Submission for OMB Review; Comment Request, 9318-9320 [E9-4425]
Download as PDF
9318
Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices
the risks are manageable. Id.,
Attachment A.
The Postal Service filed much of the
supporting materials, including the
Governors’ Decision and the specific
Express Mail & Priority Mail Contract 5,
under seal. In its Request, the Postal
Service maintains that the contract and
related financial information, including
the customer’s name and the
accompanying analyses that provide
prices, terms, conditions, and financial
projections should remain under seal.
Id. at 2–3.
II. Notice of Filings
The Commission establishes Docket
Nos. MC2009–18 and CP2009–25 for
consideration of the Request pertaining
to the proposed Express Mail & Priority
Mail Contract 5 product and the related
contract, respectively. In keeping with
practice, these dockets are addressed on
a consolidated basis for purposes of this
order; however, future filings should be
made in the specific docket in which
issues being addressed pertain.
Interested persons may submit
comments on whether the Postal
Service’s filings in the captioned
dockets are consistent with the policies
of 39 U.S.C. 3632, 3633, or 3642 and 39
CFR part 3015 and 39 CFR 3020 subpart
B. Comments are due no later than
March 4, 2009. The public portions of
these filings can be accessed via the
Commission’s Web site (https://
www.prc.gov).
The Commission appoints Paul L.
Harrington to serve as Public
Representative in these dockets.
mstockstill on PROD1PC66 with NOTICES
III. Ordering Paragraphs
It is Ordered:
1. The Commission establishes Docket
Nos. MC2009–18 and CP2009–25 for
consideration of the matters raised in
each docket.
2. Pursuant to 39 U.S.C. 505, Paul L.
Harrington is appointed to serve as
officer of the Commission (Public
Representative) to represent the
interests of the general public in these
proceedings.
3. Comments by interested persons in
these proceedings are due no later than
March 4, 2009.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E9–4415 Filed 3–2–09; 8:45 am]
16:42 Mar 02, 2009
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 22c–2; SEC File No. 270–541; OMB
Control No. 3235–0620.
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 (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Rule 22c–2 (17 CFR 270.22c–2
‘‘Mutual Fund Redemption Fees’’)
under the Investment Company Act of
1940 (15 U.S.C. 80a) (the ‘‘Investment
Company Act’’ or ‘‘Act’’) requires the
board of directors (including a majority
of independent directors) of most
registered investment companies
(‘‘funds’’) to either approve a
redemption fee of up to two percent or
determine that imposition of a
redemption fee is not necessary or
appropriate for the fund. Rule 22c–2
also requires a fund to enter into written
agreements with their financial
intermediaries (such as broker-dealers
and retirement plan administrators)
under which the fund, upon request,
can obtain certain shareholder identity
and trading information from the
intermediaries. The written agreement
must also allow the fund to direct the
intermediary to prohibit further
purchases or exchanges by specific
shareholders that the fund has
identified as being engaged in
transactions that violate the fund’s
market timing policies. These
requirements enable funds to obtain the
information that they need to monitor
the frequency of short-term trading in
omnibus accounts and enforce their
market timing policies.
The rule includes three ‘‘collections
of information’’ within the meaning of
the Paperwork Reduction Act of 1995
(‘‘PRA’’).1 First, the rule requires boards
to either approve a redemption fee of up
to two percent or determine that
imposition of a redemption fee is not
necessary or appropriate for the fund.
Second, funds must enter into
information sharing agreements with all
1 44
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U.S.C. 3501–3520.
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Sfmt 4703
of their ‘‘financial intermediaries’’ 2 and
maintain a copy of the written
information sharing agreement with
each intermediary in an easily
accessible place for six years. Third,
pursuant to the information sharing
agreements, funds must have systems
that enable them to request frequent
trading information upon demand from
their intermediaries, and to enforce any
restrictions on trading required by funds
under the rule.
The collections of information created
by Rule 22c–2 are necessary for funds to
effectively assess redemption fees,
enforce their policies in frequent
trading, and monitor short-term trading,
including market timing, in omnibus
accounts. These collections of
information are mandatory for funds
that redeem shares within seven days of
purchase. The collections of information
also are necessary to allow Commission
staff to fulfill its examination and
oversight responsibilities.
Rule 22c–2(a)(1) requires the board of
directors of all registered investment
companies and series thereof (except for
money market funds, ETFs, or funds
that affirmatively permit short-term
trading of its securities) to approve a
redemption fee for the fund, or instead
make a determination that a redemption
fee is either not necessary or appropriate
for the fund. Commission staff
understands that the boards of all funds
currently in operation have undertaken
this process for the funds they currently
oversee, and the rule does not require
boards to review this determination
periodically once it has been made.
Accordingly, we expect that only boards
of newly registered funds or newly
created series thereof would undertake
this determination. Commission staff
estimates that approximately 300 funds
or series thereof (excluding money
market funds and ETFs) are newly
formed each year and would need to
make this determination.
Commission staff estimates that it
takes approximately 2 hours of the
boards’ time, as a whole, to approve a
2 The rule defines a Financial Intermediary as: (i)
Any broker, dealer, bank, or other person that holds
securities issued by the fund in nominee name; (ii)
a unit investment trust or fund that invests in the
fund in reliance on section 12(d)(i)(E) of the Act;
and (iii) in the case of a participant directed
employee benefit plan that owns the securities
issued by the fund, a retirement plan’s
administrator under section 316(A) of the Employee
Retirement Security Act of 1974 (29 U.S.C.
1002(16)(A) or any person that maintains the plans’
participant records. Financial Intermediary does not
include any person that the fund treats as an
individual investor with respect to the fund’s
policies established for the purpose of eliminating
or reducing any dilution of the value of the
outstanding securities issued by the fund. Rule 22c–
2(c)(1).
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Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices
redemption fee or make the required
determination. In addition, Commission
staff estimates that it takes compliance
personnel of the fund approximately 8
hours to prepare trading, compliance,
and other information regarding the
fund’s operations to enable the board to
make its determination, and takes
internal counsel of the fund
approximately 3 hours to review this
information and present its
recommendations to the board.
Therefore, for each fund board that
undertakes this determination process,
Commission staff estimates it expends
approximately 13 hours.3 As a result,
Commission staff estimates that the total
time spent for all funds on this process
is 3900 hours.4
Rule 22c–2(a)(2) requires a fund to
enter into information sharing
agreements with each of its financial
intermediaries. Commission staff
understands that all currently registered
funds have already entered into such
agreements with their intermediaries.
Funds enter into new relationships with
intermediaries from time to time,
however, which requires them to enter
into new information sharing
agreements. Commission staff
understands that, in general, funds enter
into information-sharing agreement
when they initially establish a
relationship with an intermediary,
which is typically executed as an
addendum to the distribution
agreement. Commission staff estimates
that there are approximately 7,254 openend fund series currently in operation
(excluding money market funds and
ETFs). However, the Commission staff
understands that most shareholder
information agreements are entered into
by the fund group (a group of funds
with a common investment adviser),
and estimates that there are currently
680 currently active fund groups.5
Commission staff estimates that, on
average, each active fund group enters
into relationships with approximately 5
new intermediaries each year.
Commission staff understands that
funds generally use a standard
information sharing agreement, drafted
by the fund or an outside entity, and
modifies that agreement according to
the requirements of each intermediary.
Commission staff estimates that
negotiating the terms and entering into
mstockstill on PROD1PC66 with NOTICES
3 This
calculation is based on the following
estimates: (2 hours of board time + 3 hours of
internal counsel time + 8 hours of compliance time
= 13 hours).
4 This calculation is based on the following
estimates: (13 hours × 300 funds = 3,900 hours).
5 ICI, 2008 Investment Company Fact Book at Fig
1.7 (2008) (https://www.ici.org/stats/latest/2008_
factbook.pdf).
VerDate Nov<24>2008
16:42 Mar 02, 2009
Jkt 217001
an information sharing agreement takes
a total of approximately 4 hours of
attorney time per intermediary
(representing 2.5 hours of fund attorney
time and 1.5 hours of intermediary
attorney time). Accordingly,
Commission staff estimates that each
existing fund group expends 20 hours
each year 6 to enter into new
information sharing agreements, and all
existing fund groups incur a total of
13,600 hours.
In addition, newly created funds
advised by new entrants (effectively
new fund groups) must enter into
information sharing agreements with all
of their financial intermediaries.
Commission staff estimates that there
are approximately 22 new funds or fund
groups that form each year that will
have to enter into information sharing
agreements with each of their
intermediaries.7 Commission staff
estimates that funds and fund groups
formed by new advisers typically have
relationships with significantly fewer
intermediaries than existing fund
groups, and estimates that new fund
groups will typically enter into
approximately 100 information sharing
agreements with their intermediaries
when they begin operations.8 As
discussed previously, Commission staff
estimates that it takes approximately 4
hours of attorney time per intermediary
to enter into information sharing
agreements. Therefore, Commission staff
estimates that each newly formed fund
group will incur 400 hours of attorney
time,9 and all newly formed fund
groups will incur a total of 8800 hours
to enter into information sharing
agreements with their intermediaries.10
Rule 22c–2(a)(3) requires funds to
maintain records of all information
sharing agreements for 6 years in an
easily accessible place. Commission
staff estimates that there are
approximately 7,254 open-end fund
series currently in operation (excluding
money market funds and ETFs).
However, the Commission staff
anticipates that most shareholder
information agreements will be stored at
6 This estimate is based on the following
calculations: (4 hours × 5 new intermediaries = 20
hours).
7 ICI, 2008 Investment Company Fact Book at Fig
1.7 (2008) (https://www.ici.org/stats/latest/2008_
factbook.pdf).
8 Commission staff understands that funds
generally use a standard information sharing
agreement, drafted by the fund or an outside entity,
and then modifies that agreement to according the
requirements of each intermediary.
9 This estimate is based on the following
calculations: (4 hours × 100 intermediaries = 400
hours).
10 This estimate is based on the following
calculations: (22 fund groups × 400 hours + 8,800
hours).
PO 00000
Frm 00109
Fmt 4703
Sfmt 4703
9319
the fund group level and estimates that
there are currently approximately 680
fund groups. Commission staff estimates
that maintaining records of information
sharing agreements requires
approximately 10 minutes of time spent
by a general clerk per fund, each year.
Accordingly, Commission staff
estimates that all funds will incur
approximately 113 hours 11 in
complying with the recordkeeping
requirement of rule 22c–2(a)(3).
Therefore, Commission staff estimates
that to comply with the information
sharing agreement requirements of rule
22c–2(a)(1) and (3) requires a total of
22,513 hours.12
The Commission staff estimates that
on average, each fund group requests
shareholder information once a week,
and gives instructions regarding the
restriction of shareholder trades every
day, for a total of 417 responses related
to information sharing systems per fund
group each year, and a total 283,560
responses for all fund groups annually.
In addition, the staff estimates that
funds make 300 responses related to
board determinations, 3,400 responses
related to new intermediaries of existing
fund groups, 2,200 responses related to
new fund group information sharing
agreements, and 680 responses related
to recordkeeping, for a total of 6,580
responses related to the other
requirements of rule 22c–2. Therefore,
the Commission staff estimates that the
total number of responses is 290,140
(283,560 + 6,580 = 290,140).
Commission staff also estimates that
there are 7,254 potential respondents
making 290,140 responses each year.
The Commission staff estimates that the
total hour burden for rule 22c–2 is
26,413 hours.13
Rule 22c–2 requires funds to enter
into information sharing agreements
with their intermediaries that enable
funds to, upon request (i) be provided
certain information regarding
shareholders and their trades that are
held through a financial intermediary or
an indirect intermediary, and (ii) require
the intermediary to execute instructions
from the fund restricting or prohibiting
further purchases or exchanges by
shareholders that violate the fund’s
frequent trading policies. As a result of
this requirement, some funds and
11 This estimate is based on the following
calculations: (10 minutes × 680 fund groups = 6,800
minutes); (6,800 minutes / 60 = 113 hours).
12 This estimate is based on the following
calculations: (13,600 hours + 8,800 hours + 113
hours = 22,513 hours).
13 This estimate is based on the following
calculations: (3,900 hours (board determination) +
22,513 hours (information sharing agreements) =
26,413 total hours).
E:\FR\FM\03MRN1.SGM
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Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices
mstockstill on PROD1PC66 with NOTICES
intermediaries have had to develop and
maintain information sharing,
monitoring, and order execution
systems (collectively ‘‘information
sharing systems’’).
In general, the staff estimates that the
typical charges involved in operating
and maintaining information sharing
systems average 25 cents for every 100
account transactions requested. The
Commission staff estimates that, on
average, each fund group requests
information for 100,000 transactions
each week, incurring costs of $250
weekly, or $13,000 a year.14 In addition,
the Commission staff estimates that
funds pay access fees to use these
information sharing systems (or
comparable internal costs) of
approximately $30,000 each year. The
Commission staff therefore estimates
that a fund group would typically incur
approximately $43,000 in costs each
year related to the operation and
maintenance of information sharing
systems required by rule 22c–2. The
Commission staff has previously
estimated that there are approximately
680 fund groups currently active, and
therefore estimates that all fund groups
incur a total of $29,240,000 in ongoing
costs each year related to maintaining
and operating information sharing
systems.15
Commission staff estimates that it
requires approximately $100,000 to
purchase or develop and implement
such an information sharing system for
the first time. Commission staff has
previously estimated that approximately
22 funds or fund groups are formed each
year managed by new advisers, and
therefore estimates that all these funds
would incur total costs of approximately
$2,200,000.16
Responses provided to the
Commission will be accorded the same
level of confidentiality accorded to
other responses provided to the
Commission in the context of its
examination and oversight program.
Responses provided in the context of
the Commission’s examination and
oversight program are generally kept
confidential. Complying with the
information collections of rule 22c–2 is
mandatory for funds that redeem their
shares within 7 days of purchase. An
agency may not conduct or sponsor, and
a person is not required to respond to
14 This estimate is based on the following
calculations: (100,000 transaction requests ×
0.0025¢ = $250); ($250 × 52 weeks = $13,000).
15 This estimate is based on the following
calculation: (680 fund groups × $43,000 =
$29,240,000).
16 This estimate is based on the following
estimate: ($100,000 × 22 new fund groups =
$2,200,000).
VerDate Nov<24>2008
16:42 Mar 02, 2009
Jkt 217001
a collection of information unless it
displays a currently valid control
number.
Please direct general comments
regarding the above information to the
following persons: (i) Desk Officer for
the Securities and Exchange
Commission, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503
or send an e-mail to: Shagufta_Ahmed@
omb.eop.gov; and (ii) Charles Boucher,
Director/CIO, Securities and Exchange
Commission, C/O Shirley Martinson,
6432 General Green Way, Alexandria,
VA 22312; or send an e-mail to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: February 25, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–4425 Filed 3–2–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
In the Matter of Cincinnati Microwave,
Inc., Core Technologies Pennsylvania,
Inc., First Central Financial Corp.,
Imark Technologies, Inc. (n/k/a Pharm
Control Ltd.), Molten Metal
Technology, Inc., MRS Technology,
Inc., Sun Television & Appliances, Inc.,
and Telegroup, Inc.; File No. 500–1;
Order of Suspension of Trading
February 27, 2009.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Cincinnati
Microwave, Inc. because it has not filed
any periodic reports since the period
ended September 29, 1996.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Core
Technologies Pennsylvania, Inc.
because it has not filed any periodic
reports since the period ended
September 30, 1998, except for a Form
10–Q it filed for the period ended
September 30, 2008.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of First Central
Financial Corp. because it has not filed
any periodic reports since the period
ended June 30, 1997.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Imark
Technologies, Inc. (n/k/a Pharm Control
PO 00000
Frm 00110
Fmt 4703
Sfmt 4703
Ltd.) because it has not filed any
periodic reports since the period ended
March 31, 1998.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Molten
Metal Technology, Inc. because it has
not filed any periodic reports since the
period ended September 30, 1997.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of MRS
Technology, Inc. because it has not filed
any periodic reports since the period
ended September 30, 1998.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Sun
Television & Appliances, Inc. because it
has not filed any periodic reports since
the period ended November 28, 1998.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Telegroup,
Inc. because it has not filed any periodic
reports since the period ended
September 30, 1998.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the
securities of the above-listed companies
is suspended for the period from 9:30
a.m. EST on February 27, 2009, through
11:59 p.m. EDT on March 12, 2009.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–4594 Filed 2–27–09; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59448; File No. SR–CBOE–
2009–011]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Related to the Simple
Auction Liaison (SAL)
February 25, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
E:\FR\FM\03MRN1.SGM
03MRN1
Agencies
[Federal Register Volume 74, Number 40 (Tuesday, March 3, 2009)]
[Notices]
[Pages 9318-9320]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-4425]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 22c-2; SEC File No. 270-541; OMB Control No. 3235-0620.
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
(the ``Commission'') has submitted to the Office of Management and
Budget a request for extension of the previously approved collection of
information discussed below.
Rule 22c-2 (17 CFR 270.22c-2 ``Mutual Fund Redemption Fees'') under
the Investment Company Act of 1940 (15 U.S.C. 80a) (the ``Investment
Company Act'' or ``Act'') requires the board of directors (including a
majority of independent directors) of most registered investment
companies (``funds'') to either approve a redemption fee of up to two
percent or determine that imposition of a redemption fee is not
necessary or appropriate for the fund. Rule 22c-2 also requires a fund
to enter into written agreements with their financial intermediaries
(such as broker-dealers and retirement plan administrators) under which
the fund, upon request, can obtain certain shareholder identity and
trading information from the intermediaries. The written agreement must
also allow the fund to direct the intermediary to prohibit further
purchases or exchanges by specific shareholders that the fund has
identified as being engaged in transactions that violate the fund's
market timing policies. These requirements enable funds to obtain the
information that they need to monitor the frequency of short-term
trading in omnibus accounts and enforce their market timing policies.
The rule includes three ``collections of information'' within the
meaning of the Paperwork Reduction Act of 1995 (``PRA'').\1\ First, the
rule requires boards to either approve a redemption fee of up to two
percent or determine that imposition of a redemption fee is not
necessary or appropriate for the fund. Second, funds must enter into
information sharing agreements with all of their ``financial
intermediaries'' \2\ and maintain a copy of the written information
sharing agreement with each intermediary in an easily accessible place
for six years. Third, pursuant to the information sharing agreements,
funds must have systems that enable them to request frequent trading
information upon demand from their intermediaries, and to enforce any
restrictions on trading required by funds under the rule.
---------------------------------------------------------------------------
\1\ 44 U.S.C. 3501-3520.
\2\ The rule defines a Financial Intermediary as: (i) Any
broker, dealer, bank, or other person that holds securities issued
by the fund in nominee name; (ii) a unit investment trust or fund
that invests in the fund in reliance on section 12(d)(i)(E) of the
Act; and (iii) in the case of a participant directed employee
benefit plan that owns the securities issued by the fund, a
retirement plan's administrator under section 316(A) of the Employee
Retirement Security Act of 1974 (29 U.S.C. 1002(16)(A) or any person
that maintains the plans' participant records. Financial
Intermediary does not include any person that the fund treats as an
individual investor with respect to the fund's policies established
for the purpose of eliminating or reducing any dilution of the value
of the outstanding securities issued by the fund. Rule 22c-2(c)(1).
---------------------------------------------------------------------------
The collections of information created by Rule 22c-2 are necessary
for funds to effectively assess redemption fees, enforce their policies
in frequent trading, and monitor short-term trading, including market
timing, in omnibus accounts. These collections of information are
mandatory for funds that redeem shares within seven days of purchase.
The collections of information also are necessary to allow Commission
staff to fulfill its examination and oversight responsibilities.
Rule 22c-2(a)(1) requires the board of directors of all registered
investment companies and series thereof (except for money market funds,
ETFs, or funds that affirmatively permit short-term trading of its
securities) to approve a redemption fee for the fund, or instead make a
determination that a redemption fee is either not necessary or
appropriate for the fund. Commission staff understands that the boards
of all funds currently in operation have undertaken this process for
the funds they currently oversee, and the rule does not require boards
to review this determination periodically once it has been made.
Accordingly, we expect that only boards of newly registered funds or
newly created series thereof would undertake this determination.
Commission staff estimates that approximately 300 funds or series
thereof (excluding money market funds and ETFs) are newly formed each
year and would need to make this determination.
Commission staff estimates that it takes approximately 2 hours of
the boards' time, as a whole, to approve a
[[Page 9319]]
redemption fee or make the required determination. In addition,
Commission staff estimates that it takes compliance personnel of the
fund approximately 8 hours to prepare trading, compliance, and other
information regarding the fund's operations to enable the board to make
its determination, and takes internal counsel of the fund approximately
3 hours to review this information and present its recommendations to
the board. Therefore, for each fund board that undertakes this
determination process, Commission staff estimates it expends
approximately 13 hours.\3\ As a result, Commission staff estimates that
the total time spent for all funds on this process is 3900 hours.\4\
---------------------------------------------------------------------------
\3\ This calculation is based on the following estimates: (2
hours of board time + 3 hours of internal counsel time + 8 hours of
compliance time = 13 hours).
\4\ This calculation is based on the following estimates: (13
hours x 300 funds = 3,900 hours).
---------------------------------------------------------------------------
Rule 22c-2(a)(2) requires a fund to enter into information sharing
agreements with each of its financial intermediaries. Commission staff
understands that all currently registered funds have already entered
into such agreements with their intermediaries. Funds enter into new
relationships with intermediaries from time to time, however, which
requires them to enter into new information sharing agreements.
Commission staff understands that, in general, funds enter into
information-sharing agreement when they initially establish a
relationship with an intermediary, which is typically executed as an
addendum to the distribution agreement. Commission staff estimates that
there are approximately 7,254 open-end fund series currently in
operation (excluding money market funds and ETFs). However, the
Commission staff understands that most shareholder information
agreements are entered into by the fund group (a group of funds with a
common investment adviser), and estimates that there are currently 680
currently active fund groups.\5\ Commission staff estimates that, on
average, each active fund group enters into relationships with
approximately 5 new intermediaries each year. Commission staff
understands that funds generally use a standard information sharing
agreement, drafted by the fund or an outside entity, and modifies that
agreement according to the requirements of each intermediary.
Commission staff estimates that negotiating the terms and entering into
an information sharing agreement takes a total of approximately 4 hours
of attorney time per intermediary (representing 2.5 hours of fund
attorney time and 1.5 hours of intermediary attorney time).
Accordingly, Commission staff estimates that each existing fund group
expends 20 hours each year \6\ to enter into new information sharing
agreements, and all existing fund groups incur a total of 13,600 hours.
---------------------------------------------------------------------------
\5\ ICI, 2008 Investment Company Fact Book at Fig 1.7 (2008)
(https://www.ici.org/stats/latest/2008_factbook.pdf).
\6\ This estimate is based on the following calculations: (4
hours x 5 new intermediaries = 20 hours).
---------------------------------------------------------------------------
In addition, newly created funds advised by new entrants
(effectively new fund groups) must enter into information sharing
agreements with all of their financial intermediaries. Commission staff
estimates that there are approximately 22 new funds or fund groups that
form each year that will have to enter into information sharing
agreements with each of their intermediaries.\7\ Commission staff
estimates that funds and fund groups formed by new advisers typically
have relationships with significantly fewer intermediaries than
existing fund groups, and estimates that new fund groups will typically
enter into approximately 100 information sharing agreements with their
intermediaries when they begin operations.\8\ As discussed previously,
Commission staff estimates that it takes approximately 4 hours of
attorney time per intermediary to enter into information sharing
agreements. Therefore, Commission staff estimates that each newly
formed fund group will incur 400 hours of attorney time,\9\ and all
newly formed fund groups will incur a total of 8800 hours to enter into
information sharing agreements with their intermediaries.\10\
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\7\ ICI, 2008 Investment Company Fact Book at Fig 1.7 (2008)
(https://www.ici.org/stats/latest/2008_factbook.pdf).
\8\ Commission staff understands that funds generally use a
standard information sharing agreement, drafted by the fund or an
outside entity, and then modifies that agreement to according the
requirements of each intermediary.
\9\ This estimate is based on the following calculations: (4
hours x 100 intermediaries = 400 hours).
\10\ This estimate is based on the following calculations: (22
fund groups x 400 hours + 8,800 hours).
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Rule 22c-2(a)(3) requires funds to maintain records of all
information sharing agreements for 6 years in an easily accessible
place. Commission staff estimates that there are approximately 7,254
open-end fund series currently in operation (excluding money market
funds and ETFs). However, the Commission staff anticipates that most
shareholder information agreements will be stored at the fund group
level and estimates that there are currently approximately 680 fund
groups. Commission staff estimates that maintaining records of
information sharing agreements requires approximately 10 minutes of
time spent by a general clerk per fund, each year. Accordingly,
Commission staff estimates that all funds will incur approximately 113
hours \11\ in complying with the recordkeeping requirement of rule 22c-
2(a)(3).
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\11\ This estimate is based on the following calculations: (10
minutes x 680 fund groups = 6,800 minutes); (6,800 minutes / 60 =
113 hours).
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Therefore, Commission staff estimates that to comply with the
information sharing agreement requirements of rule 22c-2(a)(1) and (3)
requires a total of 22,513 hours.\12\
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\12\ This estimate is based on the following calculations:
(13,600 hours + 8,800 hours + 113 hours = 22,513 hours).
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The Commission staff estimates that on average, each fund group
requests shareholder information once a week, and gives instructions
regarding the restriction of shareholder trades every day, for a total
of 417 responses related to information sharing systems per fund group
each year, and a total 283,560 responses for all fund groups annually.
In addition, the staff estimates that funds make 300 responses related
to board determinations, 3,400 responses related to new intermediaries
of existing fund groups, 2,200 responses related to new fund group
information sharing agreements, and 680 responses related to
recordkeeping, for a total of 6,580 responses related to the other
requirements of rule 22c-2. Therefore, the Commission staff estimates
that the total number of responses is 290,140 (283,560 + 6,580 =
290,140). Commission staff also estimates that there are 7,254
potential respondents making 290,140 responses each year. The
Commission staff estimates that the total hour burden for rule 22c-2 is
26,413 hours.\13\
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\13\ This estimate is based on the following calculations:
(3,900 hours (board determination) + 22,513 hours (information
sharing agreements) = 26,413 total hours).
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Rule 22c-2 requires funds to enter into information sharing
agreements with their intermediaries that enable funds to, upon request
(i) be provided certain information regarding shareholders and their
trades that are held through a financial intermediary or an indirect
intermediary, and (ii) require the intermediary to execute instructions
from the fund restricting or prohibiting further purchases or exchanges
by shareholders that violate the fund's frequent trading policies. As a
result of this requirement, some funds and
[[Page 9320]]
intermediaries have had to develop and maintain information sharing,
monitoring, and order execution systems (collectively ``information
sharing systems'').
In general, the staff estimates that the typical charges involved
in operating and maintaining information sharing systems average 25
cents for every 100 account transactions requested. The Commission
staff estimates that, on average, each fund group requests information
for 100,000 transactions each week, incurring costs of $250 weekly, or
$13,000 a year.\14\ In addition, the Commission staff estimates that
funds pay access fees to use these information sharing systems (or
comparable internal costs) of approximately $30,000 each year. The
Commission staff therefore estimates that a fund group would typically
incur approximately $43,000 in costs each year related to the operation
and maintenance of information sharing systems required by rule 22c-2.
The Commission staff has previously estimated that there are
approximately 680 fund groups currently active, and therefore estimates
that all fund groups incur a total of $29,240,000 in ongoing costs each
year related to maintaining and operating information sharing
systems.\15\
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\14\ This estimate is based on the following calculations:
(100,000 transaction requests x 0.0025[cent] = $250); ($250 x 52
weeks = $13,000).
\15\ This estimate is based on the following calculation: (680
fund groups x $43,000 = $29,240,000).
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Commission staff estimates that it requires approximately $100,000
to purchase or develop and implement such an information sharing system
for the first time. Commission staff has previously estimated that
approximately 22 funds or fund groups are formed each year managed by
new advisers, and therefore estimates that all these funds would incur
total costs of approximately $2,200,000.\16\
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\16\ This estimate is based on the following estimate: ($100,000
x 22 new fund groups = $2,200,000).
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Responses provided to the Commission will be accorded the same
level of confidentiality accorded to other responses provided to the
Commission in the context of its examination and oversight program.
Responses provided in the context of the Commission's examination and
oversight program are generally kept confidential. Complying with the
information collections of rule 22c-2 is mandatory for funds that
redeem their shares within 7 days of purchase. 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.
Please direct general comments regarding the above information to
the following persons: (i) Desk Officer for the Securities and Exchange
Commission, Office of Management and Budget, Room 10102, New Executive
Office Building, Washington, DC 20503 or send an e-mail to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Charles Boucher, Director/CIO, Securities
and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way,
Alexandria, VA 22312; or send an e-mail to: PRA_Mailbox@sec.gov.
Comments must be submitted to OMB within 30 days of this notice.
Dated: February 25, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4425 Filed 3-2-09; 8:45 am]
BILLING CODE 8011-01-P