Submission for OMB Review; Comment Request, 4312-4314 [2022-01615]
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Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Notices
lotter on DSK11XQN23PROD with NOTICES1
estimates that 2,127,147 are new clients
and 25,852,313 are continuing clients.5
The staff estimates that each year the
investment advisory program sponsors’
staff engage in 1.5 hours per new client
and 1 hour per continuing client to
prepare, conduct and/or review
interviews regarding the client’s
financial situation and investment
objectives as required by the rule.6
Furthermore, the staff estimates that
each year the investment advisory
program sponsors’ staff spends 1 hour
per client each year to prepare and mail
quarterly client account statements,
including notices to update
information.7 Based on the estimates
above, the Commission estimates that
the total annual burden of the rule’s
paperwork requirements is 57,022,493
hours.8
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act. The estimate
is not derived from a comprehensive or
even a representative survey or study of
the costs of Commission rules and
forms. 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 OMB
control number.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (i) 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 (ii)
David Bottom, c/o John R. Pezzullo,
Director/Chief Information Officer,
indicated in Form ADV Item 5I(2)(b) and (c), and
the number of individual clients of advisers that
identify as internet advisers in Form ADV Item
2A(11). From analysis comparing reported
individual client assets in Form ADV Item 5D(a)(3)
and 5D(b)(3) to reported wrap portfolio manager
assets in Form ADV Item 5I(2)(b) and (c), we
discount the estimated number of individual clients
of non-internet advisers providing portfolio
management to wrap programs by 10%.
5 These estimates are based on the number of new
clients expected due to average year-over-year
growth in individual clients from Form ADV Item
5D(a)(1) and (b)(1) (about 8%) and an assumed rate
of yearly client turnover of 10%.
6 These estimates are based upon consultation
with investment advisers that operate investment
advisory programs that rely on rule 3a–4.
7 The staff bases this estimate in part on the fact
that, by business necessity, computer records
already will be available that contain the
information in the quarterly reports.
8 This estimate is based on the following
calculation: (25,852,313 continuing clients × 1
hour) + (2,127,147 new clients × 1.5 hours) +
(27,979,460 total clients × (0.25 hours × 4
statements)) = 57,022,493 hours.
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Securities and Exchange Commission,
100 F Street NE, Washington, DC 20549
or send an email to: PRA_Mailbox@
sec.gov.
Comments must be submitted to OMB
within 30 days 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 21, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–01555 Filed 1–26–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[OMB Control No. 3235–0627]
Rule 17g–4 30 Day Notice 2021—
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 17g–4
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’’) 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 17g–4 (17 CFR 240.17g–4) under
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) (‘‘Exchange Act’’).
The Credit Rating Agency Reform Act
of 2006 added a new section 15E,
‘‘Registration of Nationally Recognized
Statistical Rating Organizations,’’ 1 to
the Exchange Act. Pursuant to the
authority granted under section 15E of
the Exchange Act, the Commission
adopted Rule 17g–4, which requires that
a nationally recognized statistical rating
organization (‘‘NRSRO’’) establish,
maintain, and enforce written policies
and procedures to prevent the misuse of
material nonpublic information,
including policies and procedures
reasonably designed to prevent: (a) The
inappropriate dissemination of material
nonpublic information obtained in
connection with the performance of
credit rating services; (b) a person
within the NRSRO from trading on
1 15
PO 00000
U.S.C. 78o–7.
Frm 00122
Fmt 4703
Sfmt 4703
material nonpublic information; and (c)
the inappropriate dissemination of a
pending credit rating action.2
There are 9 credit rating agencies
registered with the Commission as
NRSROs under section 15E of the
Exchange Act, which have already
established the policies and procedures
required by Rule 17g–4. Based on staff
experience, an NRSRO is estimated to
spend an average of approximately 10
hours per year reviewing its policies
and procedures regarding material
nonpublic information and updating
them (if necessary), resulting in an
average industry-wide annual hour
burden of approximately 90 hours.3
An agency may not conduct or
sponsor a collection of information
unless it displays a currently valid OMB
control number. No person shall be
subject to any penalty for failing to
comply with a collection of information
subject to the PRA that does not display
a 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
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 John R. Pezzullo, 100 F Street NE,
Washington, DC 20549, or by sending an
email to: PRA_Mailbox@sec.gov.
Dated: January 21, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–01547 Filed 1–26–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–489, OMB Control No.
3235–0541]
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
2 See 17 CFR 240.17g–4; Release No. 34–55231
(Feb. 2, 2007), 72 FR 6378 (Feb. 9, 2007); Release
No. 34–55857 (June 5, 2007), 72 FR 33564 (June 18,
2007).
3 9 currently registered NRSROs × 10 hours = 90
hours.
E:\FR\FM\27JAN1.SGM
27JAN1
Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Notices
100 F Street NE, Washington, DC
20549–2736
lotter on DSK11XQN23PROD with NOTICES1
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’’) 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 606 of Regulation NMS (‘‘Rule
606’’) (17 CFR 242.606) under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et. seq.).
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
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.
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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
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
1 186 clearing brokers + 78 introducing brokers =
264.
PO 00000
Frm 00123
Fmt 4703
Sfmt 4703
4313
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.
The collection of information
obligations imposed by Rule 606 are
mandatory. The responses will be
available to the public and will not be
kept confidential.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
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
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 John Pezzullo, 100 F Street NE,
Washington, DC 20549, or by sending an
email to: PRA_Mailbox@sec.gov.
E:\FR\FM\27JAN1.SGM
27JAN1
4314
Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Notices
Dated: January 24, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
the Act 7 to determine whether to
approve or disapprove the proposed
rule change.8 On November 15, 2021,
pursuant to Section 19(b)(2) of the Act,9
the Commission designated a longer
period within which to issue an order
approving or disapproving the proposed
rule change.10
The Commission is approving the
proposed rule change, as modified by
Amendment No. 1.
[FR Doc. 2022–01615 Filed 1–26–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94025; File No. SR–
NYSEArca–2021–29]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
a Proposed Rule Change, as Modified
by Amendment No. 1, To List and
Trade Shares of ConvexityShares 1x
SPIKES Futures ETF Under NYSE Arca
Rule 8.200–E (Trust Issued Receipts)
January 21, 2022.
I. Introduction
On May 13, 2021, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the ConvexityShares 1x
SPIKES Futures ETF (‘‘Fund’’), a series
of the ConvexityShares Trust (‘‘Trust’’),
under NYSE Arca Rule 8.200–E,
Commentary .02 (‘‘Trust Issued
Receipts’’). The proposed rule change
was published for comment in the
Federal Register on May 26, 2021.3 On
July 2, 2021, pursuant to Section
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to approve or disapprove the
proposed rule change.5 On July 26,
2021, the Exchange filed Amendment
No. 1 to the proposed rule change,
which replaced and superseded the
proposed rule change as originally
filed.6 On August 12, 2021, the
Commission published notice of
Amendment No. 1 and instituted
proceedings under Section 19(b)(2)(B) of
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 91952
(May 20, 2021), 86 FR 28410. The comment letter
received on the proposed rule change is available
on the Commission’s website at: https://
www.sec.gov/comments/sr-nysearca-2021-29/
srnysearca202129.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 92321,
86 FR 36173 (July 8, 2021).
6 Amendment No. 1 is available at: https://
www.sec.gov/comments/sr-nysearca-2021-29/
srnysearca202129.htm.
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2 17
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II. Description of the Proposed Rule
Change, as Modified by Amendment
No. 1 11
The Exchange proposes to list and
trade Shares of the Fund 12 under NYSE
Arca Rule 8.200–E, Commentary .02
which governs the listing and trading of
Trust Issued Receipts 13 on the
Exchange. The Fund will be managed
and controlled by ConvexityShares, LLC
(‘‘Sponsor’’), a commodity pool
operator.14 Teucrium Trading, LLC, a
commodity trading adviser registered
with the Commodity Futures Trading
Commission, will be the Sub-Adviser
for the Fund (‘‘Sub-Adviser’’) and will
manage the Fund’s commodity futures
investment strategy.15 U.S. Bank will
7 15
U.S.C. 78s(b)(2)(B).
Securities Exchange Act Release No. 92650,
86 FR 46287 (August 18, 2021).
9 15 U.S.C. 78s(b)(2).
10 See Securities Exchange Act Release No. 93574,
86 FR 64975 (November 19, 2021). The Commission
designated January 21, 2022, as the date by which
the Commission shall either approve or disapprove
the proposed rule change.
11 Additional information regarding the Fund, the
Trust, and the Shares, including investment
strategies, creation and redemption procedures, and
portfolio holdings can be found in Amendment No.
1, supra note 6.
12 The Fund has filed a registration statement on
Form S–1 under the Securities Act of 1933, dated
May 25, 2021 (‘‘Registration Statement’’). The
Registration Statement for the Fund is not yet
effective and the Exchange will not commence
trading in Shares of the Fund until the Registration
Statement becomes effective.
13 Commentary .02 to NYSE Arca Rule 8.200–E
applies to Trust Issued Receipts that invest in
‘‘Financial Instruments.’’ The term ‘‘Financial
Instruments,’’ as defined in Commentary .02(b)(4) to
NYSE Arca Rule 8.200–E, means any combination
of investments, including cash; securities; options
on securities and indices; futures contracts; options
on futures contracts; forward contracts; equity caps,
collars, and floors; and swap agreements.
14 The Sponsor is not registered as a broker-dealer
or affiliated with a broker-dealer. In the event (a)
the Sponsor becomes registered as a broker-dealer
or becomes newly affiliated with a broker-dealer, or
(b) any new sponsor becomes registered as a brokerdealer or becomes newly affiliated with a brokerdealer, it will implement and maintain a fire wall
with respect to its relevant personnel of the brokerdealer or broker-dealer affiliate, as applicable,
regarding access to information concerning the
composition and/or changes to the portfolio, and
will be subject to procedures designed to prevent
the use and dissemination of material non-public
information regarding the portfolio.
15 The Sub-Adviser is not registered as a brokerdealer or affiliated with a broker-dealer. In the event
8 See
PO 00000
Frm 00124
Fmt 4703
Sfmt 4703
provide custody and fund accounting to
the Trust and the Fund; U.S. Bancorp
Fund Services will be the transfer agent
for the Shares and administrator for the
Fund; and Foreside will serve as the
distributor for the Fund.
The Fund will seek investment
results, before fees and expenses, that
correspond to the performance of its
benchmark index, the T3 SPIKE Front 2
Futures Index (‘‘Index’’), an investable
index of SPIKES futures contracts.16 The
Fund will seek to track the Index over
time, not just for a single day. The Index
is intended to reflect the returns that are
potentially available through an
unleveraged investment in a theoretical
portfolio of first- and second-month
futures contracts on the SPIKES
Volatility Index (‘‘SPIKES Index’’).17
The Index is comprised solely of
SPIKES futures contracts.18 The Index
(a) the Sub-Adviser becomes registered as a brokerdealer or becomes newly affiliated with a brokerdealer, or (b) any new Sub-Adviser becomes
registered as a broker-dealer or becomes newly
affiliated with a broker-dealer, it will implement
and maintain a fire wall with respect to its relevant
personnel of the broker-dealer or broker-dealer
affiliate, as applicable, regarding access to
information concerning the composition and/or
changes to the portfolio, and will be subject to
procedures designed to prevent the use and
dissemination of material non-public information
regarding the portfolio.
16 The Index is sponsored by Triple Three
Partners Pty Ltd, which licenses the use of the
Index to its affiliated company, T3i Pty Ltd (Triple
Three Partners Pty Ltd and T3i Pty Ltd. are
collectively referred to herein as ‘‘T3 Index’’ or
‘‘Index Sponsor’’). The Index Sponsor is affiliated
with the Sponsor. The Index Sponsor has
implemented and will maintain a fire wall
regarding access to information concerning the
composition of and/or changes to the Index. In
addition, the Index Sponsor has implemented and
will maintain procedures that are designed to
prevent the use and dissemination of material, nonpublic information regarding the Index. The Index
Sponsor is not registered as an investment adviser
or broker-dealer and is not affiliated with any
broker-dealers. The Index is calculated and
published by Solactive AG, which is not affiliated
with T3 Index.
17 The Exchange states that the SPIKES Index is
a non-investable index that measures the implied
volatility of the SPDR S&P 500 ETF Trust (‘‘SPY’’)
over 30 days in the future. SPY is a unit investment
trust that holds a portfolio of common stocks that
closely tracks the price performance and dividend
yield of the S&P 500 Composite Price Index (‘‘S&P
500’’). The SPIKES Index does not represent the
actual or the realized volatility of SPY. The SPIKES
Index is calculated based on the prices of a
constantly changing portfolio of SPY put and call
options. The SPIKES Index is reflective of the
premium paid by investors for certain options
linked to the level of the S&P 500. The SPIKES
Index is a theoretical calculation and cannot be
traded on a spot basis. T3 Index is the owner,
creator and licensor of the SPIKES Index. The
SPIKES Index is calculated, maintained and
published by Miami International Securities
Exchange, LLC via the Options Price Reporting
Authority.
18 According to the Exchange, SPIKES futures
contracts were launched for trading by the
Minneapolis Grain Exchange, LLC (‘‘MGEX’’) on
E:\FR\FM\27JAN1.SGM
27JAN1
]]>Agencies
[Federal Register Volume 87, Number 18 (Thursday, January 27, 2022)]
[Notices]
[Pages 4312-4314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-01615]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-489, OMB Control No. 3235-0541]
Submission for OMB Review; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services,
[[Page 4313]]
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'') 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
606 of Regulation NMS (``Rule 606'') (17 CFR 242.606) under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et. seq.).
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 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.
The collection of information obligations imposed by Rule 606 are
mandatory. The responses will be available to the public and will not
be kept confidential.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information 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 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 John Pezzullo, 100 F Street NE, Washington, DC 20549, or by sending
an email to: [email protected].
[[Page 4314]]
Dated: January 24, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-01615 Filed 1-26-22; 8:45 am]
BILLING CODE 8011-01-P
