Submission for OMB Review; Comment Request, 66883-66884 [2012-27140]

Download as PDF Federal Register / Vol. 77, No. 216 / Wednesday, November 7, 2012 / Notices 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. pmangrum on DSK3VPTVN1PROD with NOTICES Extension: Rule 2a–7; OMB Control No. 3235–0268, SEC File No. 270–258. 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’’) is soliciting comments on the collection 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 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 also 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 must also adopt guidelines and procedures relating to certain responsibilities it delegates to the fund’s investment adviser. These procedures and guidelines 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 VerDate Mar<15>2010 15:43 Nov 06, 2012 Jkt 229001 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 2010 amendments to rule 2a–7 also added new collection of information requirements. First, money market fund boards must adopt written procedures that provide for periodic testing (and reporting to the board) of the fund’s ability to maintain a stable NAV per share based on certain hypothetical events. Second, funds must post monthly portfolio information on their Web sites. Third, funds must maintain records of creditworthiness evaluations on counterparties to repurchase agreements that the fund intends to ‘‘look through’’ for purposes of rule 2a–7’s diversification limitations. Finally, money market funds must promptly notify the Commission of the purchase of any money market fund’s portfolio security by an affiliated person in reliance on rule 17a–9 under the Act and explain the reasons for such purchase. 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 and reduce the likelihood that a fund is unable to maintain a stable NAV. Commission staff estimates that there are 664 money market funds (136 fund complexes), all of which are subject to rule 2a–7. Commission staff further estimates that there will be approximately 10 new money market funds established each year. Commission staff estimates that rule 2a– 7 contains the following collection of information requirements: • Record of credit risk analyses, and determinations regarding adjustable rate securities, asset backed securities, securities subject to a demand feature or PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 66883 guarantee, and counterparties to repurchase agreements. Commission staff estimates a total annual hour burden for 664 funds to be 451,520 hours. • Establishment of written procedures designed to stabilize NAV and guidelines and procedures for board delegation of authority. Commission staff estimates a total annual hour burden for 10 new money market funds to be 155 hours. • Board review of procedures and guidelines of any investment adviser or officers to whom the fund’s board has delegated responsibility under rule 2a– 7 and amendment of such procedures and guidelines. Commission staff estimates a total annual hour burden for 166 funds to be 830 hours. • Written record of board determinations and actions related to failure of a security to meet certain eligibility standards or an event of default or insolvency and notice to the Commission of an event of default or insolvency. Commission staff estimates a total annual hour burden for 20 funds to be 30 hours. • Establishment of written procedures to test periodically the ability of the fund to maintain a stable NAV per share based on certain hypothetical events (‘‘stress testing’’). Commission staff estimates a total annual hour burden for 10 new money market funds to be 220 hours. • Review, revise, and approve written procedures to stress test a fund’s portfolio. Commission staff estimates a total annual hour burden for 136 fund complexes to be 1,632 hours. • Reports to fund boards on the results of stress testing. Commission staff estimates a total annual hour burden for 136 fund complexes to be 6,800 hours. • Monthly posting of money market fund portfolio information on a fund’s Web site. Commission staff estimates a total annual hour burden for 664 funds and 10 new money market funds to be 56,016 hours. • Notice to the Commission of the purchase of a money market fund’s portfolio security by certain affiliated persons in reliance on rule 17a–9. Commission staff estimates a total annual hour burden for 25 fund complexes to be 25 hours. Thus, the Commission estimates the total annual burden of the rule’s information collection requirements is 517,228 hours.1 1 This estimate is based on the following calculation: 451,520 hours + 155 hours + 830 hours + 30 hours + 220 hours + 1,632 hours + 6,800 hours + 56,016 hours + 25 hours = 517,228 hours. E:\FR\FM\07NON1.SGM 07NON1 pmangrum on DSK3VPTVN1PROD with NOTICES 66884 Federal Register / Vol. 77, No. 216 / Wednesday, November 7, 2012 / Notices The estimated total annual burden is being increased from 395,779 hours to 517,228 hours. This net increase is attributable to a combination of factors, including a decrease in the number of money market funds and fund complexes, and updated information from money market funds regarding hourly burdens, including revised staff estimates of the burden hours required to comply with rule 2a–7 as a result of new information received from surveyed fund representatives. 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. Commission staff estimates that in addition to the costs described above, money market funds will incur costs to preserve records, as 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. Commission staff estimates that the amount an individual fund may spend ranges from $100 per year to $300,000. Based on a cost of $0.0051295 per dollar of assets under management for small funds, $0.0005041 per dollar assets under management for medium funds, and $0.0000009 per dollar of assets under management for large funds, the staff estimates compliance with the record storage requirements of rule 2a– 7 costs the fund industry approximately $57.3 million per year. 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 $0.0000132 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 $35.6 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 ($17.8 million) and for record preservation ($28.65 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. VerDate Mar<15>2010 15:43 Nov 06, 2012 Jkt 229001 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 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 will have practical utility; (b) the accuracy of the agency’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 email to: PRA_Mailbox@sec.gov. Dated: October 29, 2012. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–27140 Filed 11–6–12; 8:45 am] BILLING CODE 8011–01–P 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: Form N–3; SEC File No. 270–281, OMB Control No. 3235–0316. 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. The title for the collection of information is ‘‘Form N–3 (17 CFR 239.17a and 274.11b) under the PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 Securities Act of 1933 (15 U.S.C. 77) and under the Investment Company Act of 1940 (15 U.S.C. 80a), Registration Statement of Separate Accounts Organized as Management Investment Companies.’’ Form N–3 is the form used by separate accounts offering variable annuity contracts which are organized as management investment companies to register under the Investment Company Act of 1940 (‘‘Investment Company Act’’) and/or to register their securities under the Securities Act of 1933 (‘‘Securities Act’’). Form N–3 is also the form used to file a registration statement under the Securities Act (and any amendments thereto) for variable annuity contracts funded by separate accounts which would be required to be registered under the Investment Company Act as management investment companies except for the exclusion provided by Section 3(c)(11) of the Investment Company Act (15 U.S.C. 80a–3(c)(11)). Section 5 of the Securities Act (15 U.S.C. 77e) requires the filing of a registration statement prior to the offer of securities to the public and that the statement be effective before any securities are sold, and Section 8 of the Investment Company Act (15 U.S.C. 80a–8) requires a separate account to register as an investment company. Form N–3 also permits separate accounts offering variable annuity contracts which are organized as investment companies to provide investors with a prospectus and a statement of additional information covering essential information about the separate account when it makes an initial or additional offering of its securities. Section 5(b) of the Securities Act requires that investors be provided with a prospectus containing the information required in a registration statement prior to the sale or at the time of confirmation or delivery of the securities. The form also may be used by the Commission in its regulatory review, inspection, and policy-making roles. Commission staff estimates that there are zero initial registration statements and 7 post-effective amendments to initial registration statements filed on Form N–3 annually and that the average number of portfolios referenced in each post-effective amendment is 2. The Commission further estimates that the hour burden for preparing and filing a post-effective amendment on Form N–3 is 155.2 hours per portfolio. The total annual hour burden for preparing and filing post-effective amendments is 2172.8 hours (7 post-effective amendments × 2 portfolios × 155.2 hours per portfolio). The estimated annual hour burden for preparing and E:\FR\FM\07NON1.SGM 07NON1

Agencies

[Federal Register Volume 77, Number 216 (Wednesday, November 7, 2012)]
[Notices]
[Pages 66883-66884]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-27140]



[[Page 66883]]

-----------------------------------------------------------------------

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 2a-7; OMB Control No. 3235-0268, SEC File No. 270-258.

    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'') is soliciting comments on the 
collection 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 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 also 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 must also adopt guidelines and procedures relating 
to certain responsibilities it delegates to the fund's investment 
adviser. These procedures and guidelines 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 2010 amendments to rule 2a-7 also added new collection of 
information requirements. First, money market fund boards must adopt 
written procedures that provide for periodic testing (and reporting to 
the board) of the fund's ability to maintain a stable NAV per share 
based on certain hypothetical events. Second, funds must post monthly 
portfolio information on their Web sites. Third, funds must maintain 
records of creditworthiness evaluations on counterparties to repurchase 
agreements that the fund intends to ``look through'' for purposes of 
rule 2a-7's diversification limitations. Finally, money market funds 
must promptly notify the Commission of the purchase of any money market 
fund's portfolio security by an affiliated person in reliance on rule 
17a-9 under the Act and explain the reasons for such purchase.
    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 and reduce the likelihood that a 
fund is unable to maintain a stable NAV.
    Commission staff estimates that there are 664 money market funds 
(136 fund complexes), all of which are subject to rule 2a-7. Commission 
staff further estimates that there will be approximately 10 new money 
market funds established each year. Commission staff estimates that 
rule 2a-7 contains the following collection of information 
requirements:
     Record of credit risk analyses, and determinations 
regarding adjustable rate securities, asset backed securities, 
securities subject to a demand feature or guarantee, and counterparties 
to repurchase agreements. Commission staff estimates a total annual 
hour burden for 664 funds to be 451,520 hours.
     Establishment of written procedures designed to stabilize 
NAV and guidelines and procedures for board delegation of authority. 
Commission staff estimates a total annual hour burden for 10 new money 
market funds to be 155 hours.
     Board review of procedures and guidelines of any 
investment adviser or officers to whom the fund's board has delegated 
responsibility under rule 2a-7 and amendment of such procedures and 
guidelines. Commission staff estimates a total annual hour burden for 
166 funds to be 830 hours.
     Written record of board determinations and actions related 
to failure of a security to meet certain eligibility standards or an 
event of default or insolvency and notice to the Commission of an event 
of default or insolvency. Commission staff estimates a total annual 
hour burden for 20 funds to be 30 hours.
     Establishment of written procedures to test periodically 
the ability of the fund to maintain a stable NAV per share based on 
certain hypothetical events (``stress testing''). Commission staff 
estimates a total annual hour burden for 10 new money market funds to 
be 220 hours.
     Review, revise, and approve written procedures to stress 
test a fund's portfolio. Commission staff estimates a total annual hour 
burden for 136 fund complexes to be 1,632 hours.
     Reports to fund boards on the results of stress testing. 
Commission staff estimates a total annual hour burden for 136 fund 
complexes to be 6,800 hours.
     Monthly posting of money market fund portfolio information 
on a fund's Web site. Commission staff estimates a total annual hour 
burden for 664 funds and 10 new money market funds to be 56,016 hours.
     Notice to the Commission of the purchase of a money market 
fund's portfolio security by certain affiliated persons in reliance on 
rule 17a-9. Commission staff estimates a total annual hour burden for 
25 fund complexes to be 25 hours.

Thus, the Commission estimates the total annual burden of the rule's 
information collection requirements is 517,228 hours.\1\
---------------------------------------------------------------------------

    \1\ This estimate is based on the following calculation: 451,520 
hours + 155 hours + 830 hours + 30 hours + 220 hours + 1,632 hours + 
6,800 hours + 56,016 hours + 25 hours = 517,228 hours.


[[Page 66884]]


---------------------------------------------------------------------------

    The estimated total annual burden is being increased from 395,779 
hours to 517,228 hours. This net increase is attributable to a 
combination of factors, including a decrease in the number of money 
market funds and fund complexes, and updated information from money 
market funds regarding hourly burdens, including revised staff 
estimates of the burden hours required to comply with rule 2a-7 as a 
result of new information received from surveyed fund representatives.
    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.
    Commission staff estimates that in addition to the costs described 
above, money market funds will incur costs to preserve records, as 
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. Commission staff estimates 
that the amount an individual fund may spend ranges from $100 per year 
to $300,000. Based on a cost of $0.0051295 per dollar of assets under 
management for small funds, $0.0005041 per dollar assets under 
management for medium funds, and $0.0000009 per dollar of assets under 
management for large funds, the staff estimates compliance with the 
record storage requirements of rule 2a-7 costs the fund industry 
approximately $57.3 million per year. 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 $0.0000132 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 $35.6 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 ($17.8 million) and for record preservation 
($28.65 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.
    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 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 will 
have practical utility; (b) the accuracy of the agency'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 
email to: PRA_Mailbox@sec.gov.

    Dated: October 29, 2012.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27140 Filed 11-6-12; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.