Submission for OMB Review; Comment Request; Extension: Rule 22c-1, 69379 [2022-25099]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 87, Number 222 (Friday, November 18, 2022)]
[Notices]
[Page 69379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25099]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-793, OMB Control No. 3235-0734]


Submission for OMB Review; Comment Request; Extension: Rule 22c-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 a request for extension of the previously approved collection of 
information discussed below.
    Rule 22c-1 (17 CFR 270.22c-1) under the Investment Company Act of 
1940 (15 U.S.C. 80a) (the ``Investment Company Act'' or ``Act'') 
enables a fund to choose to use ``swing pricing'' as a tool to mitigate 
shareholder dilution. Rule 22c-1 is intended to promote investor 
protection by providing funds with an additional tool to mitigate the 
potentially dilutive effects of shareholder purchase or redemption 
activity and a set of operational standards that allow funds to gain 
comfort using swing pricing as a means of mitigating potential 
dilution.
    The respondents to amended rule 22c-1 are open-end management 
investment companies (other than money market funds or exchange-traded 
funds) that engage in swing pricing. Compliance with rule 22c-1(a)(3) 
is mandatory for any fund that chooses to use swing pricing to adjust 
its NAV in reliance on the rule.
    While we are not aware of any funds that have engaged in swing 
pricing,\1\ we are estimating for the purpose of this analysis that 5 
fund complexes have funds that may adopt swing pricing policies and 
procedures in the future pursuant to the rule. We estimate that the 
total burden associated with the preparation and approval of swing 
pricing policies and procedures by those fund complexes that would use 
swing pricing will be 280 hours.\2\ We also estimate that it will cost 
a fund complex $48,188 to document, review and initially approve these 
policies and procedures, for a total cost of $240,940.\3\
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    \1\ No funds have engaged in swing pricing as reported on Form 
N-CEN as of August 15, 2022.
    \2\ This estimate is based on the following calculation: (48 + 2 
+ 6) hours x 5 fund complexes = 280 hours.
    \3\ These estimates are based on the following calculations: 24 
hours x $237 (hourly rate for a senior accountant) = $5,688; 24 
hours x $545 (blended hourly rate for assistant general counsel 
($510) and chief compliance officer ($580)) = $13,080; 2 hours (for 
a fund attorney's time to prepare materials for the board's 
determinations) x $400 (hourly rate for a compliance attorney) = 
$800; 6 hoursx $4,770 (hourly rate for a board of 9 directors) = 
$28,620; ($5,688 + $13,080 +$800 + $28,620) = $48,188; $48,188 x 5 
fund complexes = $240,940. The hourly wages used are from SIFMA's 
Management & Professional Earnings in the Securities Industry 2013, 
modified by Commission staff to account for an 1800-hour work-year 
and inflation, and multiplied by 5.35 to account for bonuses, firm 
size, employee benefits, and overhead. The staff has estimated the 
average cost of board of director time as $4,770 per hour for the 
board as a whole, based on information received from funds and their 
counsel.
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    Rule 22c-1 requires a fund that uses swing pricing to maintain the 
fund's swing policies and procedures that are in effect, or at any time 
within the past six years were in effect, in an easily accessible 
place.\4\ The rule also requires a fund to retain a written copy of the 
periodic report provided to the board prepared by the swing pricing 
administrator that describes, among other things, the swing pricing 
administrator's review of the adequacy of the fund's swing pricing 
policies and procedures and the effectiveness of their implementation, 
including the impact on mitigating dilution and any back-testing 
performed.\5\ The retention of these records is necessary to allow the 
staff during examinations of funds to determine whether a fund is in 
compliance with its swing pricing policies and procedures and with rule 
22c-1. We estimate a time cost per fund complex of $344.\6\ We estimate 
that the total for recordkeeping related to swing pricing will be 20 
hours, at an aggregate cost of $1,720, for all fund complexes that we 
believe include funds that have adopted swing pricing policies and 
procedures.\7\
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    \4\ See rule 22c-1(a)(3)(iii).
    \5\ See id.
    \6\ This estimate is based on the following calculations: 2 
hours x $68 (hourly rate for a general clerk) = $136; 2 hours x $104 
(hourly rate for a senior computer operator) = $208. $136 + $208 = 
$344.
    \7\ These estimates are based on the following calculations: 4 
hours x 5 fund complexes = 20 hours. 5 fund complexes x$344 = 
$1,720.
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    Amortized over a three-year period, we believe that the hour 
burdens and time costs associated with rule 22c-1, including the burden 
associated with the requirements that funds adopt policies and 
procedures, obtain board approval, and periodic review of an annual 
written report from the swing pricing administrator, and retain certain 
records and written reports related to swing pricing, will result in an 
average aggregate annual burden of 113.3 hours, and average aggregate 
time costs of $82,033.\8\ We also estimate that rule 22c-1 imposes a 
total external cost burden of $2,655 for outside legal services related 
to compliance with the policies and procedures requirement.\9\
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    \8\ These estimates are based on the following calculations: 
(280 hours (year 1) + (3 x20 hours) (years 1, 2 and 3)) / 3 = 113.3 
hours; ($240,940 (year 1) + (3 x $1,720) (years 1, 2 and 3)) / 3 = 
$82,033.
    \9\ This estimated burden is based on the estimated wage rate of 
$531 per hour for outside legal services and the following 
calculation: $531 x 5 fund complexes = $2,655.
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    These estimates of average costs are 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.
    This collection of information is necessary to obtain a benefit 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 
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 
by December 19, 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: November 14, 2022.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25099 Filed 11-17-22; 8:45 am]
BILLING CODE 8011-01-P