Proposed Collection; Comment Request, 15006-15007 [2011-6364]
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Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices
governs the custody of the assets of
registered management investment
companies (‘‘funds’’) with custodians
outside the United States.1 Under Rule
17f–5, the fund’s board of directors must
find that it is reasonable to rely on each
delegate it selects to act as the fund’s
foreign custody manager. The delegate
must agree to provide written reports
that notify the board when the fund’s
assets are placed with a foreign
custodian and when any material
change occurs in the fund’s custody
arrangements. The delegate must agree
to exercise reasonable care, prudence,
and diligence, or to adhere to a higher
standard of care. When the foreign
custody manager selects an eligible
foreign custodian, it must determine
that the fund’s assets will be subject to
reasonable care if maintained with that
custodian, and that the written contract
that governs each custody arrangement
will provide reasonable care for fund
assets. The contract must contain
certain specified provisions or others
that provide at least equivalent care.
The foreign custody manager must
establish a system to monitor the
performance of the contract and the
appropriateness of continuing to
maintain assets with the eligible foreign
custodian.
The collection of information
requirements in rule 17f–5 are intended
to provide protection for fund assets
maintained with a foreign bank
custodian whose use is not authorized
by statutory provisions that govern fund
custody arrangements,2 and that is not
subject to regulation and examination
by U.S. regulators. The requirement that
the fund board determine that it is
reasonable to rely on each delegate is
intended to ensure that the board
carefully considers each delegate’s
qualifications to perform its
responsibilities. The requirement that
the delegate provide written reports to
the board is intended to ensure that the
delegate notifies the board of important
developments concerning custody
arrangements so that the board may
exercise effective oversight. The
requirement that the delegate agree to
exercise reasonable care is intended to
provide assurances to the fund that the
delegate will properly perform its
duties.
The requirements that the foreign
custody manager determine that fund
assets will be subject to reasonable care
with the eligible foreign custodian and
1 17 CFR 270.17f–5. All references to rules 17f–
5, 17f–7, 17d–1, or 19b–1 in this notice are to 17
CFR 270.17f–5, 17 CFR 270.17f–7, 17 CFR 270.17d–
1, and 17 CFR 270.19b–1, respectively.
2 See section 17(f) of the Investment Company Act
(15 U.S.C. 80a–17(f)).
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under the custody contract, and that
each contract contain specified
provisions or equivalent provisions, are
intended to ensure that the delegate has
evaluated the level of care provided by
the custodian, that it weighs the
adequacy of contractual provisions, and
that fund assets are protected by
minimal contractual safeguards. The
requirement that the foreign custody
manager establish a monitoring system
is intended to ensure that the manager
periodically reviews each custody
arrangement and takes appropriate
action if developing custody risks may
threaten fund assets.
Commission staff estimates that each
year, approximately 135 registrants 3
could be required to make an average of
one response per registrant under rule
17f–5, requiring approximately 2.5
hours of board of director time per
response, to make the necessary
findings concerning foreign custody
managers. The total annual burden
associated with these requirements of
the rule is up to approximately 337.5
hours (135 registrants × 2.5 hours per
registrant). The staff further estimates
that during each year, approximately 15
global custodians 4 are required to make
an average of 4 responses per custodian
concerning the use of foreign custodians
other than depositories. The staff
estimates that each response will take
approximately 270 hours, requiring
approximately 1,080 total hours
annually per custodian. The total
annual burden associated with these
requirements of the rule is
approximately 16,200 hours (15 global
custodians × 1,080 hours per custodian).
Therefore, the total annual burden of all
collection of information requirements
of rule 17f–5 is estimated to be up to
16,537.5 hours (337.5 + 16,200). The
total annual cost of burden hours is
estimated to be $4,914,000 (337.5 hours
× $4,000/hour for board of director’s
time, plus 16,200 hours × $220/hour for
a trust administrator’s time).5
Compliance with the collection of
information requirements of the rule is
necessary to obtain the benefit of relying
on the rule’s permission for funds to
3 This figure is an estimate of the number of new
funds each year, based on data reported by funds
in 2010 on Form N–1A and Form N–2. In practice,
not all funds will use foreign custody managers,
and the actual figure may be smaller.
4 This estimate is based on staff research.
5 The board hourly rate is based on fund industry
representations. The $220/hour figure for a trust
administrator is from SIFMA’s Management &
Professional Earnings in the Securities Industry
2010, modified to account for an 1,800-hour workyear and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead.
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maintain their assets in foreign
custodians.
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act. The estimate
is not derived from a comprehensive or
even a representative survey or study of
the costs of Commission rules and
forms.
Written comments are invited on: (a)
Whether the collection of information is
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 burden 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 Thomas Bayer, Chief Information
Officer, Securities and Exchange
Commission, C/O Remi Pavlik-Simon,
6432 General Green Way, Alexandria,
VA 22312; or send an e-mail to:
PRA_Mailbox@sec.gov.
Dated: March 15, 2011.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–6365 Filed 3–17–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 17f–7; SEC File No. 270–470;
OMB Control No. 3235–0529.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting 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 17f–7 (17 CFR 270.17f–7)
permits funds to maintain their assets in
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Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices
foreign securities depositories based on
conditions that reflect the operations
and role of these depositories.1 Rule
17f–7 contains some ‘‘collection of
information’’ requirements. An eligible
securities depository has to meet
minimum standards for a depository.
The fund or its investment adviser
generally determines whether the
depository complies with those
requirements based on information
provided by the fund’s primary
custodian (a bank that acts as global
custodian). The depository custody
arrangement has to meet certain risk
limiting requirements. The fund can
obtain indemnification or insurance
arrangements that adequately protect
the fund against custody risks. The fund
or its investment adviser generally
determines whether indemnification or
insurance provisions are adequate. If the
fund does not rely on indemnification
or insurance, the fund’s contract with its
primary custodian is required to state
that the custodian will provide to the
fund or its investment adviser a custody
risk analysis of each depository, monitor
risks on a continuous basis, and
promptly notify the fund or its adviser
of material changes in risks. The
primary custodian and other custodians
also are required to agree to exercise
reasonable care.
The collection of information
requirements in rule 17f–7 are intended
to provide workable standards that
protect funds from the risks of using
securities depositories while assigning
appropriate responsibilities to the
fund’s primary custodian and
investment adviser based on their
capabilities. The requirement that the
depository meet specified minimum
standards is intended to ensure that the
depository is subject to basic safeguards
deemed appropriate for all depositories.
The requirement that the custody
contract state that the fund’s primary
custodian will provide an analysis of
the custody risks of depository
arrangements, monitor the risks, and
report on material changes is intended
to provide essential information about
custody risks to the fund’s investment
adviser as necessary for it to approve the
continued use of the depository. The
requirement that the primary custodian
agree to exercise reasonable care is
intended to provide assurances that its
services and the information it provides
will meet an appropriate standard of
care. The alternative requirement that
the funds obtain adequate
1 Custody of Investment Company Assets Outside
the United States, Investment Company Act Release
No. IC–23815 (April 29, 1999) (64 FR 24489 (May
6, 1999)).
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18:30 Mar 17, 2011
Jkt 223001
indemnification or insurance against the
custody risks of depository
arrangements is intended to provide
another, potentially less burdensome
means to protect assets held in
depository arrangements.
The staff estimates that each of
approximately 836 investment advisers 2
will make an average of 8 responses
annually under the rule to address
depository compliance with minimum
requirements, any indemnification or
insurance arrangements, and reviews of
risk analyses or notifications. The staff
estimates each response will take 6
hours, requiring a total of approximately
48 hours for each adviser. The total
annual burden associated with these
requirements of the rule will be
approximately 40,128 hours (836
advisers × 48 hours per adviser). The
staff further estimates that during each
year, each of approximately 15 global
custodians will make an average of 4
responses to analyze custody risks and
provide notice of any material changes
to custody risk under the rule. The staff
estimates that each response will take
260 hours, requiring approximately
1040 hours annually per custodian.3
The total annual burden associated with
these requirements is approximately
15,600 hours (15 custodians × 1040
hours). Therefore, the staff estimates
that the total annual burden associated
with all collection of information
requirements of the rule is 55,728 hours
(40,128 + 15,600). The total annual cost
of burden hours is estimated to be
$14,948,736 (40,128 × $287 for a
portfolio manager, plus 15,600 hours ×
$220/hour for a trust administrator’s
time).4 The estimate of average burden
hours is made solely for the purposes of
the Paperwork Reduction Act. The
estimate is not derived from a
comprehensive or even a representative
survey or study of the costs of
Commission rules and forms.
Compliance with the collection of
information requirements of the rule is
necessary to obtain the benefit of relying
on the rule’s permission for funds to
maintain their assets in foreign
custodians.
Written comments are invited on: (a)
Whether the collection of information is
necessary for the proper performance of
the functions of the Commission,
2 At the start of 2011, 836 investment advisers
managed or sponsored open-end (including ETFs)
portfolios and closed-end registered funds.
3 These estimates are based on conversations with
representatives of the fund industry.
4 The salaries for a portfolio manager and a trust
administrator are from SIFMA’s Management &
Professional Earnings in the Securities Industry
2010, modified to account for an 1800-hour workyear and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead.
PO 00000
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Fmt 4703
Sfmt 4703
15007
including whether the information has
practical utility; (b) the accuracy of the
Commission’s estimate of the burden 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 Thomas Bayer, Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
6432 General Green Way, Alexandria,
VA 22312; or send an e-mail to:
PRA_Mailbox@sec.gov.
Dated: March 15, 2011.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–6364 Filed 3–17–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Form N–17D–1; SEC File No. 270–
231; OMB Control No. 3235–0229.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting 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.
Section 17(d) (15 U.S.C. 80a–17(d)) of
the Investment Company Act of 1940
(‘‘Act’’) authorizes the Commission to
adopt rules that protect funds and their
security holders from overreaching by
affiliated persons when the fund and the
affiliated person participate in any joint
enterprise or other joint arrangement or
profit-sharing plan. Rule 17d–1 under
the Act (17 CFR 270.17d–1) prohibits
funds and their affiliated persons from
participating in a joint enterprise, unless
an application regarding the transaction
has been filed with and approved by the
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]]>Agencies
[Federal Register Volume 76, Number 53 (Friday, March 18, 2011)]
[Notices]
[Pages 15006-15007]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6364]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.
Extension:
Rule 17f-7; SEC File No. 270-470; OMB Control No. 3235-0529.
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange
Commission (``Commission'') is soliciting 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 17f-7 (17 CFR 270.17f-7) permits funds to maintain their
assets in
[[Page 15007]]
foreign securities depositories based on conditions that reflect the
operations and role of these depositories.\1\ Rule 17f-7 contains some
``collection of information'' requirements. An eligible securities
depository has to meet minimum standards for a depository. The fund or
its investment adviser generally determines whether the depository
complies with those requirements based on information provided by the
fund's primary custodian (a bank that acts as global custodian). The
depository custody arrangement has to meet certain risk limiting
requirements. The fund can obtain indemnification or insurance
arrangements that adequately protect the fund against custody risks.
The fund or its investment adviser generally determines whether
indemnification or insurance provisions are adequate. If the fund does
not rely on indemnification or insurance, the fund's contract with its
primary custodian is required to state that the custodian will provide
to the fund or its investment adviser a custody risk analysis of each
depository, monitor risks on a continuous basis, and promptly notify
the fund or its adviser of material changes in risks. The primary
custodian and other custodians also are required to agree to exercise
reasonable care.
---------------------------------------------------------------------------
\1\ Custody of Investment Company Assets Outside the United
States, Investment Company Act Release No. IC-23815 (April 29, 1999)
(64 FR 24489 (May 6, 1999)).
---------------------------------------------------------------------------
The collection of information requirements in rule 17f-7 are
intended to provide workable standards that protect funds from the
risks of using securities depositories while assigning appropriate
responsibilities to the fund's primary custodian and investment adviser
based on their capabilities. The requirement that the depository meet
specified minimum standards is intended to ensure that the depository
is subject to basic safeguards deemed appropriate for all depositories.
The requirement that the custody contract state that the fund's primary
custodian will provide an analysis of the custody risks of depository
arrangements, monitor the risks, and report on material changes is
intended to provide essential information about custody risks to the
fund's investment adviser as necessary for it to approve the continued
use of the depository. The requirement that the primary custodian agree
to exercise reasonable care is intended to provide assurances that its
services and the information it provides will meet an appropriate
standard of care. The alternative requirement that the funds obtain
adequate indemnification or insurance against the custody risks of
depository arrangements is intended to provide another, potentially
less burdensome means to protect assets held in depository
arrangements.
The staff estimates that each of approximately 836 investment
advisers \2\ will make an average of 8 responses annually under the
rule to address depository compliance with minimum requirements, any
indemnification or insurance arrangements, and reviews of risk analyses
or notifications. The staff estimates each response will take 6 hours,
requiring a total of approximately 48 hours for each adviser. The total
annual burden associated with these requirements of the rule will be
approximately 40,128 hours (836 advisers x 48 hours per adviser). The
staff further estimates that during each year, each of approximately 15
global custodians will make an average of 4 responses to analyze
custody risks and provide notice of any material changes to custody
risk under the rule. The staff estimates that each response will take
260 hours, requiring approximately 1040 hours annually per
custodian.\3\ The total annual burden associated with these
requirements is approximately 15,600 hours (15 custodians x 1040
hours). Therefore, the staff estimates that the total annual burden
associated with all collection of information requirements of the rule
is 55,728 hours (40,128 + 15,600). The total annual cost of burden
hours is estimated to be $14,948,736 (40,128 x $287 for a portfolio
manager, plus 15,600 hours x $220/hour for a trust administrator's
time).\4\ The estimate of average burden hours is made solely for the
purposes of the Paperwork Reduction Act. The estimate is not derived
from a comprehensive or even a representative survey or study of the
costs of Commission rules and forms. Compliance with the collection of
information requirements of the rule is necessary to obtain the benefit
of relying on the rule's permission for funds to maintain their assets
in foreign custodians.
---------------------------------------------------------------------------
\2\ At the start of 2011, 836 investment advisers managed or
sponsored open-end (including ETFs) portfolios and closed-end
registered funds.
\3\ These estimates are based on conversations with
representatives of the fund industry.
\4\ The salaries for a portfolio manager and a trust
administrator are from SIFMA's Management & Professional Earnings in
the Securities Industry 2010, modified to account for an 1800-hour
work-year and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead.
---------------------------------------------------------------------------
Written comments are invited on: (a) Whether the collection of
information is 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 burden 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 Thomas Bayer, Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312; or send an
e-mail to: PRA_Mailbox@sec.gov.
Dated: March 15, 2011.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-6364 Filed 3-17-11; 8:45 am]
BILLING CODE 8011-01-P
