Submission for OMB Review; Comment Request, 22305-22307 [2018-10146]

Download as PDF Federal Register / Vol. 83, No. 93 / Monday, May 14, 2018 / Notices Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposed rule change operative upon filing.15 At any time within 60 days of the filing of the 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 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 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: amozie on DSK3GDR082PROD with NOTICES 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 CboeBZX–2018–032 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549–1090. All submissions should refer to File Number CboeBZX–2018–032. 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 15 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Sep<11>2014 18:02 May 11, 2018 Jkt 244001 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 submit only information that you wish to make available publicly. All submissions should refer to File Number CboeBZX–2018–032 and should be submitted on or before June 4, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–10140 Filed 5–11–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–541, OMB Control No. 3235–0620] 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 22c–2. 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. Rule 22c–2 (17 CFR 270.22c–2) under the Investment Company Act of 1940 (15 U.S.C. 80a) (the ‘‘Investment Company Act’’ or ‘‘Act’’) requires the board of directors (including a majority of independent directors) of most registered open-end investment companies (‘‘funds’’) to either approve a redemption fee of up to two percent or determine that imposition of a redemption fee is not necessary or appropriate for the fund. Rule 22c–2 16 17 PO 00000 CFR 200.30–3(a)(12). Frm 00067 Fmt 4703 Sfmt 4703 22305 also requires a fund to enter into written agreements with their financial intermediaries (such as broker-dealers and retirement plan administrators) under which the fund, upon request, can obtain certain shareholder identity and trading information from the intermediaries. The written agreement must also allow the fund to direct the intermediary to prohibit further purchases or exchanges by specific shareholders that the fund has identified as being engaged in transactions that violate the fund’s market timing policies. These requirements enable funds to obtain the information that they need to monitor the frequency of short-term trading in omnibus accounts and enforce their market timing policies. The rule includes three ‘‘collections of information’’ within the meaning of the Paperwork Reduction Act of 1995 (‘‘PRA’’).1 First, the rule requires boards to either approve a redemption fee of up to two percent or determine that imposition of a redemption fee is not necessary or appropriate for the fund. Second, funds must enter into information sharing agreements with all of their ‘‘financial intermediaries’’ 2 and maintain a copy of the written information sharing agreement with each intermediary in an easily accessible place for six years. Third, pursuant to the information sharing agreements, funds must have systems that enable them to request frequent trading information upon demand from their intermediaries, and to enforce any restrictions on trading required by funds under the rule. The collections of information created by rule 22c–2 are necessary for funds to effectively assess redemption fees, enforce their policies in frequent trading, and monitor short-term trading, including market timing, in omnibus accounts. These collections of information are mandatory for funds that redeem shares within seven days of purchase. The collections of information 1 44 U.S.C. 3501–3520. rule defines a Financial Intermediary as: (i) Any broker, dealer, bank, or other person that holds securities issued by the fund in nominee name; (ii) a unit investment trust or fund that invests in the fund in reliance on section 12(d)(i)(E) of the Act; and (iii) in the case of a participant directed employee benefit plan that owns the securities issued by the fund, a retirement plan’s administrator under section 316(A) of the Employee Retirement Security Act of 1974 (29 U.S.C. 1002(16)(A) or any person that maintains the plans’ participant records. Financial Intermediary does not include any person that the fund treats as an individual investor with respect to the fund’s policies established for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the fund. Rule 22c– 2(c)(1). 2 The E:\FR\FM\14MYN1.SGM 14MYN1 22306 Federal Register / Vol. 83, No. 93 / Monday, May 14, 2018 / Notices also are necessary to allow Commission staff to fulfill its examination and oversight responsibilities. Rule 22c–2(a)(1) requires the board of directors of all registered open-end management investment companies and series thereof (except for money market funds, ETFs, or funds that affirmatively permit short-term trading of its securities) to approve a redemption fee for the fund, or instead make a determination that a redemption fee is either not necessary or appropriate for the fund. Commission staff understands that the boards of all funds currently in operation have undertaken this process for the funds they currently oversee, and the rule does not require boards to review this determination periodically once it has been made. Accordingly, we expect that only boards of newly registered funds or newly created series thereof would undertake this determination. Commission staff estimates that 42 funds (excluding money market funds and ETFs) are newly formed each year and would need to make this determination.3 Based on conversations with fund representatives,4 Commission staff estimates that it takes 2 hours of the board’s time as a whole (at a rate of $4465 per hour) 5 to approve a redemption fee or make the required determination on behalf of all series of the fund. In addition, Commission staff estimates that it takes compliance personnel of the fund 8 hours (at a rate of $66 per hour) 6 to prepare trading, compliance, and other information regarding the fund’s operations to enable the board to make its determination, and takes internal compliance counsel of the fund 3 hours (at a rate of $345 per hour) 7 to review this information and present its amozie on DSK3GDR082PROD with NOTICES 3 This estimate is based on the number of registrants filing initial Form N–1A or N–3. This estimate does not carve out money market funds, ETFs, or funds that affirmatively permit short-term trading of their securities, so this estimate corresponds to the outer limit of the number of registrants that would have to make this determination. 4 Unless otherwise stated, estimates throughout this analysis are derived from a survey of funds and conversations with fund representatives. 5 The estimate of $4465 per hour for the board’s time as a whole is based on conversations with representatives of funds and their legal counsel. 6 The $66 per hour figure for a compliance clerk is from SIFMA’s Office Salaries in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour work-year and inflation, and multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead. 7 The $345 per hour figure for internal compliance counsel is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. VerDate Sep<11>2014 18:02 May 11, 2018 Jkt 244001 recommendations to the board. Therefore, for each fund board that undertakes this determination process, Commission staff estimates it expends 13 hours 8 at a cost of $10,493.9 As a result, Commission staff estimates that the total time spent for all funds on this process is 546 hours at a cost of $440,706.10 Rule 22c–2(a)(2) also requires a fund to enter into information-sharing agreements with each of its financial intermediaries. Commission staff understands that all currently registered funds have already entered into such agreements with their intermediaries. Funds enter into new relationships with intermediaries from time to time, however, which requires them to enter into new information sharing agreements. Commission staff understands that, in general, funds enter into information-sharing agreement when they initially establish a relationship with an intermediary, which is typically executed as an addendum to the distribution agreement. The Commission staff understands that most shareholder information agreements are entered into by the fund group (a group of funds with a common investment adviser), and estimates that there are currently 850 currently active fund groups.11 Commission staff estimates that, on average, each active fund group enters into relationships with 3 new intermediaries each year. Commission staff understands that funds generally use a standard information sharing agreement, drafted by the fund or an outside entity, and modifies that agreement according to the requirements of each intermediary. Commission staff estimates that negotiating the terms and entering into an information sharing agreement takes a total of 4 hours of attorney time (at a rate of $392 per hour) 12 per intermediary (representing 2.5 hours of 8 This calculation is based on the following estimates: (2 hours of board time + 3 hours of internal compliance counsel time + 8 hours of compliance clerk time = 13 hours). 9 This calculation is based on the following estimates: ($8930 ($4465 board time × 2 hours = $8930) + $528 ($66 compliance time × 8 hours = $528) + $1035 ($345 attorney time × 3 hours = $1035) = $10,493). 10 This calculation is based on the following estimates: (13 hours × 42 funds = 546 hours); ($10,493 × 42 funds = $440,706). 11 ICI, 2017 Investment Company Fact Book at Fig 1.8 (2017) (https://www.ici.org/research/stats/ factbook). 12 The $392 per hour figure for attorneys is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour workyear and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 fund attorney time and 1.5 hours of intermediary attorney time). Accordingly, Commission staff estimates that it takes 12 hours at a cost of $4704 each year 13 to enter into new information sharing agreements, and all existing market participants incur a total of 10,200 hours at a cost of $3,998,400.14 In addition, newly created funds advised by new entrants (effectively new fund groups) must enter into information sharing agreements with all of their financial intermediaries. Commission staff estimates that there are 47 new fund groups that form each year that will have to enter into information sharing agreements with each of their intermediaries.15 Commission staff estimates that fund groups formed by new advisers typically have relationships with significantly fewer intermediaries than existing fund groups, and estimates that new fund groups will typically enter into 100 information sharing agreements with their intermediaries when they begin operations.16 As discussed previously, Commission staff estimates that it takes 4 hours of attorney time (at a rate of $392 per hour) 17 per intermediary to enter into information sharing agreements. Therefore, Commission staff estimates that each newly formed fund group will incur 400 hours of attorney time at a cost of $156,800 18 and that all newly formed fund groups will incur a total of 18,800 hours at a cost of $7,369,600 to enter into information sharing agreements with their intermediaries.19 Rule 22c–2(a)(3) requires funds to maintain records of all informationsharing agreements for 6 years in an easily accessible place. Commission staff understands that most shareholder 13 This estimate is based on the following calculations: (4 hours × 3 new intermediaries = 12 hours); (12 hours × $392 = $4704). 14 This estimate is based on the following calculations: (12 hours × 850 fund groups = 10,200 hours); (10,200 hours × $392 = $3,998,400). 15 ICI, 2017 Investment Company Fact Book at Fig 1.8 (2017) (https://www.ici.org/research/stats/ factbook). 16 Commission staff understands that funds generally use a standard information sharing agreement, drafted by the fund or an outside entity, and then modifies that agreement according to the requirements of each intermediary. 17 The $392 per hour figure for an attorney is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour workyear and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. 18 This estimate is based on the following calculations: (4 hours × 100 intermediaries = 400 hours); (400 hours × $392 = $156,800). 19 This estimate is based on the following calculations: (47 fund groups × 400 hours = 18,800 hours) ($392 × 18,800 = 7,369,600). E:\FR\FM\14MYN1.SGM 14MYN1 Federal Register / Vol. 83, No. 93 / Monday, May 14, 2018 / Notices amozie on DSK3GDR082PROD with NOTICES information agreements are stored at the fund group level and estimates that there are currently approximately 850 fund groups.20 Commission staff understands that information-sharing agreements are generally included as addendums to distribution agreements between funds and their intermediaries, and that these agreements would be stored as required by the rule as a matter of ordinary business practice. Therefore, Commission staff estimates that maintaining records of informationsharing agreements requires 10 minutes of time spent by a general clerk (at a rate of $59 per hour) 21 per fund, each year. Accordingly, Commission staff estimates that all funds will incur 141.67 hours at a cost of $8358.53 22 in complying with the recordkeeping requirement of rule 22c–2(a)(3). Therefore, Commission staff estimates that to comply with the information sharing agreement requirements of rule 22c–2(a)(2) and (3), it requires a total of 29,141.67 hours at a cost of $11,403,358.53.23 The Commission staff estimates that on average, each fund group requests shareholder information once a week, and gives instructions regarding the restriction of shareholder trades every day, for a total of 417 responses related to information sharing systems per fund group each year, and a total 354,450 responses for all fund groups annually.24 In addition, as described above, the staff estimates that funds make 42 responses related to board determinations, 2550 responses related to new intermediaries of existing fund groups, 4700 responses related to new fund group information sharing agreements, and 850 responses related to recordkeeping, for a total of 8142 responses related to the other requirements of rule 22c–2. Therefore, the Commission staff estimates that the total number of responses is 362,592 (354,450 + 8142 = 362,592). 20 ICI, 2017 Investment Company Fact Book at Fig 1.8 (2017) (https://www.ici.org/research/stats/ factbook). 21 The $59 per hour figure for a general clerk is derived from SIFMA’s Office Salaries in the Securities Industry 2013 modified to account for an 1800-hour work-year and inflation, and multiplied by 2.93 to account for bonuses, firm size, employee benefits, and overhead. 22 This estimate is based on the following calculations: (10 minutes × 850 fund groups = 8500 minutes); (8500 minutes/60 = 141.67 hours); (141.67 hours × $59 = $8358.53). 23 This estimate is based on the following calculations: (10,200 hours + 18,800 hours + 141.67 hours = 29,141.67 hours); ($3,998,400 + $7,369,600 + $8358.53 = $11,403,358.53). 24 This estimate is based on the following calculations: (52 + 365 = 417); (417 × 850 fund groups = 354,450). VerDate Sep<11>2014 18:02 May 11, 2018 Jkt 244001 The Commission staff estimates that the total hour burden for rule 22c–2 is 29,687.67 hours at a cost of $11,817,056.50.25 Responses provided to the Commission will be accorded the same level of confidentiality accorded to other responses provided to the Commission in the context of its examination and oversight program. Responses provided in the context of the Commission’s examination and oversight program are generally kept confidential. Complying with the information collections of rule 22c–2 is mandatory for funds that redeem their shares within 7 days of purchase. 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. Dated: May 8, 2018. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–10146 Filed 5–11–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–141, OMB Control No. 3235–0249] 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 12f–3 25 This estimate is based on the following calculations: (546 hours (board determination) + 29,141.67 hours (information sharing agreements) = 29,687.67 total hours); ($440,706 (board determination) + $11,376,350.53 (information sharing agreements) = $11,817,056.50). PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 22307 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of extension of the previously approved collection of information provided for in Rule 12f–3 (17 CFR 240.12f–3), under the Securities Exchange Act of 1934 (‘‘Act’’) (15 U.S.C. 78a et seq.). Rule 12f–3 (‘‘Rule’’), which was originally adopted in 1955 pursuant to Sections 12(f) and 23(a) of the Act, and as further modified in 1995, sets forth the requirements to submit an application to the Commission for termination or suspension of unlisted trading privileges in a security, as contemplated under Section 12(f)(4) of the Act. In addition to requiring that one copy of the application be filed with the Commission, the Rule requires that the application contain specified information. Under the Rule, an application to suspend or terminate unlisted trading privileges must provide, among other things, the name of the applicant; a brief statement of the applicant’s interest in the question of termination or suspension of such unlisted trading privileges; the title of the security; the name of the issuer; certain information regarding the size of the class of security, the public trading volume and price history in the security for specified time periods on the subject exchange and a statement indicating that the applicant has provided a copy of such application to the exchange from which the suspension or termination of unlisted trading privileges are sought, and to any other exchange on which the security is listed or admitted to unlisted trading privileges. The information required to be included in applications submitted pursuant to Rule 12f–3, is intended to provide the Commission with sufficient information to make the necessary findings under the Act to terminate or suspend by order the unlisted trading privileges granted a security on a national securities exchange. Without the Rule, the Commission would be unable to fulfill these statutory responsibilities. The burden of complying with Rule 12f–3 arises when a potential respondent, having a demonstrable bona fide interest in the question of termination or suspension of the unlisted trading privileges of a security, determines to seek such termination or suspension. The staff estimates that each such application to terminate or suspend unlisted trading privileges E:\FR\FM\14MYN1.SGM 14MYN1

Agencies

[Federal Register Volume 83, Number 93 (Monday, May 14, 2018)]
[Notices]
[Pages 22305-22307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10146]


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

SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-541, OMB Control No. 3235-0620]


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 22c-2.

    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.
    Rule 22c-2 (17 CFR 270.22c-2) under the Investment Company Act of 
1940 (15 U.S.C. 80a) (the ``Investment Company Act'' or ``Act'') 
requires the board of directors (including a majority of independent 
directors) of most registered open-end investment companies (``funds'') 
to either approve a redemption fee of up to two percent or determine 
that imposition of a redemption fee is not necessary or appropriate for 
the fund. Rule 22c-2 also requires a fund to enter into written 
agreements with their financial intermediaries (such as broker-dealers 
and retirement plan administrators) under which the fund, upon request, 
can obtain certain shareholder identity and trading information from 
the intermediaries. The written agreement must also allow the fund to 
direct the intermediary to prohibit further purchases or exchanges by 
specific shareholders that the fund has identified as being engaged in 
transactions that violate the fund's market timing policies. These 
requirements enable funds to obtain the information that they need to 
monitor the frequency of short-term trading in omnibus accounts and 
enforce their market timing policies.
    The rule includes three ``collections of information'' within the 
meaning of the Paperwork Reduction Act of 1995 (``PRA'').\1\ First, the 
rule requires boards to either approve a redemption fee of up to two 
percent or determine that imposition of a redemption fee is not 
necessary or appropriate for the fund. Second, funds must enter into 
information sharing agreements with all of their ``financial 
intermediaries'' \2\ and maintain a copy of the written information 
sharing agreement with each intermediary in an easily accessible place 
for six years. Third, pursuant to the information sharing agreements, 
funds must have systems that enable them to request frequent trading 
information upon demand from their intermediaries, and to enforce any 
restrictions on trading required by funds under the rule.
---------------------------------------------------------------------------

    \1\ 44 U.S.C. 3501-3520.
    \2\ The rule defines a Financial Intermediary as: (i) Any 
broker, dealer, bank, or other person that holds securities issued 
by the fund in nominee name; (ii) a unit investment trust or fund 
that invests in the fund in reliance on section 12(d)(i)(E) of the 
Act; and (iii) in the case of a participant directed employee 
benefit plan that owns the securities issued by the fund, a 
retirement plan's administrator under section 316(A) of the Employee 
Retirement Security Act of 1974 (29 U.S.C. 1002(16)(A) or any person 
that maintains the plans' participant records. Financial 
Intermediary does not include any person that the fund treats as an 
individual investor with respect to the fund's policies established 
for the purpose of eliminating or reducing any dilution of the value 
of the outstanding securities issued by the fund. Rule 22c-2(c)(1).
---------------------------------------------------------------------------

    The collections of information created by rule 22c-2 are necessary 
for funds to effectively assess redemption fees, enforce their policies 
in frequent trading, and monitor short-term trading, including market 
timing, in omnibus accounts. These collections of information are 
mandatory for funds that redeem shares within seven days of purchase. 
The collections of information

[[Page 22306]]

also are necessary to allow Commission staff to fulfill its examination 
and oversight responsibilities.
    Rule 22c-2(a)(1) requires the board of directors of all registered 
open-end management investment companies and series thereof (except for 
money market funds, ETFs, or funds that affirmatively permit short-term 
trading of its securities) to approve a redemption fee for the fund, or 
instead make a determination that a redemption fee is either not 
necessary or appropriate for the fund. Commission staff understands 
that the boards of all funds currently in operation have undertaken 
this process for the funds they currently oversee, and the rule does 
not require boards to review this determination periodically once it 
has been made. Accordingly, we expect that only boards of newly 
registered funds or newly created series thereof would undertake this 
determination. Commission staff estimates that 42 funds (excluding 
money market funds and ETFs) are newly formed each year and would need 
to make this determination.\3\
---------------------------------------------------------------------------

    \3\ This estimate is based on the number of registrants filing 
initial Form N-1A or N-3. This estimate does not carve out money 
market funds, ETFs, or funds that affirmatively permit short-term 
trading of their securities, so this estimate corresponds to the 
outer limit of the number of registrants that would have to make 
this determination.
---------------------------------------------------------------------------

    Based on conversations with fund representatives,\4\ Commission 
staff estimates that it takes 2 hours of the board's time as a whole 
(at a rate of $4465 per hour) \5\ to approve a redemption fee or make 
the required determination on behalf of all series of the fund. In 
addition, Commission staff estimates that it takes compliance personnel 
of the fund 8 hours (at a rate of $66 per hour) \6\ to prepare trading, 
compliance, and other information regarding the fund's operations to 
enable the board to make its determination, and takes internal 
compliance counsel of the fund 3 hours (at a rate of $345 per hour) \7\ 
to review this information and present its recommendations to the 
board. Therefore, for each fund board that undertakes this 
determination process, Commission staff estimates it expends 13 hours 
\8\ at a cost of $10,493.\9\ As a result, Commission staff estimates 
that the total time spent for all funds on this process is 546 hours at 
a cost of $440,706.\10\
---------------------------------------------------------------------------

    \4\ Unless otherwise stated, estimates throughout this analysis 
are derived from a survey of funds and conversations with fund 
representatives.
    \5\ The estimate of $4465 per hour for the board's time as a 
whole is based on conversations with representatives of funds and 
their legal counsel.
    \6\ The $66 per hour figure for a compliance clerk is from 
SIFMA's Office Salaries in the Securities Industry 2013, modified by 
Commission staff to account for an 1800-hour work-year and 
inflation, and multiplied by 2.93 to account for bonuses, firm size, 
employee benefits and overhead.
    \7\ The $345 per hour figure for internal compliance counsel is 
from SIFMA's Management & Professional Earnings in the Securities 
Industry 2013, modified by Commission staff to account for an 1800-
hour work-year and inflation, and multiplied by 5.35 to account for 
bonuses, firm size, employee benefits and overhead.
    \8\ This calculation is based on the following estimates: (2 
hours of board time + 3 hours of internal compliance counsel time + 
8 hours of compliance clerk time = 13 hours).
    \9\ This calculation is based on the following estimates: ($8930 
($4465 board time x 2 hours = $8930) + $528 ($66 compliance time x 8 
hours = $528) + $1035 ($345 attorney time x 3 hours = $1035) = 
$10,493).
    \10\ This calculation is based on the following estimates: (13 
hours x 42 funds = 546 hours); ($10,493 x 42 funds = $440,706).
---------------------------------------------------------------------------

    Rule 22c-2(a)(2) also requires a fund to enter into information-
sharing agreements with each of its financial intermediaries. 
Commission staff understands that all currently registered funds have 
already entered into such agreements with their intermediaries. Funds 
enter into new relationships with intermediaries from time to time, 
however, which requires them to enter into new information sharing 
agreements. Commission staff understands that, in general, funds enter 
into information-sharing agreement when they initially establish a 
relationship with an intermediary, which is typically executed as an 
addendum to the distribution agreement. The Commission staff 
understands that most shareholder information agreements are entered 
into by the fund group (a group of funds with a common investment 
adviser), and estimates that there are currently 850 currently active 
fund groups.\11\ Commission staff estimates that, on average, each 
active fund group enters into relationships with 3 new intermediaries 
each year. Commission staff understands that funds generally use a 
standard information sharing agreement, drafted by the fund or an 
outside entity, and modifies that agreement according to the 
requirements of each intermediary. Commission staff estimates that 
negotiating the terms and entering into an information sharing 
agreement takes a total of 4 hours of attorney time (at a rate of $392 
per hour) \12\ per intermediary (representing 2.5 hours of fund 
attorney time and 1.5 hours of intermediary attorney time). 
Accordingly, Commission staff estimates that it takes 12 hours at a 
cost of $4704 each year \13\ to enter into new information sharing 
agreements, and all existing market participants incur a total of 
10,200 hours at a cost of $3,998,400.\14\
---------------------------------------------------------------------------

    \11\ ICI, 2017 Investment Company Fact Book at Fig 1.8 (2017) 
(https://www.ici.org/research/stats/factbook).
    \12\ The $392 per hour figure for attorneys is from SIFMA's 
Management & Professional Earnings in the Securities Industry 2013, 
modified by Commission staff to account for an 1800-hour work-year 
and inflation, and multiplied by 5.35 to account for bonuses, firm 
size, employee benefits and overhead.
    \13\ This estimate is based on the following calculations: (4 
hours x 3 new intermediaries = 12 hours); (12 hours x $392 = $4704).
    \14\ This estimate is based on the following calculations: (12 
hours x 850 fund groups = 10,200 hours); (10,200 hours x $392 = 
$3,998,400).
---------------------------------------------------------------------------

    In addition, newly created funds advised by new entrants 
(effectively new fund groups) must enter into information sharing 
agreements with all of their financial intermediaries. Commission staff 
estimates that there are 47 new fund groups that form each year that 
will have to enter into information sharing agreements with each of 
their intermediaries.\15\ Commission staff estimates that fund groups 
formed by new advisers typically have relationships with significantly 
fewer intermediaries than existing fund groups, and estimates that new 
fund groups will typically enter into 100 information sharing 
agreements with their intermediaries when they begin operations.\16\ As 
discussed previously, Commission staff estimates that it takes 4 hours 
of attorney time (at a rate of $392 per hour) \17\ per intermediary to 
enter into information sharing agreements. Therefore, Commission staff 
estimates that each newly formed fund group will incur 400 hours of 
attorney time at a cost of $156,800 \18\ and that all newly formed fund 
groups will incur a total of 18,800 hours at a cost of $7,369,600 to 
enter into information sharing agreements with their 
intermediaries.\19\
---------------------------------------------------------------------------

    \15\ ICI, 2017 Investment Company Fact Book at Fig 1.8 (2017) 
(https://www.ici.org/research/stats/factbook).
    \16\ Commission staff understands that funds generally use a 
standard information sharing agreement, drafted by the fund or an 
outside entity, and then modifies that agreement according to the 
requirements of each intermediary.
    \17\ The $392 per hour figure for an attorney is from SIFMA's 
Management & Professional Earnings in the Securities Industry 2013, 
modified by Commission staff to account for an 1800-hour work-year 
and inflation, and multiplied by 5.35 to account for bonuses, firm 
size, employee benefits and overhead.
    \18\ This estimate is based on the following calculations: (4 
hours x 100 intermediaries = 400 hours); (400 hours x $392 = 
$156,800).
    \19\ This estimate is based on the following calculations: (47 
fund groups x 400 hours = 18,800 hours) ($392 x 18,800 = 7,369,600).
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    Rule 22c-2(a)(3) requires funds to maintain records of all 
information-sharing agreements for 6 years in an easily accessible 
place. Commission staff understands that most shareholder

[[Page 22307]]

information agreements are stored at the fund group level and estimates 
that there are currently approximately 850 fund groups.\20\ Commission 
staff understands that information-sharing agreements are generally 
included as addendums to distribution agreements between funds and 
their intermediaries, and that these agreements would be stored as 
required by the rule as a matter of ordinary business practice. 
Therefore, Commission staff estimates that maintaining records of 
information-sharing agreements requires 10 minutes of time spent by a 
general clerk (at a rate of $59 per hour) \21\ per fund, each year. 
Accordingly, Commission staff estimates that all funds will incur 
141.67 hours at a cost of $8358.53 \22\ in complying with the 
recordkeeping requirement of rule 22c-2(a)(3).
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    \20\ ICI, 2017 Investment Company Fact Book at Fig 1.8 (2017) 
(https://www.ici.org/research/stats/factbook).
    \21\ The $59 per hour figure for a general clerk is derived from 
SIFMA's Office Salaries in the Securities Industry 2013 modified to 
account for an 1800-hour work-year and inflation, and multiplied by 
2.93 to account for bonuses, firm size, employee benefits, and 
overhead.
    \22\ This estimate is based on the following calculations: (10 
minutes x 850 fund groups = 8500 minutes); (8500 minutes/60 = 141.67 
hours); (141.67 hours x $59 = $8358.53).
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    Therefore, Commission staff estimates that to comply with the 
information sharing agreement requirements of rule 22c-2(a)(2) and (3), 
it requires a total of 29,141.67 hours at a cost of $11,403,358.53.\23\
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    \23\ This estimate is based on the following calculations: 
(10,200 hours + 18,800 hours + 141.67 hours = 29,141.67 hours); 
($3,998,400 + $7,369,600 + $8358.53 = $11,403,358.53).
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    The Commission staff estimates that on average, each fund group 
requests shareholder information once a week, and gives instructions 
regarding the restriction of shareholder trades every day, for a total 
of 417 responses related to information sharing systems per fund group 
each year, and a total 354,450 responses for all fund groups 
annually.\24\ In addition, as described above, the staff estimates that 
funds make 42 responses related to board determinations, 2550 responses 
related to new intermediaries of existing fund groups, 4700 responses 
related to new fund group information sharing agreements, and 850 
responses related to recordkeeping, for a total of 8142 responses 
related to the other requirements of rule 22c-2. Therefore, the 
Commission staff estimates that the total number of responses is 
362,592 (354,450 + 8142 = 362,592).
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    \24\ This estimate is based on the following calculations: (52 + 
365 = 417); (417 x 850 fund groups = 354,450).
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    The Commission staff estimates that the total hour burden for rule 
22c-2 is 29,687.67 hours at a cost of $11,817,056.50.\25\ Responses 
provided to the Commission will be accorded the same level of 
confidentiality accorded to other responses provided to the Commission 
in the context of its examination and oversight program. Responses 
provided in the context of the Commission's examination and oversight 
program are generally kept confidential. Complying with the information 
collections of rule 22c-2 is mandatory for funds that redeem their 
shares within 7 days of purchase. 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.
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    \25\ This estimate is based on the following calculations: (546 
hours (board determination) + 29,141.67 hours (information sharing 
agreements) = 29,687.67 total hours); ($440,706 (board 
determination) + $11,376,350.53 (information sharing agreements) = 
$11,817,056.50).
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    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.

    Dated: May 8, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10146 Filed 5-11-18; 8:45 am]
 BILLING CODE 8011-01-P
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