Submission for OMB Review; Comment Request; Extension: Rule 17f-5, 30820-30821 [2023-10115]

Download as PDF 30820 Federal Register / Vol. 88, No. 92 / Friday, May 12, 2023 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–10128 Filed 5–11–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 34910; 812–15449] FOR FURTHER INFORMATION CONTACT: Hennessy Funds Trust and Hennessy Advisors, Inc. May 8, 2023. Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’). ACTION: Notice. lotter on DSK11XQN23PROD with NOTICES1 AGENCY: Notice of an application under section 6(c) of the Investment Company Act of 1940 (‘‘Act’’) for an exemption from section 15(a) of the Act and Rule 18f– 2 thereunder, as well as from certain disclosure requirements in rule 20a–1 under the Act, Item 19(a)(3) of Form N– 1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A under the Securities Exchange Act of 1934, and sections 6–07(2)(a), (b), and (c) of Regulation S–X (‘‘Disclosure Requirements’’). SUMMARY OF APPLICATION: The requested exemption would permit Applicants to enter into and materially amend subadvisory agreements with subadvisers without shareholder approval and would grant relief from the Disclosure Requirements as they relate to fees paid to the subadvisers. APPLICANTS: Hennessy Funds Trust and Hennessy Advisors, Inc. FILING DATES: The application was filed on March 31, 2023. HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing on any application by emailing the SEC’s Secretary at Secretarys-Office@sec.gov and serving the Applicants with a copy of the request by email, if an email address is listed for the relevant Applicant below, or personally or by mail, if a physical address is listed for the relevant Applicant below. Hearing requests should be received by the Commission by 5:30 p.m. on June 2, 2023, and should be accompanied by proof of service on the Applicants, in the form of an affidavit, or, for lawyers, a certificate of service. Pursuant to rule 0– 11 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:11 May 11, 2023 Jkt 259001 5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by emailing the Commission’s Secretary. ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicant: Teresa M. Nilsen, terry@ hennessyfunds.com. Trace W. Rakestraw, Senior Special Counsel, at (202) 551–6825 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: For Applicants’ representations, legal analysis, and conditions, please refer to Applicants’ application, dated March 31, 2023, which may be obtained via the Commission’s website by searching for the file number at the top of this document, or for an Applicant using the Company name search field on the SEC’s EDGAR system. The SEC’s EDGAR system may be searched at https://www.sec.gov/edgar/searchedgar/ legacy/companysearch.html. You may also call the SEC’s Public Reference Room at (202) 551–8090. For the Commission, by the Division of Investment Management, under delegated authority. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–10133 Filed 5–11–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–259, OMB Control No. 3235–0269] Submission for OMB Review; Comment Request; Extension: Rule 17f–5 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’’) has submitted to the Office of Management and Budget (‘‘OMB’’) requests for extension of the previously approved collections of information discussed below. Rule 17f–5 (17 CFR 270.17f–5) under the Investment Company Act of 1940 [15 U.S.C. 80a] (the ‘‘Act’’) governs the PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 custody of the assets of registered management investment companies (‘‘funds’’) with custodians outside the United States. Under rule 17f–5, a fund or its foreign custody manager (as delegated by the fund’s board) may maintain the fund’s foreign assets in the care of an eligible fund custodian under certain conditions. If the fund’s board delegates to a foreign custody manager authority to place foreign assets, the fund’s board must find that it is reasonable to rely on each delegate the board selects to act as the fund’s foreign custody manager. The delegate must agree to provide written reports that notify the board when the fund’s assets are placed with a foreign custodian and when any material change occurs in the fund’s custody arrangements. The delegate must agree to exercise reasonable care, prudence, and diligence, or to adhere to a higher standard of care, in performing the delegated services. When the foreign custody manager selects an eligible foreign custodian, it must determine that the fund’s assets will be subject to reasonable care if maintained with that custodian, and that the written contract that governs each custody arrangement will provide reasonable care for fund assets. The contract must contain certain specified provisions or others that provide at least equivalent care. The foreign custody manager must establish a system to monitor the performance of the contract and the appropriateness of continuing to maintain assets with the eligible foreign custodian. The collection of information requirements in rule 17f–5 are intended to provide protection for fund assets maintained with a foreign bank custodian whose use is not authorized by statutory provisions that govern fund custody arrangements,1 and that is not subject to regulation and examination by U.S. regulators. The requirement that the fund board determine that it is reasonable to rely on each delegate is intended to ensure that the board carefully considers each delegate’s qualifications to perform its responsibilities. The requirement that the delegate provide written reports to the board is intended to ensure that the delegate notifies the board of important developments concerning custody arrangements so that the board may exercise effective oversight. The requirement that the delegate agree to exercise reasonable care is intended to provide assurances to the fund that the 1 See E:\FR\FM\12MYN1.SGM section 17(f) of the Act. 15 U.S.C. 80a–17(f). 12MYN1 Federal Register / Vol. 88, No. 92 / Friday, May 12, 2023 / Notices lotter on DSK11XQN23PROD with NOTICES1 delegate will properly perform its duties. The requirements that the foreign custody manager determine that fund assets will be subject to reasonable care with the eligible foreign custodian and under the custody contract, and that each contract contain specified provisions or equivalent provisions, are intended to ensure that the delegate has evaluated the level of care provided by the custodian, that it weighs the adequacy of contractual provisions, and that fund assets are protected by minimal contractual safeguards. The requirement that the foreign custody manager establish a monitoring system is intended to ensure that the manager periodically reviews each custody arrangement and takes appropriate action if developing custody risks may threaten fund assets.2 Commission staff estimates that each year, approximately 62 registrants 3 could be required to make an average of one response per registrant under rule 17f–5. A ‘‘response’’ may involve the fund’s directors making certain findings concerning foreign custody managers, and the review and ratification of custodial contracts. Commission staff estimates a response relating to these matters will require approximately 2.5 hours of board of director time per response, to make the necessary findings concerning foreign custody managers, and 1 hour of related compliance attorney time per response, to assist the fund board.4 For registrants, the total annual burden associated with these requirements of the rule is up to approximately 217 hours (62 responses × 3.5 hours per response). Foreign custody managers are also affected by the collection of information requirements under rule 17f–5. Commission staff estimate that, in connection with each registrant’s board of directors making certain findings concerning a foreign custody manager, those findings will require 2 The staff believes that subcustodian monitoring does not involve ‘‘collection of information’’ within the meaning of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520) (‘‘Paperwork Reduction Act’’). 3 This figure is an estimate of the number of new management investment company registrants each year, based on data reported on Form N–CEN as of December 2019, 2020, and 2021. Commission staff anticipates that the number of existing registrants that change their foreign custody managers is negligible and, therefore, the compliance burden of rule 17f–5 falls primarily on new registrants. In practice, not all registrants will use foreign custody managers. The actual figure therefore may be smaller. 4 As discussed below, Commission staff estimate that a response from a registrant will also include a related burden for the applicable foreign custody manager chosen by the registrant’s board of directors. VerDate Sep<11>2014 19:11 May 11, 2023 Jkt 259001 approximately 20 hours of trust administrator time from the applicable manager. This burden relates to the foreign custody manager’s initial considerations regarding custodial arrangements with the registrant and preparing reports to the fund board.5 Commission staff further estimate that annually, approximately 15 foreign custody managers will be required to make an average of 4 responses per manager concerning the use of foreign custodians other than depositories.6 This ‘‘response’’ may involve the foreign custody manager establishing bank custody arrangements, negotiating/ renegotiating custodial contracts, preparing reports to fund boards, and establishing and/or amending the foreign custody manager’s system for monitoring custody arrangements for its clients. The staff estimates that each response will take approximately 250 hours of trust administrator time, requiring approximately 1000 total hours annually per foreign custody manager (4 responses per foreign custody manager × 250 hours per response). Thus, the total annual burden for foreign custody managers associated with the requirements of the rule is approximately 16,240 hours ((62 responses by foreign custody managers × 20 hours per response) + (15 foreign custody managers × 4 responses per manager) × 250 hours per response). Therefore, the total annual burden of all collection of information requirements of rule 17f–5 is estimated to be up to 16,457 hours (217 hours + 16,240 hours). The total monetized annual cost of burden hours is estimated to be $5,166,833 ((217 hours × $3,529/ hour blended wage rate) + (16,240 hours × $271/hour for a trust administrator’s time)).7 Compliance with the collection 5 This estimate does not include burden hours related to the establishment and/or amendment of the foreign custody manager’s system for monitoring custody arrangements for its clients, which is accounted for separately as discussed below. 6 This figure is based on the staff’s estimate of the number of global custodians that may act as foreign custody managers under rule 17f–5. 7 The rates used to create the blended rate are as follow: board of director time—$4,770 and compliance attorney time—$425. Staff estimates concerning wage rates for the cost of board of director time are based on fund industry representations. Based on fund industry representations, the staff estimated in 2014 that the average cost of board of director time, for the board as a whole, was $4,000 per hour. Adjusting for inflation, the staff estimates that the current average cost of board of director time is approximately $4,770 per hour. Estimates concerning wage rates for compliance attorneys and trust administrators are based on salary information for the securities industry compiled by the Securities Industry and Financial Markets Association and modified by Commission staff for 2023. The compliance attorney and trust administrator wage figures are based on PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 30821 of information requirements of the rule is necessary to obtain the benefit of relying on the rule’s permission for funds to maintain their assets with foreign custodians. 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 representative survey or study of the costs of Commission rules and forms. 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 June 12, 2023 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: May 8, 2023. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–10115 Filed 5–11–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97452; File No. SR–CBOE– 2023–025] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Operation of its Flexible Exchange Options (‘‘FLEX Options’’) Pilot Program Regarding Permissible Exercise Settlement Values for FLEX Index Options May 8, 2023. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 3, 2023, Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) filed with the Securities and Exchange published rates for each, modified to account for a 1800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. See Securities Industry and Financial Markets Association, Report on Management & Professional Earnings in the Securities Industry 2013. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. E:\FR\FM\12MYN1.SGM 12MYN1

Agencies

[Federal Register Volume 88, Number 92 (Friday, May 12, 2023)]
[Notices]
[Pages 30820-30821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10115]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-259, OMB Control No. 3235-0269]


Submission for OMB Review; Comment Request; Extension: Rule 17f-5

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'') has submitted to the Office of Management 
and Budget (``OMB'') requests for extension of the previously approved 
collections of information discussed below.
    Rule 17f-5 (17 CFR 270.17f-5) under the Investment Company Act of 
1940 [15 U.S.C. 80a] (the ``Act'') governs the custody of the assets of 
registered management investment companies (``funds'') with custodians 
outside the United States. Under rule 17f-5, a fund or its foreign 
custody manager (as delegated by the fund's board) may maintain the 
fund's foreign assets in the care of an eligible fund custodian under 
certain conditions. If the fund's board delegates to a foreign custody 
manager authority to place foreign assets, the fund's board must find 
that it is reasonable to rely on each delegate the board selects to act 
as the fund's foreign custody manager. The delegate must agree to 
provide written reports that notify the board when the fund's assets 
are placed with a foreign custodian and when any material change occurs 
in the fund's custody arrangements. The delegate must agree to exercise 
reasonable care, prudence, and diligence, or to adhere to a higher 
standard of care, in performing the delegated services. When the 
foreign custody manager selects an eligible foreign custodian, it must 
determine that the fund's assets will be subject to reasonable care if 
maintained with that custodian, and that the written contract that 
governs each custody arrangement will provide reasonable care for fund 
assets. The contract must contain certain specified provisions or 
others that provide at least equivalent care. The foreign custody 
manager must establish a system to monitor the performance of the 
contract and the appropriateness of continuing to maintain assets with 
the eligible foreign custodian.
    The collection of information requirements in rule 17f-5 are 
intended to provide protection for fund assets maintained with a 
foreign bank custodian whose use is not authorized by statutory 
provisions that govern fund custody arrangements,\1\ and that is not 
subject to regulation and examination by U.S. regulators. The 
requirement that the fund board determine that it is reasonable to rely 
on each delegate is intended to ensure that the board carefully 
considers each delegate's qualifications to perform its 
responsibilities. The requirement that the delegate provide written 
reports to the board is intended to ensure that the delegate notifies 
the board of important developments concerning custody arrangements so 
that the board may exercise effective oversight. The requirement that 
the delegate agree to exercise reasonable care is intended to provide 
assurances to the fund that the

[[Page 30821]]

delegate will properly perform its duties.
---------------------------------------------------------------------------

    \1\ See section 17(f) of the Act. 15 U.S.C. 80a-17(f).
---------------------------------------------------------------------------

    The requirements that the foreign custody manager determine that 
fund assets will be subject to reasonable care with the eligible 
foreign custodian and under the custody contract, and that each 
contract contain specified provisions or equivalent provisions, are 
intended to ensure that the delegate has evaluated the level of care 
provided by the custodian, that it weighs the adequacy of contractual 
provisions, and that fund assets are protected by minimal contractual 
safeguards. The requirement that the foreign custody manager establish 
a monitoring system is intended to ensure that the manager periodically 
reviews each custody arrangement and takes appropriate action if 
developing custody risks may threaten fund assets.\2\
---------------------------------------------------------------------------

    \2\ The staff believes that subcustodian monitoring does not 
involve ``collection of information'' within the meaning of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (``Paperwork 
Reduction Act'').
---------------------------------------------------------------------------

    Commission staff estimates that each year, approximately 62 
registrants \3\ could be required to make an average of one response 
per registrant under rule 17f-5. A ``response'' may involve the fund's 
directors making certain findings concerning foreign custody managers, 
and the review and ratification of custodial contracts. Commission 
staff estimates a response relating to these matters will require 
approximately 2.5 hours of board of director time per response, to make 
the necessary findings concerning foreign custody managers, and 1 hour 
of related compliance attorney time per response, to assist the fund 
board.\4\ For registrants, the total annual burden associated with 
these requirements of the rule is up to approximately 217 hours (62 
responses x 3.5 hours per response).
---------------------------------------------------------------------------

    \3\ This figure is an estimate of the number of new management 
investment company registrants each year, based on data reported on 
Form N-CEN as of December 2019, 2020, and 2021. Commission staff 
anticipates that the number of existing registrants that change 
their foreign custody managers is negligible and, therefore, the 
compliance burden of rule 17f-5 falls primarily on new registrants. 
In practice, not all registrants will use foreign custody managers. 
The actual figure therefore may be smaller.
    \4\ As discussed below, Commission staff estimate that a 
response from a registrant will also include a related burden for 
the applicable foreign custody manager chosen by the registrant's 
board of directors.
---------------------------------------------------------------------------

    Foreign custody managers are also affected by the collection of 
information requirements under rule 17f-5. Commission staff estimate 
that, in connection with each registrant's board of directors making 
certain findings concerning a foreign custody manager, those findings 
will require approximately 20 hours of trust administrator time from 
the applicable manager. This burden relates to the foreign custody 
manager's initial considerations regarding custodial arrangements with 
the registrant and preparing reports to the fund board.\5\ Commission 
staff further estimate that annually, approximately 15 foreign custody 
managers will be required to make an average of 4 responses per manager 
concerning the use of foreign custodians other than depositories.\6\ 
This ``response'' may involve the foreign custody manager establishing 
bank custody arrangements, negotiating/renegotiating custodial 
contracts, preparing reports to fund boards, and establishing and/or 
amending the foreign custody manager's system for monitoring custody 
arrangements for its clients. The staff estimates that each response 
will take approximately 250 hours of trust administrator time, 
requiring approximately 1000 total hours annually per foreign custody 
manager (4 responses per foreign custody manager x 250 hours per 
response). Thus, the total annual burden for foreign custody managers 
associated with the requirements of the rule is approximately 16,240 
hours ((62 responses by foreign custody managers x 20 hours per 
response) + (15 foreign custody managers x 4 responses per manager) x 
250 hours per response).
---------------------------------------------------------------------------

    \5\ This estimate does not include burden hours related to the 
establishment and/or amendment of the foreign custody manager's 
system for monitoring custody arrangements for its clients, which is 
accounted for separately as discussed below.
    \6\ This figure is based on the staff's estimate of the number 
of global custodians that may act as foreign custody managers under 
rule 17f-5.
---------------------------------------------------------------------------

    Therefore, the total annual burden of all collection of information 
requirements of rule 17f-5 is estimated to be up to 16,457 hours (217 
hours + 16,240 hours). The total monetized annual cost of burden hours 
is estimated to be $5,166,833 ((217 hours x $3,529/hour blended wage 
rate) + (16,240 hours x $271/hour for a trust administrator's 
time)).\7\ Compliance with the collection of information requirements 
of the rule is necessary to obtain the benefit of relying on the rule's 
permission for funds to maintain their assets with foreign custodians.
---------------------------------------------------------------------------

    \7\ The rates used to create the blended rate are as follow: 
board of director time--$4,770 and compliance attorney time--$425. 
Staff estimates concerning wage rates for the cost of board of 
director time are based on fund industry representations. Based on 
fund industry representations, the staff estimated in 2014 that the 
average cost of board of director time, for the board as a whole, 
was $4,000 per hour. Adjusting for inflation, the staff estimates 
that the current average cost of board of director time is 
approximately $4,770 per hour. Estimates concerning wage rates for 
compliance attorneys and trust administrators are based on salary 
information for the securities industry compiled by the Securities 
Industry and Financial Markets Association and modified by 
Commission staff for 2023. The compliance attorney and trust 
administrator wage figures are based on published rates for each, 
modified to account for a 1800-hour work-year and inflation, and 
multiplied by 5.35 to account for bonuses, firm size, employee 
benefits and overhead. See Securities Industry and Financial Markets 
Association, Report on Management & Professional Earnings in the 
Securities Industry 2013.
---------------------------------------------------------------------------

    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 representative survey or study of the costs of 
Commission rules and forms.
    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 June 12, 2023 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: May 8, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10115 Filed 5-11-23; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.