Proposed Collection; Comment Request, 34179-34182 [2018-15381]
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Federal Register / Vol. 83, No. 139 / Thursday, July 19, 2018 / Notices
losses materialize, is calculated as the
greatest of three estimated amounts, one
of which is this Recovery/Wind-down
Capital Requirement. Therefore, NSCC
believes the R&W Plan, as it interrelates
with the Capital Policy, is consistent
with Rule 17Ad–22(e)(15)(ii).72
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(B) Clearing Agency’s Statement on
Burden on Competition
NSCC does not believe the proposal
would have any impact, or impose any
burden, on competition not necessary or
appropriate in furtherance of the
purpose of the Act.73 The proposal
would apply uniformly to all Members
and Limited Members. NSCC does not
anticipate that the proposal would affect
its day-to-day operations under normal
circumstances, or in the management of
a typical Member default scenario or
non-default event. NSCC is not
proposing to alter the standards or
requirements for becoming or remaining
a Member, or otherwise using its
services. NSCC also does not propose to
change its methodology for calculation
of margin or Clearing Fund
contributions. The proposal is intended
to (1) address the risk of loss events and
identify the tools and resources
available to it to withstand and recover
from such events, so that it can restore
normal operations, and (2) provide a
framework for its orderly wind-down
and the transfer of its business in the
event those recovery tools do not restore
NSCC to financial viability, as described
herein.
The R&W Plan and each of the
Proposed Rules have been developed
and documented in order to satisfy
applicable regulatory requirements, as
discussed above.
With respect to the Recovery Plan, the
proposal generally reflects NSCC’s
existing tools and existing internal
procedures. Existing tools that would
have a direct impact on the rights,
responsibilities or obligations of
Members are reflected in the existing
Rules or are proposed to be included in
the Rules. Accordingly, the Recovery
Plan and the proposed Force Majeure
Rule are intended to provide a roadmap,
define the strategy and identify the tools
available to NSCC in connection with its
recovery efforts. By proposing to
enhance NSCC’s existing internal
management and its regulatory
compliance related to its recovery
efforts, NSCC does not believe the
Recovery Plan or the proposed Force
Majeure Rule would have any impact, or
impose any burden, on competition.
72 Id.
73 15
U.S.C. 78q–1(b)(3)(I).
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With respect to the Wind-down Plan,
the proposed Corporation Default Rule,
and the proposed Wind-down Rule,
which facilitate the execution of the
Wind-down Plan, the proposal would
operate to effect the transfer of all
eligible Members and Limited Members
to the Transferee, and would not
prohibit any market participant from
either bidding to become the Transferee
or from applying for membership with
the Transferee. The proposal also would
not prohibit any Member or Limited
Member from withdrawing from NSCC
prior to the Transfer Time, as is
permitted under the Rules today, or
from applying for membership with the
Transferee. Therefore, as the proposal
would treat each similarly situated
Member identically under the Winddown Plan and under these Proposed
Rules, NSCC does not believe the Winddown Plan, the proposed Corporation
Default Rule, or the proposed Winddown Rule would have any impact, or
impose any burden, on competition.
NSCC does not believe that the
proposed change to the Rule numbers
would have any impact on competition
because this proposed change is
technical in nature and would not
change NSCC’s current practices or the
rights or obligations of Members
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
While NSCC has not solicited or
received any written comments relating
to this proposal, NSCC has conducted
outreach to Members in order to provide
them with notice of the proposal. NSCC
will notify the Commission of any
written comments received by NSCC.
III. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing.
Comments may be submitted by any of
the following methods:
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–
NSCC–2017–017 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 SR–NSCC–2017–017. This file
number should be included on the
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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 NSCC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). 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 SR–NSCC–
2017–017 and should be submitted on
or before August 3, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.74
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–15367 Filed 7–18–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Regulation SCI, Form SCI; SEC File No.
270–653, OMB Control No. 3235–0703.
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
74 17
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CFR 200.30–3(a)(12).
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Federal Register / Vol. 83, No. 139 / Thursday, July 19, 2018 / Notices
(‘‘Commission’’) is soliciting comments
on the collection of information
provided for in Regulation Systems
Compliance and Integrity (‘‘Regulation
SCI’’) (17 CFR 242.1000–1007) and
Form SCI (17 CFR 249.1900) under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) (15 U.S.C. 78a et seq.).
The Commission plans to submit this
existing collection of information to the
Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Regulation SCI requires certain key
market participants to, among other
things: (1) Have comprehensive policies
and procedures in place to help ensure
the robustness and resiliency of their
technological systems, and also that
their technological systems operate in
compliance with the federal securities
laws and with their own rules; and (2)
provide certain notices and reports to
the Commission to improve
Commission oversight of securities
market infrastructure.
Regulation SCI advances the goals of
the national market system by
enhancing the capacity, integrity,
resiliency, availability, and security of
the automated systems of entities
important to the functioning of the U.S.
securities markets, as well as reinforcing
the requirement that such systems
operate in compliance with the
Exchange Act and rules and regulations
thereunder, thus strengthening the
infrastructure of the U.S. securities
markets and improving its resilience
when technological issues arise. In this
respect, Regulation SCI establishes an
updated and formalized regulatory
framework, thereby helping to ensure
more effective Commission oversight of
such systems.
Respondents consist of national
securities exchanges and associations,
registered clearing agencies, exempt
clearing agencies, plan processors, and
alternative trading systems. There are
currently 42 respondents, and the
Commission staff estimates that, on
average, 2 new respondents may become
SCI entities each year, 1 of which would
be a self-regulatory organization.
Accordingly, Commission staff
estimates that over the next three years
there will be an average of 44
respondents per year.
Rule 1001(a) requires each SCI entity
to establish, maintain, and enforce
written policies and procedures
reasonably designed to ensure that its
SCI systems and, for purposes of
security standards, indirect SCI systems,
have levels of capacity, integrity,
resiliency, availability, and security,
adequate to maintain the SCI entity’s
operational capability and promote the
maintenance of fair and orderly markets.
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The Commission staff estimates that the
total annual initial recordkeeping
burden for 2 new respondents will be
1,388 hours (694 hours per respondent
× 2 respondents), and the annual
ongoing recordkeeping burden for all
respondents will be, on average, 10,208
hours (232 hours per respondent × 44
respondents). The Commission staff
estimates that the 2 new respondents
would incur, on average, an annual
initial internal cost of compliance of
$465,656 ($232,828 per respondent × 2
respondents), as well as outside legal or
consulting costs of $94,000 ($47,000 per
respondent × 2 respondents). In
addition, all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$3,426,632 ($77,878 per respondent × 44
respondents).
Rule 1001(b) requires each SCI entity
to establish, maintain, and enforce
written policies and procedures
reasonably designed to ensure that its
SCI systems operate in a manner that
complies with the Exchange Act and the
rules and regulations thereunder and
the entity’s rules and governing
documents, as applicable. The
Commission staff estimates that the total
annual initial recordkeeping burden for
2 new respondents will be 540 hours
(270 hours per respondent × 2
respondents), and the annual ongoing
recordkeeping burden for all
respondents will be, on average, 6,820
hours (175 hours per SRO respondent ×
33 respondents + 95 hours per non-SRO
respondent × 11 non-SRO respondents).
The Commission staff estimates that the
2 new respondents would incur an
initial internal cost of compliance of
$203,160 ($101,580 per respondent × 2
respondents), as well as outside legal or
consulting costs of $54,000 ($27,000 per
respondent × 2 respondents). In
addition, all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$2,155,780 ($86,230 per respondent × 44
respondents).
Rule 1001(c) requires each SCI entity
to establish, maintain, and enforce
reasonably designed written policies
and procedures that include the criteria
for identifying responsible SCI
personnel, the designation and
documentation of responsible SCI
personnel, and escalation procedures to
quickly inform responsible SCI
personnel of potential SCI events. The
Commission staff estimates that the total
annual initial recordkeeping burden for
2 new respondents will be 228 hours
(114 hours per respondent × 2
respondents), and the annual ongoing
recordkeeping burden for all
respondents will be, on average, 1,716
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hours (39 hours per respondent × 44
respondents). The Commission staff
estimates that the 2 new respondents
would incur an initial internal cost of
compliance of $85,056 ($42,528 per
respondent × 2 respondents), and all
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $684,112 ($15,548 per
respondent × 44 respondents).
Rule 1004 requires each SCI entity to
establish standards for the designation
of certain members or participants for
BC/DR plan testing, to designate
members or participants in accordance
with these standards, to require
participation by designated members or
participants in such testing at least
annually, and to coordinate such testing
on an industry- or sector-wide basis
with other SCI entities. The Commission
staff estimates that the total annual
initial recordkeeping burden for 2 new
respondents will be 720 hours (360
hours per respondent × 2 respondents),
and the annual ongoing recordkeeping
burden for all respondents that are not
plan processors will be, on average,
5,670 hours (135 hours per respondent
× 42 respondents). The Commission
staff estimates that the 2 new
respondents would incur an initial
internal cost of compliance of $214,596
($107,298 per respondent × 2
respondents). In addition, all
respondents that are not plan processors
will incur, on average, an estimated
ongoing annual internal cost of
compliance of $1,508,850 ($35,925 per
respondent × 42 respondents). In
addition, the Commission staff estimates
that the 2 plan processor respondents
will incur an estimated ongoing annual
cost of $108,000 for outside legal
services ($54,000 per plan processor
respondent × 2 respondents).
Rule 1002(b)(1) requires each SCI
entity, upon any responsible SCI
personnel having a reasonable basis to
conclude that an SCI event has
occurred, to notify the Commission
immediately. The Commission staff
estimates that the total annual ongoing
burden for all respondents will be, on
average, 352 hours (8 hours per
respondent × 44 respondents). The
Commission staff estimates that
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $108,394 ($2,463.25
per respondent × 44 respondents).
Rule 1002(b)(2) requires each SCI
entity, within 24 hours of any
responsible SCI personnel having a
reasonable basis to conclude that the
SCI event has occurred, to submit a
written notification to the Commission
pertaining to the SCI event on a good
faith, best efforts basis. These
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notifications are required to be
submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all
respondents will be, on average, 5,280
hours (120 hours per respondent × 44
respondents). The Commission staff
estimates that respondents will incur,
on average, an estimated ongoing annual
internal cost of compliance of
$1,739,540 ($39,535 per respondent × 44
respondents).
Rule 1002(b)(3) requires each SCI
entity to provide updates to the
Commission pertaining to an SCI event
on a regular basis, or at such frequency
as reasonably requested by a
representative of the Commission, until
the SCI event is resolved and the SCI
entity’s investigation of the SCI event is
closed. The Commission staff estimates
that the total annual ongoing burden for
all respondents will be, on average, 462
hours (10.5 hours per respondent × 44
respondents). The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$144,309 ($3,279.75 per respondent × 44
respondents).
Rule 1002(b)(4) requires each SCI
entity to submit written interim reports,
as necessary, and a written final report
regarding an SCI event to the
Commission. These reports are required
to be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all
respondents will be, on average, 7,700
hours (175 hours per respondent × 44
respondents). The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$2,686,860 ($61,065 per respondent × 44
respondents).
Rule 1002(b)(5) requires each SCI
entity to submit to the Commission
quarterly reports containing a summary
description of any systems disruption or
systems intrusion that has had, or the
SCI entity reasonably estimates would
have, no or a de minimis impact on the
SCI entity’s operations or on market
participants. These reports are required
to be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all
respondents will be, on average, 7,040
hours (160 hours per respondent × 44
respondents). The Commission staff
estimates that respondents will incur,
on average, an estimated ongoing annual
internal cost of compliance of
$2,378,728 ($54,062 per respondent × 44
respondents).
In addition, the Commission staff
estimates that respondents will incur,
on average, annual costs of $255,200
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($5,800 × 44 respondents) for outside
legal advice in preparation of certain
notifications required by Rule 1002(b).
Rule 1002(c)(1)(i) requires each SCI
entity, promptly after any responsible
SCI personnel has a reasonable basis to
conclude that an SCI event (other than
a systems intrusion) has occurred, to
disseminate certain information to its
members or participants. The
Commission staff estimates that the total
annual ongoing burden for all
respondents will be, on average, 924
hours (21 hours per respondent × 44
respondents). The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$604,230 ($13,732.50 per respondent ×
44 respondents).
Rule 1002(c)(1)(ii) requires each SCI
entity, when known, to promptly
disseminate additional information
about an SCI event (other than a systems
intrusion) to its members or
participants. Rule 1002(c)(1)(iii)
requires each SCI entity to provide to its
members or participants regular updates
of any information required to be
disseminated under Rules 1002(c)(1)(i)
and (ii) until the SCI event is resolved.
The Commission staff estimates that the
total annual ongoing burden for all
respondents will be, on average, 5,148
hours (117 hours per respondent × 44
respondents). The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$2,033,856 ($46,224 per respondent × 44
respondents).
Rule 1002(c)(2) requires each SCI
entity to disseminate certain
information regarding a systems
intrusion to its members or participants,
and provides an exception when the SCI
entity determines that dissemination of
such information would likely
compromise the security of its SCI
systems or indirect SCI systems, or an
investigation of the systems intrusion,
and documents the reasons for such
determination. The Commission staff
estimates that the total annual ongoing
burden for all respondents will be, on
average, 440 hours (10 hours per
respondent × 44 respondents). The
Commission staff estimates that all
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $173,415 ($3,941.25
per respondent × 44 respondents).
In addition, the Commission staff
estimates that all respondents will
incur, on average, annual costs of
$146,080 ($3,320 × 44 respondents) for
outside legal advice in preparation of
certain notifications required by Rule
1002(c).
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Rule 1003(a)(1) requires each SCI
entity to submit to the Commission
quarterly reports describing completed,
ongoing, and planned material changes
to its SCI systems and security of
indirect SCI systems during the prior,
current, and subsequent calendar
quarters. These reports are required to
be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all
respondents will be, on average, 22,000
hours (500 hours per respondent × 44
respondents). The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$6,570,520 ($149,330 per respondent ×
44 respondents).
Rule 1003(a)(2) requires each SCI
entity to promptly submit a
supplemental report notifying the
Commission of a material error in or
material omission from a report
previously submitted under Rule
1003(a)(1). These reports are required to
be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all
respondents will be, on average, 660
hours (15 hours per respondent × 44
respondents). The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$209,176 ($4,754 per respondent × 44
respondents).
Rule 1003(b)(1) requires each SCI
entity to conduct an SCI review of its
compliance with Regulation SCI not less
than once each calendar year, with an
exception for penetration test reviews,
which are required to be conducted not
less than once every three years. Rule
1003(b)(1) also provides an exception
for assessments of SCI systems directly
supporting market regulation or market
surveillance, which are required to be
conducted at a frequency based on the
risk assessment conducted as part of the
SCI review, but in no case less than
once every three years. Rule 1003(b)(2)
requires each SCI entity to submit a
report of the SCI review to senior
management no more than 30 calendar
days after completion of the review. The
Commission staff estimates that the total
annual ongoing burden for all
respondents will be, on average, 30,360
hours (690 hours per respondent × 44
respondents). The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$9,724,660 ($221,015 per respondent ×
44 respondents).
Rule 1003(b)(3) requires each SCI
entity to submit the report of the SCI
review to the Commission and to its
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board of directors or the equivalent of
such board, together with any response
by senior management, within 60
calendar days after its submission to
senior management. These reports are
required to be submitted on Form SCI.
The Commission staff estimates that the
total annual ongoing burden for all
respondents will be, on average, 44
hours (1 hour per respondent × 44
respondents). The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$18,128 ($412 per respondent × 44
respondents).
In addition, the Commission staff
estimates that all respondents will
incur, on average, annual costs of
$2,200,000 ($50,000 × 44 respondents)
for outside legal advice in preparation of
certain notifications required by Rule
1003(b).
Rule 1006 requires each SCI entity,
with a few exceptions, to file any
notification, review, description,
analysis, or report to the Commission
required under Regulation SCI
electronically on Form SCI through the
EFFS. An SCI entity will submit to the
Commission an EAUF to register each
individual at the SCI entity who will
access the EFFS system on behalf of the
SCI entity. The Commission staff
estimates that the total annual initial
burden for 2 new respondents will be
0.6 hours (0.3 hours per respondent × 2
respondents), and the annual ongoing
burden for all respondents will be, on
average, 6.6 hours (0.15 hours per
respondent × 44 respondents). The
Commission staff estimates that the 2
new respondents would incur an initial
internal cost of compliance of $248
($124 per respondent × 2 respondents),
as well as outside costs to obtain a
digital ID of $100 ($50 per respondent
× 2 respondents). In addition, all
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $2,728 ($62 per
respondent × 44 respondents), as well as
outside costs to obtain a digital ID of
$2,200 ($50 per respondent × 44
respondents).
Rule 1002(a) requires each SCI entity,
upon any responsible SCI personnel
having a reasonable basis to conclude
that an SCI event has occurred, to begin
to take appropriate corrective action.
The Commission staff estimates that the
total annual initial recordkeeping
burden for 2 new respondents will be
228 hours (114 hours per respondent ×
2 respondents), and the annual ongoing
recordkeeping burden for all
respondents will be, on average, 1,716
hours (39 hours per respondent × 44
respondents). The Commission staff
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estimates that the 2 new respondents
would incur an initial internal cost of
compliance of $85,056 ($42,528 per
respondent × 2 respondents). In
addition, all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of $677,468
($15,397 per respondent × 44
respondents).
Rule 1003(a)(1) requires each SCI
entity to establish reasonable written
criteria for identifying a change to its
SCI systems and the security of indirect
SCI systems as material. The
Commission staff estimates that the total
annual initial recordkeeping burden for
2 new respondents will be 228 hours
(114 hours per respondent × 2
respondents), and the annual ongoing
recordkeeping burden for all
respondents will be, on average, 1,188
hours (27 hours per respondent × 44
respondents). The Commission staff
estimates that the 2 new respondents
would incur an initial internal cost of
compliance of $85,056 ($42,528 per
respondent × 2 respondents). In
addition, all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of $507,584
($11,536 per respondent × 44
respondents).
Regulation SCI also requires SCI
entities to identify certain types of
events and systems. The Commission
staff estimates that the total annual
initial recordkeeping burden for 2 new
respondents will be 396 hours (198
hours per respondent × 2 respondents),
and the annual ongoing recordkeeping
burden for all respondents will be, on
average, 1,716 hours (39 hours per
respondent × 44 respondents). The
Commission staff estimates that the 2
new respondents would incur an initial
internal cost of compliance of $139,412
($69,706 per respondent × 2
respondents). In addition, all
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $677,468 ($15,397 per
respondent × 44 respondents).
Rules 1005 and 1007 establish
recordkeeping requirements for SCI
entities other than SROs. The
Commission staff estimates that for a
new respondent that is not an SRO the
average annual initial burden would be
170 hours (170 hours × 1 respondent),
and the annual ongoing burden for all
respondents will be, on average, 275
hours (25 hours × 11 respondents). The
Commission staff estimates that a new
respondent would incur an estimated
internal initial internal cost of
compliance of $11,370, as well as a onetime cost of $900 to modify existing
recordkeeping systems. In addition, all
respondents will incur, on average, an
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estimated ongoing internal cost of
compliance of $18,975 ($1,725 × 11
respondents).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information to be collected; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: July 13, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–15381 Filed 7–18–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83635; File No. SR–CHX–
2018–004]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing of Amendment Nos. 2 and 3
and Order Granting Accelerated
Approval of a Proposed Rule Change,
as Modified by Amendments Nos. 1, 2,
and 3 Thereto, in Connection With a
Proposed Transaction Involving CHX
Holdings, Inc. and the Intercontinental
Exchange, Inc.
July 13, 2018.
I. Introduction
On May 8, 2018, the Chicago Stock
Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
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]]>Agencies
[Federal Register Volume 83, Number 139 (Thursday, July 19, 2018)]
[Notices]
[Pages 34179-34182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15381]
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SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; 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:
Regulation SCI, Form SCI; SEC File No. 270-653, OMB Control No.
3235-0703.
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
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(``Commission'') is soliciting comments on the collection of
information provided for in Regulation Systems Compliance and Integrity
(``Regulation SCI'') (17 CFR 242.1000-1007) and Form SCI (17 CFR
249.1900) under the Securities Exchange Act of 1934 (``Exchange Act'')
(15 U.S.C. 78a et seq.). The Commission plans to submit this existing
collection of information to the Office of Management and Budget
(``OMB'') for extension and approval.
Regulation SCI requires certain key market participants to, among
other things: (1) Have comprehensive policies and procedures in place
to help ensure the robustness and resiliency of their technological
systems, and also that their technological systems operate in
compliance with the federal securities laws and with their own rules;
and (2) provide certain notices and reports to the Commission to
improve Commission oversight of securities market infrastructure.
Regulation SCI advances the goals of the national market system by
enhancing the capacity, integrity, resiliency, availability, and
security of the automated systems of entities important to the
functioning of the U.S. securities markets, as well as reinforcing the
requirement that such systems operate in compliance with the Exchange
Act and rules and regulations thereunder, thus strengthening the
infrastructure of the U.S. securities markets and improving its
resilience when technological issues arise. In this respect, Regulation
SCI establishes an updated and formalized regulatory framework, thereby
helping to ensure more effective Commission oversight of such systems.
Respondents consist of national securities exchanges and
associations, registered clearing agencies, exempt clearing agencies,
plan processors, and alternative trading systems. There are currently
42 respondents, and the Commission staff estimates that, on average, 2
new respondents may become SCI entities each year, 1 of which would be
a self-regulatory organization. Accordingly, Commission staff estimates
that over the next three years there will be an average of 44
respondents per year.
Rule 1001(a) requires each SCI entity to establish, maintain, and
enforce written policies and procedures reasonably designed to ensure
that its SCI systems and, for purposes of security standards, indirect
SCI systems, have levels of capacity, integrity, resiliency,
availability, and security, adequate to maintain the SCI entity's
operational capability and promote the maintenance of fair and orderly
markets. The Commission staff estimates that the total annual initial
recordkeeping burden for 2 new respondents will be 1,388 hours (694
hours per respondent x 2 respondents), and the annual ongoing
recordkeeping burden for all respondents will be, on average, 10,208
hours (232 hours per respondent x 44 respondents). The Commission staff
estimates that the 2 new respondents would incur, on average, an annual
initial internal cost of compliance of $465,656 ($232,828 per
respondent x 2 respondents), as well as outside legal or consulting
costs of $94,000 ($47,000 per respondent x 2 respondents). In addition,
all respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $3,426,632 ($77,878 per respondent x 44
respondents).
Rule 1001(b) requires each SCI entity to establish, maintain, and
enforce written policies and procedures reasonably designed to ensure
that its SCI systems operate in a manner that complies with the
Exchange Act and the rules and regulations thereunder and the entity's
rules and governing documents, as applicable. The Commission staff
estimates that the total annual initial recordkeeping burden for 2 new
respondents will be 540 hours (270 hours per respondent x 2
respondents), and the annual ongoing recordkeeping burden for all
respondents will be, on average, 6,820 hours (175 hours per SRO
respondent x 33 respondents + 95 hours per non-SRO respondent x 11 non-
SRO respondents). The Commission staff estimates that the 2 new
respondents would incur an initial internal cost of compliance of
$203,160 ($101,580 per respondent x 2 respondents), as well as outside
legal or consulting costs of $54,000 ($27,000 per respondent x 2
respondents). In addition, all respondents will incur, on average, an
estimated ongoing annual internal cost of compliance of $2,155,780
($86,230 per respondent x 44 respondents).
Rule 1001(c) requires each SCI entity to establish, maintain, and
enforce reasonably designed written policies and procedures that
include the criteria for identifying responsible SCI personnel, the
designation and documentation of responsible SCI personnel, and
escalation procedures to quickly inform responsible SCI personnel of
potential SCI events. The Commission staff estimates that the total
annual initial recordkeeping burden for 2 new respondents will be 228
hours (114 hours per respondent x 2 respondents), and the annual
ongoing recordkeeping burden for all respondents will be, on average,
1,716 hours (39 hours per respondent x 44 respondents). The Commission
staff estimates that the 2 new respondents would incur an initial
internal cost of compliance of $85,056 ($42,528 per respondent x 2
respondents), and all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $684,112 ($15,548 per
respondent x 44 respondents).
Rule 1004 requires each SCI entity to establish standards for the
designation of certain members or participants for BC/DR plan testing,
to designate members or participants in accordance with these
standards, to require participation by designated members or
participants in such testing at least annually, and to coordinate such
testing on an industry- or sector-wide basis with other SCI entities.
The Commission staff estimates that the total annual initial
recordkeeping burden for 2 new respondents will be 720 hours (360 hours
per respondent x 2 respondents), and the annual ongoing recordkeeping
burden for all respondents that are not plan processors will be, on
average, 5,670 hours (135 hours per respondent x 42 respondents). The
Commission staff estimates that the 2 new respondents would incur an
initial internal cost of compliance of $214,596 ($107,298 per
respondent x 2 respondents). In addition, all respondents that are not
plan processors will incur, on average, an estimated ongoing annual
internal cost of compliance of $1,508,850 ($35,925 per respondent x 42
respondents). In addition, the Commission staff estimates that the 2
plan processor respondents will incur an estimated ongoing annual cost
of $108,000 for outside legal services ($54,000 per plan processor
respondent x 2 respondents).
Rule 1002(b)(1) requires each SCI entity, upon any responsible SCI
personnel having a reasonable basis to conclude that an SCI event has
occurred, to notify the Commission immediately. The Commission staff
estimates that the total annual ongoing burden for all respondents will
be, on average, 352 hours (8 hours per respondent x 44 respondents).
The Commission staff estimates that respondents will incur, on average,
an estimated ongoing annual internal cost of compliance of $108,394
($2,463.25 per respondent x 44 respondents).
Rule 1002(b)(2) requires each SCI entity, within 24 hours of any
responsible SCI personnel having a reasonable basis to conclude that
the SCI event has occurred, to submit a written notification to the
Commission pertaining to the SCI event on a good faith, best efforts
basis. These
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notifications are required to be submitted on Form SCI. The Commission
staff estimates that the total annual ongoing burden for all
respondents will be, on average, 5,280 hours (120 hours per respondent
x 44 respondents). The Commission staff estimates that respondents will
incur, on average, an estimated ongoing annual internal cost of
compliance of $1,739,540 ($39,535 per respondent x 44 respondents).
Rule 1002(b)(3) requires each SCI entity to provide updates to the
Commission pertaining to an SCI event on a regular basis, or at such
frequency as reasonably requested by a representative of the
Commission, until the SCI event is resolved and the SCI entity's
investigation of the SCI event is closed. The Commission staff
estimates that the total annual ongoing burden for all respondents will
be, on average, 462 hours (10.5 hours per respondent x 44 respondents).
The Commission staff estimates that all respondents will incur, on
average, an estimated ongoing annual internal cost of compliance of
$144,309 ($3,279.75 per respondent x 44 respondents).
Rule 1002(b)(4) requires each SCI entity to submit written interim
reports, as necessary, and a written final report regarding an SCI
event to the Commission. These reports are required to be submitted on
Form SCI. The Commission staff estimates that the total annual ongoing
burden for all respondents will be, on average, 7,700 hours (175 hours
per respondent x 44 respondents). The Commission staff estimates that
all respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $2,686,860 ($61,065 per respondent x 44
respondents).
Rule 1002(b)(5) requires each SCI entity to submit to the
Commission quarterly reports containing a summary description of any
systems disruption or systems intrusion that has had, or the SCI entity
reasonably estimates would have, no or a de minimis impact on the SCI
entity's operations or on market participants. These reports are
required to be submitted on Form SCI. The Commission staff estimates
that the total annual ongoing burden for all respondents will be, on
average, 7,040 hours (160 hours per respondent x 44 respondents). The
Commission staff estimates that respondents will incur, on average, an
estimated ongoing annual internal cost of compliance of $2,378,728
($54,062 per respondent x 44 respondents).
In addition, the Commission staff estimates that respondents will
incur, on average, annual costs of $255,200 ($5,800 x 44 respondents)
for outside legal advice in preparation of certain notifications
required by Rule 1002(b).
Rule 1002(c)(1)(i) requires each SCI entity, promptly after any
responsible SCI personnel has a reasonable basis to conclude that an
SCI event (other than a systems intrusion) has occurred, to disseminate
certain information to its members or participants. The Commission
staff estimates that the total annual ongoing burden for all
respondents will be, on average, 924 hours (21 hours per respondent x
44 respondents). The Commission staff estimates that all respondents
will incur, on average, an estimated ongoing annual internal cost of
compliance of $604,230 ($13,732.50 per respondent x 44 respondents).
Rule 1002(c)(1)(ii) requires each SCI entity, when known, to
promptly disseminate additional information about an SCI event (other
than a systems intrusion) to its members or participants. Rule
1002(c)(1)(iii) requires each SCI entity to provide to its members or
participants regular updates of any information required to be
disseminated under Rules 1002(c)(1)(i) and (ii) until the SCI event is
resolved. The Commission staff estimates that the total annual ongoing
burden for all respondents will be, on average, 5,148 hours (117 hours
per respondent x 44 respondents). The Commission staff estimates that
all respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $2,033,856 ($46,224 per respondent x 44
respondents).
Rule 1002(c)(2) requires each SCI entity to disseminate certain
information regarding a systems intrusion to its members or
participants, and provides an exception when the SCI entity determines
that dissemination of such information would likely compromise the
security of its SCI systems or indirect SCI systems, or an
investigation of the systems intrusion, and documents the reasons for
such determination. The Commission staff estimates that the total
annual ongoing burden for all respondents will be, on average, 440
hours (10 hours per respondent x 44 respondents). The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $173,415 ($3,941.25 per
respondent x 44 respondents).
In addition, the Commission staff estimates that all respondents
will incur, on average, annual costs of $146,080 ($3,320 x 44
respondents) for outside legal advice in preparation of certain
notifications required by Rule 1002(c).
Rule 1003(a)(1) requires each SCI entity to submit to the
Commission quarterly reports describing completed, ongoing, and planned
material changes to its SCI systems and security of indirect SCI
systems during the prior, current, and subsequent calendar quarters.
These reports are required to be submitted on Form SCI. The Commission
staff estimates that the total annual ongoing burden for all
respondents will be, on average, 22,000 hours (500 hours per respondent
x 44 respondents). The Commission staff estimates that all respondents
will incur, on average, an estimated ongoing annual internal cost of
compliance of $6,570,520 ($149,330 per respondent x 44 respondents).
Rule 1003(a)(2) requires each SCI entity to promptly submit a
supplemental report notifying the Commission of a material error in or
material omission from a report previously submitted under Rule
1003(a)(1). These reports are required to be submitted on Form SCI. The
Commission staff estimates that the total annual ongoing burden for all
respondents will be, on average, 660 hours (15 hours per respondent x
44 respondents). The Commission staff estimates that all respondents
will incur, on average, an estimated ongoing annual internal cost of
compliance of $209,176 ($4,754 per respondent x 44 respondents).
Rule 1003(b)(1) requires each SCI entity to conduct an SCI review
of its compliance with Regulation SCI not less than once each calendar
year, with an exception for penetration test reviews, which are
required to be conducted not less than once every three years. Rule
1003(b)(1) also provides an exception for assessments of SCI systems
directly supporting market regulation or market surveillance, which are
required to be conducted at a frequency based on the risk assessment
conducted as part of the SCI review, but in no case less than once
every three years. Rule 1003(b)(2) requires each SCI entity to submit a
report of the SCI review to senior management no more than 30 calendar
days after completion of the review. The Commission staff estimates
that the total annual ongoing burden for all respondents will be, on
average, 30,360 hours (690 hours per respondent x 44 respondents). The
Commission staff estimates that all respondents will incur, on average,
an estimated ongoing annual internal cost of compliance of $9,724,660
($221,015 per respondent x 44 respondents).
Rule 1003(b)(3) requires each SCI entity to submit the report of
the SCI review to the Commission and to its
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board of directors or the equivalent of such board, together with any
response by senior management, within 60 calendar days after its
submission to senior management. These reports are required to be
submitted on Form SCI. The Commission staff estimates that the total
annual ongoing burden for all respondents will be, on average, 44 hours
(1 hour per respondent x 44 respondents). The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $18,128 ($412 per
respondent x 44 respondents).
In addition, the Commission staff estimates that all respondents
will incur, on average, annual costs of $2,200,000 ($50,000 x 44
respondents) for outside legal advice in preparation of certain
notifications required by Rule 1003(b).
Rule 1006 requires each SCI entity, with a few exceptions, to file
any notification, review, description, analysis, or report to the
Commission required under Regulation SCI electronically on Form SCI
through the EFFS. An SCI entity will submit to the Commission an EAUF
to register each individual at the SCI entity who will access the EFFS
system on behalf of the SCI entity. The Commission staff estimates that
the total annual initial burden for 2 new respondents will be 0.6 hours
(0.3 hours per respondent x 2 respondents), and the annual ongoing
burden for all respondents will be, on average, 6.6 hours (0.15 hours
per respondent x 44 respondents). The Commission staff estimates that
the 2 new respondents would incur an initial internal cost of
compliance of $248 ($124 per respondent x 2 respondents), as well as
outside costs to obtain a digital ID of $100 ($50 per respondent x 2
respondents). In addition, all respondents will incur, on average, an
estimated ongoing annual internal cost of compliance of $2,728 ($62 per
respondent x 44 respondents), as well as outside costs to obtain a
digital ID of $2,200 ($50 per respondent x 44 respondents).
Rule 1002(a) requires each SCI entity, upon any responsible SCI
personnel having a reasonable basis to conclude that an SCI event has
occurred, to begin to take appropriate corrective action. The
Commission staff estimates that the total annual initial recordkeeping
burden for 2 new respondents will be 228 hours (114 hours per
respondent x 2 respondents), and the annual ongoing recordkeeping
burden for all respondents will be, on average, 1,716 hours (39 hours
per respondent x 44 respondents). The Commission staff estimates that
the 2 new respondents would incur an initial internal cost of
compliance of $85,056 ($42,528 per respondent x 2 respondents). In
addition, all respondents will incur, on average, an estimated ongoing
annual internal cost of compliance of $677,468 ($15,397 per respondent
x 44 respondents).
Rule 1003(a)(1) requires each SCI entity to establish reasonable
written criteria for identifying a change to its SCI systems and the
security of indirect SCI systems as material. The Commission staff
estimates that the total annual initial recordkeeping burden for 2 new
respondents will be 228 hours (114 hours per respondent x 2
respondents), and the annual ongoing recordkeeping burden for all
respondents will be, on average, 1,188 hours (27 hours per respondent x
44 respondents). The Commission staff estimates that the 2 new
respondents would incur an initial internal cost of compliance of
$85,056 ($42,528 per respondent x 2 respondents). In addition, all
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $507,584 ($11,536 per respondent x 44
respondents).
Regulation SCI also requires SCI entities to identify certain types
of events and systems. The Commission staff estimates that the total
annual initial recordkeeping burden for 2 new respondents will be 396
hours (198 hours per respondent x 2 respondents), and the annual
ongoing recordkeeping burden for all respondents will be, on average,
1,716 hours (39 hours per respondent x 44 respondents). The Commission
staff estimates that the 2 new respondents would incur an initial
internal cost of compliance of $139,412 ($69,706 per respondent x 2
respondents). In addition, all respondents will incur, on average, an
estimated ongoing annual internal cost of compliance of $677,468
($15,397 per respondent x 44 respondents).
Rules 1005 and 1007 establish recordkeeping requirements for SCI
entities other than SROs. The Commission staff estimates that for a new
respondent that is not an SRO the average annual initial burden would
be 170 hours (170 hours x 1 respondent), and the annual ongoing burden
for all respondents will be, on average, 275 hours (25 hours x 11
respondents). The Commission staff estimates that a new respondent
would incur an estimated internal initial internal cost of compliance
of $11,370, as well as a one-time cost of $900 to modify existing
recordkeeping systems. In addition, all respondents will incur, on
average, an estimated ongoing internal cost of compliance of $18,975
($1,725 x 11 respondents).
Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
estimates of the burden of the proposed collection of information; (c)
ways to enhance the quality, utility, and clarity of the information to
be collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated
collection techniques or other forms of information technology.
Consideration will be given to comments and suggestions submitted in
writing within 60 days of this publication.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
Please direct your written comments to: Pamela Dyson, Director/
Chief Information Officer, Securities and Exchange Commission, c/o
Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an email
to: [email protected].
Dated: July 13, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15381 Filed 7-18-18; 8:45 am]
BILLING CODE 8011-01-P
