Proposed Collection; Comment Request, 87638-87639 [2016-29085]

Download as PDF 87638 Federal Register / Vol. 81, No. 233 / Monday, December 5, 2016 / Notices 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 sradovich on DSK3GMQ082PROD with NOTICES Extension: Rule 17a–10, SEC File No. 270–507, OMB Control No. 3235–0563 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 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(a) of the Investment Company Act of 1940 (the ‘‘Act’’), generally prohibits affiliated persons of a registered investment company (‘‘fund’’) from borrowing money or other property from, or selling or buying securities or other property to or from, the fund or any company that the fund controls.1 Section 2(a)(3) of the Act defines ‘‘affiliated person’’ of a fund to include its investment advisers.2 Rule 17a–10 (17 CFR 270.17a–10) permits (i) a subadviser 3 of a fund to enter into transactions with funds the subadviser does not advise but that are affiliated persons of a fund that it does advise (e.g., other funds in the fund complex), and (ii) a subadviser (and its affiliated persons) to enter into transactions and arrangements with funds the subadviser does advise, but only with respect to discrete portions of the subadvised fund for which the subadviser does not provide investment advice. To qualify for the exemptions in rule 17a–10, the subadvisory relationship must be the sole reason why section 17(a) prohibits the transaction. In addition, the advisory contracts of the subadviser entering into the transaction, and any subadviser that is advising the purchasing portion of the fund, must prohibit the subadvisers from consulting with each other concerning securities transactions of the fund, and limit their responsibility to providing advice with respect to discrete portions of the fund’s portfolio.4 Section 17(a) of the 1 15 U.S.C. 80a–17(a). U.S.C. 80a–2(a)(3)(E). 3 As defined in rule 17a–10(b)(2). 17 CFR 270.17a–10(b)(2). 4 17 CFR 270.17a–10(a)(2). 2 15 VerDate Sep<11>2014 19:12 Dec 02, 2016 Jkt 241001 Investment Company Act of 1940 (the ‘‘Act’’), generally prohibits affiliated persons of a registered investment company (‘‘fund’’) from borrowing money or other property from, or selling or buying securities or other property to or from, the fund or any company that the fund controls. Section 2(a)(3) of the Act defines ‘‘affiliated person’’ of a fund to include its investment advisers. Rule 17a–10 permits (i) a subadviser of a fund to enter into transactions with funds the subadviser does not advise but that are affiliated persons of a fund that it does advise (e.g., other funds in the fund complex), and (ii) a subadviser (and its affiliated persons) to enter into transactions and arrangements with funds the subadviser does advise, but only with respect to discrete portions of the subadvised fund for which the subadviser does not provide investment advice. To qualify for the exemptions in rule 17a–10, the subadvisory relationship must be the sole reason why section 17(a) prohibits the transaction. In addition, the advisory contracts of the subadviser entering into the transaction, and any subadviser that is advising the purchasing portion of the fund, must prohibit the subadvisers from consulting with each other concerning securities transactions of the fund, and limit their responsibility to providing advice with respect to discrete portions of the fund’s portfolio. This requirement regarding the prohibitions and limitations in advisory contracts of subadvisers relying on the rule constitutes a collection of information under the Paperwork Reduction Act of 1995 (‘‘PRA’’).5 The staff assumes that all existing funds with subadvisory contracts amended those contracts to comply with the adoption of rule 17a–10 in 2003, which conditioned certain exemptions upon these contractual alterations, and therefore there is no continuing burden for those funds.6 However, the staff assumes that all newly formed subadvised funds, and funds that enter into new contracts with subadvisers, will incur the one-time burden by amending their contracts to add the terms required by the rule. Based on an analysis of fund filings, the staff estimates that approximately 319 funds enter into new subadvisory 5 44 U.S.C. 3501. of Investment Companies With Portfolio and Subadviser Affiliates, Investment Company Act Release No. 25888 (Jan. 14, 2003) [68 FR 3153, (Jan. 22, 2003)]. We assume that funds formed after 2003 that intended to rely on rule 17a– 10 would have included the required provision as a standard element in their initial subadvisory contracts. 6 Transactions PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 agreements each year.7 Based on discussions with industry representatives, the staff estimates that it will require approximately 3 attorney hours to draft and execute additional clauses in new subadvisory contracts in order for funds and subadvisers to be able to rely on the exemptions in rule 17a–10. Because these additional clauses are identical to the clauses that a fund would need to insert in their subadvisory contracts to rely on rules 10f–3, 12d3–1, and 17e–1, and because we believe that funds that use one such rule generally use all of these rules, we apportion this 3 hour time burden equally among all four rules. Therefore, we estimate that the burden allocated to rule 17a–10 for this contract change would be 0.75 hours.8 Assuming that all 319 funds that enter into new subadvisory contracts each year make the modification to their contract required by the rule, we estimate that the rule’s contract modification requirement will result in 239 burden hours annually, with an associated cost of approximately $90,820.9 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. Complying with this collection of information requirement is necessary to obtain the benefit of relying on rule 17a–10. 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 proposed collection of 7 Based on data from Morningstar, as of June 2016, there are 12,485 registered funds (open-end funds, closed-end funds, and exchange-traded funds), 4,629 funds of which have subadvisory relationships (approximately 37%). Based on data from the 2016 ICI Factbook, 862 new funds were established in 2015 (594 open-end funds + 258 exchange-traded funds + 10 closed-end funds (from the ICI Research Perspective, April 2016)). 862 new funds × 37% = 319 funds. 8 This estimate is based on the following calculation: 3 hours ÷ 4 rules = 0.75 hours. 9 These estimates are based on the following calculations: (0.75 hours × 319 portfolios = 239 burden hours); ($380 per hour × 239 hours = $90,820 total cost). The Commission’s estimates concerning the wage rates for attorney time are based on salary information for the securities industry compiled by the Securities Industry and Financial Markets Association. The estimated wage figure is based on published rates for in-house attorneys, modified to account for a 1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead, yielding an effective hourly rate of $380. See Securities Industry and Financial Markets Association, Report on Management & Professional Earnings in the Securities Industry 2013. E:\FR\FM\05DEN1.SGM 05DEN1 Federal Register / Vol. 81, No. 233 / Monday, December 5, 2016 / Notices 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 Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, C/O Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email to: PRA_Mailbox@sec.gov. Dated: November 22, 2016. Robert W. Errett, Deputy Secretary. [FR Doc. 2016–29085 Filed 12–2–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79420; File No. SR–BX– 2016–062] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter VI, Section 5 To Extend the Penny Pilot Program November 29, 2016. sradovich on DSK3GMQ082PROD with NOTICES Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 16, 2016, NASDAQ BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Chapter VI, Section 5 (Minimum U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 19:12 Dec 02, 2016 NASDAQ BX Rules Options Rules * * * * * Chapter VI Trading Systems * * * * * Sec. 5 Minimum Increments (a) The Board may establish minimum quoting increments for options contracts traded on BX Options. Such minimum increments established by the Board will be designated as a stated policy, practice, or interpretation with respect to the administration of this Section within the meaning of Section 19 of the Exchange Act and will be filed with the SEC as a rule change for effectiveness upon filing. Until such time as the Board makes a change in the increments, the following principles shall apply: (1)–(2) No Change. (3) For a pilot period scheduled to expire on [December 31, 2016] June 30, 2017 or the date of permanent approval, if earlier, if the options series is trading pursuant to the Penny Pilot program one (1) cent if the options series is trading at less than $3.00, five (5) cents if the options series is trading at $3.00 or higher, unless for QQQQs, SPY and IWM where the minimum quoting increment will be one cent for all series regardless of price. A list of such options shall be communicated to membership via an Options Trader Alert (‘‘OTA’’) posted on the Exchange’s Web site. The Exchange may replace any pilot issues that have been delisted with the next most actively traded multiply listed options classes that are not yet included in the pilot, based on trading activity in the previous six months. The replacement issues may be added to the pilot on the second trading day following [July 1, 2016] January 1, 2017. (4) No Change. (b) No Change. * * * * * The text of the proposed rule change is also available on the Exchange’s Web 3 References herein to Chapter and Series refer to rules of the BX Options Market (‘‘BX Options’’), unless otherwise noted. 1 15 VerDate Sep<11>2014 Increments),3 to extend through June 30, 2017 or the date of permanent approval, if earlier, the Penny Pilot Program in options classes in certain issues (‘‘Penny Pilot’’ or ‘‘Pilot’’), and to change the date when delisted classes may be replaced in the Penny Pilot. The text of the proposed rule change is set forth below. Proposed new language is italicized and deleted text is in brackets. Jkt 241001 PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 87639 site at http:// nasdaqomxbx.cchwallstreet.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to amend Chapter VI, Section 5, to extend the Penny Pilot through June 30, 2017 or the date of permanent approval, if earlier,4 and to change the date when delisted classes may be replaced in the Penny Pilot. The Exchange believes that extending the Penny Pilot will allow for further analysis of the Penny Pilot and a determination of how the program should be structured in the future. Under the Penny Pilot, the minimum price variation for all participating options classes, except for the Nasdaq100 Index Tracking Stock (‘‘QQQQ’’), the SPDR S&P 500 Exchange Traded Fund (‘‘SPY’’) and the iShares Russell 2000 Index Fund (‘‘IWM’’), is $0.01 for all quotations in options series that are quoted at less than $3 per contract and $0.05 for all quotations in options series that are quoted at $3 per contract or greater. QQQQ, SPY and IWM are quoted in $0.01 increments for all options series. The Penny Pilot is currently scheduled to expire on December 31, 2016. The Exchange proposes to extend the time period of the Penny Pilot through June 30, 2017 or the date of permanent approval, if earlier, and to provide a revised date for adding replacement issues to the Penny Pilot. The Exchange proposes that any Penny Pilot Program issues that have been delisted may be 4 The options exchanges in the U.S. that have pilot programs similar to the Penny Pilot (together ‘‘pilot programs’’) are currently working on a proposal for permanent approval of the respective pilot programs. E:\FR\FM\05DEN1.SGM 05DEN1

Agencies

[Federal Register Volume 81, Number 233 (Monday, December 5, 2016)]
[Notices]
[Pages 87638-87639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29085]



[[Page 87638]]

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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 17a-10, SEC File No. 270-507, OMB Control No. 3235-0563

    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 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(a) of the Investment Company Act of 1940 (the ``Act''), 
generally prohibits affiliated persons of a registered investment 
company (``fund'') from borrowing money or other property from, or 
selling or buying securities or other property to or from, the fund or 
any company that the fund controls.\1\ Section 2(a)(3) of the Act 
defines ``affiliated person'' of a fund to include its investment 
advisers.\2\ Rule 17a-10 (17 CFR 270.17a-10) permits (i) a subadviser 
\3\ of a fund to enter into transactions with funds the subadviser does 
not advise but that are affiliated persons of a fund that it does 
advise (e.g., other funds in the fund complex), and (ii) a subadviser 
(and its affiliated persons) to enter into transactions and 
arrangements with funds the subadviser does advise, but only with 
respect to discrete portions of the subadvised fund for which the 
subadviser does not provide investment advice.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 80a-17(a).
    \2\ 15 U.S.C. 80a-2(a)(3)(E).
    \3\ As defined in rule 17a-10(b)(2). 17 CFR 270.17a-10(b)(2).
---------------------------------------------------------------------------

    To qualify for the exemptions in rule 17a-10, the subadvisory 
relationship must be the sole reason why section 17(a) prohibits the 
transaction. In addition, the advisory contracts of the subadviser 
entering into the transaction, and any subadviser that is advising the 
purchasing portion of the fund, must prohibit the subadvisers from 
consulting with each other concerning securities transactions of the 
fund, and limit their responsibility to providing advice with respect 
to discrete portions of the fund's portfolio.\4\ Section 17(a) of the 
Investment Company Act of 1940 (the ``Act''), generally prohibits 
affiliated persons of a registered investment company (``fund'') from 
borrowing money or other property from, or selling or buying securities 
or other property to or from, the fund or any company that the fund 
controls. Section 2(a)(3) of the Act defines ``affiliated person'' of a 
fund to include its investment advisers. Rule 17a-10 permits (i) a 
subadviser of a fund to enter into transactions with funds the 
subadviser does not advise but that are affiliated persons of a fund 
that it does advise (e.g., other funds in the fund complex), and (ii) a 
subadviser (and its affiliated persons) to enter into transactions and 
arrangements with funds the subadviser does advise, but only with 
respect to discrete portions of the subadvised fund for which the 
subadviser does not provide investment advice.
---------------------------------------------------------------------------

    \4\ 17 CFR 270.17a-10(a)(2).
---------------------------------------------------------------------------

    To qualify for the exemptions in rule 17a-10, the subadvisory 
relationship must be the sole reason why section 17(a) prohibits the 
transaction. In addition, the advisory contracts of the subadviser 
entering into the transaction, and any subadviser that is advising the 
purchasing portion of the fund, must prohibit the subadvisers from 
consulting with each other concerning securities transactions of the 
fund, and limit their responsibility to providing advice with respect 
to discrete portions of the fund's portfolio. This requirement 
regarding the prohibitions and limitations in advisory contracts of 
subadvisers relying on the rule constitutes a collection of information 
under the Paperwork Reduction Act of 1995 (``PRA'').\5\
---------------------------------------------------------------------------

    \5\ 44 U.S.C. 3501.
---------------------------------------------------------------------------

    The staff assumes that all existing funds with subadvisory 
contracts amended those contracts to comply with the adoption of rule 
17a-10 in 2003, which conditioned certain exemptions upon these 
contractual alterations, and therefore there is no continuing burden 
for those funds.\6\ However, the staff assumes that all newly formed 
subadvised funds, and funds that enter into new contracts with 
subadvisers, will incur the one-time burden by amending their contracts 
to add the terms required by the rule.
---------------------------------------------------------------------------

    \6\ Transactions of Investment Companies With Portfolio and 
Subadviser Affiliates, Investment Company Act Release No. 25888 
(Jan. 14, 2003) [68 FR 3153, (Jan. 22, 2003)]. We assume that funds 
formed after 2003 that intended to rely on rule 17a-10 would have 
included the required provision as a standard element in their 
initial subadvisory contracts.
---------------------------------------------------------------------------

    Based on an analysis of fund filings, the staff estimates that 
approximately 319 funds enter into new subadvisory agreements each 
year.\7\ Based on discussions with industry representatives, the staff 
estimates that it will require approximately 3 attorney hours to draft 
and execute additional clauses in new subadvisory contracts in order 
for funds and subadvisers to be able to rely on the exemptions in rule 
17a-10. Because these additional clauses are identical to the clauses 
that a fund would need to insert in their subadvisory contracts to rely 
on rules 10f-3, 12d3-1, and 17e-1, and because we believe that funds 
that use one such rule generally use all of these rules, we apportion 
this 3 hour time burden equally among all four rules. Therefore, we 
estimate that the burden allocated to rule 17a-10 for this contract 
change would be 0.75 hours.\8\ Assuming that all 319 funds that enter 
into new subadvisory contracts each year make the modification to their 
contract required by the rule, we estimate that the rule's contract 
modification requirement will result in 239 burden hours annually, with 
an associated cost of approximately $90,820.\9\
---------------------------------------------------------------------------

    \7\ Based on data from Morningstar, as of June 2016, there are 
12,485 registered funds (open-end funds, closed-end funds, and 
exchange-traded funds), 4,629 funds of which have subadvisory 
relationships (approximately 37%). Based on data from the 2016 ICI 
Factbook, 862 new funds were established in 2015 (594 open-end funds 
+ 258 exchange-traded funds + 10 closed-end funds (from the ICI 
Research Perspective, April 2016)). 862 new funds x 37% = 319 funds.
    \8\ This estimate is based on the following calculation: 3 hours 
/ 4 rules = 0.75 hours.
    \9\ These estimates are based on the following calculations: 
(0.75 hours x 319 portfolios = 239 burden hours); ($380 per hour x 
239 hours = $90,820 total cost). The Commission's estimates 
concerning the wage rates for attorney time are based on salary 
information for the securities industry compiled by the Securities 
Industry and Financial Markets Association. The estimated wage 
figure is based on published rates for in-house attorneys, modified 
to account for a 1,800-hour work-year and multiplied by 5.35 to 
account for bonuses, firm size, employee benefits, and overhead, 
yielding an effective hourly rate of $380. See Securities Industry 
and Financial Markets Association, Report on Management & 
Professional Earnings in the Securities Industry 2013.
---------------------------------------------------------------------------

    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. Complying with this collection of 
information requirement is necessary to obtain the benefit of relying 
on rule 17a-10. 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 proposed 
collection of

[[Page 87639]]

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 Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Remi 
Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email 
to: PRA_Mailbox@sec.gov.

    Dated: November 22, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-29085 Filed 12-2-16; 8:45 am]
 BILLING CODE 8011-01-P