Submission for OMB Review; Comment Request; Extension: Rule 204-3, 54273-54274 [2022-18978]
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Federal Register / Vol. 87, No. 170 / Friday, September 2, 2022 / Notices
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 18a–2 (17 CFR 240.18a–2), under
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) (‘‘Exchange Act’’).
Rule 18a–2 establishes capital
requirements for nonbank major
security-based swap participants that
are also not registered as broker-dealers
(‘‘nonbank MSBSPs’’). In particular, a
nonbank MSBSP is required at all times
to have and maintain positive tangible
net worth.
Under Rule 18a–2, nonbank MSBSPs
also need to comply with Exchange Act
Rule 15c3–4 (17 CFR 240.15c3–4),
which requires OTC derivatives dealers
and other firms subject to its provisions
to establish, document, and maintain a
system of internal risk management
controls to assist the firm in managing
the risk associated with its business
activities, including market, credit,
leverage, liquidity, legal, and
operational risks.
The staff previously estimated that 5
or fewer nonbank entities would register
with the Commission as MSBSPs. The
staff continues to estimate that 5 or
fewer nonbank entities will register with
the Commission as MSBSPs, although
currently no such entities have
registered. These nonbank MSBSPs will
be required to establish, document, and
regularly review and update risk
management control systems with
respect to market, credit, leverage,
liquidity, legal and operational risks.
Based on similar estimates for OTC
derivatives dealers, the Commission
staff believes that each nonbank MSBSP
will spend approximately 2,000 hours to
implement its risk management control
system, resulting in a one-time industrywide hour burden of approximately
10,000 recordkeeping hours, or
approximately 3,333 hours per year
when annualized over 3 years.1
Based on similar estimates for OTC
derivatives dealers, the staff further
estimates that each of these firms will
spend approximately 250 hours per year
reviewing and updating its risk
management control systems, resulting
in an ongoing annual industry-wide
hour burden of approximately 1,250
recordkeeping hours per year.2
Taken together, the total industrywide recordkeeping hour burden is
approximately 4,583 hours per year.3
1 5 MSBSPs × 2,000 hours = 10,000 hours. This
one-time burden annualized over a 3-year period is
approximately 3,333 hours industry-wide (10,000
hours/3 = 3,333.33 rounded down to 3,333).
2 5 MSBSPs × 250 hours/year = 1,250 hours/year.
3 2,000 hours/3 years = 3,333.33 + 1,250 hours =
4,583.33 hours rounded down to 4,583.
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Because nonbank MSBSPs may not
initially have the systems or expertise
internally to meet the risk management
requirements of Rule 18a–2, these firms
will likely hire an outside risk
management consultant to assist them
in implementing their risk management
systems. The staff estimates that each
firm will hire an outside management
consultant for approximately 200 hours
at a cost of approximately $400 per
hour, for a one-time external
management consulting cost of
approximately $80,000 per respondent,
and a total one-time industry
management consulting cost of
approximately $400,000, or
approximately $133,333 per year 4 when
annualized over 3 years.
Nonbank MSBSPs may incur start-up
costs to comply with Rule 18a–2,
including information technology costs.
The information technology systems of
a nonbank MSBSP may be in varying
stages of readiness to enable these firms
to meet the requirements of Rule 18a–
2, so the cost of modifying their
information technology systems could
vary significantly among firms. Based
on estimates for similar collections of
information,5 the Commission staff
expects that each nonbank MSBSP will
spend an average of approximately
$16,000 for one-time initial hardware
and software external expenses, for a
total one-time industry-wide external
information technology cost of
approximately $80,000, or
approximately $26,667 per year 6 when
annualized over 3 years. Based on the
estimates for these similar collections of
information, the average ongoing
external cost to meet the information
technology requirements of Rule 18a–2
will be approximately $20,500 per
nonbank MSBSP. This will result in an
ongoing annual industry-wide external
information technology cost of
approximately $102,500.7 Taken
together, the total industry-wide
information technology related cost
burden is approximately $129,167 per
year.8
Therefore, the total industry-wide
recordkeeping cost burden is
4 5 MSBSPs × 200 hours × $400/hour = $400,000.
Annualized over three years, this industry-wide
burden is approximately $133,333 per year
($400,000/3 years = $133,333.33 rounded down to
$133,333).
5 See Risk Management Controls for Broker or
Dealers with Market Access, Exchange Act Release
No. 6321 (Nov. 3, 2010), 75 FR 69792, 69814 (Nov.
15, 2010).
6 5 MSBSPs × $16,000/3 years = $26,666.666,
rounded up to $26,667.
7 5 MSBSP × $20,500 = $102,500.
8 $80,000/3 years + $102,500 = $129,166.667
rounded up to $129,167.
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54273
approximately $262,500 per year
($133,333 + $129,167 = $262,500).
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 by
October 3, 2022 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.
Dated: August 29, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–18982 Filed 9–1–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–42, OMB Control No.
3235–0047]
Submission for OMB Review;
Comment Request; Extension: Rule
204–3
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
(‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
The title for the collection of
information is ‘‘Rule 204–3 (17 CFR
275.204–3) under the Investment
Advisers Act of 1940.’’ (15 U.S.C. 80b).
Rule 204–3, the ‘‘brochure rule,’’
requires advisers to deliver their
brochures and brochure supplements at
the start of an advisory relationship and
to deliver annually thereafter the full
updated brochures or a summary of
material changes to their brochures. The
rule also requires that advisers deliver
amended brochures or brochure
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54274
Federal Register / Vol. 87, No. 170 / Friday, September 2, 2022 / Notices
supplements (or just a statement
describing the amendments) to clients
only when disciplinary information in
the brochures or supplements becomes
materially inaccurate.
The brochure assists the client in
determining whether to retain, or
continue employing, the adviser. The
information that rule 204–3 requires to
be contained in the brochure is also
used by the Commission and staff in its
enforcement, regulatory, and
examination programs. This collection
of information is found at 17 CFR
275.204–3 and is mandatory.
The respondents to this information
collection are certain investment
advisers registered with the
Commission. The Commission has
estimated that compliance with rule
204–3 imposes a burden of
approximately 3.9 hours annually based
on advisers having a median of 92
clients each. Our latest data indicate
that there were 14,777 advisers
registered with the Commission as of
March 31, 2022. Based on this figure,
the Commission estimates a total annual
burden of 57,589 hours for this
collection of information.
Rule 204–3 does not require
recordkeeping or record retention. The
collection of information requirements
under the rule are mandatory. The
information collected pursuant to the
rule is not filed with the Commission,
but rather takes the form of disclosures
to clients and prospective clients.
Accordingly, these disclosures are not
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 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 by October 3, 2022 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: August 29, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–18978 Filed 9–1–22; 8:45 am]
BILLING CODE 8011–01–P
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16:40 Sep 01, 2022
Jkt 256001
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–176, OMB Control No.
3235–0311]
Submission for OMB Review;
Comment Request; Extension: Rule
7d–1
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. 3501–3520), 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.
Section 7(d) of the Investment
Company Act of 1940 (15 U.S.C. 80a–
7(d)) (the ‘‘Act’’ or ‘‘Investment
Company Act’’) requires an investment
company (‘‘fund’’) organized outside the
United States (‘‘foreign fund’’) to obtain
an order from the Commission allowing
the fund to register under the Act before
making a public offering of its securities
through the United States mail or any
means of interstate commerce. The
Commission may issue an order only if
it finds that it is both legally and
practically feasible effectively to enforce
the provisions of the Act against the
foreign fund, and that the registration of
the fund is consistent with the public
interest and protection of investors.
Rule 7d–1 (17 CFR 270.7d–1) under
the Act, which was adopted in 1954,
specifies the conditions under which a
Canadian management investment
company (‘‘Canadian fund’’) may
request an order from the Commission
permitting it to register under the Act.
Although rule 7d–1 by its terms applies
only to Canadian funds, other foreign
funds generally have agreed to comply
with the requirements of rule 7d–1 as a
prerequisite to receiving an order
permitting the foreign fund’s
registration under the Act.
The rule requires a Canadian fund
proposing to register under the Act to
file an application with the Commission
that contains various undertakings and
agreements of the fund. The
requirement for the Canadian fund to
file an application is a collection of
information under the Paperwork
Reduction Act. Certain of the
undertakings and agreements, in turn,
impose the following additional
information collection requirements:
(1) the fund must file with the Commission
agreements between the fund and its
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directors, officers, and service providers
requiring them to comply with the fund’s
charter and bylaws, the Act, and certain other
obligations relating to the undertakings and
agreements in the application;
(2) the fund and each of its directors,
officers, and investment advisers that is not
a U.S. resident, must file with the
Commission an irrevocable designation of the
fund’s custodian in the United States as agent
for service of process;
(3) the fund’s charter and bylaws must
provide that (a) the fund will comply with
certain provisions of the Act applicable to all
funds, (b) the fund will maintain originals or
copies of its books and records in the United
States, and (c) the fund’s contracts with its
custodian, investment adviser, and principal
underwriter, will contain certain terms,
including a requirement that the adviser
maintain originals or copies of pertinent
records in the United States;
(4) the fund’s contracts with service
providers will require that the provider
perform the contract in accordance with the
Act, the Securities Act of 1933 (15 U.S.C.
77a), and the Securities Exchange Act of 1934
(15 U.S.C. 78a), as applicable; and
(5) the fund must file, and periodically
revise, a list of persons affiliated with the
fund or its adviser or underwriter.
As noted above, under section 7(d) of
the Act the Commission may issue an
order permitting a foreign fund’s
registration only if the Commission
finds that ‘‘by reason of special
circumstances or arrangements, it is
both legally and practically feasible
effectively to enforce the provisions of
the (Act).’’ The information collection
requirements are necessary to ensure
that the substantive provisions of the
Act may be enforced as a matter of
contract right in the United States or
Canada by the fund’s shareholders or by
the Commission.
Rule 7d–1 also contains certain
information collection requirements that
are associated with other provisions of
the Act. These requirements are
applicable to all registered funds and
are outside the scope of this request.
The Commission believes that one
foreign fund is registered under rule 7d–
1 and currently active. Apart from
requirements under the Act applicable
to all registered funds, rule 7d–1
imposes ongoing burdens to maintain
records in the United States, and to
update, as necessary, certain fund
agreements, designations of the fund’s
custodian as service agent, and the
fund’s list of affiliated persons. The
Commission staff estimates that each
year under the rule, the active registrant
and its directors, officers, and service
providers engage in the following
collections of information and
associated burden hours:
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]]>Agencies
[Federal Register Volume 87, Number 170 (Friday, September 2, 2022)]
[Notices]
[Pages 54273-54274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18978]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-42, OMB Control No. 3235-0047]
Submission for OMB Review; Comment Request; Extension: Rule 204-3
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
(``Commission'') has submitted to the Office of Management and Budget a
request for extension of the previously approved collection of
information discussed below.
The title for the collection of information is ``Rule 204-3 (17 CFR
275.204-3) under the Investment Advisers Act of 1940.'' (15 U.S.C.
80b). Rule 204-3, the ``brochure rule,'' requires advisers to deliver
their brochures and brochure supplements at the start of an advisory
relationship and to deliver annually thereafter the full updated
brochures or a summary of material changes to their brochures. The rule
also requires that advisers deliver amended brochures or brochure
[[Page 54274]]
supplements (or just a statement describing the amendments) to clients
only when disciplinary information in the brochures or supplements
becomes materially inaccurate.
The brochure assists the client in determining whether to retain,
or continue employing, the adviser. The information that rule 204-3
requires to be contained in the brochure is also used by the Commission
and staff in its enforcement, regulatory, and examination programs.
This collection of information is found at 17 CFR 275.204-3 and is
mandatory.
The respondents to this information collection are certain
investment advisers registered with the Commission. The Commission has
estimated that compliance with rule 204-3 imposes a burden of
approximately 3.9 hours annually based on advisers having a median of
92 clients each. Our latest data indicate that there were 14,777
advisers registered with the Commission as of March 31, 2022. Based on
this figure, the Commission estimates a total annual burden of 57,589
hours for this collection of information.
Rule 204-3 does not require recordkeeping or record retention. The
collection of information requirements under the rule are mandatory.
The information collected pursuant to the rule is not filed with the
Commission, but rather takes the form of disclosures to clients and
prospective clients. Accordingly, these disclosures are not 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 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
by October 3, 2022 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: August 29, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-18978 Filed 9-1-22; 8:45 am]
BILLING CODE 8011-01-P
