Proposed Collection; Comment Request, 71935-71936 [2021-27497]
Download as PDF
<![CDATA[
khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 86, No. 241 / Monday, December 20, 2021 / Notices
Rule 206(4)–3 (17 CFR 275.206(4)–3)
under the Investment Advisers Act of
1940, which is entitled ‘‘Cash Payments
for Client Solicitations,’’ provides
restrictions on cash payments for client
solicitations. The rule requires that an
adviser pay all solicitors’ fees pursuant
to a written agreement. When an adviser
will provide only impersonal advisory
services to the prospective client, the
rule imposes no disclosure
requirements. When the solicitor is
affiliated with the adviser and the
adviser will provide individualized
advisory services to the prospective
client, the solicitor must, at the time of
the solicitation or referral, indicate to
the prospective client that he is
affiliated with the adviser. When the
solicitor is not affiliated with the
adviser and the adviser will provide
individualized advisory services to the
prospective client, the solicitor must, at
the time of the solicitation or referral,
provide the prospective client with a
copy of the adviser’s brochure and a
disclosure document containing
information specified in rule 206(4)–3.
Amendments to rule 206(4)–3,
adopted in 2010 in connection with rule
206(4)–5, specify that solicitation
activities involving a government entity,
as defined in rule 206(4)–5, are subject
to the additional limitations of rule
206(4)–5. In December 2020, the
Commission adopted a single marketing
rule which merged certain existing
provisions of rule 206(4)–3 into
amendments to rule 206(4)–1. In light of
these 2020 amendments, the
Commission has rescinded rule 206(4)–
3, effective November 2, 2022.
Notwithstanding the rescission of rule
206(4)–3, the Office of Management and
Budget (the ‘‘OMB’’) has requested that
the Commission submit documents in
connection with the extension of rule
206(4)–3 for the period covering
February 28, 2022 to November 2, 2022,
the effective date of the discontinuance
of rule 206(4)–3.
To the extent that the OMB has
requested this collection of information,
the information rule 206(4)–3 requires is
necessary to inform advisory clients
about the nature of the solicitor’s
financial interest in the
recommendation so the prospective
clients may consider the solicitor’s
potential bias, and to protect clients
against solicitation activities being
carried out in a manner inconsistent
with the adviser’s fiduciary duty to
clients. Rule 206(4)–3 is applicable to
all Commission-registered investment
advisers. The Commission believes that
approximately 3,829 of these advisers
have cash referral fee arrangements. The
rule requires approximately 7.04 burden
VerDate Sep<11>2014
19:34 Dec 17, 2021
Jkt 256001
hours per year per adviser and results in
a total of approximately 26,956 total
burden hours (7.04 × 3,829) for all
advisers.
Please direct your written comments
within 60 days to David Bottom,
Director/Chief Information Officer,
Securities and Exchange Commission,
C/O John R. Pezzullo, 100 F Street NE,
Washington, DC 20549; or send an email
to: PRA_Mailbox@sec.gov.
Dated: December 1, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–27498 Filed 12–17–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–489, OMB Control No.
3235–0541]
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 606 of Regulation NMS
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (‘‘PRA’’), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 606 of Regulation
NMS (‘‘Rule 606’’) (17 CFR 242.606),
under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.). The
Commission plans to submit this
existing collection of information to the
Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 606 (formerly known as Rule
11Ac1–6) requires disclosure by brokerdealers of (1) pursuant to Rule 606(a)(1),
a quarterly aggregated public report on
the handling of orders in NMS stocks
that are submitted on a held basis and
orders in NMS securities that are option
contracts with a market value less than
$50,000; (2) pursuant to Rule 606(b)(1),
a report, upon request of a customer, on
the routing of that customer’s orders in
NMS stocks that are submitted on a held
basis, orders in NMS stocks that are
submitted on a not held basis and do
not qualify for two de minimis
exceptions, and orders in NMS
securities that are option contracts,
containing certain information on the
broker-dealer’s routing of such orders
for that customer for the prior six
months; and (3) pursuant to Rule
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
71935
606(b)(3), a report, upon request of a
customer that places with the brokerdealer, directly or indirectly, NMS stock
orders of any size that are submitted on
a not held basis (subject to two de
minimis exceptions), containing certain
information on the broker-dealer’s
handling of such orders for that
customer for the prior six months.
The total annual time burden
associated with Rule 606 is
approximately 190,240 hours per year
and the total annual cost burden
associated with Rule 606 is
approximately $1,300,000 per year,
calculated as described below.
The Commission estimates that out of
the currently 3,585 broker-dealers that
are subject to the collection of
information obligations of Rule
606(a)(1), clearing brokers bear a
substantial portion of the burden of
complying with the reporting and
recordkeeping requirements of Rule 606
on behalf of small to mid-sized
introducing firms. There currently are
approximately 186 clearing brokers. In
addition, there are approximately 78
introducing brokers that receive funds
or securities from their customers.
Because at least some of these firms also
may have greater involvement in
determining where customer orders are
routed for execution, they have been
included, along with clearing brokers, in
estimating the total burden of Rule
606(a)(1).
The Commission staff estimates that
each firm significantly involved in order
routing practices incurs an average
burden of 40 hours to prepare and
disseminate the quarterly report
required by Rule 606(a)(1), or a burden
of 160 hours per year. With an estimated
264 1 broker-dealers significantly
involved in order routing practices, the
total industry-wide time burden per
year to comply with the quarterly
reporting requirement in Rule 606 is
estimated to be 42,240 hours (160 ×
264). Additionally, for each of the 264
broker-dealers subject to disclosure
requirements of Rule 606(a)(1), the
Commission estimates the annual
burden under Rule 606(a)(1)(iv) to
monitor payment for order flow and
profit-sharing relationships and
potential self-regulatory organization
rule changes that could impact their
order routing decisions and incorporate
any new information into their reports
to be 10 hours and the annual burden
for each broker-dealer to describe and
update any terms of payment for order
flow arrangements and profit-sharing
relationships with a Specified Venue
1 186 clearing brokers + 78 introducing brokers =
264.
E:\FR\FM\20DEN1.SGM
20DEN1
khammond on DSKJM1Z7X2PROD with NOTICES
71936
Federal Register / Vol. 86, No. 241 / Monday, December 20, 2021 / Notices
that may influence their order routing
decisions to be 15 hours, for a total
annual time burden of approximately
6,600 hours (25 × 264). Therefore, the
estimated total annual time burden to
comply with Rule 606(a)(1) is 48,840
hours (42,240 + 6,600).
Clearing brokers generally bear the
burden of responding to individual
customer requests under Rule 606(b)(1)
for order handling information. The
Commission staff estimates that an
average clearing broker incurs an annual
burden of 400 hours (2000 responses ×
0.2 hours/response) to prepare,
disseminate, and retain responses to
customers required by Rule 606(b)(1).
With an estimated 186 clearing brokers
subject to Rule 606(b)(1), the total
industry-wide time burden per year to
comply with the customer response
requirement in Rule 606(b)(1) is
estimated to be 74,400 hours (186 ×
400).
The Commission estimates that
approximately 200 broker-dealers are
involved in routing orders subject to the
disclosure requirements of Rule
606(b)(3). The Commission believes that
some such broker-dealers will respond
to requests for customer-specific reports
in house, while others will engage a
third-party service provider to do so.
The Commission estimates that
approximately 135 broker-dealers will
respond in-house to individual
customer requests for information on
order handling under Rule 606(b)(3),
and that for each, the individual annual
time burden will be 400 hours (200
responses × 2 hours/response), with a
total annual time burden of 54,000
hours (400 × 135).
The Commission estimates that
approximately 65 broker-dealers will
engage a third party to respond to
individual customer requests, and that
for each, the individual annual time
burden will be 200 hours (200 responses
× 1 hour/response), with a total annual
time burden of 13,000 hours (200 × 65).
The total annual cost burden associated
with engaging such third parties is
approximately $1,300,000 (65 × 200
annual requests × $100 per request to
engage a third-party service provider).
Therefore, the estimated total annual
burden to comply with Rule 606(b)(3) is
67,000 hours (54,000 + 13,000) and
$1,300,000.
The total annual time burden
associated with Rule 606 is thus
approximately 190,240 hours per year
(48,840 + 74,400 + 67,000) and the total
annual cost burden associated with Rule
606 is approximately $1,300,000 per
year.
Written comments are invited on: (a)
Whether the proposed collection of
VerDate Sep<11>2014
19:34 Dec 17, 2021
Jkt 256001
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information will have practical utility;
(b) the accuracy of the Commission’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.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number
Please direct your written comments
to David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
Dated: December 15, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–27497 Filed 12–17–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93769; File No. SR–FINRA–
2021–032]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend FINRA Rule
2251 (Processing and Forwarding of
Proxy and Other Issuer-Related
Materials)
December 14, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
7, 2021, the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by FINRA. FINRA
has designated the proposed rule change
as constituting a ‘‘non-controversial’’
rule change under paragraph (f)(6) of
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00071
Fmt 4703
Sfmt 4703
Rule 19b–4 under the Act,3 which
renders the proposal effective upon
receipt of this filing by the Commission.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend the
provisions of FINRA Rule 2251
(Processing and Forwarding of Proxy
and Other Issuer-Related Materials)
relating to seeking reimbursement from
issuers for forwarding proxy and other
materials and to make minor
conforming revisions.
The text of the proposed rule change
is available on FINRA’s website at
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. FINRA 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
FINRA Rule 2251 requires FINRA
members to transmit proxy materials
and other communications to beneficial
owners of securities and limits the
circumstances in which FINRA
members may vote proxies without
instructions from those beneficial
owners.4 The Supplementary Material
under FINRA Rule 2251 (FINRA Rule
2251.01) sets forth the rate
reimbursement provisions pursuant to
which FINRA members are entitled to
3 17
CFR 240.19b–4(f)(6).
Rule 2251 was adopted as a
consolidation of former NASD Rule 2260 and IM–
2260 as part of FINRA’s rulebook consolidation
process. See Securities Exchange Act Release No.
61052 (November 23, 2009), 74 FR 62857
(December 1, 2009) (Order Granting Approval of
Proposed Rule Change to Adopt FINRA Rule 2251
(Forwarding of Proxy and Other Issuer-Related
Materials) in the Consolidated FINRA Rulebook;
File No. SR–FINRA–2009–066).
4 FINRA
E:\FR\FM\20DEN1.SGM
20DEN1
]]>Agencies
[Federal Register Volume 86, Number 241 (Monday, December 20, 2021)]
[Notices]
[Pages 71935-71936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-27497]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-489, OMB Control No. 3235-0541]
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 606 of Regulation NMS
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.) (``PRA''), the Securities and
Exchange Commission (``Commission'') is soliciting comments on the
existing collection of information provided for in Rule 606 of
Regulation NMS (``Rule 606'') (17 CFR 242.606), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.). The Commission plans to
submit this existing collection of information to the Office of
Management and Budget (``OMB'') for extension and approval.
Rule 606 (formerly known as Rule 11Ac1-6) requires disclosure by
broker-dealers of (1) pursuant to Rule 606(a)(1), a quarterly
aggregated public report on the handling of orders in NMS stocks that
are submitted on a held basis and orders in NMS securities that are
option contracts with a market value less than $50,000; (2) pursuant to
Rule 606(b)(1), a report, upon request of a customer, on the routing of
that customer's orders in NMS stocks that are submitted on a held
basis, orders in NMS stocks that are submitted on a not held basis and
do not qualify for two de minimis exceptions, and orders in NMS
securities that are option contracts, containing certain information on
the broker-dealer's routing of such orders for that customer for the
prior six months; and (3) pursuant to Rule 606(b)(3), a report, upon
request of a customer that places with the broker-dealer, directly or
indirectly, NMS stock orders of any size that are submitted on a not
held basis (subject to two de minimis exceptions), containing certain
information on the broker-dealer's handling of such orders for that
customer for the prior six months.
The total annual time burden associated with Rule 606 is
approximately 190,240 hours per year and the total annual cost burden
associated with Rule 606 is approximately $1,300,000 per year,
calculated as described below.
The Commission estimates that out of the currently 3,585 broker-
dealers that are subject to the collection of information obligations
of Rule 606(a)(1), clearing brokers bear a substantial portion of the
burden of complying with the reporting and recordkeeping requirements
of Rule 606 on behalf of small to mid-sized introducing firms. There
currently are approximately 186 clearing brokers. In addition, there
are approximately 78 introducing brokers that receive funds or
securities from their customers. Because at least some of these firms
also may have greater involvement in determining where customer orders
are routed for execution, they have been included, along with clearing
brokers, in estimating the total burden of Rule 606(a)(1).
The Commission staff estimates that each firm significantly
involved in order routing practices incurs an average burden of 40
hours to prepare and disseminate the quarterly report required by Rule
606(a)(1), or a burden of 160 hours per year. With an estimated 264 \1\
broker-dealers significantly involved in order routing practices, the
total industry-wide time burden per year to comply with the quarterly
reporting requirement in Rule 606 is estimated to be 42,240 hours (160
x 264). Additionally, for each of the 264 broker-dealers subject to
disclosure requirements of Rule 606(a)(1), the Commission estimates the
annual burden under Rule 606(a)(1)(iv) to monitor payment for order
flow and profit-sharing relationships and potential self-regulatory
organization rule changes that could impact their order routing
decisions and incorporate any new information into their reports to be
10 hours and the annual burden for each broker-dealer to describe and
update any terms of payment for order flow arrangements and profit-
sharing relationships with a Specified Venue
[[Page 71936]]
that may influence their order routing decisions to be 15 hours, for a
total annual time burden of approximately 6,600 hours (25 x 264).
Therefore, the estimated total annual time burden to comply with Rule
606(a)(1) is 48,840 hours (42,240 + 6,600).
---------------------------------------------------------------------------
\1\ 186 clearing brokers + 78 introducing brokers = 264.
---------------------------------------------------------------------------
Clearing brokers generally bear the burden of responding to
individual customer requests under Rule 606(b)(1) for order handling
information. The Commission staff estimates that an average clearing
broker incurs an annual burden of 400 hours (2000 responses x 0.2
hours/response) to prepare, disseminate, and retain responses to
customers required by Rule 606(b)(1). With an estimated 186 clearing
brokers subject to Rule 606(b)(1), the total industry-wide time burden
per year to comply with the customer response requirement in Rule
606(b)(1) is estimated to be 74,400 hours (186 x 400).
The Commission estimates that approximately 200 broker-dealers are
involved in routing orders subject to the disclosure requirements of
Rule 606(b)(3). The Commission believes that some such broker-dealers
will respond to requests for customer-specific reports in house, while
others will engage a third-party service provider to do so. The
Commission estimates that approximately 135 broker-dealers will respond
in-house to individual customer requests for information on order
handling under Rule 606(b)(3), and that for each, the individual annual
time burden will be 400 hours (200 responses x 2 hours/response), with
a total annual time burden of 54,000 hours (400 x 135).
The Commission estimates that approximately 65 broker-dealers will
engage a third party to respond to individual customer requests, and
that for each, the individual annual time burden will be 200 hours (200
responses x 1 hour/response), with a total annual time burden of 13,000
hours (200 x 65). The total annual cost burden associated with engaging
such third parties is approximately $1,300,000 (65 x 200 annual
requests x $100 per request to engage a third-party service provider).
Therefore, the estimated total annual burden to comply with Rule
606(b)(3) is 67,000 hours (54,000 + 13,000) and $1,300,000.
The total annual time burden associated with Rule 606 is thus
approximately 190,240 hours per year (48,840 + 74,400 + 67,000) and the
total annual cost burden associated with Rule 606 is approximately
$1,300,000 per year.
Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information will
have practical utility; (b) the accuracy of the Commission'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.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number
Please direct your written comments to David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington, DC 20549; or send an email to:
[email protected].
Dated: December 15, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-27497 Filed 12-17-21; 8:45 am]
BILLING CODE 8011-01-P
