Proposed Collection; Comment Request; Extension: Rule 22c-2, 38519-38521 [2021-15426]

Download as PDF Federal Register / Vol. 86, No. 137 / Wednesday, July 21, 2021 / Notices SF–3 takes approximately 1,380 hours per response and is filed by approximately 71 issuers annually. The information collected is intended to ensure that the information required to be filed by the Commission permits verification of compliance with securities law requirements and assures the public availability of such information in the asset-backed securities market. We estimate that 25% of the 1,383.21 hours per response (345.80 hours) is prepared by the issuer for a total annual reporting burden of 24,552 hours (345.80 hours per response × 71 responses). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to (i) www.reginfo.gov/public/do/ PRAMain and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o Cynthia Roscoe, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Dated: July 1, 2021. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–15435 Filed 7–20–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Dated: July 15, 2021. J. Matthew DeLesDernier, Assistant Secretary. [SEC File No. 270–334, OMB Control No. 3235–0380] Submission for OMB Review; Comment Request jbell on DSKJLSW7X2PROD with NOTICES 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 (‘‘Commission’’) has submitted to the Office of Management and Budget this request for extension of the previously Jkt 253001 1 44 BILLING CODE 8011–01–P Extension: Form F–10 17:26 Jul 20, 2021 on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. Rule 22c–2 (17 CFR 270.22c–2) under the Investment Company Act of 1940 (15 U.S.C. 80a) (the ‘‘Investment Company Act’’ or ‘‘Act’’) requires the board of directors (including a majority of independent directors) of most registered open-end investment companies (‘‘funds’’) to either approve a redemption fee of up to two percent or determine that imposition of a redemption fee is not necessary or appropriate for the fund. Rule 22c–2 also requires a fund to enter into written agreements with their financial intermediaries (such as broker-dealers and retirement plan administrators) under which the fund, upon request, can obtain certain shareholder identity and trading information from the intermediaries. The written agreement must also allow the fund to direct the intermediary to prohibit further purchases or exchanges by specific shareholders that the fund has identified as being engaged in transactions that violate the fund’s market timing policies. These requirements enable funds to obtain the information that they need to monitor the frequency of short-term trading in omnibus accounts and enforce their market timing policies. The rule includes three ‘‘collections of information’’ within the meaning of the Paperwork Reduction Act of 1995 (‘‘PRA’’).1 First, the rule requires boards to either approve a redemption fee of up to two percent or determine that imposition of a redemption fee is not necessary or appropriate for the fund. Second, funds must enter into information sharing agreements with all of their ‘‘financial intermediaries’’ 2 and maintain a copy of the written information sharing agreement with each intermediary in an easily [FR Doc. 2021–15431 Filed 7–20–21; 8:45 am] Upon Written Request Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 VerDate Sep<11>2014 approved collection of information discussed below. Form F–10 (17 CFR 239.40) is a registration statement under the Securities Act of 1933 (15 U.S.C. 77a et seq.) that may be used by a foreign private issuer that: Is incorporated or organized in Canada; has been subject to, and in compliance with, Canadian reporting requirements for at least 12 months; and has an aggregate market value of common stock held by nonaffiliates of at least $75 million. The purpose of this information collection is to permit verification of compliance with securities law requirements and assure the public availability of such information. We estimate that Form F– 10 takes 28.98 hours per response and is filed by 77 respondents. We further estimate that 25% of the 28.98 hours per response (7.25 hours) is prepared by the issuer for an annual reporting burden of 558 hours (7.25 hours per response × 77 responses). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to (i) www.reginfo.gov/public/do/ PRAMain and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o Cynthia Roscoe, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. 38519 U.S.C. 3501–3520. rule defines a Financial Intermediary as: (i) Any broker, dealer, bank, or other person that holds securities issued by the fund in nominee name; (ii) a unit investment trust or fund that invests in the fund in reliance on section 12(d)(i)(E) of the Act; and (iii) in the case of a participant directed employee benefit plan that owns the securities issued by the fund, a retirement plan’s administrator under section 316(A) of the Employee Retirement Security Act of 1974 (29 U.S.C. 1002(16)(A) or any person that maintains the plans’ participant records. Financial Intermediary does not include any person that the fund treats as an individual investor with respect to the fund’s policies established for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the fund. Rule 22c– 2(c)(1). 2 The SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–541, OMB Control No. 3235–0620] Proposed Collection; Comment Request; Extension: Rule 22c–2 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) the Securities and Exchange Commission (the ‘‘Commission’’) is soliciting comments PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 E:\FR\FM\21JYN1.SGM 21JYN1 38520 Federal Register / Vol. 86, No. 137 / Wednesday, July 21, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES accessible place for six years. Third, pursuant to the information sharing agreements, funds must have systems that enable them to request frequent trading information upon demand from their intermediaries, and to enforce any restrictions on trading required by funds under the rule. The collections of information created by rule 22c–2 are necessary for funds to effectively assess redemption fees, enforce their policies in frequent trading, and monitor short-term trading, including market timing, in omnibus accounts. These collections of information are mandatory for funds that redeem shares within seven days of purchase. The collections of information also are necessary to allow Commission staff to fulfill its examination and oversight responsibilities. Rule 22c–2(a)(1) requires the board of directors of all registered open-end management investment companies and series thereof (except for money market funds, ETFs, or funds that affirmatively permit short-term trading of its securities) to approve a redemption fee for the fund, or instead make a determination that a redemption fee is either not necessary or appropriate for the fund. Commission staff understands that the boards of all funds currently in operation have undertaken this process for the funds they currently oversee, and the rule does not require boards to review this determination periodically once it has been made. Accordingly, we expect that only boards of newly registered funds or newly created series thereof would undertake this determination. Commission staff estimates that 36 funds (excluding money market funds and ETFs) are newly formed each year and would need to make this determination.3 Based on conversations with fund representatives,4 Commission staff estimates that it takes 2 hours of the board’s time as a whole (at a rate of $4,465 per hour) 5 to approve a redemption fee or make the required determination on behalf of all series of the fund. In addition, Commission staff estimates that it takes compliance personnel of the fund 8 hours (at a rate 3 This estimate is based on the number of registrants filing initial Form N–1A or N–3 from 2017 to 2019. This estimate does not carve out money market funds, ETFs, or funds that affirmatively permit short-term trading of their securities, so this estimate corresponds to the outer limit of the number of registrants that would have to make this determination. 4 Unless otherwise stated, estimates throughout this analysis are derived from a survey of funds and conversations with fund representatives. 5 The estimate of $4,465 per hour for the board’s time as a whole is based on conversations with representatives of funds and their legal counsel. VerDate Sep<11>2014 17:26 Jul 20, 2021 Jkt 253001 of $72 per hour) 6 to prepare trading, compliance, and other information regarding the fund’s operations to enable the board to make its determination, and takes internal compliance counsel of the fund 3 hours (at a rate of $373 per hour) 7 to review this information and present its recommendations to the board. Therefore, for each fund board that undertakes this determination process, Commission staff estimates it expends 13 hours 8 at a cost of $10,625.9 As a result, Commission staff estimates that the total time spent for all funds on this process is 468 hours at a cost of $382,500.10 Rule 22c–2(a)(2) also requires a fund to enter into information-sharing agreements with each of its financial intermediaries. Commission staff understands that all currently registered funds have already entered into such agreements with their intermediaries. Funds enter into new relationships with intermediaries from time to time, however, which requires them to enter into new information sharing agreements. Commission staff understands that, in general, funds enter into information-sharing agreement when they initially establish a relationship with an intermediary, which is typically executed as an addendum to the distribution agreement. The Commission staff understands that most shareholder information agreements are entered into by the fund group (a group of funds with a common investment adviser), and estimates that there are currently 840 currently active fund groups.11 Commission staff estimates that, on average, each active fund group enters into relationships with 3 new intermediaries each year. Commission staff understands that funds generally use a standard information sharing agreement, drafted by the fund or an outside entity, and modifies that agreement according to the requirements of each intermediary. Commission staff estimates that negotiating the terms and entering into an information sharing agreement takes a total of 4 hours of attorney time (at a rate of $425 per hour) 12 per intermediary (representing 2.5 hours of fund attorney time and 1.5 hours of intermediary attorney time). Accordingly, Commission staff estimates that it takes 12 hours at a cost of $5,100 each year 13 to enter into new information sharing agreements, and all existing market participants incur a total of 10,080 hours at a cost of $4,284,000.14 In addition, newly created funds advised by new entrants (effectively new fund groups) must enter into information sharing agreements with all of their financial intermediaries. Commission staff estimates that there are 41 new fund groups that form each year that will have to enter into information sharing agreements with each of their intermediaries.15 Commission staff estimates that fund groups formed by new advisers typically have relationships with significantly fewer intermediaries than existing fund groups, and estimates that new fund groups will typically enter into 100 information sharing agreements with their intermediaries when they begin operations.16 As discussed previously, Commission staff estimates that it takes 4 hours of attorney time (at a rate of $425 per hour) 17 per intermediary to enter into information sharing agreements. Therefore, Commission staff 6 The $72 per hour figure for a compliance clerk is from SIFMA’s Office Salaries in the Securities Industry 2013, modified by Commission staff to account for an 1,800-hour work-year and inflation, and multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead. 7 The $373 per hour figure for internal compliance counsel is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1,800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. 8 This calculation is based on the following estimates: (2 hours of board time + 3 hours of internal compliance counsel time + 8 hours of compliance clerk time = 13 hours). 9 This calculation is based on the following estimates: ($8,930 ($4,465 board time × 2 hours = $8,930) + $576 ($72 compliance time × 8 hours = $576) + $1,119 ($373 attorney time × 3 hours = $1,119) = $10,625). 10 This calculation is based on the following estimates: (13 hours × 36 funds = 468 hours); ($10,625 × 36 funds = $382,500). 11 ICI, 2020 Investment Company Fact Book at Fig 2.12 (2020) (https://www.ici.org/research/stats/ factbook). 12 The $425 per hour figure for attorneys is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1,800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. 13 This estimate is based on the following calculations: (4 hours × 3 new intermediaries = 12 hours); (12 hours × $425 = $5,100). 14 This estimate is based on the following calculations: (12 hours × 840 fund groups = 10,080 hours); (10,080 hours × $425 = $4,284,000). 15 ICI, 2020 Investment Company Fact Book at Fig 2.12 (2020) (https://www.ici.org/research/stats/ factbook). 16 Commission staff understands that funds generally use a standard information sharing agreement, drafted by the fund or an outside entity, and then modifies that agreement according to the requirements of each intermediary. 17 The $425 per hour figure for an attorney is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1,800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 E:\FR\FM\21JYN1.SGM 21JYN1 Federal Register / Vol. 86, No. 137 / Wednesday, July 21, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES estimates that each newly formed fund group will incur 400 hours of attorney time at a cost of $170,000 18 and that all newly formed fund groups will incur a total of 16,400 hours at a cost of $6,970,000 to enter into information sharing agreements with their intermediaries.19 Rule 22c–2(a)(3) requires funds to maintain records of all informationsharing agreements for 6 years in an easily accessible place. Commission staff understands that most shareholder information agreements are stored at the fund group level and estimates that there are currently approximately 840 fund groups.20 Commission staff understands that information-sharing agreements are generally included as addendums to distribution agreements between funds and their intermediaries, and that these agreements would be stored as required by the rule as a matter of ordinary business practice. Therefore, Commission staff estimates that maintaining records of informationsharing agreements requires 10 minutes of time spent by a general clerk (at a rate of $64 per hour) 21 per fund, each year. Accordingly, Commission staff estimates that all funds will incur 140 hours at a cost of $8,960 22 in complying with the recordkeeping requirement of rule 22c–2(a)(3). Therefore, Commission staff estimates that to comply with the information sharing agreement requirements of rule 22c–2(a)(2) and (3), it requires a total of 26,620 hours at a cost of $11,262,960.23 The Commission staff estimates that on average, each fund group requests shareholder information once a week, and gives instructions regarding the restriction of shareholder trades every day, for a total of 417 responses related to information sharing systems per fund group each year, and a total 350,280 responses for all fund groups 18 This estimate is based on the following calculations: (4 hours × 100 intermediaries = 400 hours); (400 hours × $425 = $170,000). 19 This estimate is based on the following calculations: (41 fund groups × 400 hours = 16,400 hours) ($425 × 16,400 = 6,970,000). 20 ICI, 2020 Investment Company Fact Book at Fig 2.12 (2020) (https://www.ici.org/research/stats/ factbook). 21 The $64 per hour figure for a general clerk is derived from SIFMA’s Office Salaries in the Securities Industry 2013 modified 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. 22 This estimate is based on the following calculations: (10 minutes × 840 fund groups = 8,400 minutes); (8,400 minutes/60 = 140 hours); (140 hours × $64 = $8,960). 23 This estimate is based on the following calculations: (10,080 hours + 16,400 hours + 140 hours = 26,620 hours); ($4,284,000 + $6,970,000 + $8,960 = $11,262,960). VerDate Sep<11>2014 17:26 Jul 20, 2021 Jkt 253001 annually.24 In addition, as described above, the staff estimates that funds make 36 responses related to board determinations, 2,520 responses related to new intermediaries of existing fund groups, 4,100 responses related to new fund group information sharing agreements, and 840 responses related to recordkeeping, for a total of 7,496 responses related to the other requirements of rule 22c–2. Therefore, the Commission staff estimates that the total number of responses is 357,776 (350,280 + 7,496 = 357,776). The Commission staff estimates that the total hour burden for rule 22c–2 is 27,088 hours at a cost of $11,645,460.25 Responses provided to the Commission will be accorded the same level of confidentiality accorded to other responses provided to the Commission in the context of its examination and oversight program. Responses provided in the context of the Commission’s examination and oversight program are generally kept confidential. Complying with the information collections of rule 22c–2 is mandatory for funds that redeem their shares within 7 days of purchase. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number. 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, C/O Cynthia Roscoe, 100 F Street NE, Washington, DC 20549; or send an email to: PRA_ Mailbox@sec.gov. Dated: July 15, 2021. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–15426 Filed 7–20–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–92418; File No. SR–ICEEU– 2021–010] Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Partial Amendment No. 1 and Designation of Longer Period for Commission Action on Proposed Rule Change Relating to the Clearing Rules, Clearing Procedures, Finance Procedures, Delivery Procedures, CDS Procedures, Membership Procedures, Complaint Resolution Procedures, and General Contract Terms July 15, 2021. I. Introduction On May 13, 2021, ICE Clear Europe Limited (‘‘ICE Clear Europe’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend its Clearing Rules, Clearing Procedures, Finance Procedures, Delivery Procedures, CDS Procedures, Membership Procedures, Complaint Resolution Procedures, and General Contract Terms to make various updates and enhancements. The proposed rule change was published for comment in the Federal Register on June 2, 2021.3 To date, the Commission has not received comments on the proposed rule change. On June 16, 2021, ICE Clear Europe filed Partial Amendment No. 1 to the proposed rule change. The Commission is publishing this notice to solicit comments on Partial Amendment No. 1 and to designate a longer period for action on the proposed rule change, as modified by Partial Amendment No. 1. II. Notice of Partial Amendment No. 1 and Solicitation of Comments On June 16, 2021, ICE Clear Europe filed Partial Amendment No. 1 to update Exhibit 5D, the Delivery 1 15 estimate is based on the following calculations: (52 + 365 = 417); (417 × 840 fund groups = 350,280). 25 This estimate is based on the following calculations: (468 hours (board determination) + 26,620 hours (information sharing agreements) = 27,088 total hours); ($382,500 (board determination) + $11,262,960 (information sharing agreements) = $11,645,460). PO 00000 24 This Frm 00077 Fmt 4703 Sfmt 4703 38521 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Proposed Rule Change Relating to the Clearing Rules, Clearing Procedures, Finance Procedures, Delivery Procedures, CDS Procedures, Membership Procedures, Complaint Resolution Procedures and General Contract Terms, Exchange Act Release No. 34–92020 (May 26, 2021); 86 FR 29612 (June 2, 2021) (SR–ICEEU–2021–010). 2 17 E:\FR\FM\21JYN1.SGM 21JYN1

Agencies

[Federal Register Volume 86, Number 137 (Wednesday, July 21, 2021)]
[Notices]
[Pages 38519-38521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15426]


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SECURITIES AND EXCHANGE COMMISSION

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


Proposed Collection; Comment Request; Extension: Rule 22c-2

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.) the Securities and Exchange Commission 
(the ``Commission'') 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 for extension and approval.
    Rule 22c-2 (17 CFR 270.22c-2) under the Investment Company Act of 
1940 (15 U.S.C. 80a) (the ``Investment Company Act'' or ``Act'') 
requires the board of directors (including a majority of independent 
directors) of most registered open-end investment companies (``funds'') 
to either approve a redemption fee of up to two percent or determine 
that imposition of a redemption fee is not necessary or appropriate for 
the fund. Rule 22c-2 also requires a fund to enter into written 
agreements with their financial intermediaries (such as broker-dealers 
and retirement plan administrators) under which the fund, upon request, 
can obtain certain shareholder identity and trading information from 
the intermediaries. The written agreement must also allow the fund to 
direct the intermediary to prohibit further purchases or exchanges by 
specific shareholders that the fund has identified as being engaged in 
transactions that violate the fund's market timing policies. These 
requirements enable funds to obtain the information that they need to 
monitor the frequency of short-term trading in omnibus accounts and 
enforce their market timing policies.
    The rule includes three ``collections of information'' within the 
meaning of the Paperwork Reduction Act of 1995 (``PRA'').\1\ First, the 
rule requires boards to either approve a redemption fee of up to two 
percent or determine that imposition of a redemption fee is not 
necessary or appropriate for the fund. Second, funds must enter into 
information sharing agreements with all of their ``financial 
intermediaries'' \2\ and maintain a copy of the written information 
sharing agreement with each intermediary in an easily

[[Page 38520]]

accessible place for six years. Third, pursuant to the information 
sharing agreements, funds must have systems that enable them to request 
frequent trading information upon demand from their intermediaries, and 
to enforce any restrictions on trading required by funds under the 
rule.
---------------------------------------------------------------------------

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

    The collections of information created by rule 22c-2 are necessary 
for funds to effectively assess redemption fees, enforce their policies 
in frequent trading, and monitor short-term trading, including market 
timing, in omnibus accounts. These collections of information are 
mandatory for funds that redeem shares within seven days of purchase. 
The collections of information also are necessary to allow Commission 
staff to fulfill its examination and oversight responsibilities.
    Rule 22c-2(a)(1) requires the board of directors of all registered 
open-end management investment companies and series thereof (except for 
money market funds, ETFs, or funds that affirmatively permit short-term 
trading of its securities) to approve a redemption fee for the fund, or 
instead make a determination that a redemption fee is either not 
necessary or appropriate for the fund. Commission staff understands 
that the boards of all funds currently in operation have undertaken 
this process for the funds they currently oversee, and the rule does 
not require boards to review this determination periodically once it 
has been made. Accordingly, we expect that only boards of newly 
registered funds or newly created series thereof would undertake this 
determination. Commission staff estimates that 36 funds (excluding 
money market funds and ETFs) are newly formed each year and would need 
to make this determination.\3\
---------------------------------------------------------------------------

    \3\ This estimate is based on the number of registrants filing 
initial Form N-1A or N-3 from 2017 to 2019. This estimate does not 
carve out money market funds, ETFs, or funds that affirmatively 
permit short-term trading of their securities, so this estimate 
corresponds to the outer limit of the number of registrants that 
would have to make this determination.
---------------------------------------------------------------------------

    Based on conversations with fund representatives,\4\ Commission 
staff estimates that it takes 2 hours of the board's time as a whole 
(at a rate of $4,465 per hour) \5\ to approve a redemption fee or make 
the required determination on behalf of all series of the fund. In 
addition, Commission staff estimates that it takes compliance personnel 
of the fund 8 hours (at a rate of $72 per hour) \6\ to prepare trading, 
compliance, and other information regarding the fund's operations to 
enable the board to make its determination, and takes internal 
compliance counsel of the fund 3 hours (at a rate of $373 per hour) \7\ 
to review this information and present its recommendations to the 
board. Therefore, for each fund board that undertakes this 
determination process, Commission staff estimates it expends 13 hours 
\8\ at a cost of $10,625.\9\ As a result, Commission staff estimates 
that the total time spent for all funds on this process is 468 hours at 
a cost of $382,500.\10\
---------------------------------------------------------------------------

    \4\ Unless otherwise stated, estimates throughout this analysis 
are derived from a survey of funds and conversations with fund 
representatives.
    \5\ The estimate of $4,465 per hour for the board's time as a 
whole is based on conversations with representatives of funds and 
their legal counsel.
    \6\ The $72 per hour figure for a compliance clerk is from 
SIFMA's Office Salaries in the Securities Industry 2013, modified by 
Commission staff to account for an 1,800-hour work-year and 
inflation, and multiplied by 2.93 to account for bonuses, firm size, 
employee benefits and overhead.
    \7\ The $373 per hour figure for internal compliance counsel is 
from SIFMA's Management & Professional Earnings in the Securities 
Industry 2013, modified by Commission staff to account for an 1,800-
hour work-year and inflation, and multiplied by 5.35 to account for 
bonuses, firm size, employee benefits and overhead.
    \8\ This calculation is based on the following estimates: (2 
hours of board time + 3 hours of internal compliance counsel time + 
8 hours of compliance clerk time = 13 hours).
    \9\ This calculation is based on the following estimates: 
($8,930 ($4,465 board time x 2 hours = $8,930) + $576 ($72 
compliance time x 8 hours = $576) + $1,119 ($373 attorney time x 3 
hours = $1,119) = $10,625).
    \10\ This calculation is based on the following estimates: (13 
hours x 36 funds = 468 hours); ($10,625 x 36 funds = $382,500).
---------------------------------------------------------------------------

    Rule 22c-2(a)(2) also requires a fund to enter into information-
sharing agreements with each of its financial intermediaries. 
Commission staff understands that all currently registered funds have 
already entered into such agreements with their intermediaries. Funds 
enter into new relationships with intermediaries from time to time, 
however, which requires them to enter into new information sharing 
agreements. Commission staff understands that, in general, funds enter 
into information-sharing agreement when they initially establish a 
relationship with an intermediary, which is typically executed as an 
addendum to the distribution agreement. The Commission staff 
understands that most shareholder information agreements are entered 
into by the fund group (a group of funds with a common investment 
adviser), and estimates that there are currently 840 currently active 
fund groups.\11\ Commission staff estimates that, on average, each 
active fund group enters into relationships with 3 new intermediaries 
each year. Commission staff understands that funds generally use a 
standard information sharing agreement, drafted by the fund or an 
outside entity, and modifies that agreement according to the 
requirements of each intermediary. Commission staff estimates that 
negotiating the terms and entering into an information sharing 
agreement takes a total of 4 hours of attorney time (at a rate of $425 
per hour) \12\ per intermediary (representing 2.5 hours of fund 
attorney time and 1.5 hours of intermediary attorney time). 
Accordingly, Commission staff estimates that it takes 12 hours at a 
cost of $5,100 each year \13\ to enter into new information sharing 
agreements, and all existing market participants incur a total of 
10,080 hours at a cost of $4,284,000.\14\
---------------------------------------------------------------------------

    \11\ ICI, 2020 Investment Company Fact Book at Fig 2.12 (2020) 
(https://www.ici.org/research/stats/factbook).
    \12\ The $425 per hour figure for attorneys is from SIFMA's 
Management & Professional Earnings in the Securities Industry 2013, 
modified by Commission staff to account for an 1,800-hour work-year 
and inflation, and multiplied by 5.35 to account for bonuses, firm 
size, employee benefits and overhead.
    \13\ This estimate is based on the following calculations: (4 
hours x 3 new intermediaries = 12 hours); (12 hours x $425 = 
$5,100).
    \14\ This estimate is based on the following calculations: (12 
hours x 840 fund groups = 10,080 hours); (10,080 hours x $425 = 
$4,284,000).
---------------------------------------------------------------------------

    In addition, newly created funds advised by new entrants 
(effectively new fund groups) must enter into information sharing 
agreements with all of their financial intermediaries. Commission staff 
estimates that there are 41 new fund groups that form each year that 
will have to enter into information sharing agreements with each of 
their intermediaries.\15\ Commission staff estimates that fund groups 
formed by new advisers typically have relationships with significantly 
fewer intermediaries than existing fund groups, and estimates that new 
fund groups will typically enter into 100 information sharing 
agreements with their intermediaries when they begin operations.\16\ As 
discussed previously, Commission staff estimates that it takes 4 hours 
of attorney time (at a rate of $425 per hour) \17\ per intermediary to 
enter into information sharing agreements. Therefore, Commission staff

[[Page 38521]]

estimates that each newly formed fund group will incur 400 hours of 
attorney time at a cost of $170,000 \18\ and that all newly formed fund 
groups will incur a total of 16,400 hours at a cost of $6,970,000 to 
enter into information sharing agreements with their 
intermediaries.\19\
---------------------------------------------------------------------------

    \15\ ICI, 2020 Investment Company Fact Book at Fig 2.12 (2020) 
(https://www.ici.org/research/stats/factbook).
    \16\ Commission staff understands that funds generally use a 
standard information sharing agreement, drafted by the fund or an 
outside entity, and then modifies that agreement according to the 
requirements of each intermediary.
    \17\ The $425 per hour figure for an attorney is from SIFMA's 
Management & Professional Earnings in the Securities Industry 2013, 
modified by Commission staff to account for an 1,800-hour work-year 
and inflation, and multiplied by 5.35 to account for bonuses, firm 
size, employee benefits and overhead.
    \18\ This estimate is based on the following calculations: (4 
hours x 100 intermediaries = 400 hours); (400 hours x $425 = 
$170,000).
    \19\ This estimate is based on the following calculations: (41 
fund groups x 400 hours = 16,400 hours) ($425 x 16,400 = 6,970,000).
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    Rule 22c-2(a)(3) requires funds to maintain records of all 
information-sharing agreements for 6 years in an easily accessible 
place. Commission staff understands that most shareholder information 
agreements are stored at the fund group level and estimates that there 
are currently approximately 840 fund groups.\20\ Commission staff 
understands that information-sharing agreements are generally included 
as addendums to distribution agreements between funds and their 
intermediaries, and that these agreements would be stored as required 
by the rule as a matter of ordinary business practice. Therefore, 
Commission staff estimates that maintaining records of information-
sharing agreements requires 10 minutes of time spent by a general clerk 
(at a rate of $64 per hour) \21\ per fund, each year. Accordingly, 
Commission staff estimates that all funds will incur 140 hours at a 
cost of $8,960 \22\ in complying with the recordkeeping requirement of 
rule 22c-2(a)(3).
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    \20\ ICI, 2020 Investment Company Fact Book at Fig 2.12 (2020) 
(https://www.ici.org/research/stats/factbook).
    \21\ The $64 per hour figure for a general clerk is derived from 
SIFMA's Office Salaries in the Securities Industry 2013 modified 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.
    \22\ This estimate is based on the following calculations: (10 
minutes x 840 fund groups = 8,400 minutes); (8,400 minutes/60 = 140 
hours); (140 hours x $64 = $8,960).
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    Therefore, Commission staff estimates that to comply with the 
information sharing agreement requirements of rule 22c-2(a)(2) and (3), 
it requires a total of 26,620 hours at a cost of $11,262,960.\23\
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    \23\ This estimate is based on the following calculations: 
(10,080 hours + 16,400 hours + 140 hours = 26,620 hours); 
($4,284,000 + $6,970,000 + $8,960 = $11,262,960).
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    The Commission staff estimates that on average, each fund group 
requests shareholder information once a week, and gives instructions 
regarding the restriction of shareholder trades every day, for a total 
of 417 responses related to information sharing systems per fund group 
each year, and a total 350,280 responses for all fund groups 
annually.\24\ In addition, as described above, the staff estimates that 
funds make 36 responses related to board determinations, 2,520 
responses related to new intermediaries of existing fund groups, 4,100 
responses related to new fund group information sharing agreements, and 
840 responses related to recordkeeping, for a total of 7,496 responses 
related to the other requirements of rule 22c-2. Therefore, the 
Commission staff estimates that the total number of responses is 
357,776 (350,280 + 7,496 = 357,776).
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    \24\ This estimate is based on the following calculations: (52 + 
365 = 417); (417 x 840 fund groups = 350,280).
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    The Commission staff estimates that the total hour burden for rule 
22c-2 is 27,088 hours at a cost of $11,645,460.\25\ Responses provided 
to the Commission will be accorded the same level of confidentiality 
accorded to other responses provided to the Commission in the context 
of its examination and oversight program. Responses provided in the 
context of the Commission's examination and oversight program are 
generally kept confidential. Complying with the information collections 
of rule 22c-2 is mandatory for funds that redeem their shares within 7 
days of purchase. An agency may not conduct or sponsor, and a person is 
not required to respond to a collection of information unless it 
displays a currently valid control number.
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    \25\ This estimate is based on the following calculations: (468 
hours (board determination) + 26,620 hours (information sharing 
agreements) = 27,088 total hours); ($382,500 (board determination) + 
$11,262,960 (information sharing agreements) = $11,645,460).
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    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, C/O Cynthia 
Roscoe, 100 F Street NE, Washington, DC 20549; or send an email to: 
[email protected].

    Dated: July 15, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15426 Filed 7-20-21; 8:45 am]
BILLING CODE 8011-01-P