Proposed Collection; Comment Request, 77200-77201 [E5-8065]

Download as PDF 77200 Federal Register / Vol. 70, No. 249 / Thursday, December 29, 2005 / Notices Information Services, Washington, DC 20549. Rule 15c1–7, SEC File No. 270–146, OMB Control No. 3235–0134 Proposed Collection; Comment Request wwhite on PROD1PC65 with NOTICES Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the collections of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. Rule 15c1–7 provides that any act of a broker-dealer designed to effect securities transactions with or for a customer account over which the broker-dealer (directly or through an agent or employee) has discretion will be considered a fraudulent, manipulative, or deceptive practice under the federal securities laws, unless a record is made of the transaction immediately by the broker-dealer. The record must include (a) the name of the customer, (b) the name, amount, and price of the security, and (c) the date and time when such transaction took place. The Commission estimates that 500 respondents collect information annually under Rule 15c1–7 and that approximately 33,333 hours would be required annually for these collections. Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency’s estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Direct your written comments to R. Corey Booth, Director/Chief Information Officer, Office of Information Technology, Securities and Exchange Commission, 100 F St. NE., Washington, DC 20549. Dated: December 20, 2005. Jonathan G. Katz, Secretary. [FR Doc. E5–8058 Filed 12–28–05; 8:45 am] BILLING CODE 8010–01–P VerDate Aug<31>2005 18:56 Dec 28, 2005 Jkt 208001 SECURITIES AND EXCHANGE COMMISSION Upon written request, copies available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. Extension: Rule 2a–7, SEC File No. 270–258, OMB Control No. 3235–0268. Notice is hereby given that under the Paperwork Reduction Act of 1995 [44 U.S.C. 3501], the Securities and Exchange Commission (the ‘‘Commission’’) is soliciting public comments on the collections of information summarized below. The Commission plans to submit these existing collections of information to the Office of Management and Budget (‘‘OMB’’) for extension and approval. Rule 2a–7 [17 CFR 270.2a–7] under the Investment Company Act of 1940 [15 U.S.C. 80a] (the ‘‘Act’’) governs money market funds. Money market funds are open-end management investment companies that differ from other open-end management investment companies in that they seek to maintain a stable price per share, usually $1.00. The rule exempts money market funds from the valuation requirements of the Act, and, subject to certain risk-limiting conditions, permits money market funds to use the ‘‘amortized cost method’’ of asset valuation or the ‘‘penny-rounding method’’ of share pricing. Rule 2a–7 imposes certain recordkeeping and reporting obligations on money market funds. The board of directors of a money market fund, in supervising the fund’s operations, must establish written procedures designed to stabilize the fund’s net asset value (‘‘NAV’’). The board also must adopt guidelines and procedures relating to certain responsibilities it delegates to the fund’s investment adviser. These procedures typically address various aspects of the fund’s operations. The fund must maintain and preserve for six years a written copy of both these procedures and guidelines. The fund also must maintain and preserve for six years a written record of the board’s considerations and actions taken in connection with the discharge of its responsibilities, to be included in the board’s minutes. In addition, the fund must maintain and preserve for three years written records of certain credit risk analyses, evaluations with respect to securities subject to demand features or guarantees, and determinations with respect to adjustable rate securities and PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 asset backed securities. If the board takes action with respect to defaulted securities, events of insolvency, or deviations in share price, the fund must file with the Commission an exhibit to Form N–SAR describing the nature and circumstances of the action. If any portfolio security fails to meet certain eligibility standards under the rule, the fund also must identify those securities in an exhibit to Form N–SAR. After certain events of default or insolvency relating to a portfolio security, the fund must notify the Commission of the event and the actions the fund intends to take in response to the situation. The recordkeeping requirements in rule 2a–7 are designed to enable Commission staff in its examinations of money market funds to determine compliance with the rule, as well as to ensure that money market funds have established procedures for collecting the information necessary to make adequate credit reviews of securities in their portfolios. The reporting requirements of rule 2a–7 are intended to assist Commission staff in overseeing money market funds. Commission staff estimates that each of 847 1 money market funds spends a total of approximately 1220 hours 2 of professional time (at $76 per hour) 3 to record credit risk analyses and determinations regarding adjustable rate securities, asset backed securities and securities subject to a demand feature or guarantee, for a total of approximately $79 million. The staff further estimates that each of 24 new money market funds spends a total of 21 hours of director, legal, and support staff time at a total cost of approximately $126,216 to adopt procedures designed to stabilize the fund’s NAV and guidelines regarding the delegation of certain responsibilities to the fund’s adviser.4 The staff further 1 These include registered money market funds and series of registered funds. This estimate is based on information from Lipper Inc.’s Lana database as of September 30, 2005. 2 This average is based on discussions with individuals at money market funds and their advisers. The actual number of burden hours may vary significantly depending on the type and number of portfolio securities held by individual funds. 3 The estimated hourly cost of professional time was based on the weighted average annual salaries reported for senior business analysts, floor managers and portfolio managers in New York City in Securities Industry Association, Management and Professional Earnings in the Securities Industry (2003) and Securities Industry Association, Office Salaries in the Securities Industry (2003) (collectively, the ‘‘SIA Salary Guides’’). 4 This estimate is based on information from iMoneyNet’s database. During the past three years, an average of 24 new money market funds have been created annually. In calculating industry costs for complying with the information collection requirements of rule 2a–7, the Commission staff E:\FR\FM\29DEN1.SGM 29DEN1 Federal Register / Vol. 70, No. 249 / Thursday, December 29, 2005 / Notices wwhite on PROD1PC65 with NOTICES estimates that on average each of 212 money market funds spends a total of 4.5 hours of director and legal time at a total cost of approximately $916,370 to review and amend written procedures and guidelines each year.5 Finally, the staff estimates that one money market fund that experiences a change in certain eligibility standards for portfolio securities or an event of default or insolvency relating to portfolio securities spends a total of one and a half hours of professional legal time (at $109.97 per hour) documenting board determinations and notifying the Commission regarding the event, for a total of $165. Thus, the Commission estimates the total annual burden of the rule’s information collection requirements are 1,034,800 hours at an annual cost of $80 million.6 Based on these estimates, Commission staff estimates the total burden of the rule’s paperwork requirements for money market funds to be 1,034,800 hours.7 This is an increase from the previous estimate of 480,830 hours. The increase is attributable to updated information from money market funds regarding hourly burdens and the significant differences in burden hours reported by the funds selected at random to be surveyed in different submission years. These estimates of burden hours are made solely for the purposes of the Paperwork Reduction Act. The estimates are not derived from a comprehensive or even a representative survey or study of Commission rules. estimate that fund boards’ hourly rate is $2000 per hour. The estimated costs for professional and support staff time were based on the average annual salaries reported in the SIA Salary Guides. The estimated costs for legal time was based on the weighted average of associate general counsel salaries reported in the SIA Salary Guides and New York law firm attorney salaries (outside counsel) based on a survey conducted by the National Law Journal available at http://www.law.com/special/ professionals/nlj/2002/firm_by_firm_ sampling_of_billing_rates_nationwide.shtml. 5 For Paperwork Reduction Act (‘‘PRA’’) purposes we assumed that on average 25% of money market funds would review and update their procedures on an annual basis. 6 A significant portion of the recordkeeping burden involves organizing information that the funds already collect when initially purchasing securities. In addition, when a money market fund analyzes a security, the analysis need not be presented in any particular format. Money market funds therefore have a choice of methods for maintaining these records that vary in technical sophistication and formality (e.g. handwritten notes, computer disks, etc.). Accordingly, the cost of preparing these documents may vary significantly among individual funds. The burden hours associated with filing reports to the Commission as an exhibit to Form N-SAR are included in the PRA burden estimate for that form. 7 This estimate is based on the following calculation: ((847 × 1220) + (1 × 1.5) + (24 × 21) + (212 × 4.5) = 1,034,800. VerDate Aug<31>2005 18:56 Dec 28, 2005 Jkt 208001 In addition to the burden hours, Commission staff estimates that money market funds will incur costs to preserve records required under rule 2a–7. These costs will vary significantly for individual funds, depending on the amount of assets under fund management and whether the fund preserves its records in a storage facility in hard copy or has developed and maintains a computer system to create and preserve compliance records.8 Commission staff estimates that the amount an individual fund may spend ranges from $100 per year to $300,000. Based on a cost of $0.0000204 per dollar of assets under management for small fund, $0.0000005 per dollar assets under management for medium funds, and $0.0000046 per dollar of assets under management for large funds,9 the staff estimates compliance with rule 2a– 7 costs the fund industry approximately $7.6 million per year.10 Based on responses from individuals in the money market fund industry, the staff estimates that some of the largest fund complexes have created computer programs for maintaining and preserving compliance records for rule 2a–7. Based on a cost of $0.0000231 per dollar of assets under management for large funds, the staff estimates that total annualized capital/startup costs range from $0 for small funds to $37.5 million for all large funds. Commission staff further estimates that, even absent the requirements of rule 2a–7, money market funds would spend at least half of the amount for capital costs ($19 million) and for record preservation ($3.8 million) to establish and maintain these records and the systems for preserving them as a part of sound business practices to ensure diversification and minimal credit risk 8 The amount of assets under management in individual money market funds ranges from approximately $400,000 to $109 billion. 9 For purpose of this PRA submission, Commission staff used the following categories for fund sizes: (i) Small—money market funds with $50 million or less in assets under management, (ii) medium—money market funds with more than $50 million up to and including $1 billion in assets under management; and (iii) large—money market funds with more than $1 billion in assets under management. 10 The staff estimated the annual cost of preserving the required books and records by identifying the annual costs incurred by several funds and then relating this total cost to the average net assets of these funds during the year. With a total of $2.2 billion under management in small funds, $174.1 billion under management in medium funds and $1623.8 billion under management in large funds, the costs of preservation were estimated as follows: ((0.0000204 × $2.2 billion) + (0.0000005 × $174.1) + (0.0000046 × $1623.8 billion) = $7.6 million. See supra note 9 regarding sizes of large, medium, and small funds. PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 77201 in a portfolio for a fund that seeks to maintain a stable price per share. The collections of information required by rule 2a–7 are necessary to obtain the benefits described above. Notices to the Commission will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Written comments are requested on: (a) Whether the collections of information are necessary for the proper performance of the functions of the Commission, including whether the information has practical utility; (b) the accuracy of the Commission’s estimate of the burdens of the collection of information; (c) ways to enhance the quality, utility and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to R. Corey Booth, Director/Chief Information Officer, Office of Information Technology, Securities and Exchange Commission, 100 F. Street, NE., Washington, DC 20549. Dated: December 20, 2005. Jonathan G. Katz, Secretary. [FR Doc. E5–8065 Filed 12–28–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. IC–27195] Notice of Applications for Deregistration Under Section 8(f) of the Investment Company Act of 1940 December 21, 2005. The following is a notice of applications for deregistration under section 8(f) of the Investment Company Act of 1940 for the month of December, 2005. A copy of each application may be obtained for a fee at the SEC’s Public Reference Branch (tel. 202–551–5850). An order granting each application will be issued unless the SEC orders a hearing. Interested persons may request a hearing on any application by writing to the SEC’s Secretary at the address below and serving the relevant applicant with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 E:\FR\FM\29DEN1.SGM 29DEN1

Agencies

[Federal Register Volume 70, Number 249 (Thursday, December 29, 2005)]
[Notices]
[Pages 77200-77201]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-8065]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon written request, copies available from: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, DC 
20549.

Extension:
    Rule 2a-7, SEC File No. 270-258, OMB Control No. 3235-0268.

    Notice is hereby given that under the Paperwork Reduction Act of 
1995 [44 U.S.C. 3501], the Securities and Exchange Commission (the 
``Commission'') is soliciting public comments on the collections of 
information summarized below. The Commission plans to submit these 
existing collections of information to the Office of Management and 
Budget (``OMB'') for extension and approval.
    Rule 2a-7 [17 CFR 270.2a-7] under the Investment Company Act of 
1940 [15 U.S.C. 80a] (the ``Act'') governs money market funds. Money 
market funds are open-end management investment companies that differ 
from other open-end management investment companies in that they seek 
to maintain a stable price per share, usually $1.00. The rule exempts 
money market funds from the valuation requirements of the Act, and, 
subject to certain risk-limiting conditions, permits money market funds 
to use the ``amortized cost method'' of asset valuation or the ``penny-
rounding method'' of share pricing.
    Rule 2a-7 imposes certain recordkeeping and reporting obligations 
on money market funds. The board of directors of a money market fund, 
in supervising the fund's operations, must establish written procedures 
designed to stabilize the fund's net asset value (``NAV''). The board 
also must adopt guidelines and procedures relating to certain 
responsibilities it delegates to the fund's investment adviser. These 
procedures typically address various aspects of the fund's operations. 
The fund must maintain and preserve for six years a written copy of 
both these procedures and guidelines. The fund also must maintain and 
preserve for six years a written record of the board's considerations 
and actions taken in connection with the discharge of its 
responsibilities, to be included in the board's minutes. In addition, 
the fund must maintain and preserve for three years written records of 
certain credit risk analyses, evaluations with respect to securities 
subject to demand features or guarantees, and determinations with 
respect to adjustable rate securities and asset backed securities. If 
the board takes action with respect to defaulted securities, events of 
insolvency, or deviations in share price, the fund must file with the 
Commission an exhibit to Form N-SAR describing the nature and 
circumstances of the action. If any portfolio security fails to meet 
certain eligibility standards under the rule, the fund also must 
identify those securities in an exhibit to Form N-SAR. After certain 
events of default or insolvency relating to a portfolio security, the 
fund must notify the Commission of the event and the actions the fund 
intends to take in response to the situation.
    The recordkeeping requirements in rule 2a-7 are designed to enable 
Commission staff in its examinations of money market funds to determine 
compliance with the rule, as well as to ensure that money market funds 
have established procedures for collecting the information necessary to 
make adequate credit reviews of securities in their portfolios. The 
reporting requirements of rule 2a-7 are intended to assist Commission 
staff in overseeing money market funds.
    Commission staff estimates that each of 847 \1\ money market funds 
spends a total of approximately 1220 hours \2\ of professional time (at 
$76 per hour) \3\ to record credit risk analyses and determinations 
regarding adjustable rate securities, asset backed securities and 
securities subject to a demand feature or guarantee, for a total of 
approximately $79 million. The staff further estimates that each of 24 
new money market funds spends a total of 21 hours of director, legal, 
and support staff time at a total cost of approximately $126,216 to 
adopt procedures designed to stabilize the fund's NAV and guidelines 
regarding the delegation of certain responsibilities to the fund's 
adviser.\4\ The staff further

[[Page 77201]]

estimates that on average each of 212 money market funds spends a total 
of 4.5 hours of director and legal time at a total cost of 
approximately $916,370 to review and amend written procedures and 
guidelines each year.\5\ Finally, the staff estimates that one money 
market fund that experiences a change in certain eligibility standards 
for portfolio securities or an event of default or insolvency relating 
to portfolio securities spends a total of one and a half hours of 
professional legal time (at $109.97 per hour) documenting board 
determinations and notifying the Commission regarding the event, for a 
total of $165. Thus, the Commission estimates the total annual burden 
of the rule's information collection requirements are 1,034,800 hours 
at an annual cost of $80 million.\6\
---------------------------------------------------------------------------

    \1\ These include registered money market funds and series of 
registered funds. This estimate is based on information from Lipper 
Inc.'s Lana database as of September 30, 2005.
    \2\ This average is based on discussions with individuals at 
money market funds and their advisers. The actual number of burden 
hours may vary significantly depending on the type and number of 
portfolio securities held by individual funds.
    \3\ The estimated hourly cost of professional time was based on 
the weighted average annual salaries reported for senior business 
analysts, floor managers and portfolio managers in New York City in 
Securities Industry Association, Management and Professional 
Earnings in the Securities Industry (2003) and Securities Industry 
Association, Office Salaries in the Securities Industry (2003) 
(collectively, the ``SIA Salary Guides'').
    \4\ This estimate is based on information from iMoneyNet's 
database. During the past three years, an average of 24 new money 
market funds have been created annually. In calculating industry 
costs for complying with the information collection requirements of 
rule 2a-7, the Commission staff estimate that fund boards' hourly 
rate is $2000 per hour. The estimated costs for professional and 
support staff time were based on the average annual salaries 
reported in the SIA Salary Guides. The estimated costs for legal 
time was based on the weighted average of associate general counsel 
salaries reported in the SIA Salary Guides and New York law firm 
attorney salaries (outside counsel) based on a survey conducted by 
the National Law Journal available at http://www.law.com/special/
professionals/nlj/2002/firm_by_firm_sampling_of_billing_
rates_nationwide.shtml.
    \5\ For Paperwork Reduction Act (``PRA'') purposes we assumed 
that on average 25% of money market funds would review and update 
their procedures on an annual basis.
    \6\ A significant portion of the recordkeeping burden involves 
organizing information that the funds already collect when initially 
purchasing securities. In addition, when a money market fund 
analyzes a security, the analysis need not be presented in any 
particular format. Money market funds therefore have a choice of 
methods for maintaining these records that vary in technical 
sophistication and formality (e.g. handwritten notes, computer 
disks, etc.). Accordingly, the cost of preparing these documents may 
vary significantly among individual funds. The burden hours 
associated with filing reports to the Commission as an exhibit to 
Form N-SAR are included in the PRA burden estimate for that form.
---------------------------------------------------------------------------

    Based on these estimates, Commission staff estimates the total 
burden of the rule's paperwork requirements for money market funds to 
be 1,034,800 hours.\7\ This is an increase from the previous estimate 
of 480,830 hours. The increase is attributable to updated information 
from money market funds regarding hourly burdens and the significant 
differences in burden hours reported by the funds selected at random to 
be surveyed in different submission years.
---------------------------------------------------------------------------

    \7\ This estimate is based on the following calculation: ((847 x 
1220) + (1 x 1.5) + (24 x 21) + (212 x 4.5) = 1,034,800.
---------------------------------------------------------------------------

    These estimates of burden hours are made solely for the purposes of 
the Paperwork Reduction Act. The estimates are not derived from a 
comprehensive or even a representative survey or study of Commission 
rules.
    In addition to the burden hours, Commission staff estimates that 
money market funds will incur costs to preserve records required under 
rule 2a-7. These costs will vary significantly for individual funds, 
depending on the amount of assets under fund management and whether the 
fund preserves its records in a storage facility in hard copy or has 
developed and maintains a computer system to create and preserve 
compliance records.\8\ Commission staff estimates that the amount an 
individual fund may spend ranges from $100 per year to $300,000. Based 
on a cost of $0.0000204 per dollar of assets under management for small 
fund, $0.0000005 per dollar assets under management for medium funds, 
and $0.0000046 per dollar of assets under management for large 
funds,\9\ the staff estimates compliance with rule 2a-7 costs the fund 
industry approximately $7.6 million per year.\10\ Based on responses 
from individuals in the money market fund industry, the staff estimates 
that some of the largest fund complexes have created computer programs 
for maintaining and preserving compliance records for rule 2a-7. Based 
on a cost of $0.0000231 per dollar of assets under management for large 
funds, the staff estimates that total annualized capital/startup costs 
range from $0 for small funds to $37.5 million for all large funds. 
Commission staff further estimates that, even absent the requirements 
of rule 2a-7, money market funds would spend at least half of the 
amount for capital costs ($19 million) and for record preservation 
($3.8 million) to establish and maintain these records and the systems 
for preserving them as a part of sound business practices to ensure 
diversification and minimal credit risk in a portfolio for a fund that 
seeks to maintain a stable price per share.
---------------------------------------------------------------------------

    \8\ The amount of assets under management in individual money 
market funds ranges from approximately $400,000 to $109 billion.
    \9\ For purpose of this PRA submission, Commission staff used 
the following categories for fund sizes: (i) Small--money market 
funds with $50 million or less in assets under management, (ii) 
medium--money market funds with more than $50 million up to and 
including $1 billion in assets under management; and (iii) large--
money market funds with more than $1 billion in assets under 
management.
    \10\ The staff estimated the annual cost of preserving the 
required books and records by identifying the annual costs incurred 
by several funds and then relating this total cost to the average 
net assets of these funds during the year. With a total of $2.2 
billion under management in small funds, $174.1 billion under 
management in medium funds and $1623.8 billion under management in 
large funds, the costs of preservation were estimated as follows: 
((0.0000204 x $2.2 billion) + (0.0000005 x $174.1) + (0.0000046 x 
$1623.8 billion) = $7.6 million. See supra note 9 regarding sizes of 
large, medium, and small funds.
---------------------------------------------------------------------------

    The collections of information required by rule 2a-7 are necessary 
to obtain the benefits described above. Notices to the Commission will 
not be kept confidential. An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless it displays a currently valid control number.
    Written comments are requested on: (a) Whether the collections of 
information are necessary for the proper performance of the functions 
of the Commission, including whether the information has practical 
utility; (b) the accuracy of the Commission's estimate of the burdens 
of the collection of information; (c) ways to enhance the quality, 
utility and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. Consideration will be given to 
comments and suggestions submitted in writing within 60 days of this 
publication.
    Please direct your written comments to R. Corey Booth, Director/
Chief Information Officer, Office of Information Technology, Securities 
and Exchange Commission, 100 F. Street, NE., Washington, DC 20549.

    Dated: December 20, 2005.
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-8065 Filed 12-28-05; 8:45 am]
BILLING CODE 8010-01-P