Submission for OMB Review; Comment Request, 14530-14534 [2018-06854]
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price discovery and transparency and
enhancing order execution
opportunities for member organizations.
The Exchange believes that this could
promote competition between the
Exchange and other execution venues,
including those that currently offer
similar order types and comparable
transaction pricing, by encouraging
additional orders to be sent to the
Exchange for execution.
Finally, the Exchange notes that it
operates in a highly competitive market
in which market participants can
readily favor competing venues if they
deem fee levels at a particular venue to
be excessive or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees and rebates to remain competitive
with other exchanges and with
alternative trading systems that have
been exempted from compliance with
the statutory standards applicable to
exchanges. Because competitors are free
to modify their own fees and credits in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited. As a result of all of these
considerations, the Exchange does not
believe that the proposed changes will
impair the ability of member
organizations or competing order
execution venues to maintain their
competitive standing in the financial
markets.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 11 of the Act and
subparagraph (f)(2) of Rule 19b–4 12
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
11 15
12 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
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public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 13 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Brent J. Fields,
Secretary.
[FR Doc. 2018–06775 Filed 4–3–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2018–10 on the subject line.
Submission for OMB Review;
Comment Request
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2018–10. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
Extension:
Rule 12d1–1, SEC File No. 270–526, OMB
Control No. 3235–0584.
13 15
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submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSE–2018–10 and should
be submitted on or before April 25,
2018.
PO 00000
U.S.C. 78s(b)(2)(B).
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Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
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.
An investment company (‘‘fund’’) is
generally limited in the amount of
securities the fund (‘‘acquiring fund’’)
can acquire from another fund
(‘‘acquired fund’’). Section 12(d) of the
Investment Company Act of 1940 (the
‘‘Investment Company Act’’ or ‘‘Act’’) 1
provides that a registered fund (and
companies it controls) cannot:
• Acquire more than three percent of
another fund’s securities;
• Invest more than five percent of its
own assets in another fund; or
• Invest more than ten percent of its
own assets in other funds in the
aggregate.2
In addition, a registered open-end
fund, its principal underwriter, and any
registered broker or dealer cannot sell
that fund’s shares to another fund if, as
a result:
• The acquiring fund (and any
companies it controls) owns more than
three percent of the acquired fund’s
stock; or
14 17
CFR 200.30–3(a)(12).
15 U.S.C. 80a.
2 See 15 U.S.C. 80a–12(d)(1)(A). If an acquiring
fund is not registered, these limitations apply only
with respect to the acquiring fund’s acquisition of
registered funds.
1 See
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• All acquiring funds (and companies
they control) in the aggregate own more
than ten percent of the acquired fund’s
stock.3
Rule 12d1–1 under the Act provides
an exemption from these limitations for
‘‘cash sweep’’ arrangements in which a
fund invests all or a portion of its
available cash in a money market fund
rather than directly in short-term
instruments.4 An acquiring fund relying
on the exemption may not pay a sales
load, distribution fee, or service fee on
acquired fund shares, or if it does, the
acquiring fund’s investment adviser
must waive a sufficient amount of its
advisory fee to offset the cost of the
loads or distribution fees.5 The acquired
fund may be a fund in the same fund
complex or in a different fund complex.
In addition to providing an exemption
from section 12(d)(1) of the Act, the rule
provides exemptions from section 17(a)
of the Act and rule 17d–1 thereunder,
which restrict a fund’s ability to enter
into transactions and joint arrangements
with affiliated persons.6 These
provisions would otherwise prohibit an
acquiring fund from investing in a
money market fund in the same fund
complex,7 and prohibit a fund that
acquires five percent or more of the
securities of a money market fund in
another fund complex from making any
additional investments in the money
market fund.8
The rule also permits a registered
fund to rely on the exemption to invest
in an unregistered money market fund
that limits its investments to those in
which a registered money market fund
may invest under rule 2a–7 under the
Act, and undertakes to comply with all
3 See
15 U.S.C. 80a–12(d)(1)(B).
17 CFR 270.12d1–1.
5 See rule 12d1–1(b)(1).
6 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d); 17
CFR 270.17d–1.
7 An affiliated person of a fund includes any
person directly or indirectly controlling, controlled
by, or under common control with such other
person. See 15 U.S.C. 80a–2(a)(3) (definition of
‘‘affiliated person’’). Most funds today are organized
by an investment adviser that advises or provides
administrative services to other funds in the same
complex. Funds in a fund complex are generally
under common control of an investment adviser or
other person exercising a controlling influence over
the management or policies of the funds. See 15
U.S.C. 80a–2(a)(9) (definition of ‘‘control’’). Not all
advisers control funds they advise. The
determination of whether a fund is under the
control of its adviser, officers, or directors depends
on all the relevant facts and circumstances. See
Investment Company Mergers, Investment
Company Act Release No. 25259 (Nov. 8, 2001) [66
FR 57602 (Nov. 15, 2001)], at n.11. To the extent
that an acquiring fund in a fund complex is under
common control with a money market fund in the
same complex, the funds would rely on the rule’s
exemptions from section 17(a) and rule 17d–1.
8 See 15 U.S.C. 80a–2(a)(3)(A), (B).
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4 See
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the other provisions of rule 2a–7.9 In
addition, the acquiring fund must
reasonably believe that the unregistered
money market fund (i) operates in
compliance with rule 2a–7, (ii) complies
with sections 17(a), (d), (e), 18, and
22(e) of the Act 10 as if it were a
registered open-end fund, (iii) has
adopted procedures designed to ensure
that it complies with these statutory
provisions, (iv) maintains the records
required by rules 31a–1(b)(1), 31a–
1(b)(2)(ii), 31a–1(b)(2)(iv), and 31a–
1(b)(9); 11 and (v) preserves
permanently, the first two years in an
easily accessible place, all books and
records required to be made under these
rules.
Rule 2a–7 contains certain collection
of information requirements. An
unregistered money market fund that
complies with rule 2a–7 would be
subject to these collection of
information requirements. In addition,
the recordkeeping requirements under
rule 31a–1 with which the acquiring
fund reasonably believes the
unregistered money market fund
complies are collections of information
for the unregistered money market fund.
The adoption of procedures by
unregistered money market funds to
ensure that they comply with sections
17(a), (d), (e), 18, and 22(e) of the Act
also constitute collections of
information. By allowing funds to invest
in registered and unregistered money
market funds, rule 12d1–1 is intended
to provide funds greater options for cash
management. In order for a registered
fund to rely on the exemption to invest
in an unregistered money market fund,
the unregistered money market fund
must comply with certain collection of
information requirements for registered
money market funds. These
requirements are intended to ensure that
the unregistered money market fund has
established procedures for collecting the
information necessary to make adequate
credit reviews of securities in its
portfolio, as well as other recordkeeping
requirements that will assist the
acquiring fund in overseeing the
unregistered money market fund (and
Commission staff in its examination of
the unregistered money market fund’s
adviser).
The number of unregistered money
market funds that are affected by rule
12d1–1 is an estimate based on the
number of private liquidity funds
9 See
17 CFR 270.2a–7.
15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d),
15 U.S.C. 80a–17(e), 15 U.S.C. 80a–18, 15 U.S.C.
80a–22(e).
11 See 17 CFR 270.31a–1(b)(1), 17 CFR 270.31a–
1(b)(2)(ii), 17 CFR 270.31a–1(b)(2)(iv), 17 CFR
270.31a–1(b)(9).
10 See
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reported on Form PF as of the fourth
calendar quarter 2016.12 The hour
burden estimates for the condition that
an unregistered money market fund
comply with rule 2a–7 are based on the
burden hours included in the
Commission’s 2013 PRA submission
regarding rule 2a–7.13 The estimated
average burden hours in this collection
of information are made solely for
purposes of the Paperwork Reduction
Act and are not derived from a
quantitative, comprehensive or even
representative survey or study of the
burdens associated with Commission
rules and forms.
In the rule 2a–7 submission,
Commission staff made the following
estimates with respect to aggregate
annual hour and cost burdens for
collections of information for each
existing registered money market fund:
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: 85 responses,
680 hours of professional time, Cost:
$178,160.14
Public website posting of monthly
portfolio information: 12 responses, 7
hours of professional time, Cost:
$17,304.15
Review of procedures and guidelines
of any investment adviser to whom the
fund’s board has delegated
responsibility under rule 2a–7 and
amendment of such procedures: 1
response, 5 hours of professional and
director time, Cost: $5,960.16
Based on census data available on
Form PF, the staff believes that the
number of private liquidity funds
reported on Form PF (69) is the most
12 See U.S. Securities and Exchange Commission
Annual Staff Report Relating to the Use of Form PF
Data, Private Fund Statistics, Fourth Calendar
Quarter 2016, available at https://www.sec.gov/files/
im-private-fund-annual-report-101617.pdf.
13 See Securities and Exchange Commission,
Request for OMB Approval of Extension for
Approved Collection for Rule 2a–7 under the
Investment Company Act of 1940 (OMB Control No.
3235–0268) (approved Aug. 28, 2013). This was the
most recent rule 2a–7 submission that includes
certain estimates with respect to aggregate annual
hour and cost burdens for collections of information
for each existing registered money market fund,
fund complexes with registered money market
funds, registered money market funds that
experience an event of default or insolvency, and
newly registered money market funds.
14 This estimate is based on the following
calculation: (680 burden hours × $262 per hour for
professional time) = $178,160 per fund.
15 This estimate is based on the following
calculation: (12 × 7 burden hours × $206 per hour
for a webmaster) = $17,304 per fund.
16 This estimate is based on the following
calculation: (1 hour × $4,500 per hour for board
time) + (4 hours × $365 per hour for professional
time) = $5,960 per fund.
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current and accurate estimate the
number of unregistered money market
funds affected by rule 12d1–1.17 Each of
these unregistered money market funds
engages in the collections of information
described above. Accordingly, the staff
estimates that unregistered money
market funds complying with the
collections of information described
above engage in a total of 6,762 annual
responses under rule 12d1–1,18 the
aggregate annual burden hours
associated with these responses is
47,748,19 and the aggregate annual cost
to funds is $13,898,256.20
In the rule 2a–7 submission,
Commission staff further estimated the
aggregate annual hour and cost burdens
for collections of information for fund
complexes with registered money
market funds as follows:
Review, revise, and approve
procedures concerning stress testing: 1
response, 12 burden hours of
professional and director time, Cost:
$8,021.21
Report to fund boards on the results
of stress testing: 5 responses, 10 burden
hours of professional and support staff
time, Cost: $15,490.22
17 See supra note 12. The staff notes, however,
that this estimate may be overstated to the extent
that a private liquidity fund reported on Form PF
does not follow all of rule 2a–7’s requirements (that
include collections of information) or because no
registered investment companies invest in such a
fund. The staff also notes, however, that this
estimate may be understated to the extent that there
are additional unregistered money market funds
that are not required to be reported on Form PF
(because Form PF is filed only by certain
investments advisers to private funds that have
$150 million in private fund assets under
management).
18 The estimate is based on the following
calculations: (69 funds × 85 responses for
documentation of credit analyses and other
determinations) = 5,865 responses. (69 funds × 12
responses for public website posting) = 828
responses. (69 funds × 1 response for policies and
procedures related to delegation to an investment
adviser) = 69 responses. 5,865 responses + 828
responses + 69 responses = 6,762 responses.
19 This estimate is based on the following
calculations: (69 funds × 680 hours for
documentation of credit analyses and other
determinations) = 46,920 hours. (69 funds × 7 hours
for public website posting) = 483 hours. (69 funds
× 5 hours for policies and procedures related to
delegation to an investment adviser) = 345 hours.
46,920 hours + 483 hours + 345 hours = 47,748
hours.
20 This estimate is based on the following
calculations: (69 funds × $178,160) = $12,293,040.
(69 funds × $17,304) = $1,193,976. (69 funds ×
$5,960) = $411,240. $12,293,040 + $1,193,976 +
$411,240 = $13,898,256.
21 This estimate is based on the following
calculation: (1 hour × $4,500 per hour for board
time) + (5 hours × $322 per hour for a portfolio
manager) + (3 hours × $259 per hour for a risk
management specialist) + (3 hours × $378 per hour
for an attorney) = $8,021 per response.
22 This estimate is based on the following
calculation: (5 responses × 5 hours × $322 per hour
for a portfolio manager) + (5 responses × 2 hours
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Reporting of rule 17a–9
transactions: 23 1 response, 1 burden
hour of legal time, Cost: $378.24
Based on the number of liquidity fund
advisers reported on Form PF, the staff
estimates that there are 39 fund
complexes with unregistered money
market funds invested in by mutual
funds in excess of the statutory limits
under rule 12d1–1.25 Each of these fund
complexes engages in the collections of
information described above.
Accordingly, the staff estimates that
these fund complexes complying with
the collections of information described
above engage in a total of 273 annual
responses under rule 12d1–1,26 the
aggregate annual burden hours
associated with these responses is 897,27
and the aggregate annual cost to funds
is $931,671.28
In the rule 2a–7 submission,
Commission staff further estimated the
aggregate annual burdens for registered
money market funds that experience an
event of default or insolvency as
follows:
Written record of board
determinations and actions related to
failure of a security to meet certain
eligibility standards or an event of
default of default or insolvency: 2
responses, 1 burden hour of legal time,
Cost: $378.
Notice to Commission of an event of
default or insolvency: 1 response, 0.5
burden hours of legal time, Cost: $189.
Consistent with the estimate in the
rule 2a–7 submissions, Commission
staff estimates that approximately 2
percent, or 1, unregistered money
× $279 per hour for a compliance manager) + (5
responses × 2 hours × $378 per hour for an attorney)
+ (5 responses × 1 hour × $174 per hour for support
staff) = $15,490 per fund complex.
23 See 17 CFR 270.17a–9.
24 The estimate is based on the following
calculations: (1 response × $378 per hour for an
attorney) = $378 per response.
25 See supra note 12.
26 The estimate is based on the following
calculations: (39 fund complexes × 1 response for
revision of procedures concerning stress testing) =
39 responses. (39 fund complexes × 5 responses to
provide stress testing reports) = 195 responses. (39
fund complexes × 1 response for reporting of rule
17a–9 transactions) = 39 responses. 39 responses +
195 responses + 39 responses = 273 responses.
27 This estimate is based on the following
calculations: (39 fund complexes × 12 hours for
revision of procedures concerning stress testing) =
468 hours. (39 fund complexes × 10 hours to
provide stress testing reports) = 390 hours. (39 fund
complexes × 1 hour for reporting of rule 17a–9
transactions) = 39 hours. 468 hours + 390 hours +
39 hours = 897 hours.
28 This estimate is based on the following
calculations: (39 fund complexes × $8,021 for
revision of procedures concerning stress testing) =
$312,819. (39 fund complexes × $15,490 to provide
stress testing reports) = $604,110. (39 fund
complexes × $378 for reporting of rule 17a–9
transactions) = $14,742. $312,819 + $604,110 +
$14,742 = $931,671.
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market fund experiences an event of
default or insolvency each year.
Accordingly, the staff estimates that one
unregistered money market fund will
comply with these collection of
information requirements and engage in
3 annual responses under rule 12d1–1,29
the aggregate annual burden hours
associated with these responses is 1.5,30
and the aggregate annual cost to funds
is $567.31
In the rule 2a–7 submission,
Commission staff further estimated the
aggregate annual burdens for newly
registered money market funds as
follows:
Establish written procedures and
guidelines designed to stabilize the
fund’s net asset value and establish
procedures for board delegation of
authority: 1 response, 15.5 hours of
director, legal, and support staff time,
Cost: $6,328.32
Adopt procedures concerning stress
testing: 1 response per fund complex, 22
burden hours of professional and
director time per fund complex, Cost:
$19,373 per fund complex.33
Commission staff estimates that the
proportion of unregistered money
market funds that intend to newly
undertake the collection of information
burdens of rule 2a–7 will be similar to
the proportion of money market funds
that are newly registered. Based on a
projection of 10 new money market
funds per year (in the most recent rule
2a–7 submission), the staff estimates
that, similarly, there will be 10 new
unregistered money market funds that
undertake the above burden to establish
written procedures and guidelines
designed to stabilize the fund’s net asset
value and establish procedures for board
delegation of authority.34 Accordingly,
29 The estimate is based on the following
calculations: (1 fund × 2 responses) + (1 fund × 1
response) = 3 responses.
30 This estimate is based on the following
calculations: (1 fund × 1 hour) + (1 fund × 0.5
hours) = 1.5 hours.
31 This estimate is based on the following
calculations: (1 fund × $378) + (1 fund × $189) =
$567.
32 This estimate is based on the following
calculation: (0.5 hours × $4,500 per hour for board
time) + (7.2 hours × $378 per hour for an attorney)
+ (7.8 hours × $174 per hour for support staff) =
$6,328 per response.
33 This estimate is based on the following
calculation: (3 hours × $4,500 per hour for board
time) + (8 hours × $378 per hour for an attorney)
+ (11 hours × $259 per hour for a risk management
specialist) = $19,373 per response. See also infra
note 34.
34 The staff’s estimate is based on historical data
provided in Lipper Inc.’s LANA database and
projections about the growth of the money market
mutual fund industry going forward. The actual
number of new money market funds launched may
vary significantly from our estimates depending
upon developments in market interest rates and
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the staff estimates that 10 unregistered
money market funds will comply with
this collection of information
requirement and engage in 10 annual
responses under rule 12d1–1,35 the
aggregate annual burden hours
associated with these responses is 155,36
and the aggregate annual cost to funds
is $62,380.37
Accordingly, the estimated total
number of annual responses under rule
12d1–1 for the collections of
information described in the rule 2a–7
submissions is 7,048, the aggregate
annual burden hours associated with
these responses is 48,801.5, and the
aggregate cost to funds is $14,892,874.38
Rules 31a–1(b)(1), 31a–1(b)(2)(ii),
31a–1(b)(2)(iv), and 31a–1(b)(9) require
registered funds to keep certain records,
which include journals and general and
auxiliary ledgers, including ledgers for
each portfolio security and each
shareholder of record of the fund. Most
of the records required to be maintained
by the rule are the type that generally
would be maintained as a matter of good
business practice and to prepare the
unregistered money market fund’s
financial statements. Accordingly,
Commission staff estimates that the
requirements under rules 31a–1(b)(1),
31a–1(b)(2)(ii), 31a–1(b)(2)(iv), and 31a–
1(b)(9) would not impose any additional
burden because the costs of maintaining
these records would be incurred by
unregistered money market funds in any
case to keep books and records that are
necessary to prepare financial
statements for shareholders, to prepare
the fund’s annual income tax returns,
and as a normal business custom.
Rule 12d1–1 also requires
unregistered money market funds in
which registered funds invest to adopt
procedures designed to ensure that the
unregistered money market funds
comply with sections 17(a), (d), (e), and
22(e) of the Act. This is a one-time
collection of information requirement
that applies to unregistered money
market funds that intend to comply with
the requirements of rule 12d1–1. As
discussed above, based on a projection
of 10 new money market funds per year,
the staff estimates that, similarly, there
other factors. The staff does not estimate any new
fund complexes being launched in the next year.
35 The estimate is based on the following
calculations: (10 funds × 1 response) = 10
responses.
36 This estimate is based on the following
calculations: (10 funds × 15.5 hours) = 155 hours.
37 This estimate is based on the following
calculations: (10 funds × $6,238) = $62,380.
38 These estimates are based upon the following
calculations: (6,762 + 273 + 3+ 10) = 7,048 annual
responses; (47,748 + 897 + 1.5 + 155) = 48,801.5
burden hours; and ($13,898,256 + $931,671 + $567
+ $62,380) = $14,892,874.
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will be 10 new unregistered money
market funds that undertake the above
burden to establish written procedures
and guidelines designed to ensure that
the unregistered money market funds
comply with sections 17(a), (d), (e), and
22(e) of the Act. The staff estimates the
burden as follows:
Establish written procedures and
guidelines designed to ensure that the
unregistered money market funds
comply with sections 17(a), (d), (e), and
22(e) of the Act: 1 response, 15.5 hours
of director, legal, and support staff time,
Cost: $6,328.39
Accordingly, the staff estimates that
10 unregistered money market funds
will comply with this collection of
information requirement and engage in
10 annual responses under rule 12d1–
1,40 the aggregate annual burden hours
associated with these responses is 155,41
and the aggregate annual cost to funds
is $62,380.42
Commission staff also estimates that
unregistered 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. In the rule 2a–7
submission, Commission staff estimated
that the amount an individual money
market fund may spend ranges from
$100 per year to $300,000. We have no
reason to believe the range is different
for unregistered money market funds.
Based on Form PF data as of the fourth
calendar quarter 2016, private liquidity
funds have $293 billion in gross asset
value.43 The Commission does not have
specific information about the
proportion of assets held in small,
medium-sized, or large unregistered
money market funds. Because private
liquidity funds are often used as cash
management vehicles, the staff estimates
that each private liquidity fund is a
‘‘large’’ fund (i.e., more than $1 billion
in assets under management). Based on
a cost of $0.0000009 per dollar of assets
39 This estimate is based on the following
calculation: (0.5 hours × $4,500 per hour for board
time) + (7.2 hours × $378 per hour for an attorney)
+ (7.8 hours × $174 per hour for support staff) =
$6,328 per response.
40 The estimate is based on the following
calculations: (10 funds × 1 response) = 10
responses.
41 This estimate is based on the following
calculations: (10 funds × 15.5 hours) = 155 hours.
42 This estimate is based on the following
calculations: (10 funds × $6,238) = $62,380.
43 See supra note 12.
PO 00000
Frm 00124
Fmt 4703
Sfmt 4703
14533
under management (for large funds),44
the staff estimates compliance with rule
2a–7 for these unregistered money
market funds totals $263,700
annually.45
Consistent with estimates made in the
rule 2a–7 submission, Commission staff
estimates that unregistered money
market funds also incur capital costs to
create computer programs for
maintaining and preserving compliance
records for rule 2a–7 of $0.0000132 per
dollar of assets under management.
Based on the assets under management
figures described above, staff estimates
annual capital costs for all unregistered
money market funds of $3.87 million.46
Commission staff further estimates
that, even absent the requirements of
rule 2a–7, money market funds would
spend at least half of the amounts
described above for record preservation
($131,850) and for capital costs ($1.94
million). Commission staff concludes
that the aggregate annual costs of
compliance with the rule are $131,850
for record preservation and $1.94
million for capital costs.
The collections of information
required for unregistered money market
funds by rule 12d1–1 are necessary in
order for acquiring funds to able 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.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) 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. Comments must be submitted to
OMB within 30 days of this notice.
44 The recordkeeping cost estimates are
$0.0051295 per dollar of assets under management
for small funds, and $0.0005041 per dollar of assets
under management for medium-sized funds. The
cost estimates are the same as those used in the
most recently approved rule 2a–7 submission.
45 This estimate is based on the following
calculation: ($293 billion × $0.0000009) = $263,700
billion for small funds.
46 This estimate is based on the following
calculation: ($293 billion × 0.0000132) = $3.87
million.
E:\FR\FM\04APN1.SGM
04APN1
14534
Federal Register / Vol. 83, No. 65 / Wednesday, April 4, 2018 / Notices
Dated: March 29, 2018.
Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018–06854 Filed 4–3–18; 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 FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
amozie on DSK30RV082PROD with NOTICES
Extension:
Rule 35d–1, SEC File No. 270–491, OMB
Control No. 3235–0548.
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
(‘‘OMB’’) a request for extension of the
previously approved collection of
information discussed below.
Rule 35d–1 (17 CFR 270.35d–1) under
the Investment Company Act of 1940
(15 U.S.C. 80a–1 et seq.) defines as
‘‘materially deceptive and misleading’’
for purposes of Section 35(d), among
other things, a name suggesting that a
registered investment company or series
thereof (a ‘‘fund’’) focuses its
investments in a particular type of
investment or investments, in
investments in a particular industry or
group of industries, or in investments in
a particular country or geographic
region, unless, among other things, the
fund adopts a certain investment policy.
Rule 35d–1 further requires either that
the investment policy is fundamental or
that the fund has adopted a policy to
provide its shareholders with at least 60
days prior notice of any change in the
investment policy (‘‘notice to
shareholders’’). The rule’s notice to
shareholders provision is intended to
ensure that when shareholders purchase
shares in a fund based, at least in part,
on its name, and with the expectation
that it will follow the investment policy
suggested by that name, they will have
sufficient time to decide whether to
redeem their shares in the event that the
fund decides to pursue a different
investment policy.
The Commission estimates that there
are approximately 9,939 open-end and
closed-end funds that have names that
are covered by the rule. The
Commission estimates that of these
9,939 funds, approximately 33 will
provide prior notice to shareholders
VerDate Sep<11>2014
18:12 Apr 03, 2018
Jkt 244001
pursuant to a policy adopted in
accordance with this rule per year. The
Commission estimates that the annual
burden associated with the notice to
shareholders requirement of the rule is
20 hours per response, for annual total
of 660 hours per year.
Estimates of average burden hours are
made solely for the purposes of the
Paperwork Reduction Act and are not
derived from a comprehensive or even
representative survey or study of the
costs of Commission rules and forms.
The collection of information under rule
35d–1 is mandatory. The information
provided under rule 35d–1 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 OMB control number.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) 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. Comments must be submitted to
OMB within 30 days of this notice.
Dated: March 30, 2018.
Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018–06855 Filed 4–3–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82964; File No. SR–
NASDAQ–2018–022]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Exchange Rule 7034
March 29, 2018.
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 March 16,
2018, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00125
Fmt 4703
Sfmt 4703
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
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
Rule 7034, as described below.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.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 Exchange proposes to amend
Rule 7034 pertaining to colocation
services and fees to harmonize it with
the rules of Nasdaq BX, Inc. (‘‘BX’’).
The Exchange first proposes to amend
Rule 7034(b), under the heading
‘‘Market Data Connectivity,’’ to recategorize and to update references to
the CBOE/Bats/Direct Edge data feeds to
reflect their current names. Similarly,
the Exchange proposes to delete a
$1,000 installation fee that presently
applies to the Direct Edge feeds because
the Direct Edge feeds are now offerings
of CBOE, along with the BZX and BYX
feeds. Going forward, a single, one-time
$1,000 installation fee will apply to
subscribers to any or all of the CBOE
data feeds. The Exchange also proposes
to correct a typographical error in the
name of the TSXV Level 2 Feed. The
Exchange notes that this proposal will
render this paragraph of Rule 7034(b)
consistent with BX Rule 7034(b).
Second, the Exchange proposes to
amend Rule 7034(b), under the heading
E:\FR\FM\04APN1.SGM
04APN1
]]>Agencies
[Federal Register Volume 83, Number 65 (Wednesday, April 4, 2018)]
[Notices]
[Pages 14530-14534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06854]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736.
Extension:
Rule 12d1-1, SEC File No. 270-526, OMB Control No. 3235-0584.
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.
An investment company (``fund'') is generally limited in the amount
of securities the fund (``acquiring fund'') can acquire from another
fund (``acquired fund''). Section 12(d) of the Investment Company Act
of 1940 (the ``Investment Company Act'' or ``Act'') \1\ provides that a
registered fund (and companies it controls) cannot:
---------------------------------------------------------------------------
\1\ See 15 U.S.C. 80a.
---------------------------------------------------------------------------
Acquire more than three percent of another fund's
securities;
Invest more than five percent of its own assets in another
fund; or
Invest more than ten percent of its own assets in other
funds in the aggregate.\2\
---------------------------------------------------------------------------
\2\ See 15 U.S.C. 80a-12(d)(1)(A). If an acquiring fund is not
registered, these limitations apply only with respect to the
acquiring fund's acquisition of registered funds.
---------------------------------------------------------------------------
In addition, a registered open-end fund, its principal underwriter,
and any registered broker or dealer cannot sell that fund's shares to
another fund if, as a result:
The acquiring fund (and any companies it controls) owns
more than three percent of the acquired fund's stock; or
[[Page 14531]]
All acquiring funds (and companies they control) in the
aggregate own more than ten percent of the acquired fund's stock.\3\
---------------------------------------------------------------------------
\3\ See 15 U.S.C. 80a-12(d)(1)(B).
---------------------------------------------------------------------------
Rule 12d1-1 under the Act provides an exemption from these
limitations for ``cash sweep'' arrangements in which a fund invests all
or a portion of its available cash in a money market fund rather than
directly in short-term instruments.\4\ An acquiring fund relying on the
exemption may not pay a sales load, distribution fee, or service fee on
acquired fund shares, or if it does, the acquiring fund's investment
adviser must waive a sufficient amount of its advisory fee to offset
the cost of the loads or distribution fees.\5\ The acquired fund may be
a fund in the same fund complex or in a different fund complex. In
addition to providing an exemption from section 12(d)(1) of the Act,
the rule provides exemptions from section 17(a) of the Act and rule
17d-1 thereunder, which restrict a fund's ability to enter into
transactions and joint arrangements with affiliated persons.\6\ These
provisions would otherwise prohibit an acquiring fund from investing in
a money market fund in the same fund complex,\7\ and prohibit a fund
that acquires five percent or more of the securities of a money market
fund in another fund complex from making any additional investments in
the money market fund.\8\
---------------------------------------------------------------------------
\4\ See 17 CFR 270.12d1-1.
\5\ See rule 12d1-1(b)(1).
\6\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d); 17 CFR
270.17d-1.
\7\ An affiliated person of a fund includes any person directly
or indirectly controlling, controlled by, or under common control
with such other person. See 15 U.S.C. 80a-2(a)(3) (definition of
``affiliated person''). Most funds today are organized by an
investment adviser that advises or provides administrative services
to other funds in the same complex. Funds in a fund complex are
generally under common control of an investment adviser or other
person exercising a controlling influence over the management or
policies of the funds. See 15 U.S.C. 80a-2(a)(9) (definition of
``control''). Not all advisers control funds they advise. The
determination of whether a fund is under the control of its adviser,
officers, or directors depends on all the relevant facts and
circumstances. See Investment Company Mergers, Investment Company
Act Release No. 25259 (Nov. 8, 2001) [66 FR 57602 (Nov. 15, 2001)],
at n.11. To the extent that an acquiring fund in a fund complex is
under common control with a money market fund in the same complex,
the funds would rely on the rule's exemptions from section 17(a) and
rule 17d-1.
\8\ See 15 U.S.C. 80a-2(a)(3)(A), (B).
---------------------------------------------------------------------------
The rule also permits a registered fund to rely on the exemption to
invest in an unregistered money market fund that limits its investments
to those in which a registered money market fund may invest under rule
2a-7 under the Act, and undertakes to comply with all the other
provisions of rule 2a-7.\9\ In addition, the acquiring fund must
reasonably believe that the unregistered money market fund (i) operates
in compliance with rule 2a-7, (ii) complies with sections 17(a), (d),
(e), 18, and 22(e) of the Act \10\ as if it were a registered open-end
fund, (iii) has adopted procedures designed to ensure that it complies
with these statutory provisions, (iv) maintains the records required by
rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-1(b)(9);
\11\ and (v) preserves permanently, the first two years in an easily
accessible place, all books and records required to be made under these
rules.
---------------------------------------------------------------------------
\9\ See 17 CFR 270.2a-7.
\10\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d), 15 U.S.C.
80a-17(e), 15 U.S.C. 80a-18, 15 U.S.C. 80a-22(e).
\11\ See 17 CFR 270.31a-1(b)(1), 17 CFR 270.31a-1(b)(2)(ii), 17
CFR 270.31a-1(b)(2)(iv), 17 CFR 270.31a-1(b)(9).
---------------------------------------------------------------------------
Rule 2a-7 contains certain collection of information requirements.
An unregistered money market fund that complies with rule 2a-7 would be
subject to these collection of information requirements. In addition,
the recordkeeping requirements under rule 31a-1 with which the
acquiring fund reasonably believes the unregistered money market fund
complies are collections of information for the unregistered money
market fund. The adoption of procedures by unregistered money market
funds to ensure that they comply with sections 17(a), (d), (e), 18, and
22(e) of the Act also constitute collections of information. By
allowing funds to invest in registered and unregistered money market
funds, rule 12d1-1 is intended to provide funds greater options for
cash management. In order for a registered fund to rely on the
exemption to invest in an unregistered money market fund, the
unregistered money market fund must comply with certain collection of
information requirements for registered money market funds. These
requirements are intended to ensure that the unregistered money market
fund has established procedures for collecting the information
necessary to make adequate credit reviews of securities in its
portfolio, as well as other recordkeeping requirements that will assist
the acquiring fund in overseeing the unregistered money market fund
(and Commission staff in its examination of the unregistered money
market fund's adviser).
The number of unregistered money market funds that are affected by
rule 12d1-1 is an estimate based on the number of private liquidity
funds reported on Form PF as of the fourth calendar quarter 2016.\12\
The hour burden estimates for the condition that an unregistered money
market fund comply with rule 2a-7 are based on the burden hours
included in the Commission's 2013 PRA submission regarding rule 2a-
7.\13\ The estimated average burden hours in this collection of
information are made solely for purposes of the Paperwork Reduction Act
and are not derived from a quantitative, comprehensive or even
representative survey or study of the burdens associated with
Commission rules and forms.
---------------------------------------------------------------------------
\12\ See U.S. Securities and Exchange Commission Annual Staff
Report Relating to the Use of Form PF Data, Private Fund Statistics,
Fourth Calendar Quarter 2016, available at https://www.sec.gov/files/im-private-fund-annual-report-101617.pdf.
\13\ See Securities and Exchange Commission, Request for OMB
Approval of Extension for Approved Collection for Rule 2a-7 under
the Investment Company Act of 1940 (OMB Control No. 3235-0268)
(approved Aug. 28, 2013). This was the most recent rule 2a-7
submission that includes certain estimates with respect to aggregate
annual hour and cost burdens for collections of information for each
existing registered money market fund, fund complexes with
registered money market funds, registered money market funds that
experience an event of default or insolvency, and newly registered
money market funds.
---------------------------------------------------------------------------
In the rule 2a-7 submission, Commission staff made the following
estimates with respect to aggregate annual hour and cost burdens for
collections of information for each existing registered money market
fund:
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: 85 responses, 680 hours of professional time, Cost:
$178,160.\14\
---------------------------------------------------------------------------
\14\ This estimate is based on the following calculation: (680
burden hours x $262 per hour for professional time) = $178,160 per
fund.
---------------------------------------------------------------------------
Public website posting of monthly portfolio information: 12
responses, 7 hours of professional time, Cost: $17,304.\15\
---------------------------------------------------------------------------
\15\ This estimate is based on the following calculation: (12 x
7 burden hours x $206 per hour for a webmaster) = $17,304 per fund.
---------------------------------------------------------------------------
Review of procedures and guidelines of any investment adviser to
whom the fund's board has delegated responsibility under rule 2a-7 and
amendment of such procedures: 1 response, 5 hours of professional and
director time, Cost: $5,960.\16\
---------------------------------------------------------------------------
\16\ This estimate is based on the following calculation: (1
hour x $4,500 per hour for board time) + (4 hours x $365 per hour
for professional time) = $5,960 per fund.
---------------------------------------------------------------------------
Based on census data available on Form PF, the staff believes that
the number of private liquidity funds reported on Form PF (69) is the
most
[[Page 14532]]
current and accurate estimate the number of unregistered money market
funds affected by rule 12d1-1.\17\ Each of these unregistered money
market funds engages in the collections of information described above.
Accordingly, the staff estimates that unregistered money market funds
complying with the collections of information described above engage in
a total of 6,762 annual responses under rule 12d1-1,\18\ the aggregate
annual burden hours associated with these responses is 47,748,\19\ and
the aggregate annual cost to funds is $13,898,256.\20\
---------------------------------------------------------------------------
\17\ See supra note 12. The staff notes, however, that this
estimate may be overstated to the extent that a private liquidity
fund reported on Form PF does not follow all of rule 2a-7's
requirements (that include collections of information) or because no
registered investment companies invest in such a fund. The staff
also notes, however, that this estimate may be understated to the
extent that there are additional unregistered money market funds
that are not required to be reported on Form PF (because Form PF is
filed only by certain investments advisers to private funds that
have $150 million in private fund assets under management).
\18\ The estimate is based on the following calculations: (69
funds x 85 responses for documentation of credit analyses and other
determinations) = 5,865 responses. (69 funds x 12 responses for
public website posting) = 828 responses. (69 funds x 1 response for
policies and procedures related to delegation to an investment
adviser) = 69 responses. 5,865 responses + 828 responses + 69
responses = 6,762 responses.
\19\ This estimate is based on the following calculations: (69
funds x 680 hours for documentation of credit analyses and other
determinations) = 46,920 hours. (69 funds x 7 hours for public
website posting) = 483 hours. (69 funds x 5 hours for policies and
procedures related to delegation to an investment adviser) = 345
hours. 46,920 hours + 483 hours + 345 hours = 47,748 hours.
\20\ This estimate is based on the following calculations: (69
funds x $178,160) = $12,293,040. (69 funds x $17,304) = $1,193,976.
(69 funds x $5,960) = $411,240. $12,293,040 + $1,193,976 + $411,240
= $13,898,256.
---------------------------------------------------------------------------
In the rule 2a-7 submission, Commission staff further estimated the
aggregate annual hour and cost burdens for collections of information
for fund complexes with registered money market funds as follows:
Review, revise, and approve procedures concerning stress testing: 1
response, 12 burden hours of professional and director time, Cost:
$8,021.\21\
---------------------------------------------------------------------------
\21\ This estimate is based on the following calculation: (1
hour x $4,500 per hour for board time) + (5 hours x $322 per hour
for a portfolio manager) + (3 hours x $259 per hour for a risk
management specialist) + (3 hours x $378 per hour for an attorney) =
$8,021 per response.
---------------------------------------------------------------------------
Report to fund boards on the results of stress testing: 5
responses, 10 burden hours of professional and support staff time,
Cost: $15,490.\22\
---------------------------------------------------------------------------
\22\ This estimate is based on the following calculation: (5
responses x 5 hours x $322 per hour for a portfolio manager) + (5
responses x 2 hours x $279 per hour for a compliance manager) + (5
responses x 2 hours x $378 per hour for an attorney) + (5 responses
x 1 hour x $174 per hour for support staff) = $15,490 per fund
complex.
---------------------------------------------------------------------------
Reporting of rule 17a-9 transactions: \23\ 1 response, 1 burden
hour of legal time, Cost: $378.\24\
---------------------------------------------------------------------------
\23\ See 17 CFR 270.17a-9.
\24\ The estimate is based on the following calculations: (1
response x $378 per hour for an attorney) = $378 per response.
---------------------------------------------------------------------------
Based on the number of liquidity fund advisers reported on Form PF,
the staff estimates that there are 39 fund complexes with unregistered
money market funds invested in by mutual funds in excess of the
statutory limits under rule 12d1-1.\25\ Each of these fund complexes
engages in the collections of information described above. Accordingly,
the staff estimates that these fund complexes complying with the
collections of information described above engage in a total of 273
annual responses under rule 12d1-1,\26\ the aggregate annual burden
hours associated with these responses is 897,\27\ and the aggregate
annual cost to funds is $931,671.\28\
---------------------------------------------------------------------------
\25\ See supra note 12.
\26\ The estimate is based on the following calculations: (39
fund complexes x 1 response for revision of procedures concerning
stress testing) = 39 responses. (39 fund complexes x 5 responses to
provide stress testing reports) = 195 responses. (39 fund complexes
x 1 response for reporting of rule 17a-9 transactions) = 39
responses. 39 responses + 195 responses + 39 responses = 273
responses.
\27\ This estimate is based on the following calculations: (39
fund complexes x 12 hours for revision of procedures concerning
stress testing) = 468 hours. (39 fund complexes x 10 hours to
provide stress testing reports) = 390 hours. (39 fund complexes x 1
hour for reporting of rule 17a-9 transactions) = 39 hours. 468 hours
+ 390 hours + 39 hours = 897 hours.
\28\ This estimate is based on the following calculations: (39
fund complexes x $8,021 for revision of procedures concerning stress
testing) = $312,819. (39 fund complexes x $15,490 to provide stress
testing reports) = $604,110. (39 fund complexes x $378 for reporting
of rule 17a-9 transactions) = $14,742. $312,819 + $604,110 + $14,742
= $931,671.
---------------------------------------------------------------------------
In the rule 2a-7 submission, Commission staff further estimated the
aggregate annual burdens for registered money market funds that
experience an event of default or insolvency as follows:
Written record of board determinations and actions related to
failure of a security to meet certain eligibility standards or an event
of default of default or insolvency: 2 responses, 1 burden hour of
legal time, Cost: $378.
Notice to Commission of an event of default or insolvency: 1
response, 0.5 burden hours of legal time, Cost: $189.
Consistent with the estimate in the rule 2a-7 submissions,
Commission staff estimates that approximately 2 percent, or 1,
unregistered money market fund experiences an event of default or
insolvency each year. Accordingly, the staff estimates that one
unregistered money market fund will comply with these collection of
information requirements and engage in 3 annual responses under rule
12d1-1,\29\ the aggregate annual burden hours associated with these
responses is 1.5,\30\ and the aggregate annual cost to funds is
$567.\31\
---------------------------------------------------------------------------
\29\ The estimate is based on the following calculations: (1
fund x 2 responses) + (1 fund x 1 response) = 3 responses.
\30\ This estimate is based on the following calculations: (1
fund x 1 hour) + (1 fund x 0.5 hours) = 1.5 hours.
\31\ This estimate is based on the following calculations: (1
fund x $378) + (1 fund x $189) = $567.
---------------------------------------------------------------------------
In the rule 2a-7 submission, Commission staff further estimated the
aggregate annual burdens for newly registered money market funds as
follows:
Establish written procedures and guidelines designed to stabilize
the fund's net asset value and establish procedures for board
delegation of authority: 1 response, 15.5 hours of director, legal, and
support staff time, Cost: $6,328.\32\
---------------------------------------------------------------------------
\32\ This estimate is based on the following calculation: (0.5
hours x $4,500 per hour for board time) + (7.2 hours x $378 per hour
for an attorney) + (7.8 hours x $174 per hour for support staff) =
$6,328 per response.
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Adopt procedures concerning stress testing: 1 response per fund
complex, 22 burden hours of professional and director time per fund
complex, Cost: $19,373 per fund complex.\33\
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\33\ This estimate is based on the following calculation: (3
hours x $4,500 per hour for board time) + (8 hours x $378 per hour
for an attorney) + (11 hours x $259 per hour for a risk management
specialist) = $19,373 per response. See also infra note 34.
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Commission staff estimates that the proportion of unregistered
money market funds that intend to newly undertake the collection of
information burdens of rule 2a-7 will be similar to the proportion of
money market funds that are newly registered. Based on a projection of
10 new money market funds per year (in the most recent rule 2a-7
submission), the staff estimates that, similarly, there will be 10 new
unregistered money market funds that undertake the above burden to
establish written procedures and guidelines designed to stabilize the
fund's net asset value and establish procedures for board delegation of
authority.\34\ Accordingly,
[[Page 14533]]
the staff estimates that 10 unregistered money market funds will comply
with this collection of information requirement and engage in 10 annual
responses under rule 12d1-1,\35\ the aggregate annual burden hours
associated with these responses is 155,\36\ and the aggregate annual
cost to funds is $62,380.\37\
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\34\ The staff's estimate is based on historical data provided
in Lipper Inc.'s LANA database and projections about the growth of
the money market mutual fund industry going forward. The actual
number of new money market funds launched may vary significantly
from our estimates depending upon developments in market interest
rates and other factors. The staff does not estimate any new fund
complexes being launched in the next year.
\35\ The estimate is based on the following calculations: (10
funds x 1 response) = 10 responses.
\36\ This estimate is based on the following calculations: (10
funds x 15.5 hours) = 155 hours.
\37\ This estimate is based on the following calculations: (10
funds x $6,238) = $62,380.
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Accordingly, the estimated total number of annual responses under
rule 12d1-1 for the collections of information described in the rule
2a-7 submissions is 7,048, the aggregate annual burden hours associated
with these responses is 48,801.5, and the aggregate cost to funds is
$14,892,874.\38\
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\38\ These estimates are based upon the following calculations:
(6,762 + 273 + 3+ 10) = 7,048 annual responses; (47,748 + 897 + 1.5
+ 155) = 48,801.5 burden hours; and ($13,898,256 + $931,671 + $567 +
$62,380) = $14,892,874.
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Rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-
1(b)(9) require registered funds to keep certain records, which include
journals and general and auxiliary ledgers, including ledgers for each
portfolio security and each shareholder of record of the fund. Most of
the records required to be maintained by the rule are the type that
generally would be maintained as a matter of good business practice and
to prepare the unregistered money market fund's financial statements.
Accordingly, Commission staff estimates that the requirements under
rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-1(b)(9)
would not impose any additional burden because the costs of maintaining
these records would be incurred by unregistered money market funds in
any case to keep books and records that are necessary to prepare
financial statements for shareholders, to prepare the fund's annual
income tax returns, and as a normal business custom.
Rule 12d1-1 also requires unregistered money market funds in which
registered funds invest to adopt procedures designed to ensure that the
unregistered money market funds comply with sections 17(a), (d), (e),
and 22(e) of the Act. This is a one-time collection of information
requirement that applies to unregistered money market funds that intend
to comply with the requirements of rule 12d1-1. As discussed above,
based on a projection of 10 new money market funds per year, the staff
estimates that, similarly, there will be 10 new unregistered money
market funds that undertake the above burden to establish written
procedures and guidelines designed to ensure that the unregistered
money market funds comply with sections 17(a), (d), (e), and 22(e) of
the Act. The staff estimates the burden as follows:
Establish written procedures and guidelines designed to ensure that
the unregistered money market funds comply with sections 17(a), (d),
(e), and 22(e) of the Act: 1 response, 15.5 hours of director, legal,
and support staff time, Cost: $6,328.\39\
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\39\ This estimate is based on the following calculation: (0.5
hours x $4,500 per hour for board time) + (7.2 hours x $378 per hour
for an attorney) + (7.8 hours x $174 per hour for support staff) =
$6,328 per response.
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Accordingly, the staff estimates that 10 unregistered money market
funds will comply with this collection of information requirement and
engage in 10 annual responses under rule 12d1-1,\40\ the aggregate
annual burden hours associated with these responses is 155,\41\ and the
aggregate annual cost to funds is $62,380.\42\
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\40\ The estimate is based on the following calculations: (10
funds x 1 response) = 10 responses.
\41\ This estimate is based on the following calculations: (10
funds x 15.5 hours) = 155 hours.
\42\ This estimate is based on the following calculations: (10
funds x $6,238) = $62,380.
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Commission staff also estimates that unregistered 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. In the rule 2a-7 submission, Commission staff
estimated that the amount an individual money market fund may spend
ranges from $100 per year to $300,000. We have no reason to believe the
range is different for unregistered money market funds. Based on Form
PF data as of the fourth calendar quarter 2016, private liquidity funds
have $293 billion in gross asset value.\43\ The Commission does not
have specific information about the proportion of assets held in small,
medium-sized, or large unregistered money market funds. Because private
liquidity funds are often used as cash management vehicles, the staff
estimates that each private liquidity fund is a ``large'' fund (i.e.,
more than $1 billion in assets under management). Based on a cost of
$0.0000009 per dollar of assets under management (for large funds),\44\
the staff estimates compliance with rule 2a-7 for these unregistered
money market funds totals $263,700 annually.\45\
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\43\ See supra note 12.
\44\ The recordkeeping cost estimates are $0.0051295 per dollar
of assets under management for small funds, and $0.0005041 per
dollar of assets under management for medium-sized funds. The cost
estimates are the same as those used in the most recently approved
rule 2a-7 submission.
\45\ This estimate is based on the following calculation: ($293
billion x $0.0000009) = $263,700 billion for small funds.
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Consistent with estimates made in the rule 2a-7 submission,
Commission staff estimates that unregistered money market funds also
incur capital costs to create computer programs for maintaining and
preserving compliance records for rule 2a-7 of $0.0000132 per dollar of
assets under management. Based on the assets under management figures
described above, staff estimates annual capital costs for all
unregistered money market funds of $3.87 million.\46\
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\46\ This estimate is based on the following calculation: ($293
billion x 0.0000132) = $3.87 million.
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Commission staff further estimates that, even absent the
requirements of rule 2a-7, money market funds would spend at least half
of the amounts described above for record preservation ($131,850) and
for capital costs ($1.94 million). Commission staff concludes that the
aggregate annual costs of compliance with the rule are $131,850 for
record preservation and $1.94 million for capital costs.
The collections of information required for unregistered money
market funds by rule 12d1-1 are necessary in order for acquiring funds
to able 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.
The public may view the background documentation for this
information collection at the following website, www.reginfo.gov.
Comments should be directed to: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503, or by sending an email to:
[email protected]; and (ii) 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: [email protected]. Comments must be submitted to OMB within 30
days of this notice.
[[Page 14534]]
Dated: March 29, 2018.
Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018-06854 Filed 4-3-18; 8:45 am]
BILLING CODE 8011-01-P
