Submission for OMB Review; Comment Request, 3132-3135 [2022-01058]
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Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices
estimates that the average number of
hours necessary to complete a
submission pursuant to Rule 19h–1(a)
notices is 80 hours (for a total annual
burden for all respondents in the
amount of 17,600 hours). With respect
to submissions for Rule 19h–1(a)(4)
notifications, and based upon past
submissions, the staff estimates that
respondents will make a total of 9
submissions per year. The staff
estimates that the average number of
hours necessary to complete a
submission pursuant to Rule 19h–1(a)(4)
notifications is 80 hours (for a total
annual burden for all respondents in the
amount of 14,400 hours). With respect
to submissions for Rule 19h–1(b), and
based upon past submissions, the staff
estimates that respondents will make a
total of 28 submissions per year. The
staff estimates that the average number
of hours necessary to complete a
submission pursuant to Rule 19h–1(b) is
13 hours (for a total annual burden for
all respondents in the amount of 7,280
hours). With respect to submissions for
Rule 19h–1(d), and based upon past
submissions, the staff estimates that
respondents will make a total of 5
submissions per year. The staff
estimates that the average number of
hours necessary to complete a
submission pursuant to Rule 19h–1(d) is
80 hours (for a total annual burden for
all respondents in the amount of 8,000
hours). The aggregate annual burden for
all respondents is thus approximately
47,280 hours (17,600 +14,400 + 7,280 +
8,000).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility and clarity
of the information to be collected; and
(d) ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
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Pezzullo, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: January 14, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–01059 Filed 1–19–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–653, OMB Control No.
3235–0703]
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Regulation SCI, Form SCI
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Regulation Systems Compliance and
Integrity (‘‘Regulation SCI’’) (17 CFR
242.1000–1007) and Form SCI (17 CFR
249.1900) under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’)
(15 U.S.C. 78a et seq.).
Regulation SCI requires certain key
market participants to, among other
things: (1) Have comprehensive policies
and procedures in place to help ensure
the robustness and resiliency of their
technological systems, and also that
their technological systems operate in
compliance with the federal securities
laws and with their own rules; and (2)
provide certain notices and reports to
the Commission to improve
Commission oversight of securities
market infrastructure.
Regulation SCI advances the goals of
the national market system by
enhancing the capacity, integrity,
resiliency, availability, and security of
the automated systems of entities
important to the functioning of the U.S.
securities markets, as well as reinforcing
the requirement that such systems
operate in compliance with the
Exchange Act and rules and regulations
thereunder, thus strengthening the
infrastructure of the U.S. securities
markets and improving its resilience
when technological issues arise. In this
respect, Regulation SCI establishes an
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updated and formalized regulatory
framework, thereby helping to ensure
more effective Commission oversight of
such systems.
Respondents consist of national
securities exchanges and associations,
registered clearing agencies, exempt
clearing agencies, plan processors, and
alternative trading systems. There are
currently 47 respondents, and the
Commission staff estimates that, on
average, 2 new respondents may become
SCI entities each year, 1 of which would
be a self-regulatory organization
(‘‘SRO’’). Accordingly, Commission staff
estimates that over the next three years
there will be an average of 49
respondents per year.
In addition, in December 2020, the
Commission adopted amendments to
Regulation SCI in connection with
updates to the national market system
for the collection, consolidation, and
dissemination of information with
respect to quotations for and
transactions in national market system
(‘‘NMS’’) stocks (‘‘Infrastructure
Amendments’’). Specifically, the
Commission adopted a definition of
‘‘SCI competing consolidator’’ that will
subject competing consolidators to
Regulation SCI, after a transition period,
if they are above a specified
consolidated market data gross revenue
threshold.1 The Infrastructure
Amendments increased the number of
respondents to the collections of
information in Regulation SCI, and the
Commission estimates that seven
competing consolidators will meet this
definition and be subject to the
requirements of Regulation SCI.2
Rule 1001(a) requires each SCI entity
to establish, maintain, and enforce
written policies and procedures
reasonably designed to ensure that its
SCI systems and, for purposes of
security standards, indirect SCI systems,
have levels of capacity, integrity,
resiliency, availability, and security,
adequate to maintain the SCI entity’s
operational capability and promote the
maintenance of fair and orderly markets.
The Commission staff estimates that the
total annual initial recordkeeping
burden for 7 new respondents will be
4,511 hours, and the annual ongoing
recordkeeping burden for all 54
respondents will be, on average, 12,528
hours. The Commission staff estimates
1 See Securities Exchange Act Release No. 34–
90610 (December 9, 2020), 86 FR 18596 (April 9,
2021) (File No. S7–03–20) (‘‘Infrastructure Adopting
Release’’).
2 Some of these respondents were estimated to
incur no, or only part of, the estimated initial
burdens because they were already subject to
Regulation SCI (i.e., as plan processors, SROs or
affiliates of SROs).
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that the 7 new respondents would incur,
on average, an annual initial internal
cost of compliance of $1,513,382, as
well as outside legal or consulting costs
of $305,500. In addition, all respondents
will incur, on average, an estimated
ongoing annual internal cost of
compliance of $4,205,412.
Rule 1001(b) requires each SCI entity
to establish, maintain, and enforce
written policies and procedures
reasonably designed to ensure that its
SCI systems operate in a manner that
complies with the Exchange Act and the
rules and regulations thereunder and
the entity’s rules and governing
documents, as applicable. The
Commission staff estimates that the total
annual initial recordkeeping burden for
7 new respondents will be 1,755 hours,
and the annual ongoing recordkeeping
burden for all respondents will be, on
average, 8,010 hours. The Commission
staff estimates that the 7 new
respondents would incur an initial
internal cost of compliance of $660,270,
as well as outside legal or consulting
costs of $175,500. In addition, all
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $2,539,890.
Rule 1001(c) requires each SCI entity
to establish, maintain, and enforce
reasonably designed written policies
and procedures that include the criteria
for identifying responsible SCI
personnel, the designation and
documentation of responsible SCI
personnel, and escalation procedures to
quickly inform responsible SCI
personnel of potential SCI events. The
Commission staff estimates that the total
annual initial recordkeeping burden for
7 new respondents will be 741 hours,
and the annual ongoing recordkeeping
burden for all respondents will be, on
average, 2,106. The Commission staff
estimates that the 7 new respondents
would incur an initial internal cost of
compliance of $276,432, and all
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $839,592.
Rule 1004 requires each SCI entity to
establish standards for the designation
of certain members or participants for
BC/DR plan testing, to designate
members or participants in accordance
with these standards, to require
participation by designated members or
participants in such testing at least
annually, and to coordinate such testing
on an industry- or sector-wide basis
with other SCI entities. The Commission
staff estimates that the total annual
initial recordkeeping burden for 9 new
respondents will be 2,700 hours, and
the annual ongoing recordkeeping
burden for all respondents that are not
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plan processors will be, on average,
7,290 hours. The Commission staff
estimates that the 7 new respondents
would incur an initial internal cost of
compliance of $804,735. In addition, all
respondents that are not plan processors
will incur, on average, an estimated
ongoing annual internal cost of
compliance of $1,939,950. In addition,
the Commission staff estimates that the
2 plan processor respondents will incur
an estimated ongoing annual cost of
$108,000 for outside legal services
($54,000 per plan processor respondent
× 2 respondents).
Rule 1002(b)(1) requires each SCI
entity, upon any responsible SCI
personnel having a reasonable basis to
conclude that an SCI event has
occurred, to notify the Commission
immediately. The Commission staff
estimates that the total annual ongoing
burden for all 54 respondents will be,
on average, 432 hours. The Commission
staff estimates that respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$133,030.
Rule 1002(b)(2) requires each SCI
entity, within 24 hours of any
responsible SCI personnel having a
reasonable basis to conclude that the
SCI event has occurred, to submit a
written notification to the Commission
pertaining to the SCI event on a good
faith, best efforts basis. These
notifications are required to be
submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 54
respondents will be, on average, 6,480
hours. The Commission staff estimates
that respondents will incur, on average,
an estimated ongoing annual internal
cost of compliance of $2,134,890.
Rule 1002(b)(3) requires each SCI
entity to provide updates to the
Commission pertaining to an SCI event
on a regular basis, or at such frequency
as reasonably requested by a
representative of the Commission, until
the SCI event is resolved and the SCI
entity’s investigation of the SCI event is
closed. The Commission staff estimates
that the total annual ongoing burden for
all 54 respondents will be, on average,
567 hours. The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$177,106.50.
Rule 1002(b)(4) requires each SCI
entity to submit written interim reports,
as necessary, and a written final report
regarding an SCI event to the
Commission. These reports are required
to be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 54
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respondents will be, on average, 9,450
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$3,297,510.
Rule 1002(b)(5) requires each SCI
entity to submit to the Commission
quarterly reports containing a summary
description of any systems disruption or
systems intrusion that has had, or the
SCI entity reasonably estimates would
have, no or a de minimis impact on the
SCI entity’s operations or on market
participants. These reports are required
to be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 54
respondents will be, on average, 8,640
hours. The Commission staff estimates
that respondents will incur, on average,
an estimated ongoing annual internal
cost of compliance of $2,919,348.
In addition, the Commission staff
estimates that all 54 respondents will
incur, on average, annual costs of
$313,200 for outside legal advice in
preparation of certain notifications
required by Rule 1002(b).
Rule 1002(c)(1)(i) requires each SCI
entity, promptly after any responsible
SCI personnel has a reasonable basis to
conclude that an SCI event (other than
a systems intrusion) has occurred, to
disseminate certain information to its
members or participants. The
Commission staff estimates that the total
annual ongoing burden for all 54
respondents will be, on average, 1,134
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$741,557.50.
Rule 1002(c)(1)(ii) requires each SCI
entity, when known, to promptly
disseminate additional information
about an SCI event (other than a systems
intrusion) to its members or
participants. Rule 1002(c)(1)(iii)
requires each SCI entity to provide to its
members or participants regular updates
of any information required to be
disseminated under Rules 1002(c)(1)(i)
and (ii) until the SCI event is resolved.
The Commission staff estimates that the
total annual ongoing burden for all 54
respondents will be, on average, 6,318
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$2,496,096.
Rule 1002(c)(2) requires each SCI
entity to disseminate certain
information regarding a systems
intrusion to its members or participants,
and provides an exception when the SCI
entity determines that dissemination of
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such information would likely
compromise the security of its SCI
systems or indirect SCI systems, or an
investigation of the systems intrusion,
and documents the reasons for such
determination. The Commission staff
estimates that the total annual ongoing
burden for all 54 respondents will be,
on average, 540 hours. The Commission
staff estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$212,827.25.
In addition, the Commission staff
estimates that all 54 respondents will
incur, on average, annual costs of
$179,280 for outside legal advice in
preparation of certain notifications
required by Rule 1002(c).
Rule 1003(a)(1) requires each SCI
entity to submit to the Commission
quarterly reports describing completed,
ongoing, and planned material changes
to its SCI systems and security of
indirect SCI systems during the prior,
current, and subsequent calendar
quarters. These reports are required to
be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 54
respondents will be, on average, 27,000
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$8,063,820.
Rule 1003(a)(2) requires each SCI
entity to promptly submit a
supplemental report notifying the
Commission of a material error in or
material omission from a report
previously submitted under Rule
1003(a)(1). These reports are required to
be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 54
respondents will be, on average, 810
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of $256,716.
Rule 1003(b)(1) requires each SCI
entity to conduct an SCI review of its
compliance with Regulation SCI not less
than once each calendar year, with an
exception for penetration test reviews,
which are required to be conducted not
less than once every three years. Rule
1003(b)(1) also provides an exception
for assessments of SCI systems directly
supporting market regulation or market
surveillance, which are required to be
conducted at a frequency based on the
risk assessment conducted as part of the
SCI review, but in no case less than
once every three years. Rule 1003(b)(2)
requires each SCI entity to submit a
report of the SCI review to senior
management no more than 30 calendar
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days after completion of the review. The
Commission staff estimates that the total
annual ongoing burden for all 54
respondents will be, on average, 37,260
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$11,934,810.
Rule 1003(b)(3) requires each SCI
entity to submit the report of the SCI
review to the Commission and to its
board of directors or the equivalent of
such board, together with any response
by senior management, within 60
calendar days after its submission to
senior management. These reports are
required to be submitted on Form SCI.
The Commission staff estimates that the
total annual ongoing burden for all 54
respondents will be, on average, 54
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of $22,248.
In addition, the Commission staff
estimates that all respondents will
incur, on average, annual costs of
$2,700,000 for outside legal advice in
preparation of certain notifications
required by Rule 1003(b).
Rule 1006 requires each SCI entity,
with a few exceptions, to file any
notification, review, description,
analysis, or report to the Commission
required under Regulation SCI
electronically on Form SCI through the
EFFS. An SCI entity will submit to the
Commission an EAUF to register each
individual at the SCI entity who will
access the EFFS system on behalf of the
SCI entity. The Commission staff
estimates that the total annual initial
burden for 7 new respondents will be
1.95 hours, and the annual ongoing
burden for all respondents will be, on
average, 8.1 hours. The Commission
staff estimates that the 7 new
respondents would incur an initial
internal cost of compliance of $806. In
addition, all 54 respondents will incur,
on average, an estimated ongoing annual
internal cost of compliance of $3,348, as
well as outside costs to obtain a digital
ID of $2,700.
Rule 1002(a) requires each SCI entity,
upon any responsible SCI personnel
having a reasonable basis to conclude
that an SCI event has occurred, to begin
to take appropriate corrective action.
The Commission staff estimates that the
total annual initial recordkeeping
burden for 7 new respondents will be
741 hours, and the annual ongoing
recordkeeping burden for all 54
respondents will be, on average, 2,106
hours. The Commission staff estimates
that the 7 new respondents would incur
an initial internal cost of compliance of
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$276,432. In addition, all 54
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $831,438.
Rule 1003(a)(1) requires each SCI
entity to establish reasonable written
criteria for identifying a change to its
SCI systems and the security of indirect
SCI systems as material. The
Commission staff estimates that the total
annual initial recordkeeping burden for
7 new respondents will be 741 hours,
and the annual ongoing recordkeeping
burden for all 54 respondents will be,
on average, 1,458 hours. The
Commission staff estimates that the 7
new respondents would incur an initial
internal cost of compliance of $276,432.
In addition, all 54 respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$622,944.
Regulation SCI also requires SCI
entities to identify certain types of
events and systems. The Commission
staff estimates that the total annual
initial recordkeeping burden for 7 new
respondents will be 1,287 hours, and
the annual ongoing recordkeeping
burden for all 54 respondents will be,
on average, 2,106 hours. The
Commission staff estimates that the 7
new respondents would incur an initial
internal cost of compliance of $453,089.
In addition, all 54 respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$831,438.
Rules 1005 and 1007 establish
recordkeeping requirements for SCI
entities other than SROs. The
Commission staff estimates that for 6
new respondents that are not SROs the
average annual initial burden would be
935 hours, and the annual ongoing
burden for all 18 respondents will be,
on average, 450 hours. The Commission
staff estimates that 6 new respondents
would incur an estimated internal
initial internal cost of compliance of
$64,515, as well as a one-time cost of
$5,400 to modify existing recordkeeping
systems. In addition, all 18 respondents
will incur, on average, an estimated
ongoing internal cost of compliance of
$31,050.
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.
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
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Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to (i) MBX.OMB.OIRA.SEC_desk_
officer@omb.eop.gov and (ii) David
Bottom, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o John Pezzullo, 100 F
Street NE, Washington, DC 20549, or by
sending an email to: PRA_Mailbox@
sec.gov.
Dated: January 14, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–01058 Filed 1–19–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–523, OMB Control No.
3235–0585]
lotter on DSK11XQN23PROD with NOTICES1
Submission for OMB Review;
Comment Request; Extension: Rule
206(4)–7
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for extension of the
previously approved collection of
information discussed below.
The title for the collection of
information is ‘‘Investment Advisers Act
rule 206(4)–7, 17 CFR Sec. 275.206(4)–
7, Compliance procedures and
practices.’’ This collection of
information is found at 17 CFR
275.206(4)–7, and is mandatory. Rule
206(4)–7 under the Investment Advisers
Act of 1940 (‘‘Advisers Act’’) requires
each investment adviser registered with
the Commission to (1) adopt and
implement written policies and
procedures reasonably designed to
prevent violations of the Advisers Act
and its rules, (2) review those
compliance policies and procedures
annually, and (3) designate a chief
compliance officer who is responsible
for administering the compliance
policies and procedures. The rule is
designed to protect investors by
fostering better compliance with the
securities laws. The collection of
information under rule 206(4)–7 is
necessary to help ensure that
investment advisers maintain
comprehensive internal programs that
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promote the advisers’ compliance with
the Advisers Act and its rules. The
Commission’s examination and
oversight staff may review the
information collected to assess
investment advisers’ compliance
programs. Responses provided to the
Commission pursuant to the rule in the
context of the Commission’s
examination and oversight program are
generally 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.
The respondents to this information
collection are investment advisers
registered with the Commission.
Updated data indicate that there were
14,376 advisers registered with the
Commission as of August 2021. Each
respondent would produce one
response, per year. Commission staff has
estimated that compliance with rule
206(4)–7 imposes an annual burden of
approximately 90 hours per response.
Based on this figure, Commission staff
estimates a total annual burden of
1,293,840 hours for this collection of
information.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (1) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to:
Lindsay.M.Abate@omb.eop.gov; and (2)
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. Written comments
and recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to www.reginfo.gov/public/do/
PRAMain. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function.
Dated: January 14, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–01061 Filed 1–19–22; 8:45 am]
BILLING CODE 8011–01–P
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3135
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–586, OMB Control No.
3235–0647]
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 204
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 204 (17 CFR 242.204), under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).
Rule 204(a) provides that a participant
of a registered clearing agency must
deliver securities to a registered clearing
agency for clearance and settlement on
a long or short sale in any equity
security by settlement date, or if a
participant of a registered clearing
agency has a fail to deliver position at
a registered clearing agency in any
equity security for a long or short sale
transaction in the equity security, the
participant shall, by no later than the
beginning of regular trading hours on
the applicable close-out date,
immediately close out its fail to deliver
positions by borrowing or purchasing
securities of like kind and quantity. For
a short sale transaction, the participant
must close out a fail to deliver by no
later than the beginning of regular
trading hours on the settlement day
following the settlement date. If a
participant has a fail to deliver that the
participant can demonstrate on its books
and records resulted from a long sale, or
that is attributable to bona-fide market
making activities, the participant must
close out the fail to deliver by no later
than the beginning of regular trading
hours on the third consecutive
settlement day following the settlement
date. Rule 204 is intended to help
further the Commission’s goal of
reducing fails to deliver by maintaining
the reductions in fails to deliver
achieved by the adoption of temporary
Rule 204T, as well as other actions
taken by the Commission. In addition,
Rule 204 is intended to help further the
Commission’s goal of addressing
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[Federal Register Volume 87, Number 13 (Thursday, January 20, 2022)]
[Notices]
[Pages 3132-3135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-01058]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-653, OMB Control No. 3235-0703]
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
Extension:
Regulation SCI, Form SCI
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget (``OMB'') a request for approval of extension of the
previously approved collection of information provided for in
Regulation Systems Compliance and Integrity (``Regulation SCI'') (17
CFR 242.1000-1007) and Form SCI (17 CFR 249.1900) under the Securities
Exchange Act of 1934 (``Exchange Act'') (15 U.S.C. 78a et seq.).
Regulation SCI requires certain key market participants to, among
other things: (1) Have comprehensive policies and procedures in place
to help ensure the robustness and resiliency of their technological
systems, and also that their technological systems operate in
compliance with the federal securities laws and with their own rules;
and (2) provide certain notices and reports to the Commission to
improve Commission oversight of securities market infrastructure.
Regulation SCI advances the goals of the national market system by
enhancing the capacity, integrity, resiliency, availability, and
security of the automated systems of entities important to the
functioning of the U.S. securities markets, as well as reinforcing the
requirement that such systems operate in compliance with the Exchange
Act and rules and regulations thereunder, thus strengthening the
infrastructure of the U.S. securities markets and improving its
resilience when technological issues arise. In this respect, Regulation
SCI establishes an updated and formalized regulatory framework, thereby
helping to ensure more effective Commission oversight of such systems.
Respondents consist of national securities exchanges and
associations, registered clearing agencies, exempt clearing agencies,
plan processors, and alternative trading systems. There are currently
47 respondents, and the Commission staff estimates that, on average, 2
new respondents may become SCI entities each year, 1 of which would be
a self-regulatory organization (``SRO''). Accordingly, Commission staff
estimates that over the next three years there will be an average of 49
respondents per year.
In addition, in December 2020, the Commission adopted amendments to
Regulation SCI in connection with updates to the national market system
for the collection, consolidation, and dissemination of information
with respect to quotations for and transactions in national market
system (``NMS'') stocks (``Infrastructure Amendments''). Specifically,
the Commission adopted a definition of ``SCI competing consolidator''
that will subject competing consolidators to Regulation SCI, after a
transition period, if they are above a specified consolidated market
data gross revenue threshold.\1\ The Infrastructure Amendments
increased the number of respondents to the collections of information
in Regulation SCI, and the Commission estimates that seven competing
consolidators will meet this definition and be subject to the
requirements of Regulation SCI.\2\
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\1\ See Securities Exchange Act Release No. 34-90610 (December
9, 2020), 86 FR 18596 (April 9, 2021) (File No. S7-03-20)
(``Infrastructure Adopting Release'').
\2\ Some of these respondents were estimated to incur no, or
only part of, the estimated initial burdens because they were
already subject to Regulation SCI (i.e., as plan processors, SROs or
affiliates of SROs).
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Rule 1001(a) requires each SCI entity to establish, maintain, and
enforce written policies and procedures reasonably designed to ensure
that its SCI systems and, for purposes of security standards, indirect
SCI systems, have levels of capacity, integrity, resiliency,
availability, and security, adequate to maintain the SCI entity's
operational capability and promote the maintenance of fair and orderly
markets. The Commission staff estimates that the total annual initial
recordkeeping burden for 7 new respondents will be 4,511 hours, and the
annual ongoing recordkeeping burden for all 54 respondents will be, on
average, 12,528 hours. The Commission staff estimates
[[Page 3133]]
that the 7 new respondents would incur, on average, an annual initial
internal cost of compliance of $1,513,382, as well as outside legal or
consulting costs of $305,500. In addition, all respondents will incur,
on average, an estimated ongoing annual internal cost of compliance of
$4,205,412.
Rule 1001(b) requires each SCI entity to establish, maintain, and
enforce written policies and procedures reasonably designed to ensure
that its SCI systems operate in a manner that complies with the
Exchange Act and the rules and regulations thereunder and the entity's
rules and governing documents, as applicable. The Commission staff
estimates that the total annual initial recordkeeping burden for 7 new
respondents will be 1,755 hours, and the annual ongoing recordkeeping
burden for all respondents will be, on average, 8,010 hours. The
Commission staff estimates that the 7 new respondents would incur an
initial internal cost of compliance of $660,270, as well as outside
legal or consulting costs of $175,500. In addition, all respondents
will incur, on average, an estimated ongoing annual internal cost of
compliance of $2,539,890.
Rule 1001(c) requires each SCI entity to establish, maintain, and
enforce reasonably designed written policies and procedures that
include the criteria for identifying responsible SCI personnel, the
designation and documentation of responsible SCI personnel, and
escalation procedures to quickly inform responsible SCI personnel of
potential SCI events. The Commission staff estimates that the total
annual initial recordkeeping burden for 7 new respondents will be 741
hours, and the annual ongoing recordkeeping burden for all respondents
will be, on average, 2,106. The Commission staff estimates that the 7
new respondents would incur an initial internal cost of compliance of
$276,432, and all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $839,592.
Rule 1004 requires each SCI entity to establish standards for the
designation of certain members or participants for BC/DR plan testing,
to designate members or participants in accordance with these
standards, to require participation by designated members or
participants in such testing at least annually, and to coordinate such
testing on an industry- or sector-wide basis with other SCI entities.
The Commission staff estimates that the total annual initial
recordkeeping burden for 9 new respondents will be 2,700 hours, and the
annual ongoing recordkeeping burden for all respondents that are not
plan processors will be, on average, 7,290 hours. The Commission staff
estimates that the 7 new respondents would incur an initial internal
cost of compliance of $804,735. In addition, all respondents that are
not plan processors will incur, on average, an estimated ongoing annual
internal cost of compliance of $1,939,950. In addition, the Commission
staff estimates that the 2 plan processor respondents will incur an
estimated ongoing annual cost of $108,000 for outside legal services
($54,000 per plan processor respondent x 2 respondents).
Rule 1002(b)(1) requires each SCI entity, upon any responsible SCI
personnel having a reasonable basis to conclude that an SCI event has
occurred, to notify the Commission immediately. The Commission staff
estimates that the total annual ongoing burden for all 54 respondents
will be, on average, 432 hours. The Commission staff estimates that
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $133,030.
Rule 1002(b)(2) requires each SCI entity, within 24 hours of any
responsible SCI personnel having a reasonable basis to conclude that
the SCI event has occurred, to submit a written notification to the
Commission pertaining to the SCI event on a good faith, best efforts
basis. These notifications are required to be submitted on Form SCI.
The Commission staff estimates that the total annual ongoing burden for
all 54 respondents will be, on average, 6,480 hours. The Commission
staff estimates that respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $2,134,890.
Rule 1002(b)(3) requires each SCI entity to provide updates to the
Commission pertaining to an SCI event on a regular basis, or at such
frequency as reasonably requested by a representative of the
Commission, until the SCI event is resolved and the SCI entity's
investigation of the SCI event is closed. The Commission staff
estimates that the total annual ongoing burden for all 54 respondents
will be, on average, 567 hours. The Commission staff estimates that all
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $177,106.50.
Rule 1002(b)(4) requires each SCI entity to submit written interim
reports, as necessary, and a written final report regarding an SCI
event to the Commission. These reports are required to be submitted on
Form SCI. The Commission staff estimates that the total annual ongoing
burden for all 54 respondents will be, on average, 9,450 hours. The
Commission staff estimates that all respondents will incur, on average,
an estimated ongoing annual internal cost of compliance of $3,297,510.
Rule 1002(b)(5) requires each SCI entity to submit to the
Commission quarterly reports containing a summary description of any
systems disruption or systems intrusion that has had, or the SCI entity
reasonably estimates would have, no or a de minimis impact on the SCI
entity's operations or on market participants. These reports are
required to be submitted on Form SCI. The Commission staff estimates
that the total annual ongoing burden for all 54 respondents will be, on
average, 8,640 hours. The Commission staff estimates that respondents
will incur, on average, an estimated ongoing annual internal cost of
compliance of $2,919,348.
In addition, the Commission staff estimates that all 54 respondents
will incur, on average, annual costs of $313,200 for outside legal
advice in preparation of certain notifications required by Rule
1002(b).
Rule 1002(c)(1)(i) requires each SCI entity, promptly after any
responsible SCI personnel has a reasonable basis to conclude that an
SCI event (other than a systems intrusion) has occurred, to disseminate
certain information to its members or participants. The Commission
staff estimates that the total annual ongoing burden for all 54
respondents will be, on average, 1,134 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $741,557.50.
Rule 1002(c)(1)(ii) requires each SCI entity, when known, to
promptly disseminate additional information about an SCI event (other
than a systems intrusion) to its members or participants. Rule
1002(c)(1)(iii) requires each SCI entity to provide to its members or
participants regular updates of any information required to be
disseminated under Rules 1002(c)(1)(i) and (ii) until the SCI event is
resolved. The Commission staff estimates that the total annual ongoing
burden for all 54 respondents will be, on average, 6,318 hours. The
Commission staff estimates that all respondents will incur, on average,
an estimated ongoing annual internal cost of compliance of $2,496,096.
Rule 1002(c)(2) requires each SCI entity to disseminate certain
information regarding a systems intrusion to its members or
participants, and provides an exception when the SCI entity determines
that dissemination of
[[Page 3134]]
such information would likely compromise the security of its SCI
systems or indirect SCI systems, or an investigation of the systems
intrusion, and documents the reasons for such determination. The
Commission staff estimates that the total annual ongoing burden for all
54 respondents will be, on average, 540 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $212,827.25.
In addition, the Commission staff estimates that all 54 respondents
will incur, on average, annual costs of $179,280 for outside legal
advice in preparation of certain notifications required by Rule
1002(c).
Rule 1003(a)(1) requires each SCI entity to submit to the
Commission quarterly reports describing completed, ongoing, and planned
material changes to its SCI systems and security of indirect SCI
systems during the prior, current, and subsequent calendar quarters.
These reports are required to be submitted on Form SCI. The Commission
staff estimates that the total annual ongoing burden for all 54
respondents will be, on average, 27,000 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $8,063,820.
Rule 1003(a)(2) requires each SCI entity to promptly submit a
supplemental report notifying the Commission of a material error in or
material omission from a report previously submitted under Rule
1003(a)(1). These reports are required to be submitted on Form SCI. The
Commission staff estimates that the total annual ongoing burden for all
54 respondents will be, on average, 810 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $256,716.
Rule 1003(b)(1) requires each SCI entity to conduct an SCI review
of its compliance with Regulation SCI not less than once each calendar
year, with an exception for penetration test reviews, which are
required to be conducted not less than once every three years. Rule
1003(b)(1) also provides an exception for assessments of SCI systems
directly supporting market regulation or market surveillance, which are
required to be conducted at a frequency based on the risk assessment
conducted as part of the SCI review, but in no case less than once
every three years. Rule 1003(b)(2) requires each SCI entity to submit a
report of the SCI review to senior management no more than 30 calendar
days after completion of the review. The Commission staff estimates
that the total annual ongoing burden for all 54 respondents will be, on
average, 37,260 hours. The Commission staff estimates that all
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $11,934,810.
Rule 1003(b)(3) requires each SCI entity to submit the report of
the SCI review to the Commission and to its board of directors or the
equivalent of such board, together with any response by senior
management, within 60 calendar days after its submission to senior
management. These reports are required to be submitted on Form SCI. The
Commission staff estimates that the total annual ongoing burden for all
54 respondents will be, on average, 54 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $22,248.
In addition, the Commission staff estimates that all respondents
will incur, on average, annual costs of $2,700,000 for outside legal
advice in preparation of certain notifications required by Rule
1003(b).
Rule 1006 requires each SCI entity, with a few exceptions, to file
any notification, review, description, analysis, or report to the
Commission required under Regulation SCI electronically on Form SCI
through the EFFS. An SCI entity will submit to the Commission an EAUF
to register each individual at the SCI entity who will access the EFFS
system on behalf of the SCI entity. The Commission staff estimates that
the total annual initial burden for 7 new respondents will be 1.95
hours, and the annual ongoing burden for all respondents will be, on
average, 8.1 hours. The Commission staff estimates that the 7 new
respondents would incur an initial internal cost of compliance of $806.
In addition, all 54 respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $3,348, as well as
outside costs to obtain a digital ID of $2,700.
Rule 1002(a) requires each SCI entity, upon any responsible SCI
personnel having a reasonable basis to conclude that an SCI event has
occurred, to begin to take appropriate corrective action. The
Commission staff estimates that the total annual initial recordkeeping
burden for 7 new respondents will be 741 hours, and the annual ongoing
recordkeeping burden for all 54 respondents will be, on average, 2,106
hours. The Commission staff estimates that the 7 new respondents would
incur an initial internal cost of compliance of $276,432. In addition,
all 54 respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $831,438.
Rule 1003(a)(1) requires each SCI entity to establish reasonable
written criteria for identifying a change to its SCI systems and the
security of indirect SCI systems as material. The Commission staff
estimates that the total annual initial recordkeeping burden for 7 new
respondents will be 741 hours, and the annual ongoing recordkeeping
burden for all 54 respondents will be, on average, 1,458 hours. The
Commission staff estimates that the 7 new respondents would incur an
initial internal cost of compliance of $276,432. In addition, all 54
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $622,944.
Regulation SCI also requires SCI entities to identify certain types
of events and systems. The Commission staff estimates that the total
annual initial recordkeeping burden for 7 new respondents will be 1,287
hours, and the annual ongoing recordkeeping burden for all 54
respondents will be, on average, 2,106 hours. The Commission staff
estimates that the 7 new respondents would incur an initial internal
cost of compliance of $453,089. In addition, all 54 respondents will
incur, on average, an estimated ongoing annual internal cost of
compliance of $831,438.
Rules 1005 and 1007 establish recordkeeping requirements for SCI
entities other than SROs. The Commission staff estimates that for 6 new
respondents that are not SROs the average annual initial burden would
be 935 hours, and the annual ongoing burden for all 18 respondents will
be, on average, 450 hours. The Commission staff estimates that 6 new
respondents would incur an estimated internal initial internal cost of
compliance of $64,515, as well as a one-time cost of $5,400 to modify
existing recordkeeping systems. In addition, all 18 respondents will
incur, on average, an estimated ongoing internal cost of compliance of
$31,050.
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.
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
[[Page 3135]]
recommendations for the proposed information collection should be sent
within 30 days of publication of this notice to (i)
[email protected] and (ii) David Bottom,
Director/Chief Information Officer, Securities and Exchange Commission,
c/o John Pezzullo, 100 F Street NE, Washington, DC 20549, or by sending
an email to: [email protected].
Dated: January 14, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-01058 Filed 1-19-22; 8:45 am]
BILLING CODE 8011-01-P
