The Securities and Exchange Commission (SEC) released an order on February 27, 2026, establishing the fiscal year 2026 annual adjustments to transaction fee rates under Section 31 of the Securities Exchange Act of 1934. This adjustment sets a uniform rate of $20.60 per $1,000,000 for fees on covered sales by national securities exchanges and associations, effective April 4, 2026. The change follows the signing of the Consolidated Appropriations Act, 2026, by President Trump on February 3, 2026, which provided the SEC with a regular appropriation of $2,149,000,000 for the fiscal year. This development ensures that fee collections match the agency's funding needs, reflecting statutory requirements to balance regulatory costs with market activity. The adjustment is significant as it directly impacts the operational funding of the SEC while influencing transaction costs in U.S. securities markets.
Legal and Statutory Background
Section 31 of the Exchange Act mandates that national securities exchanges and associations pay fees to the SEC based on the aggregate dollar amount of certain securities sales, known as covered sales. Specifically, Section 31(b) applies to sales on exchanges, while Section 31(c) covers those transacted through association members off-exchange. These fees fund the SEC's operations, with annual adjustments required under Section 31(j) to produce collections equal to the agency's congressional appropriation.
The process involves estimating future covered sales and adjusting rates accordingly. As outlined in the order, the SEC must publish the new rates within 30 days of the appropriation's enactment. In this case, the appropriation was part of the Consolidated Appropriations Act, 2026 (Public Law 119-75), signed by President Trump. The order notes that no mid-year adjustment is mentioned here, though such adjustments can occur if collections deviate significantly.
Historical context shows these fees have been in place since the Exchange Act's amendments, with adjustments tied to market volume forecasts. For instance, prior fiscal years have seen rates fluctuate based on economic conditions and trading activity, ensuring the SEC's self-funding mechanism adapts to real-world data.
Calculation Methodology and Key Components
The SEC calculates the uniform adjusted rate by subtracting estimated fees collected before the effective date and assessments on security futures from the appropriation amount, then dividing by the projected covered sales for the remainder of the fiscal year.
For fiscal year 2026, the appropriation is $2,149,000,000. The order estimates zero fees collected prior to April 4, 2026, at the current rate, and zero assessments on security futures, as no such products are currently traded. The projected aggregate dollar amount of covered sales from April 4 to August 31, 2026, is $104,121,391,900,000, leading to the rate of $20.60 per million.
Appendix A details the forecasting model, which uses historical data from April 2015 to December 2025 to predict average daily sales. The method employs an ordinary least squares regression on an eight-month trailing moving average of average daily covered sales, incorporating one- and two-month lags. Parameter estimates include a constant of +686,264,830, beta1 of +1.647148, and beta2 of -0.644620, with a root-mean squared error of 10,624,793,826. This yields a baseline estimate of aggregate sales for the full fiscal year and subsets, ensuring the rate targets the exact appropriation.
Sherry R. Haywood, Assistant Secretary of the SEC, signed the order, emphasizing its basis in verifiable data from exchanges and the Financial Industry Regulatory Authority (FINRA).
Implications and Perspectives
The rate increase to $20.60 per million represents a calibrated response to projected market activity. Short-term implications include potential minor increases in transaction costs for market participants, though the per-million structure minimizes impact on smaller trades. Exchanges and associations will apply this rate to covered sales starting April 4, 2026, which is 60 days after the appropriation's enactment, as required by Section 31(j)(4)(A).
Long-term, this adjustment underscores the SEC's reliance on market-driven funding, potentially stabilizing amid volatile trading volumes. Perspectives vary: industry groups may view it as a necessary but burdensome fee, arguing it could affect liquidity if rates rise sharply in future years. Regulators and policymakers, however, see it as essential for maintaining oversight, with the self-funding model promoting efficiency.
No direct legal precedents are cited in the order, but it aligns with past adjustments, such as those in fiscal year 2020, where similar forecasting methods were used. Political forces include congressional budgeting priorities, with the 2026 appropriation reflecting bipartisan support for SEC operations amid evolving market regulations.
In conclusion, the SEC's fiscal year 2026 fee rate adjustment aligns collections with its $2.149 billion appropriation, using data-driven projections to set the rate at $20.60 per million effective April 4, 2026. Key takeaways include the emphasis on accurate sales forecasting and the absence of security futures assessments. Potential next steps involve monitoring actual collections, which could trigger mid-year adjustments if variances occur. Ongoing debates may focus on refining the forecasting model to better account for market disruptions or advocating for alternative funding structures to reduce dependency on transaction volumes. These elements highlight the balance between regulatory funding and market efficiency in the U.S. securities landscape.
