Proposed Collection; Comment Request, 16249-16267 [2021-06243]
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Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / 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 SR–
CFE–2021–007 on the subject line.
Paper Comments
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• 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–CFE–2021–007. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CFE–2021–007, and should
be submitted on or before April 16,
2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–06232 Filed 3–25–21; 8:45 am]
BILLING CODE 8011–01–P
50
17 CFR 200.30–3(a)(73).
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SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–526, OMB Control No.
3235–0584]
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:
Rule 12d1–1
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
An investment company (‘‘fund’’) is
generally limited in the amount of
securities the fund (‘‘acquiring fund’’)
can acquire from another fund
(‘‘acquired fund’’). Section 12(d) of the
Investment Company Act of 1940 (the
‘‘Investment Company Act’’ or ‘‘Act’’) 1
provides that a registered fund (and
companies it controls) cannot:
• Acquire more than three percent of
another fund’s securities;
• invest more than five percent of its
own assets in another fund; or
• invest more than ten percent of its
own assets in other funds in the
aggregate.2
In addition, a registered open-end
fund, its principal underwriter, and any
registered broker or dealer cannot sell
that fund’s shares to another fund if, as
a result:
• The acquiring fund (and any
companies it controls) owns more than
three percent of the acquired fund’s
stock; or
• all acquiring funds (and companies
they control) in the aggregate own more
than ten percent of the acquired fund’s
stock.3
Rule 12d1–1 under the Act provides
an exemption from these limitations for
1 See
15 U.S.C. 80a.
15 U.S.C. 80a–12(d)(1)(A). If an acquiring
fund is not registered, these limitations apply only
with respect to the acquiring fund’s acquisition of
registered funds.
3 See 15 U.S.C. 80a–12(d)(1)(B).
2 See
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16249
‘‘cash sweep’’ arrangements in which a
fund invests all or a portion of its
available cash in a money market fund
rather than directly in short-term
instruments.4 An acquiring fund relying
on the exemption may not pay a sales
load, distribution fee, or service fee on
acquired fund shares, or if it does, the
acquiring fund’s investment adviser
must waive a sufficient amount of its
advisory fee to offset the cost of the
loads or distribution fees.5 The acquired
fund may be a fund in the same fund
complex or in a different fund complex.
In addition to providing an exemption
from section 12(d)(1) of the Act, the rule
provides exemptions from section 17(a)
of the Act and rule 17d–1 thereunder,
which restrict a fund’s ability to enter
into transactions and joint arrangements
with affiliated persons.6 These
provisions would otherwise prohibit an
acquiring fund from investing in a
money market fund in the same fund
complex,7 and prohibit a fund that
acquires five percent or more of the
securities of a money market fund in
another fund complex from making any
additional investments in the money
market fund.8
4 See
17 CFR 270.12d1–1.
rule 12d1–1(b)(1).
6 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d); 17
CFR 270.17d–1.
7 An affiliated person of a fund includes any
person directly or indirectly controlling, controlled
by, or under common control with such other
person. See 15 U.S.C. 80a–2(a)(3) (definition of
‘‘affiliated person’’). Most funds today are organized
by an investment adviser that advises or provides
administrative services to other funds in the same
complex. Funds in a fund complex are generally
under common control of an investment adviser or
other person exercising a controlling influence over
the management or policies of the funds. See 15
U.S.C. 80a–2(a)(9) (definition of ‘‘control’’). Not all
advisers control funds they advise. The
determination of whether a fund is under the
control of its adviser, officers, or directors depends
on all the relevant facts and circumstances. See
Investment Company Mergers, Investment
Company Act Release No. 25259 (Nov. 8, 2001) [66
FR 57602 (Nov. 15, 2001)], at n.11. To the extent
that an acquiring fund in a fund complex is under
common control with a money market fund in the
same complex, the funds would rely on the rule’s
exemptions from section 17(a) and rule 17d–1.
8 See 15 U.S.C. 80a–2(a)(3)(A), (B).
5 See
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Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
The rule also permits a registered
fund to rely on the exemption to invest
in an unregistered money market fund
that limits its investments to those in
which a registered money market fund
may invest under rule 2a–7 under the
Act, and undertakes to comply with all
the other provisions of rule 2a–7.9 In
addition, the acquiring fund must
reasonably believe that the unregistered
money market fund (i) operates in
compliance with rule 2a–7, (ii) complies
with sections 17(a), (d), (e), 18, and
22(e) of the Act 10 as if it were a
registered open-end fund, (iii) has
adopted procedures designed to ensure
that it complies with these statutory
provisions, (iv) maintains the records
required by rules 31a–1(b)(1), 31a–
1(b)(2)(ii), 31a–1(b)(2)(iv), and 31a–
1(b)(9); 11 and (v) preserves
permanently, the first two years in an
easily accessible place, all books and
records required to be made under these
rules.
Rule 2a–7 contains certain collection
of information requirements. An
unregistered money market fund that
complies with rule 2a–7 would be
subject to these collection of
information requirements. In addition,
the recordkeeping requirements under
rule 31a–1 with which the acquiring
fund reasonably believes the
unregistered money market fund
complies are collections of information
for the unregistered money market fund.
The adoption of procedures by
unregistered money market funds to
ensure that they comply with sections
17(a), (d), (e), 18, and 22(e) of the Act
also constitute collections of
9 See
17 CFR 270.2a–7.
15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d),
15 U.S.C. 80a–17(e), 15 U.S.C. 80a–18, 15 U.S.C.
80a–22(e).
11 See 17 CFR 270.31a–1(b)(1), 17 CFR 270.31a–
1(b)(2)(ii), 17 CFR 270.31a–1(b)(2)(iv), 17 CFR
270.31a–1(b)(9).
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10 See
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information. By allowing funds to invest
in registered and unregistered money
market funds, rule 12d1–1 is intended
to provide funds greater options for cash
management. In order for a registered
fund to rely on the exemption to invest
in an unregistered money market fund,
the unregistered money market fund
must comply with certain collection of
information requirements for registered
money market funds. These
requirements are intended to ensure that
the unregistered money market fund has
established procedures for collecting the
information necessary to make adequate
credit reviews of securities in its
portfolio, as well as other recordkeeping
requirements that will assist the
acquiring fund in overseeing the
unregistered money market fund (and
Commission staff in its examination of
the unregistered money market fund’s
adviser).
The estimated average burden hours
in this collection of information are
made solely for purposes of the
Paperwork Reduction Act and are not
derived from a quantitative,
comprehensive or even representative
survey or study of the burdens
associated with Commission rules and
forms.
The number of unregistered money
market funds that are affected by rule
12d1–1 is an estimate based on the
number of private liquidity funds
reported on Form PF as of the fourth
calendar quarter 2019.12 The hour
burden estimates for the condition that
an unregistered money market fund
comply with rule 2a–7 are based on the
burden hours included in the
12 See the U.S. Securities and Exchange
Commission’s Division of Investment
Management—Analytics Office Private Funds
Statistics, Fourth Calendar Quarter (Oct. 2, 2020)
available at https://www.sec.gov/divisions/
investment/private-funds-statistics/private-fundsstatistics-2019-q4.pdf.
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Commission’s 2019 PRA extension
regarding rule 2a–7.13 However, we
have updated the estimated costs
associated using the following
methodology:
• For professional personnel:
SIFMA’s Management & Professional
Earnings in the Securities Industry 2013,
modified for 2020 by Commission staff
to account for an 1,800-hour work-year
and inflation, and multiplied by 5.35 to
account for bonuses, firm size,
employee benefits, and overhead;
• For a fund board of directors:
SIFMA data does not include a board of
directors. For board time, Commission
staff currently uses a cost of $4,770 per
hour, which was last adjusted for
inflation in 2019. This estimate assumes
an average of nine board members per
year; and
• For clerical personnel: SIFMA’s
Office Salaries in the Securities Industry
2013, modified for 2020 by Commission
staff to account for an 1,800-hour workyear and inflation, and multiplied by
2.93 to account for bonuses, firm size,
employee benefits, and overhead.
The estimated burden of information
collection for rule 2a–7 is set forth in
Table 1 below. We use these estimated
burdens for registered money market
funds to extrapolate the information
collection burdens for unregistered
money market funds under rule 12d1–
1 in Table 2 below.
BILLING CODE 8011–01–P
13 See Securities and Exchange Commission,
Request for OMB Approval of Extension for
Approved Collection for Rule 2a–7 under the
Investment Company Act of 1940 (OMB Control No.
3235–0268) (approved May 28, 2019) (the ‘‘2019
rule 2a–7 PRA extension’’). The 2019 rule 2a–7 PRA
extension was the most recent rule 2a–7 submission
that includes certain estimates with respect to
aggregate annual hour and cost burdens for
collections of information for registered money
market funds.
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Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
16251
Table 1: Rule 2a-7 burden of information collection for registered money market funds 14
Reco.rd of credit risk
analyse~, and
determination.regarding
adjustable rate
securities, asset backed
securities, securities
subjectto a demand
feature orgu~rantee.,
and counterparties.to
re urohase a· reeinents
85 responses annually for
each of 433 funds 15
680 burden hours of
professional (business
analyst or portfolio
manager) time per fund
X
$232 per hour
(intermediate business
analyst)
+
$332 per hour (senior
portfolio manager)
$564
433
$282 median weighted
average per hour of
professional time
14 The estimated responses and hour burdens
shown in this chart were included in the Securities
and Exchange Commission, Request for OMB
Approval of Extension for Approved Collection for
Rule 2a–7 under the Investment Company Act of
1940 (OMB Control No. 3235–0268) (approved May
28, 2019) (the ‘‘2019 rule 2aa–7 PRA extension’’).
The 2019 rule 2aa–7 PRA extension was the most
recent rule 2a–7 submission that includes certain
estimates with respect to aggregate annual hour and
cost burdens for collections of information for
registered money market funds.
However, the cost burdens shown in this chart
have been updated. The cost burdens for
professional personnel are based on SIFMA’s
Management & Professional Earnings in the
Securities Industry 2013, modified for 2020 by the
Commission staff to account for an 1,800-hour
work-year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits
and overhead and the cost burdens for clerical
personnel are based on SIFMA’s Office Salaries in
the Securities Industry 2013, modified for 2020 by
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Commission staff to account for an 1,800-hour
work-year and inflation, and multiplied by 2.93 to
account for bonuses, firm size, employee benefits
and overhead. However, SIFMA data does not
include a board of directors. For board time,
Commission staff currently uses a cost of $4,770 per
hour, which was last adjusted for inflation in 2019.
This estimate assumes an average of nine board
members per year.
15 The number of funds based on Form N–MFP
filings for the month ended September 30, 2018 and
used in the 2019 rule 2a–7 PRA extension.
16 For purposes of the 2019 rule 2a–7 PRA
extension, we assumed that on average 25% (433
funds × .25 = 108 funds) of money market funds
would review and update their procedures on
annual basis).
17 We have not amortized the one-time hour and
cost burdens figures associated with new funds,
because we estimated there would be 10 new funds
each year. Therefore, the burden would occur each
year instead of occurring over a three-year period.
We have done this throughout this PRA.
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18 Commission staff estimates that there are 91
fund complexes subject to rule 2a–7. This estimate
is based on Form N–MEP filings with the
Commission for the month ended September 30,
2018.
19 We estimated that approximately two new
money market funds would seek to qualify as retail
money market funds under rule 2a–7 and therefore
be required to adopt written policies and
procedures reasonably designed to limit beneficial
owners to natural persons.
For purposes of the 2019 rule 2a–7 PRA
extension, Form N–MFP data reflects that of the 30
new money market funds created between April of
2015 through September 2018, only six new money
market funds elected to be retail funds—or
approximately two per year ((6 funds/42 months) ×
12 months). Based on these figures, we estimated
that two new money market fund per year would
elect to be a retail fund.
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$282 x 294,440 (hours)=
16252
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
Disclosure ofPorifolio
Information
12 months x 433 funds=
5,196 responses per year
Disclosure ofPorifolio
Information
12 hours (webmaster)
annually X 433 funds=
5,196 hours per year +
24 hours (webmaster)
initial burden for each
new fund x 10 new funds
= 240 one-time hours
5,436 annual aggregate
one-time and recurring
burdens for the disclosure
of portfolio holdings
information
Disclosure ofDaily and
Weekly Liquid Assets and
Net Shareholder Flow
31.5 hours (senior
systems analyst/senior
programmer) + 4.5 hours
(compliance
manager/compliance
attorney) = 36 hours x
433 funds= 15,588 hours
peryear +
$1,359,000 aggregate
annual one-time and
recurringlaborburdens
for disclosure of portfolio
information
Disclosure ofDaily and
Weekly Liquid Assets and
Net Shareholder Flow
31.5 hours x $311
(blended rate for a senior
systems analyst ($287)
and senior programmer
($334) = $9,797 (per
fund)
+
4.5 hours x $340
(blended rate for a
compliance manager
($312) and a compliance
attorney ($368)) = $1,530
= $11,327 (per fund to
update the depiction of
daily and weekly liquid
assets and the fund's net
inflow or outflow on the
fund's website each
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Disclosure ofDaily and
Weekly Liquid Assets and
Net Shareholder Flow
252 business days x 433
funds= 109,116
responses per year
Disclosure ofPorifolio
Information
5,196 hours for433 funds
x $250 (per hour for a
webmaster) =$1,299,000
(for recurring internal
burden labor costs) +
240 hours for 10 new
funds x $250 (per hour for
a webmaster) = $60,000
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
business day during that
year) x
433 funds =$4,904,591 +
700 hours (aggregate total
one-time burden for 10
new funds) x
[20 hours x $340 (blended
rate for a compliance
manager ($312) and a
compliance attorney
($368))= $6,800 +
50 hours x $311 (blended
rate for a senior systems
analyst ($287) and senior
programmer ($334)
=$15,550
= $22,350 (internal labor
cost burden for each new
funds)]= $223,500
16,288 aggregate annual
one-time and recurring
burden hours for
disclosure of daily and
weekly liquid assets and
shareholder flow
$5,128,091 aggregate
annual one-time and
recurring burdens for
disclosure of daily and
weekly liquid assets and
shareholder flow
Disclosure ofDaily
CurrentNAV
32 hours (senior systems
analyst/senior
progranuner) x 433 funds
= 13,856 hours per year+
Disclosure ofDaily
CurrentNAV
32 hours x $311 (blended
rate for a senior systems
analyst ($287) and senior
programmer ($334) =
$9,952 (annual ongoing
internal labor cost burden
per fund) x 433 funds=
$4,309,216 (ongoing
annual burden) +
70 hours x 10 new funds
= 700 one-time hours
14,556 aggregate annual
one-time and recurring
burden hours for the
disclosure of daily current
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NAY
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700 hours (aggregate total
one-time burden for 10
new funds) x
[20 hours x $340 (blended
rate for compliance
manager ($312) and a
compliance attorney
($368))=$6,800 +
50 hours x $311 (blended
rate for a senior systems
analyst ($287) and senior
progranuner ($334) =
$15,550 $22,350 per fund
x 10 new funds =
$223,500 (total one-time
cost burden)] =
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Disclosure ofDaily
CurrentNAV
252 business days x 433
funds= 109,116
responses per year
70 hours (blended time
for a compliance manager
and a compliance
attorney) x 10 new funds
= 700 one-time hours
16253
16254
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
$4,532,716 aggregate
annual one-time and
recurring labor burdens
for disclosure of daily and
current NAY
TJisclosure a/Financial
Support Received by the
Fund, the Imposition and
Removal ofLiquidity
Fees, and the Suspension
and Resumption ofFund
Redemptions
11 responses per year
TJisclosure of Financial
Support Received by the
Fund, the Imposition and
Removal ofLiquidity
Fees, and the Suspension
and Resumption ofFund
Redemptions
1 additional burden hour
each time a fund updates
its website to include new
disclosure about the
provision of financial
support to fund x 10
reports per year=
Disclosure ofFinancial
Support Received by the
Fund, the Imposition and
Removal ofLiquidity
Fees, and the Suspension
and Resumption ofFund
Redemptions
10 reports per fund x 1
hour per website update x
$250 per hour for a
webmaster (internal cost
burden per fund to include
new disclosure) =
10 hours per year
+
1 burden hour for website
updates x l estimated
instance of a fund
updating its website
regarding the imposition
and removal of liquidity
fees, and suspension and
resumption of fund
redemptions = 1 hour per
year
+
1 hour (annual aggregate
burden) x $250 per hour
for a webmaster =
$250 (aggregate internal
labor cost burden)
$2,750 aggregate annual
one-time and recurring
burden for the disclosure
of financial support
received by the fund, the
imposition and removal of
liquidity fees, and the
suspension and
resumption of fund
redemptions
Total Estimated
Responses Relating to
Website Disclosure
Total Estimated Burden
Hours Relating to Website
Disclosure
Total Estimated Cost
Burden Relating to
Website Disclosure
5,196 +109,116 +
109,116 + 11 =
5,436 + 16,288 + 14,556
+ 11 =
$1,359,000 + $5,128,091
+ $4,532,716 +
$2,750 =
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11 aggregate annual onetime and recurring burden
for the disclosure of
financial support received
by the fund, the
imposition and removal of
liquidity fees, and the
suspension and
resumption of fund
redemptions
$2,500 (aggregate internal
labor cost burden for
disclosure of financial
support provided to
fimds)
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
16255
Board review of
procedures and.
guidelines of any
investment adviser.or
officers to whom the
fund's board has
delegated i:esponsibility
under rule 2a-'7 and
aniendment of such
procedures an.d
idelines
1 response annually for
each of 108 funds 16
1 hour (board time)
1 hour x $4770 (board
time)= $4,770
+ 4 hours (compliance
and professional legal
time)=
5 hours per fund
4 x $340 (blended rate for
compliance manager
($312) and a compliance
attorney ($368)) = $1,360
$4,770+ $1,360 = $6,130
(cost per fund)
Total
5 hours x 108 estimated
res onses =
$6,130 x 108 estimated
res onses =
108 estimated responses
annuall
540 estimated burden
hours
$662,040 estimated cost
burden
1 response annually 17 for
each of 91 fund
complexes 18
1 hour of board time
5 hours of senior portfolio
manager time
3 hours of risk
management specialist
time
1 hour x $4,770 (board
time)= $4,770
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5 x $332 (Sr. portfolio
manager)= $1,660
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approve written.
proced.ures_ to stress test
a fund:s ortfolio
16256
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Total
+ 3 hours of professional
legal time
3 x $201 (risk
management specialist)=
$603
12 burden hours per fund
complex
3 x $401 (attorney) =
$1,203
12 hours x 91estimated
responses=
$4,770 + $1,660+ $603+
$1,203 =
$8,236 per fund complex
91 estimated responses
annuall
1,092 estimated burden
hours
$8,236 x 91 estimated
res onses =
$749,476 estimated cost
burden
5 responses annually for
each of 91 fund
complexes
5 hours senior portfolio
manager time
2 hours compliance
manager time
2 hours professional legal
time
+ 1 hour uaralegal time
5 x $332 (sr. portfolio
manager)= $1,660
2 x $312 (compliance
manager) = $624
2 x $419 (attorney)=
$838
= 10 hours per response
1 x $219 (paralegal)=
$219
10 hours x 455 responses
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Total
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455 estimated responses
annuall
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4,550 estimated burden
hours
$3,341 x 455 estimated
res onses =
$1,520,155 estimated
cost burden
12 hours (attorney time)+
+ 1 hour oard time =
12 x $419 (attorney)=
$5 028
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$1,660 + $624 + $838 +
$219 = $3,341 per
response
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
16257
13 hours per fund
1 hour x $4,770 ( board
time) = $4,770
$5,028 + $4,770 =$9,798
(per fund)
Total
2 estimated responses
annuall
1 response annually for
10 new money market
funds
13 hours x 2 estimated
res onses =
26 estimated burden
hours
$9,798 x 2 estimated
res onses =
$19,596 estimated cost
burden
3 hours board time
8 hours professional legal
time
7 hours risk management
specialist time
+ 4 hours senior risk
management time
3 hours x $4,770 ( board
time)= $14,310
22 hours
8 hours x $419 (attorney)
= $3,352
7 hours x $201 (risk
management specialist)=
$1,407
4 hours x $361 (sr. risk
management specialist)=
$1,444
khammond on DSKJM1Z7X2PROD with NOTICES
Total
10 estimated responses
annuall
1 response annually for
10 new funds
VerDate Sep<11>2014
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22 hours x 10 estimated
res onses =
220 estimated burden
hours
$20,513 x 10 estimated
res onses =
$205,130 estimated cost
burden
.5 hours of board time
7 .2 hours professional
le al time
.5 x hours x $4,770 (
board time) =$2,385
Sfmt 4725
26MRN1
E:\FR\FM\26MRN1.SGM
EN26MR21.013</GPH>
$14,310 + $3,352 +
$1,407 + $1,444 =
$20,513 (per response)
16258
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
+ 7. 7 hours paralegal time
= 15.5 hour per response
7.2 hours x $419
(attorney)= $3,016.80
7.7 hours x $219
(paralegal)= $1,686.30
$2,385 + $3,016.80 +
$1,686.30 = $7,088.10 per
response
Total
10 estimated responses
annuall
2 funds per year
15.5 hours xlO estimated
res onses =
155 estimated burden
hours
$7,088.10 x 10 estimated
res onses =
$70,881 estimated cost
burden
4 hours attorney
2 hours of board time
+ 1 hour of fund's
compliance attorney =
7 hours per fund
4 hours x $419 (attorney)
= $1,676
2 hours x $4,770 ( board
time) = $9,540
1 x $368 (compliance
attorney) = $368
7 hours x 2 funds =
2 estimated responses
annuall
14 estimated burden
hours
2 responses annually for
20 funds
.5 hours (professional
legal time)
.5 hour x $419 (attorney)
= $209.50 per response
Total
40 estimated responses
annuall
20 estimated burden
hours
$209.50 x 40 estimated
res onses =
$8,380 estimated cost
burden
TOTAL ESTIMATED
ANNUAL BURDEN OF
INFORMATION
COLLECTION FOR
RULE 2a-7
260,962 estimated
responses annually
337,348 estimated
burden hours annually
$97,313,463 estimated
cost burden annually
Based on the estimated burden of
information collection for rule 2a–7 and
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Form PF filings, the estimated burden of
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information collection for rule 12d1–1 is
set forth in Table 2 below.
E:\FR\FM\26MRN1.SGM
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khammond on DSKJM1Z7X2PROD with NOTICES
Total
$1,676+$9,540+$368 =
$11,584 estimated cost
burden er fund x 2 funds
$23,168 estimated cost
burden
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
16259
Table 2: Rule 12dl-1 burden of information collection burden estimates for unregistered
money market funds
85 responses annually per
41 liquidity funds 21
680 burden hours of
professional (business
analyst or portfolio
manager) time per liquidity
fund
x 41 liquidity funds
$232 per hour
(intermediate business
analyst)
+
$332 per hour (senior
portfolio manager)
$564
20 The cost burdens shown in this chart for
professional personnel are based on SIFMA’s
Management & Professional Earnings in the
Securities Industry 2013, modified for 2020 by the
Commission staff to account for an 1,800-hour
work-year and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits
and overhead and the cost burdens for clerical
personnel are based on SIFMA’s Office Salaries in
the Securities Industry 2013, modified for 2020 by
Commission staff to account for an 1,800-hour
work-year and inflation, and multiplied by 2.93 to
account for bonuses, firm size, employee benefits
and overhead. However, SIFMA data does not
include a board of directors. For board time,
Commission staff currently uses a cost of $4,770 per
hour, which was last adjusted for inflation in 2019.
This estimate assumes an average of nine board
members per year.
We use these estimated burdens for registered
money market funds to extrapolate the information
collection burdens for unregistered money market
funds under rule 12d1–1 in this Table 2.
21 The number of liquidity funds is based on the
following: 65 × the percentage of liquidity funds
that are at least partially in compliance with the
risk-limiting provisions of rule 2a–7 and used in the
most recent supporting statement for rule 2a–7
VerDate Sep<11>2014
17:14 Mar 25, 2021
Jkt 253001
100¥37.2) = 62.8%. The result (rounded up to a
whole number) is 41 liquidity funds. The number
of liquidity funds is based on the U.S. Securities
and Exchange Commission’s Division of Investment
Management—Analytics Office Private Funds
Statistics, Fourth Calendar Quarter (Oct. 2, 2020)
available at https://www.sec.gov/divisions/
investment/private-funds-statistics/private-fundsstatistics-2019-q4.pdf.
22 The number of new unregistered money market
funds is estimated from 2018–2019 historical Form
PF filings by liquidity fund advisers. See Securities
and Exchange Commission’s Division of Investment
Management—Analytics Office Private Funds
Statistics, Fourth Calendar Quarter (Oct. 2, 2020)
available at https://www.sec.gov/divisions/
investment/private-funds-statistics/private-fundsstatistics-2019-q4.pdf.
23 We recognize that in many cases the adviser to
an unregistered money market fund typically
performs the function of the fund’s board. Money
Market Fund Reform; Amendments to Form PF
Investment Company Act Rel. No. 31166 (Jul. 23,
2014), 79 FR 47735, 47809 (Aug. 14, 2014).
24 For purposes of this PRA extension, we
assumed that on average 25% (41 funds × .25 =
approximately 10 funds) of liquidity funds would
review and update their procedures on annual
basis.
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25 This number has been derived from the number
of advisers to liquidity funds. See U.S Securities
and Exchange Commission, Division of Investment
Management, Analytics Office, Private Fund
Statistics, Fourth Quarter 2019 (Oct. 2, 2020), Table
2.
26 See supra note 23.
27 There are no liquidity funds of this type;
liquidity funds only are offered to qualified
investors.
28 See supra note 23.
29 Id.
30 Id.
31 In the context of registered money market
funds, we have previously estimated an average of
approximately 2 occurrences for 20 funds each year;
however, this number may vary significantly in any
particular year. For purposes of this PRA extension,
we assumed there would be same proportion of
unregistered money market funds experiencing
events of default or solvency each year. (20/433
registered money market funds = approximately
5%. 5% × 41 liquidity funds = approximately 2
liquidity funds.)
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+2
16260
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
= $282 median weighted
average per hour
X
3,485 estimated
responses per liquidity
fund annuall
27,880 estimated burden
hours
Disclosure ofPortfolio
Holdings Information
12 months x 41 liquidity
funds = 492 responses
per year
Disclosure ofPortfolio
Holdings Information
12 hours (one hour per
monthly filing) to update
the website to include the
disclosure of portfolio
holdings information x 41
liquidity funds = 492 hours
per year+
24 hours of webmaster
time for an estimated 1
new liquidity fund 22 each
year to initially develop a
webpage and provide
monthly disclosure for the
initial year = 24 one-time
burden hours
khammond on DSKJM1Z7X2PROD with NOTICES
516 aggregate annual onetime and recurring burden
hours for the disclosure of
portfolio holdings
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E:\FR\FM\26MRN1.SGM
27,880 hours=
$7,862,160 estimated
cost burden
Disclosure ofPortfolio
Holdings Information
492 hours for 41 liquidity
funds x $250 (per hour
for a webmaster)
=$123,000 (for recurring
internal burden labor
costs)+
24 hours for 1 new
liquidity fund x $250 (per
hour for a webmaster) =
$6,000
$129,000 total aggregate
annual one-time and
recurring labor burdens
for disclosure of portfolio
holdings
26MRN1
EN26MR21.016</GPH>
Total
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
Disclosure ofDaily and
Week~y Liquid Assets and
Net Shareholder Flow
252 business days x 41
liquidity funds= 10,332
per year
Disclosure ofDaily and
Week~y Liquid Assets and
Net Shareholder Flow
36 hours ongoing annual
burden x 41 liquidity funds
= 1,476 hours per year
+
70 hours for each new
liquidity fund x 1 new fund
= 70 one-time hours
1,476 ammal burden hours
+ 70 one-time burden
hours = 1,546 aggregate
annual recurring and onetime burden hours for
disclosure of daily and
weekly liquid assets and
shareholder flow
16261
Disclosure ofDaily and
Week~y Liquid Assets and
Net Shareholder Flow
31.5 hours x $311
(blended rate for a senior
systems analyst ($287)
and senior programmer
($334) = $9,797 (per
liquidity fund)
+
4.5 hours x $340
(blended rate for
compliance manager
($312) and a compliance
attorney ($368)) = $ l ,530
= $11,327 (per fund to
update the depiction of
daily and weekly liquid
assets and the liquidity
fund's net inflow or
outflow on the liquidity
fund's website each
business day during that
year)
X
41 liquidity funds
= $464,407 recurring
aggregate annual cost
burdens for the disclosure
of daily and weekly liquid
assets and weekly liquid
assets and the fund's net
inflow or outflow on the
liquidity fund's website
each business day during
the year
+
= $2,028,907 aggregate
annual recurring and onetime cost burdens for
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26MRN1
EN26MR21.017</GPH>
khammond on DSKJM1Z7X2PROD with NOTICES
70 hours aggregate total
one-time burden for 1
new fund) x f20 hours x
$340 (blended rate for
compliance manager
($312) and a compliance
attorney ($368))= $6,800
+ 50 hours x $311
(blended rate for a senior
systems analyst ($287)
and senior programmer
($334) =$15,550
= $22,350 (internal labor
cost burden for each new
fund)]= $1,564,500
16262
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
disclosure of daily and
weekly liquid assets and
shareholder flow
Disclosure ofDaily
CurrentNAV
252 business days x 41
liquidity funds= 10,332
per year
Disclosure ofDaily
Current }VA V
32 hours x $311 (blended
rate for a senior systems
analyst ($287) and senior
programmer ($334) =
$9,952 (annual ongoing
internal labor cost burden
per fund) x 41 funds
= $408,932 ongoing
annual cost burdens
Disclosure ofDaily
CurrentNAV
32 hours x 41 liquidity
funds = 1,312 hours per
year
+
70 one-time burden hours
for each new liquidity fund
x 1 new liquidity fund = 70
one-time burden hours
+
1,312 annual burden hours
+ 70 one-time burden
hours= 1,382 aggregate
annual recurring and onetime burden hours for
disclosure of daily current
NAY
70 hours (aggregate total
one-time burden for 1
new liquidity fund) x
[20 hours x $340
(blended rate for
compliance manager
($312) and a compliance
attorney ($368))= $6,800
+
50 hours x $311 (blended
rate for a senior systems
analyst ($287) and senior
programmer ($334) =
$15,550 = $22,350
(internal labor cost
burden for each new
fund)]= $1,564,500
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17:14 Mar 25, 2021
Jkt 253001
Disclosure ofFinancial
Support Received by the
Fund, and Imposition and
Removal ofLiquidity
Fees, and the :','uspension
and Resumption ofFund
Redemptions
Not applicable
Disclosure ofFinancial
Support Received by the
Fund, and Imposition and
Removal ofLiquidity Fees,
and the Suspension and
Resumption ofFund
Redemptions
Not applicable
Total Estimated Burden
Hours Relating to
Website Disclosure
Total Estimated Burden
Hours Relating to Website
Disclosure
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Sfmt 4725
Disclosure ofFinancial
Support Received by the
Fund, and Impusiliun and
Removal ofLiquidity
Fees, and the Suspension
and Resumption of Fund
Redemptions
Not applicable
E:\FR\FM\26MRN1.SGM
Total Estimated Burden
Hours Relating to
Website Disclosure
26MRN1
EN26MR21.018</GPH>
khammond on DSKJM1Z7X2PROD with NOTICES
$408,932 (recurring
internal cost burden) +
$1,564,500 (one-time
internal labor cost
burden) = $1,973,432
aggregate annual
recurring and one-time
cost burdens
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
TOTAL
492+ 10,332+ 10,332 =
516 + 1,546 + 1,382 + 0 +0
$129,000 + $2,028,907+
$1,973,432 =
21,156 estimated
res onses
3,444 estimated burden
hours
$4,131,339 estimated
cost burden
1 response annually for
each of 10 funds 24
1 hour (board time)
1 hour x $4 770 ( board
time)= $4,770
+ 4 hours (compliance and
12rofessional legal time) =
5 hours
4 x $340 (blended rate for
compliance manager
($312) and a compliance
attorney ($368)) = $1,360
16263
$4,770+ $1,360 = $6,130
(cost per fund)
khammond on DSKJM1Z7X2PROD with NOTICES
TOTAL
VerDate Sep<11>2014
17:14 Mar 25, 2021
10 estimated responses
50 estimated burden
hours
1 response annually for
each of 36 fund
com lexes 25
1 hour of board time
5 hours of senior portfolio
mana ertime
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E:\FR\FM\26MRN1.SGM
$6,130 x 10 estimated
res onses =
$61,300 estimated cost
burden
1 hour x $4,770 ( board
time)= $4,770
26MRN1
EN26MR21.019</GPH>
5 hours x 10 responses =
16264
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
3 hours of risk
management specialist
time
+ 3 hours of professional
legal time
5 x $332 (Sr. portfolio
manager) = $1,660
12 hours
3 x $401 (attorney)=
$1,203
12 hours x 36 estimated
responses=
TOTAL
36 estimated responses
432 estimated burden
hours
5 responses annually for
each of 36 fund
complexes
5 hours senior portfolio
manager time
2 hours compliance
manager time
2 hours professional legal
time
+ 1 hour 12aralegal time
3 X $201 (risk
management specialist) =
$603
$4,770 + $1,660+ $603+
$1,203 = $8,236 per
liquidity fund complex
$8,236 x 36 estimated
res onses =
$296,496 estimated cost
burden
5 x $332 (sr. portfolio
manager) = $1,660
2 x $312 (compliance
manager) = $624
2 x $419 (attorney)=
$838
= 10 hours per response
1 x $219 (paralegal)=
$219
$1,660 + $624 + $838 +
$219 = $3,341 per
response
TOTAL
180 estimated responses
1800 estimated burden
hours
$3,341 x 180 estimated
res onses =
$601,380 estimated cost
burden
Establishment of.
written proceduresto
testperiodic:ally the
abilit .of the fund to
VerDate Sep<11>2014
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EN26MR21.020</GPH>
khammond on DSKJM1Z7X2PROD with NOTICES
TOTAL
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
1 response annually for 1
new liquidity fund
3 hours board time
8 hours professional legal
time
7 hours risk management
specialist time
+4 hours senior risk
management time
22 hours
16265
3 hours x $4,770 (board
time)= $14,310
8 hours x $419 (attorney)
= $3,352
7 hours x $201 (risk
management specialist) =
$1,407
4 hours x $361 (sr. risk
management specialist) =
$1,444
$14,310 + $3,352 +
$1,407 + $1,444 =
$20,513 (per response)
TOTAL
1 estimated response
22 estimated burden
hours
1 response annually for 1
new liquidity fund
.5 hours board time
7 .2 hours professional
legal time
+7.8 hours 12aralegal time
$20,513(cost) x 1
estimated res onse
$20,513 estimated cost
burden
.5 hours x $4,770 (board
time)= $2,385
7.2 hours x $419
(attorney)= $3,016.80
15.5 hours
7.8 hours x $219
(paralegal)= $1,708.20
$2,385 + $3,016.80+
$1,708.20 = $7,110 (per
response)
VerDate Sep<11>2014
17:14 Mar 25, 2021
1 estimated response
Jkt 253001
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Fmt 4703
15.5 estimated burden
hours
Sfmt 4725
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26MRN1
EN26MR21.021</GPH>
khammond on DSKJM1Z7X2PROD with NOTICES
TOTAL
$7,110 x 1 estimated
res onse =
$7,110 estimated cost
burden
16266
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
2 liquidity funds per year
4 hours attorney
2 hours of board time
+ 1 hours of fund's
com12liance attorney
7 hours per liquidity fund
4 hours x $419 (attorney)
= $1,676
2 hours x $4,770 ( board
time)= $9,540
1 x $368 (compliance
attorney)= $368
$1,676+$9,540+$368 =
$11,584 per liquidity fund
2 estimated responses
annually for 2 liquidity
funds 31
$11,584 x 2 estimated
res onses =
$23,168 estimated costs
burden
.5 hours (professional legal
time)
= $209.50
khammond on DSKJM1Z7X2PROD with NOTICES
x 4 responses
Total
4 estimated responses
2 estimated burden hours
TOTAL ESTIMATED
BURDEN OF
INFORMATION
COLLECTION FOR
RULE 12dl-1
24,875 estimated
responses annually
33,660 estimated burden
hours annually
Commission staff estimates that in
addition to the costs described in Table
2 above, unregistered money market
funds will incur costs to preserve
records, as required under rule 2a–7.
These costs will vary significantly for
individual funds, depending on the
amount of assets under fund
management and whether the fund
preserves its records in a storage facility
in hard copy or has developed and
maintains a computer system to create
and preserve compliance records. In the
2019 rule 2a–7 PRA extension,
Commission staff estimated that the
amount an individual money market
fund may spend ranges from $100 per
year to $300,000. We have no reason to
believe the range is different for
unregistered money market funds.
Based on Form PF data as of the fourth
VerDate Sep<11>2014
17:14 Mar 25, 2021
Jkt 253001
.5 hour x $419 (attorney)
$209.50 x 4 estimated
res onses =
$838 estimated cost
burden
$13,004,304 estimated
cost burden annually
calendar quarter 2019, liquidity funds
have $294 billion in gross asset value.32
The Commission does not have specific
information about the proportion of
assets held in small, medium-sized, or
large unregistered money market funds.
Because liquidity funds are often used
as cash management vehicles, the staff
estimates that each private liquidity
fund is a ‘‘large’’ fund (i.e., more than
$1 billion in assets under management).
Based on a cost of $0.0000009 per dollar
of assets under management (for large
funds),33 the staff estimates compliance
with rule 2a–7 for these unregistered
money market funds totals $264,600
annually.34
Consistent with estimates made in the
rule 2a–7 submission, Commission staff
estimates that unregistered money
market funds also incur capital costs to
create computer programs for
maintaining and preserving compliance
records for rule 2a–7 of $0.0000132 per
dollar of assets under management.
Based on the assets under management
figures described above, staff estimates
32 See U.S Securities and Exchange Commission,
Division of Investment Management, Analytics
Office, Private Fund Statistics, Fourth Quarter 2019
(Oct. 2, 2020), Table 3.
33 The recordkeeping cost estimates are
$0.0051295 per dollar of assets under management
for small funds, and $0.0005041 per dollar of assets
under management for medium-sized funds. The
cost estimates are the same as those used in the
most recently approved rule 2a–7 submission.
34 This estimate is based on the following
calculation: ($294 billion × $0.0000009) = $264,600
for large funds.
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E:\FR\FM\26MRN1.SGM
26MRN1
EN26MR21.022</GPH>
2 estimated responses
TOTAL
7 hours x 2 estimated
res onses =
14 estimated hours
burden
Federal Register / Vol. 86, No. 57 / Friday, March 26, 2021 / Notices
annual capital costs for all unregistered
money market funds of $3.88 million.35
Commission staff further estimates
that, even absent the requirements of
rule 2a–7, money market funds would
spend at least half of the amounts
described above for record preservation
($132,300) and for capital costs ($1.94
million). Commission staff concludes
that the aggregate annual costs of
compliance with the rule are $132,300
for record preservation and $1.94
million for capital costs.
The collections of information
required for unregistered money market
funds by rule 12d1–1 are necessary in
order for acquiring funds to be able to
obtain the benefits described above.
Notices to the Commission will not be
kept confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless it displays a
currently valid control number.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, 100 F Street NE,
Washington, DC 20549; or send an email
to: PRA_Mailbox@sec.gov.
Dated: March 22, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–06243 Filed 3–25–21; 8:45 am]
khammond on DSKJM1Z7X2PROD with NOTICES
35 This estimate is based on the following
calculation: ($294 billion × 0.0000132) = $3.88
million.
17:14 Mar 25, 2021
[Release No. 34–91383; File No. SR–CFE–
2021–006]
Self-Regulatory Organizations; Cboe
Futures Exchange, LLC; Notice of a
Filing of a Proposed Rule Change
Regarding Disruptive Trading
Practices
March 22, 2021.
Pursuant to Section 19(b)(7) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
March 15, 2021 Cboe Futures Exchange,
LLC (‘‘CFE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change described in Items
I, II, and III below, which Items have
been prepared by CFE. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons. CFE also has
filed this proposed rule change with the
Commodity Futures Trading
Commission (‘‘CFTC’’). CFE filed a
written certification with the CFTC
under Section 5c(c) of the Commodity
Exchange Act (‘‘CEA’’) 2 on March 15,
2021.
I. Self-Regulatory Organization’s
Description of the Proposed Rule
Change
The Exchange proposes to provide
additional guidance in its rules
regarding prohibited disruptive
practices.
The rule amendments included as
part of this proposed rule change are to
apply to all products traded on CFE,
including both non-security futures and
any security futures that may be listed
for trading on CFE. The scope of this
filing is limited solely to the application
of the proposed rule change to security
futures that may be traded on CFE.
Although no security futures are
currently listed for trading on CFE, CFE
may list security futures for trading in
the future.
The text of the proposed rule change
is attached as Exhibit 4 to the filing but
is not attached to the publication of this
notice.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, CFE
included statements concerning the
purpose of and basis for the proposed
rule change and discussed any
BILLING CODE 8011–01–C
VerDate Sep<11>2014
SECURITIES AND EXCHANGE
COMMISSION
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1
2
PO 00000
15 U.S.C. 78s(b)(7).
7 U.S.C. 7a–2(c).
Frm 00088
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16267
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. CFE has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
CFE Rule 620 (Disruptive Practices)
prohibits various disruptive practices
and CFE Policy and Procedure XVIII
(Disruptive Trading Practices) (‘‘P&P
XVIII’’) of the Policies and Procedures
section of the CFE Rulebook lists
various factors that CFE may consider in
assessing whether conduct violates Rule
620. The proposed rule change proposes
to make the following clarifying updates
in relation to these provisions.
CFE is proposing to amend the
provisions of Rule 620 in the following
manner.
Rule 620(b)(iii) currently provides
that no Person shall enter or cause to be
entered an actionable or non-actionable
message or messages with intent to
overload, delay, or disrupt the systems
of the Exchange or other market
participants. CFE proposes to add a new
subparagraph (b)(iv) to Rule 620 to
address disruption to the systems of the
Exchange or market participants in this
context and accordingly proposes to
remove reference to disruption from
Rule 620(b)(iii).
Specifically, proposed revised Rule
620(b)(iii) will provide that no Person
shall enter or cause to be entered an
actionable or non-actionable message(s)
with intent to overload or delay the
systems of the Exchange or other market
participants.
Proposed new Rule 620(b)(iv) will
provide that no Person shall
intentionally or recklessly submit or
cause to be submitted an actionable or
non-actionable message(s) that has the
potential to disrupt the systems of the
Exchange or other market participants.
CFE also proposes to make the
following two non-substantive changes
to Rule 620(b): (1) To change the
numbering of current subparagraph
(b)(iv) of Rule 620 to subparagraph (b)(v)
of Rule 620 to account for the addition
of proposed new Rule 620(b)(iv) and (2)
to revise Rule 620(b)(ii), Rule 620(b)(iii),
and renumbered Rule 620(b)(v) to use
the same wording when referring to an
actionable or non-actionable message(s)
and thus to provide for consistent
language in relation to these references
throughout Rule 620(b).
E:\FR\FM\26MRN1.SGM
26MRN1
]]>Agencies
[Federal Register Volume 86, Number 57 (Friday, March 26, 2021)]
[Notices]
[Pages 16249-16267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06243]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-526, OMB Control No. 3235-0584]
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:
Rule 12d1-1
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (the ``Commission'') is soliciting comments on the
collection of information summarized below. The Commission plans to
submit this existing collection of information to the Office of
Management and Budget (``OMB'') for extension and approval.
An investment company (``fund'') is generally limited in the amount
of securities the fund (``acquiring fund'') can acquire from another
fund (``acquired fund''). Section 12(d) of the Investment Company Act
of 1940 (the ``Investment Company Act'' or ``Act'') \1\ provides that a
registered fund (and companies it controls) cannot:
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\1\ See 15 U.S.C. 80a.
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Acquire more than three percent of another fund's
securities;
invest more than five percent of its own assets in another
fund; or
invest more than ten percent of its own assets in other
funds in the aggregate.\2\
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\2\ See 15 U.S.C. 80a-12(d)(1)(A). If an acquiring fund is not
registered, these limitations apply only with respect to the
acquiring fund's acquisition of registered funds.
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In addition, a registered open-end fund, its principal underwriter,
and any registered broker or dealer cannot sell that fund's shares to
another fund if, as a result:
The acquiring fund (and any companies it controls) owns
more than three percent of the acquired fund's stock; or
all acquiring funds (and companies they control) in the
aggregate own more than ten percent of the acquired fund's stock.\3\
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\3\ See 15 U.S.C. 80a-12(d)(1)(B).
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Rule 12d1-1 under the Act provides an exemption from these
limitations for ``cash sweep'' arrangements in which a fund invests all
or a portion of its available cash in a money market fund rather than
directly in short-term instruments.\4\ An acquiring fund relying on the
exemption may not pay a sales load, distribution fee, or service fee on
acquired fund shares, or if it does, the acquiring fund's investment
adviser must waive a sufficient amount of its advisory fee to offset
the cost of the loads or distribution fees.\5\ The acquired fund may be
a fund in the same fund complex or in a different fund complex. In
addition to providing an exemption from section 12(d)(1) of the Act,
the rule provides exemptions from section 17(a) of the Act and rule
17d-1 thereunder, which restrict a fund's ability to enter into
transactions and joint arrangements with affiliated persons.\6\ These
provisions would otherwise prohibit an acquiring fund from investing in
a money market fund in the same fund complex,\7\ and prohibit a fund
that acquires five percent or more of the securities of a money market
fund in another fund complex from making any additional investments in
the money market fund.\8\
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\4\ See 17 CFR 270.12d1-1.
\5\ See rule 12d1-1(b)(1).
\6\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d); 17 CFR
270.17d-1.
\7\ An affiliated person of a fund includes any person directly
or indirectly controlling, controlled by, or under common control
with such other person. See 15 U.S.C. 80a-2(a)(3) (definition of
``affiliated person''). Most funds today are organized by an
investment adviser that advises or provides administrative services
to other funds in the same complex. Funds in a fund complex are
generally under common control of an investment adviser or other
person exercising a controlling influence over the management or
policies of the funds. See 15 U.S.C. 80a-2(a)(9) (definition of
``control''). Not all advisers control funds they advise. The
determination of whether a fund is under the control of its adviser,
officers, or directors depends on all the relevant facts and
circumstances. See Investment Company Mergers, Investment Company
Act Release No. 25259 (Nov. 8, 2001) [66 FR 57602 (Nov. 15, 2001)],
at n.11. To the extent that an acquiring fund in a fund complex is
under common control with a money market fund in the same complex,
the funds would rely on the rule's exemptions from section 17(a) and
rule 17d-1.
\8\ See 15 U.S.C. 80a-2(a)(3)(A), (B).
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[[Page 16250]]
The rule also permits a registered fund to rely on the exemption to
invest in an unregistered money market fund that limits its investments
to those in which a registered money market fund may invest under rule
2a-7 under the Act, and undertakes to comply with all the other
provisions of rule 2a-7.\9\ In addition, the acquiring fund must
reasonably believe that the unregistered money market fund (i) operates
in compliance with rule 2a-7, (ii) complies with sections 17(a), (d),
(e), 18, and 22(e) of the Act \10\ as if it were a registered open-end
fund, (iii) has adopted procedures designed to ensure that it complies
with these statutory provisions, (iv) maintains the records required by
rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-1(b)(9);
\11\ and (v) preserves permanently, the first two years in an easily
accessible place, all books and records required to be made under these
rules.
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\9\ See 17 CFR 270.2a-7.
\10\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d), 15 U.S.C.
80a-17(e), 15 U.S.C. 80a-18, 15 U.S.C. 80a-22(e).
\11\ See 17 CFR 270.31a-1(b)(1), 17 CFR 270.31a-1(b)(2)(ii), 17
CFR 270.31a-1(b)(2)(iv), 17 CFR 270.31a-1(b)(9).
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Rule 2a-7 contains certain collection of information requirements.
An unregistered money market fund that complies with rule 2a-7 would be
subject to these collection of information requirements. In addition,
the recordkeeping requirements under rule 31a-1 with which the
acquiring fund reasonably believes the unregistered money market fund
complies are collections of information for the unregistered money
market fund. The adoption of procedures by unregistered money market
funds to ensure that they comply with sections 17(a), (d), (e), 18, and
22(e) of the Act also constitute collections of information. By
allowing funds to invest in registered and unregistered money market
funds, rule 12d1-1 is intended to provide funds greater options for
cash management. In order for a registered fund to rely on the
exemption to invest in an unregistered money market fund, the
unregistered money market fund must comply with certain collection of
information requirements for registered money market funds. These
requirements are intended to ensure that the unregistered money market
fund has established procedures for collecting the information
necessary to make adequate credit reviews of securities in its
portfolio, as well as other recordkeeping requirements that will assist
the acquiring fund in overseeing the unregistered money market fund
(and Commission staff in its examination of the unregistered money
market fund's adviser).
The estimated average burden hours in this collection of
information are made solely for purposes of the Paperwork Reduction Act
and are not derived from a quantitative, comprehensive or even
representative survey or study of the burdens associated with
Commission rules and forms.
The number of unregistered money market funds that are affected by
rule 12d1-1 is an estimate based on the number of private liquidity
funds reported on Form PF as of the fourth calendar quarter 2019.\12\
The hour burden estimates for the condition that an unregistered money
market fund comply with rule 2a-7 are based on the burden hours
included in the Commission's 2019 PRA extension regarding rule 2a-
7.\13\ However, we have updated the estimated costs associated using
the following methodology:
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\12\ See the U.S. Securities and Exchange Commission's Division
of Investment Management--Analytics Office Private Funds Statistics,
Fourth Calendar Quarter (Oct. 2, 2020) available at https://www.sec.gov/divisions/investment/private-funds-statistics/private-funds-statistics-2019-q4.pdf.
\13\ See Securities and Exchange Commission, Request for OMB
Approval of Extension for Approved Collection for Rule 2a-7 under
the Investment Company Act of 1940 (OMB Control No. 3235-0268)
(approved May 28, 2019) (the ``2019 rule 2a-7 PRA extension''). The
2019 rule 2a-7 PRA extension was the most recent rule 2a-7
submission that includes certain estimates with respect to aggregate
annual hour and cost burdens for collections of information for
registered money market funds.
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For professional personnel: SIFMA's Management &
Professional Earnings in the Securities Industry 2013, modified for
2020 by Commission staff to account for an 1,800-hour work-year and
inflation, and multiplied by 5.35 to account for bonuses, firm size,
employee benefits, and overhead;
For a fund board of directors: SIFMA data does not include
a board of directors. For board time, Commission staff currently uses a
cost of $4,770 per hour, which was last adjusted for inflation in 2019.
This estimate assumes an average of nine board members per year; and
For clerical personnel: SIFMA's Office Salaries in the
Securities Industry 2013, modified for 2020 by Commission staff to
account for an 1,800-hour work-year and inflation, and multiplied by
2.93 to account for bonuses, firm size, employee benefits, and
overhead.
The estimated burden of information collection for rule 2a-7 is set
forth in Table 1 below. We use these estimated burdens for registered
money market funds to extrapolate the information collection burdens
for unregistered money market funds under rule 12d1-1 in Table 2 below.
BILLING CODE 8011-01-P
[[Page 16251]]
[GRAPHIC] [TIFF OMITTED] TN26MR21.007
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\14\ The estimated responses and hour burdens shown in this
chart were included in the Securities and Exchange Commission,
Request for OMB Approval of Extension for Approved Collection for
Rule 2a-7 under the Investment Company Act of 1940 (OMB Control No.
3235-0268) (approved May 28, 2019) (the ``2019 rule 2aa-7 PRA
extension''). The 2019 rule 2aa-7 PRA extension was the most recent
rule 2a-7 submission that includes certain estimates with respect to
aggregate annual hour and cost burdens for collections of
information for registered money market funds.
However, the cost burdens shown in this chart have been updated.
The cost burdens for professional personnel are based on SIFMA's
Management & Professional Earnings in the Securities Industry 2013,
modified for 2020 by the Commission staff to account for an 1,800-
hour work-year and inflation, and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead and the cost
burdens for clerical personnel are based on SIFMA's Office Salaries
in the Securities Industry 2013, modified for 2020 by Commission
staff to account for an 1,800-hour work-year and inflation, and
multiplied by 2.93 to account for bonuses, firm size, employee
benefits and overhead. However, SIFMA data does not include a board
of directors. For board time, Commission staff currently uses a cost
of $4,770 per hour, which was last adjusted for inflation in 2019.
This estimate assumes an average of nine board members per year.
\15\ The number of funds based on Form N-MFP filings for the
month ended September 30, 2018 and used in the 2019 rule 2a-7 PRA
extension.
\16\ For purposes of the 2019 rule 2a-7 PRA extension, we
assumed that on average 25% (433 funds x .25 = 108 funds) of money
market funds would review and update their procedures on annual
basis).
\17\ We have not amortized the one-time hour and cost burdens
figures associated with new funds, because we estimated there would
be 10 new funds each year. Therefore, the burden would occur each
year instead of occurring over a three-year period. We have done
this throughout this PRA.
\18\ Commission staff estimates that there are 91 fund complexes
subject to rule 2a-7. This estimate is based on Form N-MEP filings
with the Commission for the month ended September 30, 2018.
\19\ We estimated that approximately two new money market funds
would seek to qualify as retail money market funds under rule 2a-7
and therefore be required to adopt written policies and procedures
reasonably designed to limit beneficial owners to natural persons.
For purposes of the 2019 rule 2a-7 PRA extension, Form N-MFP
data reflects that of the 30 new money market funds created between
April of 2015 through September 2018, only six new money market
funds elected to be retail funds--or approximately two per year ((6
funds/42 months) x 12 months). Based on these figures, we estimated
that two new money market fund per year would elect to be a retail
fund.
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Based on the estimated burden of information collection for rule
2a-7 and Form PF filings, the estimated burden of information
collection for rule 12d1-1 is set forth in Table 2 below.
[[Page 16259]]
[GRAPHIC] [TIFF OMITTED] TN26MR21.015
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\20\ The cost burdens shown in this chart for professional
personnel are based on SIFMA's Management & Professional Earnings in
the Securities Industry 2013, modified for 2020 by the Commission
staff to account for an 1,800-hour work-year and inflation, and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead and the cost burdens for clerical personnel
are based on SIFMA's Office Salaries in the Securities Industry
2013, modified for 2020 by Commission staff to account for an 1,800-
hour work-year and inflation, and multiplied by 2.93 to account for
bonuses, firm size, employee benefits and overhead. However, SIFMA
data does not include a board of directors. For board time,
Commission staff currently uses a cost of $4,770 per hour, which was
last adjusted for inflation in 2019. This estimate assumes an
average of nine board members per year.
We use these estimated burdens for registered money market funds
to extrapolate the information collection burdens for unregistered
money market funds under rule 12d1-1 in this Table 2.
\21\ The number of liquidity funds is based on the following: 65
x the percentage of liquidity funds that are at least partially in
compliance with the risk-limiting provisions of rule 2a-7 and used
in the most recent supporting statement for rule 2a-7 100-37.2) =
62.8%. The result (rounded up to a whole number) is 41 liquidity
funds. The number of liquidity funds is based on the U.S. Securities
and Exchange Commission's Division of Investment Management--
Analytics Office Private Funds Statistics, Fourth Calendar Quarter
(Oct. 2, 2020) available at https://www.sec.gov/divisions/investment/private-funds-statistics/private-funds-statistics-2019-q4.pdf.
\22\ The number of new unregistered money market funds is
estimated from 2018-2019 historical Form PF filings by liquidity
fund advisers. See Securities and Exchange Commission's Division of
Investment Management--Analytics Office Private Funds Statistics,
Fourth Calendar Quarter (Oct. 2, 2020) available at https://www.sec.gov/divisions/investment/private-funds-statistics/private-funds-statistics-2019-q4.pdf.
\23\ We recognize that in many cases the adviser to an
unregistered money market fund typically performs the function of
the fund's board. Money Market Fund Reform; Amendments to Form PF
Investment Company Act Rel. No. 31166 (Jul. 23, 2014), 79 FR 47735,
47809 (Aug. 14, 2014).
\24\ For purposes of this PRA extension, we assumed that on
average 25% (41 funds x .25 = approximately 10 funds) of liquidity
funds would review and update their procedures on annual basis.
\25\ This number has been derived from the number of advisers to
liquidity funds. See U.S Securities and Exchange Commission,
Division of Investment Management, Analytics Office, Private Fund
Statistics, Fourth Quarter 2019 (Oct. 2, 2020), Table 2.
\26\ See supra note 23.
\27\ There are no liquidity funds of this type; liquidity funds
only are offered to qualified investors.
\28\ See supra note 23.
\29\ Id.
\30\ Id.
\31\ In the context of registered money market funds, we have
previously estimated an average of approximately 2 occurrences for
20 funds each year; however, this number may vary significantly in
any particular year. For purposes of this PRA extension, we assumed
there would be same proportion of unregistered money market funds
experiencing events of default or solvency each year. (20/433
registered money market funds = approximately 5%. 5% x 41 liquidity
funds = approximately 2 liquidity funds.)
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Commission staff estimates that in addition to the costs described
in Table 2 above, unregistered money market funds will incur costs to
preserve records, as required under rule 2a-7. These costs will vary
significantly for individual funds, depending on the amount of assets
under fund management and whether the fund preserves its records in a
storage facility in hard copy or has developed and maintains a computer
system to create and preserve compliance records. In the 2019 rule 2a-7
PRA extension, Commission staff estimated that the amount an individual
money market fund may spend ranges from $100 per year to $300,000. We
have no reason to believe the range is different for unregistered money
market funds. Based on Form PF data as of the fourth calendar quarter
2019, liquidity funds have $294 billion in gross asset value.\32\ The
Commission does not have specific information about the proportion of
assets held in small, medium-sized, or large unregistered money market
funds. Because liquidity funds are often used as cash management
vehicles, the staff estimates that each private liquidity fund is a
``large'' fund (i.e., more than $1 billion in assets under management).
Based on a cost of $0.0000009 per dollar of assets under management
(for large funds),\33\ the staff estimates compliance with rule 2a-7
for these unregistered money market funds totals $264,600 annually.\34\
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\32\ See U.S Securities and Exchange Commission, Division of
Investment Management, Analytics Office, Private Fund Statistics,
Fourth Quarter 2019 (Oct. 2, 2020), Table 3.
\33\ The recordkeeping cost estimates are $0.0051295 per dollar
of assets under management for small funds, and $0.0005041 per
dollar of assets under management for medium-sized funds. The cost
estimates are the same as those used in the most recently approved
rule 2a-7 submission.
\34\ This estimate is based on the following calculation: ($294
billion x $0.0000009) = $264,600 for large funds.
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Consistent with estimates made in the rule 2a-7 submission,
Commission staff estimates that unregistered money market funds also
incur capital costs to create computer programs for maintaining and
preserving compliance records for rule 2a-7 of $0.0000132 per dollar of
assets under management. Based on the assets under management figures
described above, staff estimates
[[Page 16267]]
annual capital costs for all unregistered money market funds of $3.88
million.\35\
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\35\ This estimate is based on the following calculation: ($294
billion x 0.0000132) = $3.88 million.
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Commission staff further estimates that, even absent the
requirements of rule 2a-7, money market funds would spend at least half
of the amounts described above for record preservation ($132,300) and
for capital costs ($1.94 million). Commission staff concludes that the
aggregate annual costs of compliance with the rule are $132,300 for
record preservation and $1.94 million for capital costs.
The collections of information required for unregistered money
market funds by rule 12d1-1 are necessary in order for acquiring funds
to be able to obtain the benefits described above. Notices to the
Commission will not be kept confidential. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid control number.
Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the collection of information; (c) ways to enhance the
quality, utility, and clarity of the information collected; and (d)
ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology. Consideration will
be given to comments and suggestions submitted in writing within 60
days of this publication.
Please direct your written comments to David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, 100 F Street
NE, Washington, DC 20549; or send an email to: [email protected].
Dated: March 22, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-06243 Filed 3-25-21; 8:45 am]
BILLING CODE 8011-01-C
