Tagged: Section 31 fees

The Emperor’s ETF Clothes

If somebody tells you he has a plan to improve your financial condition by borrowing your credit card and buying himself a bunch of stuff with it, be suspicious.

With that setup, we have a story to tell you. In a minute.

First, we said last week: “Overall sentiment is surprisingly good in money behind client shares. Stocks may recover quickly.”

Spot on. It shows how data-analytics help us understand market behavior. But remember our qualifier: “The DXY dollar index shows the same fissures it had last summer when the Euro nearly came undone. This currency crisis is coming back in weeks or months.”

We stand by that. The Infinite Elasticity Theorem posited by central banks is about to snap. It goes like this: “In times of crisis, expand the supply of money until the problem disappears under a pile of paper, because we can’t handle the truth, so we don’t want you to either.”

To our story. The Nasdaq has asked the SEC to approve its Market Quality Program, in which sponsors of thinly traded (under 2m shares daily) Exchange Traded Funds would pay market makers to trade the ETFs. The Nasdaq says these payments will stimulate trading in the ETFs, thus narrowing spreads, making markets efficient, enhancing market confidence and integrity, and boosting volumes in issuer components of the ETFs. (more…)

The Facts

Mark Twain said, “Get your facts first and then you can distort them as much as you please.”

The 1959 annual review of Mark Twain’s accounts by his successors in Redding, CT, found that his IBM shares, perhaps once units of the International Time-Recording Co. formed in the 19th century, were worth $148,000.

That’s a little-known fact. By wading through fine print for years, we’ve not only passed on nuggets about humorists, but we’ve also found nifty facts proving trading markets have fundamentally altered the IR job.

We found a couple this week that may surprise you. The 2012 SEC budget reveals that the agency collected about $1.3 billion in “Section 31” fees in 2011.

Every trade earns the SEC a fee. Since 1933, the SEC Act (now US Code, Title 15, Sections 77 and 78) has allocated Section 6(b) fees for securities offerings, 13(e) fees on corporate stock repurchases, and 14(g) fees on proxy solicitation to “recover the costs to the government of the securities registration process…”

Don’t get lost in the b’s, e’s and g’s. Stay with me here. (more…)