month	Aggregate maximum offering prices, in $Millions	Average daily aggregate max. offering prices (AAMOP) in $Millions	log (AAMOP)	Log (Change in AAMOP)	Forecast log(AAMOP)	Standard error	Forecast AAMOP, in $Millions	Forecast aggregate maximum offering prices, in $Millions
(A)	(B)	(C)	(D)	(E)	(F)	(G)	(H)	(I)	(J)
Jul-11	20	215,391	10,770	23.100
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
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	401,391	18,245	23.627	0.110
Sep-19	20	382,876	19,144	23.675	0.048
Oct-19	23	181,113	7,874	22.787	−0.888
Nov-19	20	553,889	27,694	24.044	1.258
Dec-19	21	438,062	20,860	23.761	−0.283
Jan-20	21	636,403	30,305	24.135	0.373
Feb-20	19	424,133	22,323	23.829	−0.306
Mar-20	22	409,403	18,609	23.647	−0.182
Apr-20	21	389,821	18,563	23.644	−0.002
May-20	20	731,835	36,592	24.323	0.679
Jun-20	22	650,219	29,555	24.110	−0.214
Jul-20	22	457,871	20,812	23.759	−0.351
Aug-20	21	465,953	22,188	23.823	0.064
Sep-20	21	435,323	20,730	23.755	−0.068
Oct-20	22	429,638	19,529	23.695	−0.060
Nov-20	20	849,894	42,495	24.473	0.777
Dec-20	22	493,133	22,415	23.833	−0.640
Jan-21	19	753,590	39,663	24.404	0.571
Feb-21	19	785,163	41,324	24.445	0.041
Mar-21	23	960,806	41,774	24.456	0.011
Apr-21	21	430,803	20,514	23.744	−0.711
May-21	20	759,512	37,976	24.360	0.616
Jun-21	22	512,966	23,317	23.872	−0.488
Jul-21	21	485,097	23,100	23.863	−0.009
Aug-21	22					24.066	0.331	29,885	657,469
Sep-21	21					24.074	0.332	30,141	632,962
Oct-21	21					24.082	0.334	30,399	638,385
Nov-21	21					24.090	0.335	30,660	643,855
Dec-21	22					24.098	0.337	30,922	680,294
Jan-22	20					24.106	0.339	31,187	623,748
Feb-22	19					24.114	0.340	31,455	597,638
Mar-22	23					24.122	0.342	31,724	729,655
Apr-22	20					24.130	0.343	31,996	639,919
May-22	21					24.138	0.345	32,270	677,673
Jun-22	22					24.146	0.346	32,547	716,026
Jul-22	20					24.154	0.348	32,825	656,510
Aug-22	23					24.162	0.350	33,107	761,455
Sep-22	21					24.170	0.351	33,390	701,199

Footnotes

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. 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 prices 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” required by 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).

6.  15 U.S.C. 77f(b)(6)(A).

7.  The Commission annually adjusts for inflation the civil monetary penalties that can be imposed under the statutes administered by Commission, as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, pursuant to guidance from the Office of Management and Budget (“OMB”). See OMB December 16, 2019, Memorandum for the Heads of Executive Departments and Agencies, M-20-05, on “Implementation of Penalty Inflation Adjustments for 2020, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.”

8.  This value was announced on July 13, 2021. See https://www.bls.gov/​news.release/​archives/​cpi_​07132021.htm.

9.  See Supplemental Tables, “CPI-U News Release Companion File” from the July 13, 2021, press release.

10.  Appendix A explains how we determined the “baseline estimate of the aggregate maximum offering prices” for fiscal year 2022 using our methodology, and then shows the arithmetical process of calculating the fiscal year 2022 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 prices” for fiscal year 2022.

11.  15 U.S.C. 77f(b)(4), 15 U.S.C. 78m(e)(6), and 15 U.S.C. 78n(g)(6).

12.  15 U.S.C. 77f(b), 78m(e), and 78n(g).