Proposed Collection; Comment Request, 15005-15006 [2011-6365]
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Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices
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the Commission for permission to
distribute long-term capital gains more
than once a year if the fund did not
foresee the circumstances that created
the need for the distribution. The
application must set forth the pertinent
facts and explain the circumstances that
justify the distribution.4 An application
that meets those requirements is
deemed to be granted unless the
Commission denies the request within
15 days after the Commission receives
the application.
Commission staff estimates that, on
average, each year six funds file an
application under rule 19b–1(e). The
staff understands that funds that file an
application generally use outside
counsel to prepare the application. The
cost burden of using outside counsel is
discussed below. The staff estimates
that, on average, the fund’s investment
adviser spends a total of approximately
4 hours to review an application,
including 3.5 hours by an assistant
general counsel, 0.5 hours by an
administrative assistant, and the fund’s
board of directors spends an additional
1 hour, for a total of 5 hours. Thus, the
Commission staff estimates that the
annual hour burden of the collection of
information imposed by rule 19b–1 is
approximately five hours per fund, for
a total burden of 30 hours.
The Commission staff estimates that
there is no hourly burden associated
with complying with the collection of
information component of rule 19b–1(c).
As noted above, the Commission staff
understands that funds that file an
application under rule 19b–1(e)
generally use outside counsel to prepare
the application.5 The staff estimates
that, on average, outside counsel spends
10 hours preparing a rule 19b–1(e)
application, including eight hours by an
associate and two hours by a partner.
Outside counsel billing arrangements
and rates vary based on numerous
factors, but the staff has estimated the
average cost of outside counsel as $400
per hour, based on information received
from funds, intermediaries, and their
counsel. The staff therefore estimates
that the average cost of outside counsel
preparation of the 19b–(e) exemptive
application is $4,000.6 Thus, the staff
estimates that the total annual cost
burden imposed by the exemptive
4 Rule 19b–1(e) also requires that the application
comply with rule 0–2 [17 CFR 270.02], which sets
forth the general requirements for papers and
applications filed with the Commission.
5 This understanding is based on conversations
with representatives from the fund industry.
6 This estimate is based on the following
calculation: 10 hours multiplied by $400 per hour
equals $4,000.
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18:30 Mar 17, 2011
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application requirements of rule 19b–
1(e) is $24,000.7
The Commission staff estimates that
there are approximately 3759 UITs 8 that
may rely on rule 19b–1(c) to make
capital gains distributions. The staff
estimates that, on average, these UITs
rely on rule 19b–1(c) once a year to
make a capital gains distribution.9 In
most cases, the trustee of the UIT is
responsible for preparing and sending
the notices that must accompany a
capital gains distribution under rule
19b–1(c)(2). These notices require
limited preparation, the cost of which
accounts for only a small, indiscrete
portion of the comprehensive fee
charged by the trustee for its services to
the UIT. The staff believes that as a
matter of good business practices, and
for tax preparation reasons, UITs would
collect and distribute the capital gains
information required to be sent to
unitholders under rule 19b–1(c) even in
the absence of the rule. The staff
estimates that the cost of preparing a
notice for a capital gains distribution
under rule 19b–1(c)(2) is approximately
$50. There is no separate cost to mail
the notices because they are mailed with
the capital gains distribution. Thus, the
staff estimates that the capital gains
distribution notice requirement imposes
an annual cost on UITs of
approximately $187,950.10 The staff
therefore estimates that the total cost
imposed by rule 19b–1 is $211,950
($187,950 plus $24,000 equals
$211,950).
Based on these calculations, the total
number of respondents for rule 19b–1 is
estimated to be 3,765 (3759 UIT
portfolios + 6 funds filing an application
under rule 19b–1(e)), the total annual
hour burden is estimated to be 30 hours,
and the total annual cost burden is
estimated to be $211,950. These
estimates of average annual burden
hours and costs are made solely for
purposes of the Paperwork Reduction
Act. The collections of information
required by 19b–1(c) and 19b–1(e) are
necessary to obtain the benefits
7 This estimate is based on the following
calculation: $4,000 multiplied by 6 (funds) equals
$24,000.
8 The Investment Company Institute, Unit
Investment Trust Data, (January 2011).
9 The number of times UITs rely on the rule to
make capital gains distributions depends on a wide
range of factors and, thus, can vary greatly across
years. A number of UITs are organized as grantor
trusts, and therefore do not generally make capital
gains distributions under rule 19b–1(c), or may not
rely on rule 19b–1(c) as they do not meet the rule’s
requirements. Other UITs may distribute capital
gains biannually, annually, quarterly, or at other
intervals.
10 This estimate is based on the following
calculation: 3,759 UITs multiplied by $50 equals
$187,950.
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15005
described above. Responses 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 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. 2011–6366 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–5; SEC File No. 270–259;
OMB Control No. 3235–0269.
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 collection of information
summarized below. The Commission
plans to submit the existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 17f–5 under the Investment
Company Act of 1940 (15 U.S.C. 80a)
(‘‘Investment Company Act’’ or ‘‘Act’’)
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Emcdonald on DSK2BSOYB1PROD with NOTICES
15006
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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18:30 Mar 17, 2011
Jkt 223001
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.
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
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
E:\FR\FM\18MRN1.SGM
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]]>Agencies
[Federal Register Volume 76, Number 53 (Friday, March 18, 2011)]
[Notices]
[Pages 15005-15006]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6365]
-----------------------------------------------------------------------
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-5; SEC File No. 270-259; OMB Control No. 3235-0269.
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 collection of
information summarized below. The Commission plans to submit the
existing collection of information to the Office of Management and
Budget for extension and approval.
Rule 17f-5 under the Investment Company Act of 1940 (15 U.S.C. 80a)
(``Investment Company Act'' or ``Act'')
[[Page 15006]]
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\2\ See section 17(f) of the Investment Company Act (15 U.S.C.
80a-17(f)).
---------------------------------------------------------------------------
The requirements that the foreign custody manager determine that
fund assets will be subject to reasonable care with the eligible
foreign custodian and 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 x 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 x 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 x $4,000/hour for board of
director's time, plus 16,200 hours x $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 maintain their assets in foreign
custodians.
---------------------------------------------------------------------------
\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 work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead.
---------------------------------------------------------------------------
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
