Proposed Collection; Comment Request; Extension: Rule 19b-1, 77906-77907 [2022-27488]

Download as PDF 77906 Federal Register / Vol. 87, No. 243 / Tuesday, December 20, 2022 / Notices subparagraph (f)(6) of Rule 19b–4 thereunder.21 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–27497 Filed 12–19–22; 8:45 am] Electronic Comments BILLING CODE 8011–01–P • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2022–075. SECURITIES AND EXCHANGE COMMISSION Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2022–075. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public lotter on DSK11XQN23PROD with NOTICES1 Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NASDAQ–2022–075, and should be submitted on or before January 10, 2023. 21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. VerDate Sep<11>2014 18:41 Dec 19, 2022 Jkt 259001 [SEC File No. 270–312, OMB Control No. 3235–0354] Proposed Collection; Comment Request; Extension: Rule 19b–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. 350l–3520), the Securities and Exchange Commission (‘‘Commission’’) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. Section 19(b) of the Investment Company Act of 1940 (the ‘‘Act’’) (15 U.S.C. 80a–19(b)) authorizes the Commission to regulate registered investment company (‘‘fund’’) distributions of long-term capital gains made more frequently than once every twelve months. Accordingly, rule 19b– 1 under the Act (17 CFR 270.19b–1) regulates the frequency of fund distributions of capital gains. Rule 19b– 1(c) states that the rule does not apply to a unit investment trust (‘‘UIT’’) if it is engaged exclusively in the business of investing in certain eligible securities 22 17 PO 00000 CFR 200.30–3(a)(12). Frm 00120 Fmt 4703 Sfmt 4703 (generally, fixed-income securities), provided that: (i) the capital gains distribution falls within one of five categories specified in the rule 1 and (ii) the distribution is accompanied by a report to the unitholder that clearly describes the distribution as a capital gains distribution (the ‘‘notice requirement’’).2 Rule 19b–1(e) permits a fund to apply to the Commission for permission to distribute long-term capital gains that would otherwise be prohibited by the rule if the fund did not foresee the circumstances that created the need for the distribution. The application must set forth the pertinent facts and explain the circumstances that justify the distribution.3 An application that meets those requirements is deemed to be granted unless the Commission denies the request within 15 days after the Commission receives the application. Commission staff estimates that one fund will file an application under rule 19b–1(e) each year.4 The staff understands that if a fund files an application it generally uses outside counsel to prepare the application. The cost burden of using outside counsel is discussed in Item 13 below. The staff estimates that, on average, a fund’s investment adviser would spend approximately 4 hours to review an application, including 3.5 hours by an assistant general counsel at a cost of $510 per hour and 0.5 hours by an administrative assistant at a cost of $89 per hour, and the fund’s board of directors would spend an additional 1 hour at a cost of $4,770 per hour, for a total of 5 hours.5 Thus, the staff 1 17 CFR 270.19b–1(c)(1). notice requirement in rule 19b–1(c)(2) supplements the notice requirement of section 19(a) [15 U.S.C. 80a–19(a)], which requires any distribution in the nature of a dividend payment to be accompanied by a notice disclosing the source of the distribution. 3 Rule 19b–1(e) also requires that the application comply with rule 0–2 [17 CFR 270.02] under the Act, which sets forth the general requirements for papers and applications filed with the Commission pursuant to the Act and rules thereunder. 4 This estimate is based on the average number of applications filed with the Commission pursuant to rule 19b–1(e) in the prior three-year period. 5 The estimate for assistant general counsels is from SIFMA’s Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour workyear and inflation and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. The estimate for administrative assistants is from SIFMA’s Office Salaries in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour work-year and inflation and multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead. The staff previously estimated in 2009 that the average cost of board of director time was $4,000 per hour for the board as a whole, based on information received from funds and their counsel. Adjusting for 2 The E:\FR\FM\20DEN1.SGM 20DEN1 Federal Register / Vol. 87, No. 243 / Tuesday, December 20, 2022 / Notices lotter on DSK11XQN23PROD with NOTICES1 estimates that the annual hour burden of the collection of information imposed by rule 19b–1(e) would be approximately five hours per fund, at a cost of $6,599.50.6 Because the staff estimates that, each year, one fund will file an application pursuant to rule 19b– 1(e), the total burden for the information collection is 5 hours at a cost of $6,599.50. Commission staff estimates that there is no hour burden associated with complying with the collection of information component of rule 19b–1(c). This estimate assumes that UITs using rule 19b–1(c) do not have their own employees or staff and that the mechanics of the notice requirement would be handled by a UIT sponsor or trustee as an accommodation for the UIT. As such, the costs related to this aspect of the collection of information are captured in the external cost estimates below. As noted above, Commission staff understands that funds that file an application under rule 19b–1(e) generally use outside counsel to prepare the application.7 The staff estimates that, on average, outside counsel spends 10 hours preparing a rule 19b–1(e) application, including eight hours by an associate and two hours by a partner. Outside counsel billing arrangements and rates vary based on numerous factors, but the staff has estimated the average cost of outside counsel as $531 per hour, based on information received from funds, intermediaries, and their counsel. The staff therefore estimates that the average cost of outside counsel preparation of the rule 19b–1(e) exemptive application is $5,310.8 Because the staff estimates that, each year, one fund will file an application pursuant to rule 19b–1(e), the total annual cost burden imposed by the exemptive application requirements of rule 19b–1(e) is estimated to be $5,310. The Commission staff estimates that there are approximately 1,779 UITs that may rely on rule 19b–1(c) to make capital gains distributions.9 The staff estimates that, on average, these UITs inflation, the staff estimates that the current average cost of board of director time is approximately $4,770. 6 This estimate is based on the following calculations: $1,785 (3.5 hours × $510 = $1,785) plus $44.5 (0.5 hours × $89 = $44.5) plus $4,770 equals $6,599.50 (cost of one application). 7 This understanding is based on conversations with representatives from the fund industry. 8 This estimate is based on the following calculation: 10 hours multiplied by $531per hour equals $5,310. 9 See 2022 Investment Company Fact Book, Investment Company Institute, available at https:// www.icifactbook.org/pdf/2022_factbook.pdf (totaling the number of taxable debt and tax-free debt UITs presented in Table 14). VerDate Sep<11>2014 18:41 Dec 19, 2022 Jkt 259001 rely on rule 19b–1(c) once a year to make a capital gains distribution.10 In most cases, the trustee of the UIT is responsible for preparing and sending the notices that must accompany a capital gains distribution under rule 19b–1(c)(2). These notices require limited preparation, the cost of which accounts for only a small, indiscrete portion of the comprehensive fee charged by the trustee for its services to the UIT. The staff believes that as a matter of good business practice, and for tax preparation reasons, UITs would collect and distribute the capital gains information required to be sent to unitholders under rule 19b–1(c) even in the absence of the rule. The staff estimates that the cost of preparing and distributing a notice for a capital gains distribution under rule 19b–1(c)(2) is approximately $50.11 Thus, the staff estimates that the capital gains distribution notice requirement imposes an annual cost on UITs of approximately $88,950.12 The staff therefore estimates that the total cost imposed by rule 19b–1 is $94,260.13 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. 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 estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information 10 The number of times UITs rely on the rule to make capital gains distributions depends on a wide range of factors and, thus, can vary greatly across years and UITs. UITs may distribute capital gains biannually, annually, quarterly, or at other intervals. Additionally, a number of UITs are organized as grantor trusts, and therefore do not generally make capital gains distributions under rule 19b–1(c), or may not rely on rule 19b–1(c) as they do not meet the rule’s requirements. 11 Although the $50 estimate is consistent with prior renewals it is possible that the actual costs have decreased over time as a result of electronic automation or other efficiencies. In an abundance of a caution, and for purposes of this Paperwork Reduction Act renewal, we are assuming on a conservative basis that this cost has not changed. 12 This estimate is based on the following calculation: 1,779 UITs multiplied by $50 equals $88,950. 13 This estimate is based on the following calculation: $88,950 (total cost associated with rule 19b–1(c)) + $5,310 (total cost associated with rule 19b–1(e)) = $94,260. PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 77907 technology. Consideration will be given to comments and suggestions submitted by February 21, 2023. 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, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an email to: PRA_ Mailbox@sec.gov. Dated: December 14, 2022. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–27488 Filed 12–19–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–96499; File No. SR– NYSEARCA–2022–80] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7.19–E December 14, 2022. Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on December 8, 2022, NYSE Arca, Inc. (‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 7.19–E pertaining to pre-trade risk controls to make additional pre-trade risk controls available to Entering Firms. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 E:\FR\FM\20DEN1.SGM 20DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 87, Number 243 (Tuesday, December 20, 2022)]
[Notices]
[Pages 77906-77907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27488]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-312, OMB Control No. 3235-0354]


Proposed Collection; Comment Request; Extension: Rule 19b-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. 350l-3520), the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the collection of 
information summarized below. The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget for extension and approval.
    Section 19(b) of the Investment Company Act of 1940 (the ``Act'') 
(15 U.S.C. 80a-19(b)) authorizes the Commission to regulate registered 
investment company (``fund'') distributions of long-term capital gains 
made more frequently than once every twelve months. Accordingly, rule 
19b-1 under the Act (17 CFR 270.19b-1) regulates the frequency of fund 
distributions of capital gains. Rule 19b-1(c) states that the rule does 
not apply to a unit investment trust (``UIT'') if it is engaged 
exclusively in the business of investing in certain eligible securities 
(generally, fixed-income securities), provided that: (i) the capital 
gains distribution falls within one of five categories specified in the 
rule \1\ and (ii) the distribution is accompanied by a report to the 
unitholder that clearly describes the distribution as a capital gains 
distribution (the ``notice requirement'').\2\ Rule 19b-1(e) permits a 
fund to apply to the Commission for permission to distribute long-term 
capital gains that would otherwise be prohibited by the rule if the 
fund did not foresee the circumstances that created the need for the 
distribution. The application must set forth the pertinent facts and 
explain the circumstances that justify the distribution.\3\ An 
application that meets those requirements is deemed to be granted 
unless the Commission denies the request within 15 days after the 
Commission receives the application.
---------------------------------------------------------------------------

    \1\ 17 CFR 270.19b-1(c)(1).
    \2\ The notice requirement in rule 19b-1(c)(2) supplements the 
notice requirement of section 19(a) [15 U.S.C. 80a-19(a)], which 
requires any distribution in the nature of a dividend payment to be 
accompanied by a notice disclosing the source of the distribution.
    \3\ Rule 19b-1(e) also requires that the application comply with 
rule 0-2 [17 CFR 270.02] under the Act, which sets forth the general 
requirements for papers and applications filed with the Commission 
pursuant to the Act and rules thereunder.
---------------------------------------------------------------------------

    Commission staff estimates that one fund will file an application 
under rule 19b-1(e) each year.\4\ The staff understands that if a fund 
files an application it generally uses outside counsel to prepare the 
application. The cost burden of using outside counsel is discussed in 
Item 13 below. The staff estimates that, on average, a fund's 
investment adviser would spend approximately 4 hours to review an 
application, including 3.5 hours by an assistant general counsel at a 
cost of $510 per hour and 0.5 hours by an administrative assistant at a 
cost of $89 per hour, and the fund's board of directors would spend an 
additional 1 hour at a cost of $4,770 per hour, for a total of 5 
hours.\5\ Thus, the staff

[[Page 77907]]

estimates that the annual hour burden of the collection of information 
imposed by rule 19b-1(e) would be approximately five hours per fund, at 
a cost of $6,599.50.\6\ Because the staff estimates that, each year, 
one fund will file an application pursuant to rule 19b-1(e), the total 
burden for the information collection is 5 hours at a cost of 
$6,599.50.
---------------------------------------------------------------------------

    \4\ This estimate is based on the average number of applications 
filed with the Commission pursuant to rule 19b-1(e) in the prior 
three-year period.
    \5\ The estimate for assistant general counsels is 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 estimate for 
administrative assistants is from SIFMA's Office Salaries in the 
Securities Industry 2013, modified by Commission staff to account 
for an 1800-hour work-year and inflation and multiplied by 2.93 to 
account for bonuses, firm size, employee benefits and overhead. The 
staff previously estimated in 2009 that the average cost of board of 
director time was $4,000 per hour for the board as a whole, based on 
information received from funds and their counsel. Adjusting for 
inflation, the staff estimates that the current average cost of 
board of director time is approximately $4,770.
    \6\ This estimate is based on the following calculations: $1,785 
(3.5 hours x $510 = $1,785) plus $44.5 (0.5 hours x $89 = $44.5) 
plus $4,770 equals $6,599.50 (cost of one application).
---------------------------------------------------------------------------

    Commission staff estimates that there is no hour burden associated 
with complying with the collection of information component of rule 
19b-1(c). This estimate assumes that UITs using rule 19b-1(c) do not 
have their own employees or staff and that the mechanics of the notice 
requirement would be handled by a UIT sponsor or trustee as an 
accommodation for the UIT. As such, the costs related to this aspect of 
the collection of information are captured in the external cost 
estimates below.
    As noted above, Commission staff understands that funds that file 
an application under rule 19b-1(e) generally use outside counsel to 
prepare the application.\7\ The staff estimates that, on average, 
outside counsel spends 10 hours preparing a rule 19b-1(e) application, 
including eight hours by an associate and two hours by a partner. 
Outside counsel billing arrangements and rates vary based on numerous 
factors, but the staff has estimated the average cost of outside 
counsel as $531 per hour, based on information received from funds, 
intermediaries, and their counsel. The staff therefore estimates that 
the average cost of outside counsel preparation of the rule 19b-1(e) 
exemptive application is $5,310.\8\ Because the staff estimates that, 
each year, one fund will file an application pursuant to rule 19b-1(e), 
the total annual cost burden imposed by the exemptive application 
requirements of rule 19b-1(e) is estimated to be $5,310.
---------------------------------------------------------------------------

    \7\ This understanding is based on conversations with 
representatives from the fund industry.
    \8\ This estimate is based on the following calculation: 10 
hours multiplied by $531per hour equals $5,310.
---------------------------------------------------------------------------

    The Commission staff estimates that there are approximately 1,779 
UITs that may rely on rule 19b-1(c) to make capital gains 
distributions.\9\ The staff estimates that, on average, these UITs rely 
on rule 19b-1(c) once a year to make a capital gains distribution.\10\ 
In most cases, the trustee of the UIT is responsible for preparing and 
sending the notices that must accompany a capital gains distribution 
under rule 19b-1(c)(2). These notices require limited preparation, the 
cost of which accounts for only a small, indiscrete portion of the 
comprehensive fee charged by the trustee for its services to the UIT. 
The staff believes that as a matter of good business practice, and for 
tax preparation reasons, UITs would collect and distribute the capital 
gains information required to be sent to unitholders under rule 19b-
1(c) even in the absence of the rule. The staff estimates that the cost 
of preparing and distributing a notice for a capital gains distribution 
under rule 19b-1(c)(2) is approximately $50.\11\ Thus, the staff 
estimates that the capital gains distribution notice requirement 
imposes an annual cost on UITs of approximately $88,950.\12\ The staff 
therefore estimates that the total cost imposed by rule 19b-1 is 
$94,260.\13\
---------------------------------------------------------------------------

    \9\ See 2022 Investment Company Fact Book, Investment Company 
Institute, available at https://www.icifactbook.org/pdf/2022_factbook.pdf (totaling the number of taxable debt and tax-free 
debt UITs presented in Table 14).
    \10\ The number of times UITs rely on the rule to make capital 
gains distributions depends on a wide range of factors and, thus, 
can vary greatly across years and UITs. UITs may distribute capital 
gains biannually, annually, quarterly, or at other intervals. 
Additionally, a number of UITs are organized as grantor trusts, and 
therefore do not generally make capital gains distributions under 
rule 19b-1(c), or may not rely on rule 19b-1(c) as they do not meet 
the rule's requirements.
    \11\ Although the $50 estimate is consistent with prior renewals 
it is possible that the actual costs have decreased over time as a 
result of electronic automation or other efficiencies. In an 
abundance of a caution, and for purposes of this Paperwork Reduction 
Act renewal, we are assuming on a conservative basis that this cost 
has not changed.
    \12\ This estimate is based on the following calculation: 1,779 
UITs multiplied by $50 equals $88,950.
    \13\ This estimate is based on the following calculation: 
$88,950 (total cost associated with rule 19b-1(c)) + $5,310 (total 
cost associated with rule 19b-1(e)) = $94,260.
---------------------------------------------------------------------------

    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.
    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 
estimate of the burden of the collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information collected; 
and (d) ways to minimize the burden of the collection of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology. Consideration will 
be given to comments and suggestions submitted by February 21, 2023.
    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, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an 
email to: [email protected].

    Dated: December 14, 2022.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-27488 Filed 12-19-22; 8:45 am]
BILLING CODE 8011-01-P

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