COMMODITY EXCHANGE REGISTRATION FEES MONDAY, JULY 25, 1955 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met at 10 a. m., Hon. Harold D. Cooley (chairman) presiding. The CHAIRMAN. We will now take up S. 1051. (The bill referred to is as follows :) [S. 1051, 84th Cong., 1st sess.] AN ACT To amend section 8a (4) of the Commodity Exchange Act, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 8a (4) of the Commodity Exchange Act, as amended (7 U. S. C. 12a (4)), is amended to read as follows: "(4) to fix and establish from time to time reasonable fees and charges for registrations and renewals thereof and for copies of registration certificates; and". Passed the Senate March 8, 1955. Attest: FELTON M. JOHNSTON, Secretary. The CHAIRMAN. Mr. Kauffman, will you come forward to the table, please. STATEMENT OF RODGER R. KAUFFMAN, ADMINISTRATOR, COMMODITY EXCHANGE AUTHORITY, UNITED STATES DEPARTMENT OF AGRICULTURE Mr. KAUFFMAN. Mr. Chairman, S. 1051 is a bill which would amend section 8a (4) of the Commodity Exchange Act, as amended, which was enacted in 1936. Subsection (4) of that section which was enacted in 1936 provides that the maximum fee for registration of brokerage firms that are registered as futures commission merchants under the Commodities Exchange Act, and that the maximum fee for the registration of floor brokers under such statute shall not exceed $10 per year. The provision obviously was not designed as a revenue-raising measure and that maximum has remained unchanged. Congress in the independent offices appropriation act expressed the policy that government agencies "to the full extent possible" should arrange to recover the costs of special services such as licensing, registration, and so forth, keeping in mind the public interest and the benefit to the recipient. Pursuant to that provision in the independent offices appropriation act, the Bureau of the Budget has directed the various departments where they have statutory maximum fees which do not permit full recovery of the costs to submit legislation so that the costs will be recovered to the fullest extent practical, keeping in mind the public interest and the value of the services rendered to the recipient. This bill would remove the present $10 statutory maximum and in lieu thereof would authorize the Secretary from time to time to fix and establish reasonable fees and charges for registration, renewals thereof, and for copies of registration certificates. The present receipts from that source aggregated during the past fiscal year $18,378. The present estimate of the costs of this specific activity approximate $30,000, so there is the sum of $12,000 involved. Should the statutory maximum be eliminated and the Secretary be authorized to fix reasonable fees, the Department would be in a position to invite suggestions and comments from those affected as to the proper level of fees. It is believed that the maximum for brokerage firms registered as futures commission merchants would probably not exceed $25 or $50, and the fee for an individual registered as a floor broker would not exceed $15 or $20. That would make up the $12,000 gap between the present receipts and the estimated costs, and I may say that none of the receipts inured to the benefit of the Department of Agriculture, but they are all deposited in the Treasury. None of them are available for the enforcement of this act. Mr. HOPE. I take it then that if we take the ceiling off it would be your purpose to arrange a schedule of fees which would bring in approximately the amount that this service is now costing; in other words, you want to put it on a self-sustaining basis? Mr. KAUFFMAN. Precisely. Mr. HOPE. And you would make that arrangement and work out a schedule after consultation with the various commodity exchanges, and with those who would be affected by the increase in the fees? Mr. KAUFFMAN. That would be the procedure followed, Mr. Hope. The CHAIRMAN. This is just a fee that they pay for the purpose of operating on the commodity exchange? Mr. KAUFFMAN. Yes, as floor brokers executing orders on the trading floors, and as brokerage firms soliciting business from the public. The CHAIRMAN. If there are no further questions Mr. POAGE. My people do not like these brokers. There is a prejudice against them, perhaps unwarranted. The CHAIRMAN. And they would want to make it a $100 fee? Mr. POAGE. They would be glad to make it a $1,000 fee. Should we not hear something from those who are going to be the victims of this? The CHAIRMAN. Is it the fee that they pay for registering? Mr. KAUFFMAN. Yes, and this applies solely to the individuals who are engaged in business as floor brokers and brokerage firms. The CHAIRMAN. Do you require them to establish the fact that they are people of good character and reputable in all respects? Can any reprobate go in and start in business? Mr. KAUFFMAN. There are no standards imposed by the statute, Mr. Chairman. The statute makes it mandatory that applicants be registered provided they furnish the information respecting their business required by the statute and by the Secretary of Agriculture. Thereafter they must continue to report such information. The CHAIRMAN. What is the information required? You say that there is no test of character involved and integrity and fair dealing. Mr. KAUFFMAN. There is no standard of that kind imposed, or authorized by the statute. Mr. POAGE. The cotton exchanges and the grain exchanges sometimes impose those tests themselves. Mr. KAUFFMAN. That is true, with respect to their own members. The members of the exchange, the floor brokers, are confined almost entirely to exchange members. There are one or two exchanges where members may sponsor or license a nonmember to act for him as a floor broker on the trading floor of that particular exchange. Mr. POAGE. And this is just a tax on those people? Mr. KAUFFMAN. This is a small fee which is designed to be purely a nominal fee. The CHAIRMAN. What is the purpose of requiring the registration if you do not have any tests as to eligibility? Mr. KAUFFMAN. They have to be registered in order to engage in this line of business, and for any violation of the statute or the regulations their registration may be suspended or revoked, which would prevent them from so engaging. The CHAIRMAN. I remember that the exchanges were very much exercised about this once before and said that they had done a good job of leasing themselves and they did not want the Congress to set up lease regulations; that they had operated successfully, and so forth. Mr. HOPE. I would like to ask Mr. Kauffman if he knows what the attitude of the exchanges and the floor brokers and others who might be affected by this legislation is. Mr. KAUFFMAN. We have heard of no opposition whatever to this proposed legislation. The CHAIRMAN. What would the fees actually be fixed at, in your opinion, if we removed the limitation? Mr. KAUFFMAN. It would not be necessary, I think, to have the fee for the brokerage firms exceed $20, $25, or $30 a year, nor the fee for an individual registered as a floor broker to be in excess of $15 or $20 a year. Those amounts would provide sufficient money to cover the cost. The CHAIRMAN. As it is now, the Government is bearing a part of the cost because the fees are inadequate? Mr. KAUFFMAN. That is right. The CHAIRMAN. Mr. Poage mentioned the fact that perhaps we should hear testimony from some of these licensees, or people who operate. Do you know of any opposition? Mr. KAUFFMAN. I know of no opposition to this proposal, Mr. Chair man. Mr. HOPE. I think all of us have had the same experience. If there is any legislation here before this committee that does meet with the opposition of anybody connected with the commodity exchanges, we get plenty of mail. We never fail to get plenty of letters on the matter. I have not had a single letter. The CHAIRMAN. I have not had any, either. Mr. HOPE. They subscribe to all of the legislative services. The CHAIRMAN. If there are no further questions, we thank you very much, Mr. Kauffman. (Whereupon the committee proceeded to the consideration of other business.) |