Proposed Collection; Comment Request; Extension: Rule 10f-3, 52528-52529 [2024-13701]
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Federal Register / Vol. 89, No. 121 / Monday, June 24, 2024 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 24 and paragraph (f) of Rule
19b–4 25 thereunder. 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. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change 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:
lotter on DSK11XQN23PROD with NOTICES1
Electronic Comments
• 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–
CboeEDGA–2024–023 on the subject
line.
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–CboeEDGA–2024–023. 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
24 15
25 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate Sep<11>2014
18:55 Jun 21, 2024
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 the
Exchange. 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–CboeEDGA–2024–023 and should
be submitted on or before July 15, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13707 Filed 6–21–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–237, OMB Control No.
3235–0226]
Proposed Collection; Comment
Request; Extension: Rule 10f–3
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA
Services, 100 F Street NE,
Washington, DC 20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collections of information
discussed below. The Commission plans
to submit these existing collections of
information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Section 10(f) of the Investment
Company Act of 1940 (the ‘‘Act’’)
prohibits a registered investment
company (‘‘fund’’) from purchasing any
security during an underwriting or
selling syndicate if the fund has certain
affiliated relationships with a principal
underwriter for the security.1 Congress
enacted this provision in 1940 to protect
funds and their shareholders by
preventing underwriters from
‘‘dumping’’ unmarketable securities on
affiliated funds.
Rule 10f–3 under the Act permits a
fund to engage in a securities
26 17
1 15
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CFR 200.30–3(a)(12).
U.S.C. 80a–10(f).
Frm 00096
Fmt 4703
Sfmt 4703
transaction that otherwise would violate
Section 10(f) if, among other things: (i)
the fund’s directors have approved
procedures for purchases made in
reliance on the rule, regularly review
fund purchases to determine whether
they comply with these procedures, and
approve necessary changes to the
procedures; and (ii) a written record of
each transaction effected under the rule
is maintained for six years, the first two
of which in an easily accessible place.2
Rule 10f–3 also conditionally allows
managed portions of fund portfolios to
purchase securities offered in otherwise
off-limits primary offerings. To qualify
for this exemption, Rule 10f–3 requires
that the subadviser that is advising the
purchaser be contractually prohibited
from providing investment advice to
any other portion of the fund’s portfolio
and consulting with any other of the
fund’s advisers that is a principal
underwriter or affiliated person of a
principal underwriter concerning the
fund’s securities transactions.
These requirements provide a
mechanism for fund boards to oversee
compliance with the rule. The required
recordkeeping facilitates the
Commission staff’s review of Rule 10f–
3 transactions during routine fund
inspections and, when necessary, in
connection with enforcement actions.
The staff estimates that approximately
745 funds engage in at least one Rule
10f–3 transaction each year, for a total
of 745 such transactions.3 Rule 10f–3
requires that the purchasing fund create
a written record of each transaction that
includes, among other things,
information about from whom the
securities were purchased and the terms
of the transaction. The staff estimates
that it takes an average fund
approximately 30 minutes per
transaction at a time cost of $131 per
transaction to document each
transaction.4 Thus, annually funds
2 17
CFR 270.10f–3.
estimates are based on the average
number of fund filings on Form N–CEN made with
the Commission for fiscal years 2021 through 2023;
although business development companies
(‘‘BDCs’’) may also rely on Rule 10f–3, they do not
file on Form N–CEN, so our estimates for purposes
of this PRA exclude BDCs; further, because Form
N–CEN does not require any specific information
about Rule 10f–3 transactions, we assume for
purposes of this PRA that that each fund reported
to have relied on Rule 10f–3 engaged in one such
transaction annually.
4 The staff estimates that this task is shared
between a compliance clerk ($84/hour) and a
compliance attorney ($440/hour), for a blended
hourly wage rate of $262 ($84 + $440 ÷ 2 = $262)
and a half-hour blended wage rate of $131 ($262 ÷
2 = $131); all hourly wage rates are derived 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
3 These
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24JNN1
lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 121 / Monday, June 24, 2024 / Notices
spend approximately 373 hours 5 at an
internal cost of $97,595 documenting
these transactions.6
The funds also must maintain and
preserve these transactional records in
accordance with the rule’s
recordkeeping requirement, and the staff
estimates that it takes a fund
approximately 20 minutes per
transaction at a time cost of $28 per
transaction to comply with this part of
the rule.7 The staff estimates that
annually, in the aggregate, funds spend
approximately 248 hours 8 at a cost of
$20,832 to comply with this aspect of
Rule 10f–3’s recordkeeping
requirements.9
In addition, fund boards must, no less
than quarterly, examine each of these
transactions to ensure that they comply
with the fund’s policies and procedures.
The information or materials upon
which the board relied in making its
determination also must be maintained.
The staff estimates that it takes a fund
1 hour per quarter at a cost of $262 per
quarter to comply with the maintenance
requirement of the rule.10 Thus
annually, in the aggregate, funds spend
approximately 2,980 hours 11 annually
at a total internal cost of $780,760 to
comply with this recordkeeping
requirement.12
The staff further estimates that
reviewing and revising as needed
written procedures for Rule 10f–3
transactions takes, on average for each
fund, two hours of a compliance
attorney’s time at a cost of
approximately $880 13 per year.14 Thus,
annually, in the aggregate, the staff
estimates that funds spend a total of
approximately 1,490 hours 15 at a cost of
approximately $655,600 16 on
monitoring and revising Rule 10f–3
procedures.
Based on an analysis of Form N–CEN
filings, the staff estimates that
approximately 589 new funds enter into
sub-advisory agreements each year.17
Based on discussions with industry
representatives, the staff estimates that
it will require approximately 0.75
attorney hours to draft and execute
additional clauses in new subadvisory
contracts in order for funds and
subadvisers to be able to rely on the
exemptions in Rule 10f–3.18 Assuming
that all 589 new funds that enter into
new subadvisory contracts each year
make the modification to their
subadvisory contracts required by the
rule, we estimate that Rule 10f–3’s
subadvisory contract requirement will
require a total of 442 burden hours
annually for new funds, with an
associated aggregate internal cost of
approximately $221,200.19
The staff estimates that complying
with Rule 10f–3’s requirements imposes
an internal burden of 5,408 hours at an
internal cost of approximately
$1,755,155. This estimate does not
include the time spent to report a fund’s
reliance on Rule 10f–3 on Form N–CEN,
which is subject to a separate PRA
information collection.
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
for bonuses, firm size, employee benefits and
overhead.
5 This estimate is based on the following
calculation: (0.5 hours × 745 transactions =
approximately, 373 hours).
6 This estimate is based on the following
calculation: (745 transactions × $131 = $97,595).
7 The wage figure of $28 is one third of an average
compliance clerk’s hourly wage rate of $84 ($84 ÷
3 = $28).
8 This estimate is based on the following
calculations: (20 minutes × 745 transactions =
14,900 minutes; 14,900 minutes/60 = 248 hours).
9 This estimate is based on the following
calculation: (248 hours × $84 = $20,832).
10 The staff estimates that a compliance clerk
spends half an hour preparing the report and a
compliance attorney spends half an hour reviewing
the report, for a blended hourly wage rate of $262
per hour. See supra note 4.
11 This estimate is based on the following
calculation: (1 hour per quarter × 4 quarters × 745
funds = 2,980 hours).
12 This estimate is based on the following
calculation: (2,980 hours × $262 = $780,760).
13 This estimate is based on the following
calculation: (2 hours × $440 = $880).
14 These averages take into account the fact that
in most years, fund attorneys and boards spend
little or no time modifying procedures and in other
years, they spend significant time doing so.
15 This estimate is based on the following
calculation: (745 funds × 2 hours = 1,490 hours).
16 This estimate is based on the following
calculation: (745 funds × $880 = $655,600).
17 Based on the average number of subadvisory
agreements entered into by funds during fiscal years
2021–2023, as filed with the Commission on Form
N–CEN, we estimate that approximately 559 new
open-end funds and 30 new closed-end funds, or a
total of 589 new funds enter into new subadvisory
agreements each year (559 + 30 = 589 new funds);
we understand that existing funds may also enter
into new subadvisory agreements, but in many
cases would benefit from having previously drafted
Rule 10f–3 clauses in prior or existing subadvisory
contracts.
18 Because such clauses are identical to the
clauses that a fund would need to insert in their
subadvisory contracts to rely on Rules 12d3–1, 17a–
10, and 17e–1, and because we believe that funds
that use one such rule generally use all of these
rules, we apportion this 3 hour time burden equally
to all four rules; therefore, we estimate that the
burden allocated to Rule 10f–3 for this contract
change would be 0.75 hours (3 hours ÷ 4 rules =
.75 hours/rule); the staff further estimates that the
average hourly wage rate for an attorney to perform
this service is $375/hour.
19 These estimates are based on the following
calculations: (0.75 hours × 589 new funds =
approximately 442 burden hours); ($500 per hour
× 442 hours = approximately, $221,200 total cost).
VerDate Sep<11>2014
18:55 Jun 21, 2024
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52529
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 August 23, 2024.
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, 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: June 17, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13701 Filed 6–21–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–433, OMB Control No.
3235–0489]
Proposed Collection; Comment
Request; Extension: Rule 17a–6
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 in Rule 17a–6 (17 CFR
240.17a–6) under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17a–6 permits national securities
exchanges, national securities
associations, registered clearing
agencies, and the Municipal Securities
Rulemaking Board (‘‘MSRB’’)
(collectively, ‘‘SROs’’) to destroy or
convert to microfilm or other recording
media records maintained under Rule
17a–1, if they have filed a record
destruction plan with the Commission
and the Commission has declared the
plan effective.
E:\FR\FM\24JNN1.SGM
24JNN1
]]>Agencies
[Federal Register Volume 89, Number 121 (Monday, June 24, 2024)]
[Notices]
[Pages 52528-52529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13701]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-237, OMB Control No. 3235-0226]
Proposed Collection; Comment Request; Extension: Rule 10f-3
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the collections
of information discussed below. The Commission plans to submit these
existing collections of information to the Office of Management and
Budget (``OMB'') for extension and approval.
Section 10(f) of the Investment Company Act of 1940 (the ``Act'')
prohibits a registered investment company (``fund'') from purchasing
any security during an underwriting or selling syndicate if the fund
has certain affiliated relationships with a principal underwriter for
the security.\1\ Congress enacted this provision in 1940 to protect
funds and their shareholders by preventing underwriters from
``dumping'' unmarketable securities on affiliated funds.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 80a-10(f).
---------------------------------------------------------------------------
Rule 10f-3 under the Act permits a fund to engage in a securities
transaction that otherwise would violate Section 10(f) if, among other
things: (i) the fund's directors have approved procedures for purchases
made in reliance on the rule, regularly review fund purchases to
determine whether they comply with these procedures, and approve
necessary changes to the procedures; and (ii) a written record of each
transaction effected under the rule is maintained for six years, the
first two of which in an easily accessible place.\2\
---------------------------------------------------------------------------
\2\ 17 CFR 270.10f-3.
---------------------------------------------------------------------------
Rule 10f-3 also conditionally allows managed portions of fund
portfolios to purchase securities offered in otherwise off-limits
primary offerings. To qualify for this exemption, Rule 10f-3 requires
that the subadviser that is advising the purchaser be contractually
prohibited from providing investment advice to any other portion of the
fund's portfolio and consulting with any other of the fund's advisers
that is a principal underwriter or affiliated person of a principal
underwriter concerning the fund's securities transactions.
These requirements provide a mechanism for fund boards to oversee
compliance with the rule. The required recordkeeping facilitates the
Commission staff's review of Rule 10f-3 transactions during routine
fund inspections and, when necessary, in connection with enforcement
actions.
The staff estimates that approximately 745 funds engage in at least
one Rule 10f-3 transaction each year, for a total of 745 such
transactions.\3\ Rule 10f-3 requires that the purchasing fund create a
written record of each transaction that includes, among other things,
information about from whom the securities were purchased and the terms
of the transaction. The staff estimates that it takes an average fund
approximately 30 minutes per transaction at a time cost of $131 per
transaction to document each transaction.\4\ Thus, annually funds
[[Page 52529]]
spend approximately 373 hours \5\ at an internal cost of $97,595
documenting these transactions.\6\
---------------------------------------------------------------------------
\3\ These estimates are based on the average number of fund
filings on Form N-CEN made with the Commission for fiscal years 2021
through 2023; although business development companies (``BDCs'') may
also rely on Rule 10f-3, they do not file on Form N-CEN, so our
estimates for purposes of this PRA exclude BDCs; further, because
Form N-CEN does not require any specific information about Rule 10f-
3 transactions, we assume for purposes of this PRA that that each
fund reported to have relied on Rule 10f-3 engaged in one such
transaction annually.
\4\ The staff estimates that this task is shared between a
compliance clerk ($84/hour) and a compliance attorney ($440/hour),
for a blended hourly wage rate of $262 ($84 + $440 / 2 = $262) and a
half-hour blended wage rate of $131 ($262 / 2 = $131); all hourly
wage rates are derived 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.
\5\ This estimate is based on the following calculation: (0.5
hours x 745 transactions = approximately, 373 hours).
\6\ This estimate is based on the following calculation: (745
transactions x $131 = $97,595).
---------------------------------------------------------------------------
The funds also must maintain and preserve these transactional
records in accordance with the rule's recordkeeping requirement, and
the staff estimates that it takes a fund approximately 20 minutes per
transaction at a time cost of $28 per transaction to comply with this
part of the rule.\7\ The staff estimates that annually, in the
aggregate, funds spend approximately 248 hours \8\ at a cost of $20,832
to comply with this aspect of Rule 10f-3's recordkeeping
requirements.\9\
---------------------------------------------------------------------------
\7\ The wage figure of $28 is one third of an average compliance
clerk's hourly wage rate of $84 ($84 / 3 = $28).
\8\ This estimate is based on the following calculations: (20
minutes x 745 transactions = 14,900 minutes; 14,900 minutes/60 = 248
hours).
\9\ This estimate is based on the following calculation: (248
hours x $84 = $20,832).
---------------------------------------------------------------------------
In addition, fund boards must, no less than quarterly, examine each
of these transactions to ensure that they comply with the fund's
policies and procedures. The information or materials upon which the
board relied in making its determination also must be maintained. The
staff estimates that it takes a fund 1 hour per quarter at a cost of
$262 per quarter to comply with the maintenance requirement of the
rule.\10\ Thus annually, in the aggregate, funds spend approximately
2,980 hours \11\ annually at a total internal cost of $780,760 to
comply with this recordkeeping requirement.\12\
---------------------------------------------------------------------------
\10\ The staff estimates that a compliance clerk spends half an
hour preparing the report and a compliance attorney spends half an
hour reviewing the report, for a blended hourly wage rate of $262
per hour. See supra note 4.
\11\ This estimate is based on the following calculation: (1
hour per quarter x 4 quarters x 745 funds = 2,980 hours).
\12\ This estimate is based on the following calculation: (2,980
hours x $262 = $780,760).
---------------------------------------------------------------------------
The staff further estimates that reviewing and revising as needed
written procedures for Rule 10f-3 transactions takes, on average for
each fund, two hours of a compliance attorney's time at a cost of
approximately $880 \13\ per year.\14\ Thus, annually, in the aggregate,
the staff estimates that funds spend a total of approximately 1,490
hours \15\ at a cost of approximately $655,600 \16\ on monitoring and
revising Rule 10f-3 procedures.
---------------------------------------------------------------------------
\13\ This estimate is based on the following calculation: (2
hours x $440 = $880).
\14\ These averages take into account the fact that in most
years, fund attorneys and boards spend little or no time modifying
procedures and in other years, they spend significant time doing so.
\15\ This estimate is based on the following calculation: (745
funds x 2 hours = 1,490 hours).
\16\ This estimate is based on the following calculation: (745
funds x $880 = $655,600).
---------------------------------------------------------------------------
Based on an analysis of Form N-CEN filings, the staff estimates
that approximately 589 new funds enter into sub-advisory agreements
each year.\17\ Based on discussions with industry representatives, the
staff estimates that it will require approximately 0.75 attorney hours
to draft and execute additional clauses in new subadvisory contracts in
order for funds and subadvisers to be able to rely on the exemptions in
Rule 10f-3.\18\ Assuming that all 589 new funds that enter into new
subadvisory contracts each year make the modification to their
subadvisory contracts required by the rule, we estimate that Rule 10f-
3's subadvisory contract requirement will require a total of 442 burden
hours annually for new funds, with an associated aggregate internal
cost of approximately $221,200.\19\
---------------------------------------------------------------------------
\17\ Based on the average number of subadvisory agreements
entered into by funds during fiscal years 2021-2023, as filed with
the Commission on Form N-CEN, we estimate that approximately 559 new
open-end funds and 30 new closed-end funds, or a total of 589 new
funds enter into new subadvisory agreements each year (559 + 30 =
589 new funds); we understand that existing funds may also enter
into new subadvisory agreements, but in many cases would benefit
from having previously drafted Rule 10f-3 clauses in prior or
existing subadvisory contracts.
\18\ Because such clauses are identical to the clauses that a
fund would need to insert in their subadvisory contracts to rely on
Rules 12d3-1, 17a-10, and 17e-1, and because we believe that funds
that use one such rule generally use all of these rules, we
apportion this 3 hour time burden equally to all four rules;
therefore, we estimate that the burden allocated to Rule 10f-3 for
this contract change would be 0.75 hours (3 hours / 4 rules = .75
hours/rule); the staff further estimates that the average hourly
wage rate for an attorney to perform this service is $375/hour.
\19\ These estimates are based on the following calculations:
(0.75 hours x 589 new funds = approximately 442 burden hours); ($500
per hour x 442 hours = approximately, $221,200 total cost).
---------------------------------------------------------------------------
The staff estimates that complying with Rule 10f-3's requirements
imposes an internal burden of 5,408 hours at an internal cost of
approximately $1,755,155. This estimate does not include the time spent
to report a fund's reliance on Rule 10f-3 on Form N-CEN, which is
subject to a separate PRA information collection.
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 August 23, 2024.
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, 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: June 17, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13701 Filed 6-21-24; 8:45 am]
BILLING CODE 8011-01-P
