CLINTON’S BUDGET: BUSINESS IMPACT : Fees Proposed to Help Run SEC, CFTC

The Clinton Administration on Monday proposed levying new and higher fees on companies and securities transactions to raise more than $2 billion to help run two agencies that regulate stock and commodity futures markets.

The Administration, which seeks to raise the money over the next five years, says the proposal is aimed at avoiding the budget crises that have bedeviled the Securities and Exchange, and Commodity Futures and Trading commissions.

The plan drew immediate fire from securities industry officials, and legislative aides say it may be difficult to persuade the Republican Congress to raise or impose new fees.

For fiscal 1996, the White House proposes a $342.9-million appropriation for the SEC, about 12% more than the $306 million, which included stopgap funding, for 1995.

To pay for it, the Administration plans legislation that would allow the SEC to use fees it collects to fund its budget. The Administration also wants to raise fees the agency collects from companies by $1.7 billion in the next five years, from $310 million for fiscal 1966 to $376 million for fiscal 2000.

The proposed budget for the CTFC is $59.7 million, an increase of about 21% from the $49.1 million for fiscal 1995. The proposal would be funded for the 1996 fiscal year and the next four years by a 10-cent transaction fee for commodity futures and option contracts traded on futures exchanges. The fee would bring in an estimated $60 million each year, or $300 million up to the year 2000. Congress would have the power to adjust the fee to match the CFTC’s funding requirements.

An industry group and two of the biggest U.S. futures exchanges urged Congress to reject the transaction fee, saying that it is in effect a tax that would raise market costs and send business overseas.

Chicago Board of Trade Chairman Patrick Arbor said the transaction fee would “widen the bid/ask spread on government debt, increasing government financing costs and increasing the federal deficit.”

“It punishes U.S. exchange-traded products vis-a-vis over-the-counter markets as well as the foreign markets,” said John Damgard, president of the Futures Industry Assn.