Submission for OMB Review; Comment Request: Rule 15c6-2, 66923-66925 [2023-21167]
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
(C) Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants, or Others
DTC has not received or solicited any
written comments relating to this
proposal. If any written comments are
received, they would be publicly filed
as an Exhibit 2 to this filing, as required
by Form 19b–4 and the General
Instructions thereto.
Persons submitting comments are
cautioned that, according to Section IV
(Solicitation of Comments) of the
Exhibit 1A in the General Instructions to
Form 19b–4, the Commission does not
edit personal identifying information
from comment submissions.
Commenters should submit only
information that they wish to make
available publicly, including their
name, email address, and any other
identifying information.
All prospective commenters should
follow the Commission’s instructions on
how to submit comments, available at
www.sec.gov/regulatory-actions/how-tosubmit-comments. General questions
regarding the rule filing process or
logistical questions regarding this filing
should be directed to the Main Office of
the Commission’s Division of Trading
and Markets at tradingandmarkets@
sec.gov or 202–551–5777.
DTC reserves the right to not respond
to any comments received.
III. Date of Effectiveness of the
Proposed Rule Change, and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
(i) significantly affect the protection of
investors or the public interest;
(ii) impose any significant burden on
competition; and
(iii) become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate, it has become effective
pursuant to section 19(b)(3)(A) of the
Act 15 and Rule 19b–4(f)(6)
thereunder.16
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 necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
15 15
16 17
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:
18:09 Sep 27, 2023
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21137 Filed 9–27–23; 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–
DTC–2023–009 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. S7–05–22, OMB Control No.
3235–XXXX]
Submission for OMB Review;
Comment Request: Rule 15c6–2
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to file
number SR–DTC–2023–009. 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
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of DTC
and on DTCC’s website (https://
dtcc.com/legal/sec-rule-filings.aspx). Do
not include personal identifiable
information in submissions; you should
submit only information that you wish
to make available publicly. We may
redact in part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–DTC–2023–009 and
should be submitted on or before
October 19, 2023.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
VerDate Sep<11>2014
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
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
provided for 17 CFR 240.15c6–2 (‘‘Rule
15c6–2’’) under the Securities Exchange
Act of 1934 (‘‘Exchange Act’’) (15 U.S.C.
78a et seq.). The Commission has
submitted this collection of information
to the Office of Management and Budget
(‘‘OMB’’) for approval. The title of the
information collection is ‘‘Rule 15c6–2.’’
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.
Rule 15c6–2 was adopted as part of
the final rules to shorten the standard
settlement cycle for securities
transactions from two business days
after the transaction date to one
business day following the transaction
date. The compliance date for adopted
Rule 15c6–2 is May 28, 2024. Certain
provisions of Rule 15c6–2 contain
‘‘collection of information’’
requirements within the meaning of the
PRA.1 The requirements for this
collection of information is mandatory
for any broker or dealer (‘‘brokerdealer’’) engaging in the allocation,
confirmation, or affirmation process
with another party or parties to achieve
settlement of a securities transaction
that is subject to the requirements of
§ 240.15c6–1(a) to either enter into
written agreements as specified in the
rule or establish, maintain, and enforce
written policies and procedures
reasonably designed to address certain
objectives related to completing
17 17
1 See
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CFR 200.30–3(a)(12).
44 U.S.C. 3501 et seq.
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
allocations, confirmations, and
affirmations as soon as technologically
practicable and no later than the end of
trade date.2
Specifically, for a broker-dealer that
determines to establish, maintain, and
enforce written policies and procedures
pursuant to Rule 15c6–2(a), Rule 15c6–
2(b) requires that such policies and
procedures must be reasonably designed
to (1) identify and describe any
technology systems, operations, and
processes that the broker-dealer uses to
coordinate with other relevant parties,
including investment advisers and
custodians, to ensure completion of the
allocation, confirmation, or affirmation
process for the transaction; (2) set target
time frames on trade date for completing
the allocation, confirmation, and
affirmation for the transaction; (3)
describe the procedures that the brokerdealer will follow to ensure the prompt
communication of trade information,
investigate any discrepancies in trade
information, and adjust trade
information to help ensure that the
allocation, confirmation, and
affirmation can be completed by the
target time frames on trade date; (4)
describe how the broker-dealer plans to
identify and address delays if another
party, including an investment adviser
or a custodian, is not promptly
completing the allocation or affirmation
for the transaction, or if the brokerdealer experiences delays in promptly
completing the confirmation; and (5)
measure, monitor, and document the
rates of allocations, confirmations, and
affirmations completed as soon as
technologically practicable and no later
than the end of the day on trade date.
The purpose of the collection under
Rule 15c6–2 is to ensure that parties to
institutional transactions—that is,
transactions where a broker-dealer or its
customer must engage with agents of the
customer, including the customer’s
investment adviser or its securities
custodian, to prepare a transaction for
settlement—can ensure the completion
of the allocation, confirmation, and
affirmation process as soon as
technologically practicable and no later
than the end of the day on trade date.
The respondents to the collection of
information are broker-dealers that are
parties to institutional trades. As of
December 31, 2021, 3,508 broker-dealers
were registered with the Commission.3
2 See 17 CFR 240.15c6–2; Exchange Act Release
No. 96930 (Feb. 15, 2023) 88 FR 13872 (Mar. 6,
2023) (‘‘Rule 15c6–2 Adopting Release’’); see also
Exchange Act Release No. 94196 (Feb. 9, 2022), 87
FR 10436 (Feb. 24, 2022) (‘‘Rule 15c6–2 Proposing
Release’’).
3 This estimate is derived from FOCUS Report
data as of December 31, 2021.
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18:09 Sep 27, 2023
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Of those, approximately 143 brokerdealers are participants of the
Depository Trust Company (‘‘DTC’’),4 a
clearing agency registered with the
Commission that provides central
securities depository services for
transactions in U.S. equity securities.
Participants in DTC can facilitate the
settlement of securities transactions on
behalf of their customers. For example,
broker-dealers that participate in DTC
are often referred to as ‘‘clearing
brokers’’ within the securities industry.
In addition to broker-dealers, DTC
participants include bank custodians
that may also hold securities on behalf
of institutional customers. Among other
things, DTC facilitates the settlement of
securities transactions using the
delivery-versus-payment (‘‘DVP’’) and
receipt-versus-payment (‘‘RVP’’)
methods, both of which are commonly
used by buyers and sellers to settle an
institutional transaction once the parties
have completed the allocation,
confirmation, and affirmation process.
Because DTC is the only clearing agency
that provides central securities
depository services for U.S. equities, the
Commission believes that the set of
participants at DTC that are brokerdealers are a useful, if partial, estimate
of broker-dealers that participate in the
allocation, confirmation, and
affirmation process and therefore of
broker-dealers that would be subject to
the requirements of Rule 15c6–2.
In addition, other broker-dealers may
participate in the allocation,
confirmation, and affirmation process
but, because they do not maintain status
as a participant in DTC, rely on
commercial relationships with DTC
participants (i.e., clearing brokers) to
facilitate final settlement of their
institutional transactions. Using annual
statistics compiled by the Financial
Industry Regulatory Authority
(‘‘FINRA’’), the Commission estimates
that approximately 268 additional
broker-dealers may serve institutional
customers.5 Accordingly, the
Commission estimates that
approximately 411 broker-dealers would
be subject to the requirements of Rule
15c6–2.
Rule 15c6–2 will impose both initial
and ongoing burdens. The extent to
which a respondent will incur a burden
4 See DTCC, DTC Member Directories, https://
www.dtcc.com/client-center/dtc-directories (last
updated July 1, 2023).
5 Specifically, statistics compiled by FINRA
suggest that approximately 256 small firms and 12
medium-sized firms in the ‘‘Trading and
Execution’’ category perform ‘‘Institutional
Brokerage.’’ FINRA, 2022 FINRA Industry Snapshot
33, 34 (2022), https://www.finra.org/sites/default/
files/2022-03/2022-industry-snapshot.pdf.
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to comply with the collection of
information under Rule 15c6–2 will
depend on the extent to which the
broker-dealer determines that its
policies and procedures, as opposed to
its written agreements, will be used to
comply with the rule and how any
existing policies and procedures for
ensuring timely settlement would need
to be modified to address same-day
affirmation. As a general matter, most
broker-dealers maintain policies and
procedures to ensure the timely
settlement of their transactions, and the
securities industry considers achieving
‘‘same-day affirmation’’ an industry best
practice. Nonetheless, the Commission
believes that respondent broker-dealers
will need to evaluate existing policies
and procedures, identify any gaps, and
then update their policies and
procedures to address any gaps
identified. Accordingly, the
Commission estimates that respondent
broker-dealers would incur an aggregate
one-time burden of approximately 240
hours 6 to create policies and procedures
required under the rule, and that the
internal cost (or monetized value of the
hour burden) of this one-time burden
per broker-dealer would be $88,880.7
Rule 15c6–2 also imposes ongoing
burdens on a respondent broker-dealer
as follows: (i) ongoing monitoring and
compliance activities with respect to the
written policies and procedures
required by the proposed rule; and (ii)
ongoing documentation activities with
respect to its obligations to measure,
monitor, and document the rates of
allocations, confirmations, and
affirmations completed as soon as
technologically practicable and no later
than the end of the day on trade date.
The Commission estimates that the
ongoing activities required by Rule
15c6–2 would impose an aggregate
annual burden on a respondent brokerdealer of 480 hours,8 and an internal
cost (or monetized value of the hour
6 This figure was calculated as follows: (Assistant
General Counsel for 20 hours + Compliance
Attorney for 120 hours + Senior Risk Management
Specialist for 20 hours + Risk Management
Specialist for 80 hours) = 240 hours × 411
respondents = 98,640 hours.
7 This figure was calculated as follows: (Assistant
General Counsel at $543/hour × 20 hours = $10,860)
+ (Compliance Attorney at $426/hour × 120 hours
= $51,120) + (Senior Risk Management Specialist at
$417/hour × 20 hours = $8,340) + (Risk
Management Specialist at $232/hour × 80 hours =
$18,560) = $88,880 × 411 respondents =
$36,529,680.
8 This figure was calculated as follows: (Assistant
General Counsel for 48 hours + Compliance
Attorney for 192 hours + Senior Risk Management
Specialist for 48 hours + Risk Management
Specialist for 192 hours) = 480 hours × 411
respondents = 197,280 hours.
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Federal Register / Vol. 88, No. 187 / Thursday, September 28, 2023 / Notices
burden) per broker-dealer of $172,416.9
The total industry internal cost is
estimated to be approximately $107M.10
Rule 15c6–2 imposes a recordkeeping
requirement on broker-dealers to
maintain policies and procedures
consistent with the rule. Where the
Commission requests that a brokerdealer produce records retained
pursuant to the requirements of Rule
15c6–2, a broker-dealer can request
confidential treatment of the
information. If such confidential
treatment request is made, the
Commission anticipates that it will keep
the information confidential subject to
applicable law.
Pursuant to Exchange Act Rule 17a–
4(b)(7), a broker or dealer registered
pursuant to section 15 of the Exchange
Act must preserve for a period of not
less than three years, the first two years
in an easily accessible place, all written
agreements (or copies thereof) entered
into by such member, broker or dealer
relating to its business as such,
including agreements with respect to
any account.11
Pursuant to 17 CFR 240.17a–4(e)(7), a
broker or dealer registered pursuant to
section 15 of the Exchange Act must
maintain and preserve in an easily
accessible place each compliance,
supervisory, and procedures manual,
including any updates, modifications,
and revisions to the manual, describing
the policies and practices of the
member, broker or dealer with respect to
compliance with applicable laws and
rules, and supervision of the activities
of each natural person associated with
the member, broker or dealer until three
years after the termination of the use of
the manual.12
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
ddrumheller on DSK120RN23PROD with NOTICES1
9 This
figure was calculated as follows: (Assistant
General Counsel at $543/hour × 48 hours = $26,064)
+ (Compliance Attorney at $426/hour × 192 hours
= $81,792) + (Senior Risk Management Specialist at
$417/hour × 48 hours = $20,016) + (Risk
Management Specialist at $232/hour × 192 hours =
$44,544) = $172,416 × 411 respondents =
$70,862,976.
10 This figure was calculated as follows:
$36,529,680 (industry one-time burden) +
$70,862,976 (industry ongoing burden) =
$107,392,656.
11 17 CFR 240.17a–4(b)(7). The title of the
information collection for 17 CFR 240.17a–4 is
‘‘Records to be Preserved by Broker-Dealers’’ (OMB
Control No. 3235–0279).
12 17 CFR 240.17a–4(e)(7).
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18:09 Sep 27, 2023
Jkt 259001
October 30, 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: September 22, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–21167 Filed 9–27–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98483; File No. SR–
NYSEAMER–2023–44]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Modify Rule 900.3NYP
September 22, 2023.
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
September 18, 2023, NYSE American
LLC (‘‘NYSE American’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
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 modify
Rule 900.3NYP(g)(1) regarding Complex
Qualified Contingent Cross Orders. 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.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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66925
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to modify
Rule 900.3NYP(g)(1) regarding Complex
Qualified Contingent Cross (‘‘QCC’’)
Orders to allow Complex QCC Orders in
non-standard ratios (as defined below)
to be processed electronically.4 The
Exchange notes that an identical rule
change was recently adopted on its
affiliated exchange, NYSE Arca, Inc.
(‘‘NYSE Arca’’) and therefore this
proposal raises no new or novel issues
not previously considered by the
Commission.5
Rule 900.3NYP(f) provides that a
Complex Order is any order involving
the simultaneous purchase and/or sale
of two or more option series in the same
underlying security (the ‘‘legs’’ or
‘‘components’’ of the Complex Order),
for the same account, in a ratio that is
equal to or greater than one-to-three
(.333) and less than or equal to three-toone (3.00) (referred to herein as the
‘‘standard ratio’’ or ‘‘standard ratio
requirement’’).The Exchange currently
permits certain Complex Orders with
ratios greater than three-to-one or less
than one-to-three (‘‘non-standard
ratios’’) for execution on the Exchange’s
trading floor.6 This proposed change is
competitive as at least one other options
exchange permits Complex QCC Orders
in non-standard ratios to be processed
electronically.7 As such, the Exchange
4 The Exchange notes that this proposed change
modifies a Pillar rule (i.e., with a ‘‘P’’ modifier) that
has not yet been implemented. The Exchange
anticipates migrating to its Pillar trading platform
beginning on October 23, 2023. As is the case with
all Pillar rules, this proposed rule change (as well
as the entire Rule 900.3NYP) will not be
implemented until all other Pillar-related rule
filings are approved or operative, as applicable, and
the Exchange announces the migration of
underlying symbols to Pillar by Trader Update.
5 See Securities Exchange Act Release No. 98279
(September 1, 2023), 88 FR 62115 (September 8,
2023) (SR–NYSEARCA–2023–57) (immediately
effective rule change to modify Rule 6.62P–O(g)(1)
to allow Complex QCC Orders in non-standard
ratios).
6 See, e.g., Rule 900.3NYP(h)(6)(B) (regarding
Stock/Complex Orders, which are a subset of
Complex Orders (per Rule 900.3NYP(f)), that are
only available for trading in Open Outcry and are
not subject to the standard ratio requirement).
7 In June 2022, Cboe Exchange, Inc. (‘‘Cboe’’)
began supporting the electronic processing of
certain stock-option orders in non-standard ratios,
including Complex QCC Orders. See Cboe Exchange
Continued
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]]>Agencies
[Federal Register Volume 88, Number 187 (Thursday, September 28, 2023)]
[Notices]
[Pages 66923-66925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21167]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. S7-05-22, OMB Control No. 3235-XXXX]
Submission for OMB Review; Comment Request: Rule 15c6-2
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 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collection of
information provided for 17 CFR 240.15c6-2 (``Rule 15c6-2'') under the
Securities Exchange Act of 1934 (``Exchange Act'') (15 U.S.C. 78a et
seq.). The Commission has submitted this collection of information to
the Office of Management and Budget (``OMB'') for approval. The title
of the information collection is ``Rule 15c6-2.'' 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.
Rule 15c6-2 was adopted as part of the final rules to shorten the
standard settlement cycle for securities transactions from two business
days after the transaction date to one business day following the
transaction date. The compliance date for adopted Rule 15c6-2 is May
28, 2024. Certain provisions of Rule 15c6-2 contain ``collection of
information'' requirements within the meaning of the PRA.\1\ The
requirements for this collection of information is mandatory for any
broker or dealer (``broker-dealer'') engaging in the allocation,
confirmation, or affirmation process with another party or parties to
achieve settlement of a securities transaction that is subject to the
requirements of Sec. 240.15c6-1(a) to either enter into written
agreements as specified in the rule or establish, maintain, and enforce
written policies and procedures reasonably designed to address certain
objectives related to completing
[[Page 66924]]
allocations, confirmations, and affirmations as soon as technologically
practicable and no later than the end of trade date.\2\
---------------------------------------------------------------------------
\1\ See 44 U.S.C. 3501 et seq.
\2\ See 17 CFR 240.15c6-2; Exchange Act Release No. 96930 (Feb.
15, 2023) 88 FR 13872 (Mar. 6, 2023) (``Rule 15c6-2 Adopting
Release''); see also Exchange Act Release No. 94196 (Feb. 9, 2022),
87 FR 10436 (Feb. 24, 2022) (``Rule 15c6-2 Proposing Release'').
---------------------------------------------------------------------------
Specifically, for a broker-dealer that determines to establish,
maintain, and enforce written policies and procedures pursuant to Rule
15c6-2(a), Rule 15c6-2(b) requires that such policies and procedures
must be reasonably designed to (1) identify and describe any technology
systems, operations, and processes that the broker-dealer uses to
coordinate with other relevant parties, including investment advisers
and custodians, to ensure completion of the allocation, confirmation,
or affirmation process for the transaction; (2) set target time frames
on trade date for completing the allocation, confirmation, and
affirmation for the transaction; (3) describe the procedures that the
broker-dealer will follow to ensure the prompt communication of trade
information, investigate any discrepancies in trade information, and
adjust trade information to help ensure that the allocation,
confirmation, and affirmation can be completed by the target time
frames on trade date; (4) describe how the broker-dealer plans to
identify and address delays if another party, including an investment
adviser or a custodian, is not promptly completing the allocation or
affirmation for the transaction, or if the broker-dealer experiences
delays in promptly completing the confirmation; and (5) measure,
monitor, and document the rates of allocations, confirmations, and
affirmations completed as soon as technologically practicable and no
later than the end of the day on trade date.
The purpose of the collection under Rule 15c6-2 is to ensure that
parties to institutional transactions--that is, transactions where a
broker-dealer or its customer must engage with agents of the customer,
including the customer's investment adviser or its securities
custodian, to prepare a transaction for settlement--can ensure the
completion of the allocation, confirmation, and affirmation process as
soon as technologically practicable and no later than the end of the
day on trade date.
The respondents to the collection of information are broker-dealers
that are parties to institutional trades. As of December 31, 2021,
3,508 broker-dealers were registered with the Commission.\3\ Of those,
approximately 143 broker-dealers are participants of the Depository
Trust Company (``DTC''),\4\ a clearing agency registered with the
Commission that provides central securities depository services for
transactions in U.S. equity securities. Participants in DTC can
facilitate the settlement of securities transactions on behalf of their
customers. For example, broker-dealers that participate in DTC are
often referred to as ``clearing brokers'' within the securities
industry. In addition to broker-dealers, DTC participants include bank
custodians that may also hold securities on behalf of institutional
customers. Among other things, DTC facilitates the settlement of
securities transactions using the delivery-versus-payment (``DVP'') and
receipt-versus-payment (``RVP'') methods, both of which are commonly
used by buyers and sellers to settle an institutional transaction once
the parties have completed the allocation, confirmation, and
affirmation process. Because DTC is the only clearing agency that
provides central securities depository services for U.S. equities, the
Commission believes that the set of participants at DTC that are
broker-dealers are a useful, if partial, estimate of broker-dealers
that participate in the allocation, confirmation, and affirmation
process and therefore of broker-dealers that would be subject to the
requirements of Rule 15c6-2.
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\3\ This estimate is derived from FOCUS Report data as of
December 31, 2021.
\4\ See DTCC, DTC Member Directories, https://www.dtcc.com/client-center/dtc-directories (last updated July 1, 2023).
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In addition, other broker-dealers may participate in the
allocation, confirmation, and affirmation process but, because they do
not maintain status as a participant in DTC, rely on commercial
relationships with DTC participants (i.e., clearing brokers) to
facilitate final settlement of their institutional transactions. Using
annual statistics compiled by the Financial Industry Regulatory
Authority (``FINRA''), the Commission estimates that approximately 268
additional broker-dealers may serve institutional customers.\5\
Accordingly, the Commission estimates that approximately 411 broker-
dealers would be subject to the requirements of Rule 15c6-2.
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\5\ Specifically, statistics compiled by FINRA suggest that
approximately 256 small firms and 12 medium-sized firms in the
``Trading and Execution'' category perform ``Institutional
Brokerage.'' FINRA, 2022 FINRA Industry Snapshot 33, 34 (2022),
https://www.finra.org/sites/default/files/2022-03/2022-industry-snapshot.pdf.
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Rule 15c6-2 will impose both initial and ongoing burdens. The
extent to which a respondent will incur a burden to comply with the
collection of information under Rule 15c6-2 will depend on the extent
to which the broker-dealer determines that its policies and procedures,
as opposed to its written agreements, will be used to comply with the
rule and how any existing policies and procedures for ensuring timely
settlement would need to be modified to address same-day affirmation.
As a general matter, most broker-dealers maintain policies and
procedures to ensure the timely settlement of their transactions, and
the securities industry considers achieving ``same-day affirmation'' an
industry best practice. Nonetheless, the Commission believes that
respondent broker-dealers will need to evaluate existing policies and
procedures, identify any gaps, and then update their policies and
procedures to address any gaps identified. Accordingly, the Commission
estimates that respondent broker-dealers would incur an aggregate one-
time burden of approximately 240 hours \6\ to create policies and
procedures required under the rule, and that the internal cost (or
monetized value of the hour burden) of this one-time burden per broker-
dealer would be $88,880.\7\
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\6\ This figure was calculated as follows: (Assistant General
Counsel for 20 hours + Compliance Attorney for 120 hours + Senior
Risk Management Specialist for 20 hours + Risk Management Specialist
for 80 hours) = 240 hours x 411 respondents = 98,640 hours.
\7\ This figure was calculated as follows: (Assistant General
Counsel at $543/hour x 20 hours = $10,860) + (Compliance Attorney at
$426/hour x 120 hours = $51,120) + (Senior Risk Management
Specialist at $417/hour x 20 hours = $8,340) + (Risk Management
Specialist at $232/hour x 80 hours = $18,560) = $88,880 x 411
respondents = $36,529,680.
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Rule 15c6-2 also imposes ongoing burdens on a respondent broker-
dealer as follows: (i) ongoing monitoring and compliance activities
with respect to the written policies and procedures required by the
proposed rule; and (ii) ongoing documentation activities with respect
to its obligations to measure, monitor, and document the rates of
allocations, confirmations, and affirmations completed as soon as
technologically practicable and no later than the end of the day on
trade date. The Commission estimates that the ongoing activities
required by Rule 15c6-2 would impose an aggregate annual burden on a
respondent broker-dealer of 480 hours,\8\ and an internal cost (or
monetized value of the hour
[[Page 66925]]
burden) per broker-dealer of $172,416.\9\ The total industry internal
cost is estimated to be approximately $107M.\10\
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\8\ This figure was calculated as follows: (Assistant General
Counsel for 48 hours + Compliance Attorney for 192 hours + Senior
Risk Management Specialist for 48 hours + Risk Management Specialist
for 192 hours) = 480 hours x 411 respondents = 197,280 hours.
\9\ This figure was calculated as follows: (Assistant General
Counsel at $543/hour x 48 hours = $26,064) + (Compliance Attorney at
$426/hour x 192 hours = $81,792) + (Senior Risk Management
Specialist at $417/hour x 48 hours = $20,016) + (Risk Management
Specialist at $232/hour x 192 hours = $44,544) = $172,416 x 411
respondents = $70,862,976.
\10\ This figure was calculated as follows: $36,529,680
(industry one-time burden) + $70,862,976 (industry ongoing burden) =
$107,392,656.
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Rule 15c6-2 imposes a recordkeeping requirement on broker-dealers
to maintain policies and procedures consistent with the rule. Where the
Commission requests that a broker-dealer produce records retained
pursuant to the requirements of Rule 15c6-2, a broker-dealer can
request confidential treatment of the information. If such confidential
treatment request is made, the Commission anticipates that it will keep
the information confidential subject to applicable law.
Pursuant to Exchange Act Rule 17a-4(b)(7), a broker or dealer
registered pursuant to section 15 of the Exchange Act must preserve for
a period of not less than three years, the first two years in an easily
accessible place, all written agreements (or copies thereof) entered
into by such member, broker or dealer relating to its business as such,
including agreements with respect to any account.\11\
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\11\ 17 CFR 240.17a-4(b)(7). The title of the information
collection for 17 CFR 240.17a-4 is ``Records to be Preserved by
Broker-Dealers'' (OMB Control No. 3235-0279).
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Pursuant to 17 CFR 240.17a-4(e)(7), a broker or dealer registered
pursuant to section 15 of the Exchange Act must maintain and preserve
in an easily accessible place each compliance, supervisory, and
procedures manual, including any updates, modifications, and revisions
to the manual, describing the policies and practices of the member,
broker or dealer with respect to compliance with applicable laws and
rules, and supervision of the activities of each natural person
associated with the member, broker or dealer until three years after
the termination of the use of the manual.\12\
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\12\ 17 CFR 240.17a-4(e)(7).
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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 30, 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: September 22, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21167 Filed 9-27-23; 8:45 am]
BILLING CODE 8011-01-P
