Submission for OMB Review; Comment Request; Extension: Regulation SCI, Form SCI, 106704-106707 [2024-31351]
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106704
Federal Register / Vol. 89, No. 249 / Monday, December 30, 2024 / Notices
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 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–CboeEDGX–2024–085 and should be
submitted on or before January 21, 2025.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–30909 Filed 12–27–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–149, OMB Control No.
3235–0130]
ddrumheller on DSK120RN23PROD with NOTICES1
Submission for OMB Review;
Comment Request; Extension: Rule
17Ad–2(c), (d), and (h)
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’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 17Ad–2(c), (d), and (h), (17 CFR
240.17Ad–2(c), (d), and (h)), under the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).
Rule 17Ad–2(c), (d), and (h)
enumerates the requirements with
which transfer agents must comply to
inform the Commission or the
appropriate regulator of a transfer
agent’s failure to meet the minimum
performance standards set by the
Commission rule by filing a notice.
While it is estimated that there are
740 transfer agents, only approximately
three notices pursuant to Rule 17Ad–
2(c), (d), and (h) are filed annually. In
view of: (a) the readily available nature
of most of the information required to be
included in the notice (since that
information must be compiled and
retained pursuant to other Commission
rules); (b) the summary fashion that
such information must be presented in
the notice (most notices are one page or
less in length); and (c) the experience of
the staff regarding the notices, the
Commission staff estimates that, on
average, most notices require
approximately one-half hour to prepare.
The Commission staff thus estimates
that transfer agents spend an average of
a total of one and a half hours per year
complying with the rule (3 × .5 hours =
1.5 hours).
The retention period for the
recordkeeping requirement under Rule
17Ad–2(c), (d), and (h) is not less than
two years following the date the notice
is submitted. The recordkeeping
requirement under this rule is
mandatory to assist the Commission in
monitoring transfer agents who fail to
meet the minimum performance
standards set by the Commission rule.
This rule does not involve the collection
of confidential information. Please note
that a transfer agent is not required to
file under the rule unless it does not
meet the minimum performance
standards for turnaround, processing or
forwarding items received for transfer
during a month.
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.
The public may view and comment
on this information collection request
at: https://www.reginfo.gov/public/do/
PRAViewICR?ref_nbr=202410-3235-005
or send an email comment to
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov within 30 days of the day
after publication of this notice by
January 30, 2025.
Dated: December 23, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–31359 Filed 12–27–24; 8:45 am]
BILLING CODE 8011–01–P
24 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–653, OMB Control No.
3235–0703]
Submission for OMB Review;
Comment Request; Extension:
Regulation SCI, Form SCI
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’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Regulation Systems Compliance and
Integrity (‘‘Regulation SCI’’) (17 CFR
242.1000–1007) and Form SCI (17 CFR
249.1900) under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’)
(15 U.S.C. 78a et seq.).
Regulation SCI requires certain key
market participants to, among other
things: (1) have comprehensive policies
and procedures in place to help ensure
the robustness and resiliency of their
technological systems, and also that
their technological systems operate in
compliance with the federal securities
laws and with their own rules; and (2)
provide certain notices and reports to
the Commission to improve
Commission oversight of securities
market infrastructure.
Regulation SCI advances the goals of
the national market system by
enhancing the capacity, integrity,
resiliency, availability, and security of
the automated systems of entities
important to the functioning of the U.S.
securities markets, as well as reinforcing
the requirement that such systems
operate in compliance with the
Exchange Act and rules and regulations
thereunder, thus strengthening the
infrastructure of the U.S. securities
markets and improving its resilience
when technological issues arise. In this
respect, Regulation SCI establishes an
updated and formalized regulatory
framework, thereby helping to ensure
more effective Commission oversight of
such systems.
Respondents consist of national
securities exchanges and associations,
registered clearing agencies, exempt
clearing agencies, plan processors, and
alternative trading systems. There are
currently 48 respondents, and the
Commission staff estimates that, on
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average, 2 new respondents may become
SCI entities each year, 1 of which would
be a self-regulatory organization
(‘‘SRO’’). Accordingly, Commission staff
estimates that over the next three years
there will be an average of 50
respondents per year.
In addition, in December 2020, the
Commission adopted amendments to
Regulation SCI in connection with
updates to the national market system
for the collection, consolidation, and
dissemination of information with
respect to quotations for and
transactions in national market system
(‘‘NMS’’) stocks (‘‘Infrastructure
Amendments’’). Specifically, the
Commission adopted a definition of
‘‘SCI competing consolidator’’ that will
subject competing consolidators to
Regulation SCI, after a transition period,
if they are above a specified
consolidated market data gross revenue
threshold.1 The Infrastructure
Amendments increased the number of
respondents to the collections of
information in Regulation SCI, and the
Commission estimates that seven
competing consolidators will meet this
definition and be subject to the
requirements of Regulation SCI.2
Rule 1001(a) requires each SCI entity
to establish, maintain, and enforce
written policies and procedures
reasonably designed to ensure that its
SCI systems and, for purposes of
security standards, indirect SCI systems,
have levels of capacity, integrity,
resiliency, availability, and security,
adequate to maintain the SCI entity’s
operational capability and promote the
maintenance of fair and orderly markets.
The Commission staff estimates that the
total annual initial recordkeeping
burden for 7 new respondents will be
4,511 hours, and the annual ongoing
recordkeeping burden for all 55
respondents will be, on average, 12,760
hours. The Commission staff estimates
that the 7 new respondents would incur,
on average, an annual initial internal
cost of compliance of $1,696,578, as
well as outside legal or consulting costs
of $305,500. In addition, all respondents
will incur, on average, an estimated
ongoing annual internal cost of
compliance of $4,801,060.
Rule 1001(b) requires each SCI entity
to establish, maintain, and enforce
written policies and procedures
1 See Securities Exchange Act Release No. 34–
90610 (December 9, 2020), 86 FR 18596 (April 9,
2021) (File No. S7–03–20) (‘‘Infrastructure Adopting
Release’’).
2 Some of these respondents were estimated to
incur no, or only part of, the estimated initial
burdens because they were already subject to
Regulation SCI (i.e., as plan processors, SROs or
affiliates of SROs).
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reasonably designed to ensure that its
SCI systems operate in a manner that
complies with the Exchange Act and the
rules and regulations thereunder and
the entity’s rules and governing
documents, as applicable. The
Commission staff estimates that the total
annual initial recordkeeping burden for
7 new respondents will be 1,755 hours,
and the annual ongoing recordkeeping
burden for all respondents will be, on
average, 8,105 hours. The Commission
staff estimates that the 7 new
respondents would incur an initial
internal cost of compliance of $628,160,
as well as outside legal or consulting
costs of $175,500. In addition, all
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $2,881,660.
Rule 1001(c) requires each SCI entity
to establish, maintain, and enforce
reasonably designed written policies
and procedures that include the criteria
for identifying responsible SCI
personnel, the designation and
documentation of responsible SCI
personnel, and escalation procedures to
quickly inform responsible SCI
personnel of potential SCI events. The
Commission staff estimates that the total
annual initial recordkeeping burden for
7 new respondents will be 741 hours,
and the annual ongoing recordkeeping
burden for all respondents will be, on
average, 2,145. The Commission staff
estimates that the 7 new respondents
would incur an initial internal cost of
compliance of $309,868, and all
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $958,485.
Rule 1004 requires each SCI entity to
establish standards for the designation
of certain members or participants for
BC/DR plan testing, to designate
members or participants in accordance
with these standards, to require
participation by designated members or
participants in such testing at least
annually, and to coordinate such testing
on an industry- or sector-wide basis
with other SCI entities. The Commission
staff estimates that the total annual
initial recordkeeping burden for 9 new
respondents will be 2,700 hours, and
the annual ongoing recordkeeping
burden for all respondents that are not
plan processors will be, on average,
7,425 hours. The Commission staff
estimates that the 7 new respondents
would incur an initial internal cost of
compliance of $902,865. In addition, all
respondents that are not plan processors
will incur, on average, an estimated
ongoing annual internal cost of
compliance of $2,217,600. In addition,
the Commission staff estimates that the
2 plan processor respondents will incur
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an estimated ongoing annual cost of
$108,000 for outside legal services
($54,000 per plan processor respondent
× 2 respondents).
Rule 1002(b)(1) requires each SCI
entity, upon any responsible SCI
personnel having a reasonable basis to
conclude that an SCI event has
occurred, to notify the Commission
immediately. The Commission staff
estimates that the total annual ongoing
burden for all 55 respondents will be,
on average, 440 hours. The Commission
staff estimates that respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$151,882.50.
Rule 1002(b)(2) requires each SCI
entity, within 24 hours of any
responsible SCI personnel having a
reasonable basis to conclude that the
SCI event has occurred, to submit a
written notification to the Commission
pertaining to the SCI event on a good
faith, best efforts basis. These
notifications are required to be
submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 55
respondents will be, on average, 6,600
hours. The Commission staff estimates
that respondents will incur, on average,
an estimated ongoing annual internal
cost of compliance of $2,427,325.
Rule 1002(b)(3) requires each SCI
entity to provide updates to the
Commission pertaining to an SCI event
on a regular basis, or at such frequency
as reasonably requested by a
representative of the Commission, until
the SCI event is resolved and the SCI
entity’s investigation of the SCI event is
closed. The Commission staff estimates
that the total annual ongoing burden for
all 55 respondents will be, on average,
578 hours. The Commission staff
estimates that all respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$202,235.
Rule 1002(b)(4) requires each SCI
entity to submit written interim reports,
as necessary, and a written final report
regarding an SCI event to the
Commission. These reports are required
to be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 55
respondents will be, on average, 9,625
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$3,795,800.
Rule 1002(b)(5) requires each SCI
entity to submit to the Commission
quarterly reports containing a summary
description of any systems disruption or
systems intrusion that has had, or the
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SCI entity reasonably estimates would
have, no or a de minimis impact on the
SCI entity’s operations or on market
participants. These reports are required
to be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 55
respondents will be, on average, 8,800
hours. The Commission staff estimates
that respondents will incur, on average,
an estimated ongoing annual internal
cost of compliance of $3,329,040.
In addition, the Commission staff
estimates that all 55 respondents will
incur, on average, annual costs of
$319,000 for outside legal advice in
preparation of certain notifications
required by Rule 1002(b).
Rule 1002(c)(1)(i) requires each SCI
entity, promptly after any responsible
SCI personnel has a reasonable basis to
conclude that an SCI event (other than
a systems intrusion) has occurred, to
disseminate certain information to its
members or participants. The
Commission staff estimates that the total
annual ongoing burden for all 55
respondents will be, on average, 1,155
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of $506,815.
Rule 1002(c)(1)(ii) requires each SCI
entity, when known, to promptly
disseminate additional information
about an SCI event (other than a systems
intrusion) to its members or
participants. Rule 1002(c)(1)(iii)
requires each SCI entity to provide to its
members or participants regular updates
of any information required to be
disseminated under Rules 1002(c)(1)(i)
and (ii) until the SCI event is resolved.
The Commission staff estimates that the
total annual ongoing burden for all 55
respondents will be, on average, 6,435
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$2,841,795.
Rule 1002(c)(2) requires each SCI
entity to disseminate certain
information regarding a systems
intrusion to its members or participants,
and provides an exception when the SCI
entity determines that dissemination of
such information would likely
compromise the security of its SCI
systems or indirect SCI systems, or an
investigation of the systems intrusion,
and documents the reasons for such
determination. The Commission staff
estimates that the total annual ongoing
burden for all 55 respondents will be,
on average, 550 hours. The Commission
staff estimates that all respondents will
incur, on average, an estimated ongoing
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annual internal cost of compliance of
$242,330.
In addition, the Commission staff
estimates that all 55 respondents will
incur, on average, annual costs of
$182,600 for outside legal advice in
preparation of certain notifications
required by Rule 1002(c).
Rule 1003(a)(1) requires each SCI
entity to submit to the Commission
quarterly reports describing completed,
ongoing, and planned material changes
to its SCI systems and security of
indirect SCI systems during the prior,
current, and subsequent calendar
quarters. These reports are required to
be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 55
respondents will be, on average, 27,500
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$9,204,800.
Rule 1003(a)(2) requires each SCI
entity to promptly submit a
supplemental report notifying the
Commission of a material error in or
material omission from a report
previously submitted under Rule
1003(a)(1). These reports are required to
be submitted on Form SCI. The
Commission staff estimates that the total
annual ongoing burden for all 55
respondents will be, on average, 825
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of $293,040.
Rule 1003(b)(1) requires each SCI
entity to conduct an SCI review of its
compliance with Regulation SCI not less
than once each calendar year, with an
exception for penetration test reviews,
which are required to be conducted not
less than once every three years. Rule
1003(b)(1) also provides an exception
for assessments of SCI systems directly
supporting market regulation or market
surveillance, which are required to be
conducted at a frequency based on the
risk assessment conducted as part of the
SCI review, but in no case less than
once every three years. Rule 1003(b)(2)
requires each SCI entity to submit a
report of the SCI review to senior
management no more than 30 calendar
days after completion of the review. The
Commission staff estimates that the total
annual ongoing burden for all 55
respondents will be, on average, 37,950
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of
$13,623,225.
Rule 1003(b)(3) requires each SCI
entity to submit the report of the SCI
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review to the Commission and to its
board of directors or the equivalent of
such board, together with any response
by senior management, within 60
calendar days after its submission to
senior management. These reports are
required to be submitted on Form SCI.
The Commission staff estimates that the
total annual ongoing burden for all 55
respondents will be, on average, 55
hours. The Commission staff estimates
that all respondents will incur, on
average, an estimated ongoing annual
internal cost of compliance of $25,410.
In addition, the Commission staff
estimates that all respondents will
incur, on average, annual costs of
$2,750,000 for outside legal advice in
preparation of certain notifications
required by Rule 1003(b).
Rule 1006 requires each SCI entity,
with a few exceptions, to file any
notification, review, description,
analysis, or report to the Commission
required under Regulation SCI
electronically on Form SCI through the
EFFS. An SCI entity will submit to the
Commission an EAUF to register each
individual at the SCI entity who will
access the EFFS system on behalf of the
SCI entity. The Commission staff
estimates that the total annual initial
burden for 7 new respondents will be 2
hours, and the annual ongoing burden
for all respondents will be, on average,
8 hours. The Commission staff estimates
that the 7 new respondents would incur
an initial internal cost of compliance of
$903. In addition, all 55 respondents
will incur, on average, an estimated
ongoing annual internal cost of
compliance of $3,795, as well as outside
costs to obtain a digital ID of $2,750.
Rule 1002(a) requires each SCI entity,
upon any responsible SCI personnel
having a reasonable basis to conclude
that an SCI event has occurred, to begin
to take appropriate corrective action.
The Commission staff estimates that the
total annual initial recordkeeping
burden for 7 new respondents will be
741 hours, and the annual ongoing
recordkeeping burden for all 55
respondents will be, on average, 2,145
hours. The Commission staff estimates
that the 7 new respondents would incur
an initial internal cost of compliance of
$309,868. In addition, all 55
respondents will incur, on average, an
estimated ongoing annual internal cost
of compliance of $949,190.
Rule 1003(a)(1) requires each SCI
entity to establish reasonable written
criteria for identifying a change to its
SCI systems and the security of indirect
SCI systems as material. The
Commission staff estimates that the total
annual initial recordkeeping burden for
7 new respondents will be 741 hours,
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and the annual ongoing recordkeeping
burden for all 55 respondents will be,
on average, 1,485 hours. The
Commission staff estimates that the 7
new respondents would incur an initial
internal cost of compliance of $309,868.
In addition, all 55 respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$711,095.
Regulation SCI also requires SCI
entities to identify certain types of
events and systems. The Commission
staff estimates that the total annual
initial recordkeeping burden for 7 new
respondents will be 1,287 hours, and
the annual ongoing recordkeeping
burden for all 55 respondents will be,
on average, 2,145 hours. The
Commission staff estimates that the 7
new respondents would incur an initial
internal cost of compliance of $507,936.
In addition, all 55 respondents will
incur, on average, an estimated ongoing
annual internal cost of compliance of
$949,190.
Rules 1005 and 1007 establish
recordkeeping requirements for SCI
entities other than SROs. The
Commission staff estimates that for 6
new respondents that are not SROs the
average annual initial burden would be
935 hours, and the annual ongoing
burden for all 19 respondents will be,
on average, 475 hours. The Commission
staff estimates that 6 new respondents
would incur an estimated internal
initial internal cost of compliance of
$72,930, as well as a one-time cost of
$5,400 to modify existing recordkeeping
systems. In addition, all 19 respondents
will incur, on average, an estimated
ongoing internal cost of compliance of
$37,050.
The Commission estimates that the
increase in the number of SCI entities
raises the total industry annual burden
hours to 150,619 hours and cost to
$3,848,749 respectively.
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.
The public may view and comment
on this information collection request
at: https://www.reginfo.gov/public/do/
PRAViewICR?ref_nbr=202410-3235-003
or send an email comment to
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov within 30 days of the day
after publication of this notice by
January 30, 2025.
Dated: December 23, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–31351 Filed 12–27–24; 8:45 am]
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101998; File Nos. SR–
NASDAQ–2024–028; SR–CboeBZX–2024–
091]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Cboe BZX
Exchange, Inc.; Order Granting
Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, To
List and Trade Shares of the Hashdex
Nasdaq Crypto Index US ETF and
Granting Accelerated Approval of a
Proposed Rule Change, as Modified by
Amendment No. 1, To List and Trade
Shares of the Franklin Crypto Index
ETF, a Series of the Franklin Crypto
Trust
December 19, 2024.
I. Introduction
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 each of The Nasdaq Stock
Market LLC (‘‘Nasdaq’’) and Cboe BZX
Exchange, Inc. (‘‘BZX’’, and together
with Nasdaq, the ‘‘Exchanges’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule changes to list and trade shares of
the following. Nasdaq proposes to list
and trade shares of the Hashdex Nasdaq
Crypto Index US ETF 3 under Nasdaq
Rule 5711(d) (Commodity-Based Trust
Shares); and BZX proposes to list and
trade shares of the Franklin Crypto
Index ETF, a series of the Franklin
Crypto Trust,4 under BZX Rule
14.11(e)(4) (Commodity-Based Trust
Shares). Each filing was subject to
notice and comment.5
Each of the foregoing proposed rule
changes, as modified by their respective
amendments, is referred to herein as a
‘‘Proposal’’ and together as the
‘‘Proposals.’’ Each trust (or series of a
trust) described in a Proposal is referred
to herein as a ‘‘Trust’’ and together as
the ‘‘Trusts.’’ As described in more
detail in the Proposals’ respective
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 101218
(Sept. 30, 2024), 89 FR 80970 (Oct. 4, 2024) (SR–
NASDAQ–2024–028) (‘‘Hashdex Filing’’).
4 See Amendment No. 1 to Proposed Rule Change
to List and Trade Shares of the Franklin Crypto
Index ETF, a Series of the Franklin Crypto Trust,
under BZX Rule 14.11(e)(4), Commodity-Based
Trust Shares (SR–CboeBZX–2024–091), filed Dec.
17, 2024, available at: https://www.sec.gov/
comments/sr-cboebzx-2024-091/
srcboebzx2024091.htm (‘‘Franklin Filing’’).
5 The Commission did not receive any comments
on the Franklin Filing. Comments received on the
Hashdex Filing are available at: https://
www.sec.gov/comments/sr-nasdaq-2024-028/
srnasdaq2024028.htm.
2 17
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amended filings,6 each Proposal seeks to
list and trade shares of a Trust that
would hold both spot bitcoin 7 and spot
ether,8 in whole or in part.9 This order
approves the Proposals.10
II. Discussion and Commission
Findings
After careful review, the Commission
finds that the Proposals are consistent
with the Exchange Act and rules and
regulations thereunder applicable to a
national securities exchange.11 In
particular, the Commission finds that
the Proposals are consistent with
Section 6(b)(5) of the Exchange Act,12
which requires, among other things, that
the Exchanges’ rules be designed to
‘‘prevent fraudulent and manipulative
acts and practices’’ and, ‘‘in general, to
protect investors and the public
interest;’’ and with Section
11A(a)(1)(C)(iii) of the Exchange Act,13
which sets forth Congress’ finding that
it is in the public interest and
appropriate for the protection of
investors and the maintenance of fair
and orderly markets to assure the
availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities.
A. Exchange Act Section 6(b)(5)
The Commission has explained that
one way an exchange that lists bitcoinbased or ether-based exchange-traded
products (‘‘ETPs’’) can meet the
obligation under Exchange Act Section
6(b)(5) that its rules be designed to
prevent fraudulent and manipulative
acts and practices is by demonstrating
that the exchange has a comprehensive
surveillance-sharing agreement with a
6 See
supra notes 3–4.
are digital assets that are issued and
transferred via a distributed, open-source protocol
used by a peer-to-peer computer network through
which transactions are recorded on a public
transaction ledger known as the ‘‘Bitcoin
blockchain.’’ The Bitcoin protocol governs the
creation of new bitcoins and the cryptographic
system that secures and verifies bitcoin
transactions.
8 Ether is a digital asset that is native to, and
minted and transferred via, a distributed, opensource protocol used by a peer-to-peer computer
network through which transactions are recorded
on a public transaction ledger known as
‘‘Ethereum.’’ The Ethereum protocol governs the
creation of new ether and the cryptographic system
that secures and verifies transactions on Ethereum.
9 Each Trust could also hold cash and cash
equivalents. See Hashdex Filing at 80970; Franklin
Filing at 8.
10 The Franklin Filing is being approved on an
accelerated basis. See infra Section III.
11 In approving the Proposals, the Commission
has considered the Proposals’ impacts on efficiency,
competition, and capital formation. See 15 U.S.C.
78c(f).
12 15 U.S.C. 78f(b)(5).
13 15 U.S.C. 78k–1(a)(1)(C)(iii).
7 Bitcoins
E:\FR\FM\30DEN1.SGM
30DEN1
]]>Agencies
[Federal Register Volume 89, Number 249 (Monday, December 30, 2024)]
[Notices]
[Pages 106704-106707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-31351]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-653, OMB Control No. 3235-0703]
Submission for OMB Review; Comment Request; Extension: Regulation
SCI, Form SCI
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'') has submitted to the Office of Management
and Budget (``OMB'') a request for approval of extension of the
previously approved collection of information provided for in
Regulation Systems Compliance and Integrity (``Regulation SCI'') (17
CFR 242.1000-1007) and Form SCI (17 CFR 249.1900) under the Securities
Exchange Act of 1934 (``Exchange Act'') (15 U.S.C. 78a et seq.).
Regulation SCI requires certain key market participants to, among
other things: (1) have comprehensive policies and procedures in place
to help ensure the robustness and resiliency of their technological
systems, and also that their technological systems operate in
compliance with the federal securities laws and with their own rules;
and (2) provide certain notices and reports to the Commission to
improve Commission oversight of securities market infrastructure.
Regulation SCI advances the goals of the national market system by
enhancing the capacity, integrity, resiliency, availability, and
security of the automated systems of entities important to the
functioning of the U.S. securities markets, as well as reinforcing the
requirement that such systems operate in compliance with the Exchange
Act and rules and regulations thereunder, thus strengthening the
infrastructure of the U.S. securities markets and improving its
resilience when technological issues arise. In this respect, Regulation
SCI establishes an updated and formalized regulatory framework, thereby
helping to ensure more effective Commission oversight of such systems.
Respondents consist of national securities exchanges and
associations, registered clearing agencies, exempt clearing agencies,
plan processors, and alternative trading systems. There are currently
48 respondents, and the Commission staff estimates that, on
[[Page 106705]]
average, 2 new respondents may become SCI entities each year, 1 of
which would be a self-regulatory organization (``SRO''). Accordingly,
Commission staff estimates that over the next three years there will be
an average of 50 respondents per year.
In addition, in December 2020, the Commission adopted amendments to
Regulation SCI in connection with updates to the national market system
for the collection, consolidation, and dissemination of information
with respect to quotations for and transactions in national market
system (``NMS'') stocks (``Infrastructure Amendments''). Specifically,
the Commission adopted a definition of ``SCI competing consolidator''
that will subject competing consolidators to Regulation SCI, after a
transition period, if they are above a specified consolidated market
data gross revenue threshold.\1\ The Infrastructure Amendments
increased the number of respondents to the collections of information
in Regulation SCI, and the Commission estimates that seven competing
consolidators will meet this definition and be subject to the
requirements of Regulation SCI.\2\
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\1\ See Securities Exchange Act Release No. 34-90610 (December
9, 2020), 86 FR 18596 (April 9, 2021) (File No. S7-03-20)
(``Infrastructure Adopting Release'').
\2\ Some of these respondents were estimated to incur no, or
only part of, the estimated initial burdens because they were
already subject to Regulation SCI (i.e., as plan processors, SROs or
affiliates of SROs).
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Rule 1001(a) requires each SCI entity to establish, maintain, and
enforce written policies and procedures reasonably designed to ensure
that its SCI systems and, for purposes of security standards, indirect
SCI systems, have levels of capacity, integrity, resiliency,
availability, and security, adequate to maintain the SCI entity's
operational capability and promote the maintenance of fair and orderly
markets. The Commission staff estimates that the total annual initial
recordkeeping burden for 7 new respondents will be 4,511 hours, and the
annual ongoing recordkeeping burden for all 55 respondents will be, on
average, 12,760 hours. The Commission staff estimates that the 7 new
respondents would incur, on average, an annual initial internal cost of
compliance of $1,696,578, as well as outside legal or consulting costs
of $305,500. In addition, all respondents will incur, on average, an
estimated ongoing annual internal cost of compliance of $4,801,060.
Rule 1001(b) requires each SCI entity to establish, maintain, and
enforce written policies and procedures reasonably designed to ensure
that its SCI systems operate in a manner that complies with the
Exchange Act and the rules and regulations thereunder and the entity's
rules and governing documents, as applicable. The Commission staff
estimates that the total annual initial recordkeeping burden for 7 new
respondents will be 1,755 hours, and the annual ongoing recordkeeping
burden for all respondents will be, on average, 8,105 hours. The
Commission staff estimates that the 7 new respondents would incur an
initial internal cost of compliance of $628,160, as well as outside
legal or consulting costs of $175,500. In addition, all respondents
will incur, on average, an estimated ongoing annual internal cost of
compliance of $2,881,660.
Rule 1001(c) requires each SCI entity to establish, maintain, and
enforce reasonably designed written policies and procedures that
include the criteria for identifying responsible SCI personnel, the
designation and documentation of responsible SCI personnel, and
escalation procedures to quickly inform responsible SCI personnel of
potential SCI events. The Commission staff estimates that the total
annual initial recordkeeping burden for 7 new respondents will be 741
hours, and the annual ongoing recordkeeping burden for all respondents
will be, on average, 2,145. The Commission staff estimates that the 7
new respondents would incur an initial internal cost of compliance of
$309,868, and all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $958,485.
Rule 1004 requires each SCI entity to establish standards for the
designation of certain members or participants for BC/DR plan testing,
to designate members or participants in accordance with these
standards, to require participation by designated members or
participants in such testing at least annually, and to coordinate such
testing on an industry- or sector-wide basis with other SCI entities.
The Commission staff estimates that the total annual initial
recordkeeping burden for 9 new respondents will be 2,700 hours, and the
annual ongoing recordkeeping burden for all respondents that are not
plan processors will be, on average, 7,425 hours. The Commission staff
estimates that the 7 new respondents would incur an initial internal
cost of compliance of $902,865. In addition, all respondents that are
not plan processors will incur, on average, an estimated ongoing annual
internal cost of compliance of $2,217,600. In addition, the Commission
staff estimates that the 2 plan processor respondents will incur an
estimated ongoing annual cost of $108,000 for outside legal services
($54,000 per plan processor respondent x 2 respondents).
Rule 1002(b)(1) requires each SCI entity, upon any responsible SCI
personnel having a reasonable basis to conclude that an SCI event has
occurred, to notify the Commission immediately. The Commission staff
estimates that the total annual ongoing burden for all 55 respondents
will be, on average, 440 hours. The Commission staff estimates that
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $151,882.50.
Rule 1002(b)(2) requires each SCI entity, within 24 hours of any
responsible SCI personnel having a reasonable basis to conclude that
the SCI event has occurred, to submit a written notification to the
Commission pertaining to the SCI event on a good faith, best efforts
basis. These notifications are required to be submitted on Form SCI.
The Commission staff estimates that the total annual ongoing burden for
all 55 respondents will be, on average, 6,600 hours. The Commission
staff estimates that respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $2,427,325.
Rule 1002(b)(3) requires each SCI entity to provide updates to the
Commission pertaining to an SCI event on a regular basis, or at such
frequency as reasonably requested by a representative of the
Commission, until the SCI event is resolved and the SCI entity's
investigation of the SCI event is closed. The Commission staff
estimates that the total annual ongoing burden for all 55 respondents
will be, on average, 578 hours. The Commission staff estimates that all
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $202,235.
Rule 1002(b)(4) requires each SCI entity to submit written interim
reports, as necessary, and a written final report regarding an SCI
event to the Commission. These reports are required to be submitted on
Form SCI. The Commission staff estimates that the total annual ongoing
burden for all 55 respondents will be, on average, 9,625 hours. The
Commission staff estimates that all respondents will incur, on average,
an estimated ongoing annual internal cost of compliance of $3,795,800.
Rule 1002(b)(5) requires each SCI entity to submit to the
Commission quarterly reports containing a summary description of any
systems disruption or systems intrusion that has had, or the
[[Page 106706]]
SCI entity reasonably estimates would have, no or a de minimis impact
on the SCI entity's operations or on market participants. These reports
are required to be submitted on Form SCI. The Commission staff
estimates that the total annual ongoing burden for all 55 respondents
will be, on average, 8,800 hours. The Commission staff estimates that
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $3,329,040.
In addition, the Commission staff estimates that all 55 respondents
will incur, on average, annual costs of $319,000 for outside legal
advice in preparation of certain notifications required by Rule
1002(b).
Rule 1002(c)(1)(i) requires each SCI entity, promptly after any
responsible SCI personnel has a reasonable basis to conclude that an
SCI event (other than a systems intrusion) has occurred, to disseminate
certain information to its members or participants. The Commission
staff estimates that the total annual ongoing burden for all 55
respondents will be, on average, 1,155 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $506,815.
Rule 1002(c)(1)(ii) requires each SCI entity, when known, to
promptly disseminate additional information about an SCI event (other
than a systems intrusion) to its members or participants. Rule
1002(c)(1)(iii) requires each SCI entity to provide to its members or
participants regular updates of any information required to be
disseminated under Rules 1002(c)(1)(i) and (ii) until the SCI event is
resolved. The Commission staff estimates that the total annual ongoing
burden for all 55 respondents will be, on average, 6,435 hours. The
Commission staff estimates that all respondents will incur, on average,
an estimated ongoing annual internal cost of compliance of $2,841,795.
Rule 1002(c)(2) requires each SCI entity to disseminate certain
information regarding a systems intrusion to its members or
participants, and provides an exception when the SCI entity determines
that dissemination of such information would likely compromise the
security of its SCI systems or indirect SCI systems, or an
investigation of the systems intrusion, and documents the reasons for
such determination. The Commission staff estimates that the total
annual ongoing burden for all 55 respondents will be, on average, 550
hours. The Commission staff estimates that all respondents will incur,
on average, an estimated ongoing annual internal cost of compliance of
$242,330.
In addition, the Commission staff estimates that all 55 respondents
will incur, on average, annual costs of $182,600 for outside legal
advice in preparation of certain notifications required by Rule
1002(c).
Rule 1003(a)(1) requires each SCI entity to submit to the
Commission quarterly reports describing completed, ongoing, and planned
material changes to its SCI systems and security of indirect SCI
systems during the prior, current, and subsequent calendar quarters.
These reports are required to be submitted on Form SCI. The Commission
staff estimates that the total annual ongoing burden for all 55
respondents will be, on average, 27,500 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $9,204,800.
Rule 1003(a)(2) requires each SCI entity to promptly submit a
supplemental report notifying the Commission of a material error in or
material omission from a report previously submitted under Rule
1003(a)(1). These reports are required to be submitted on Form SCI. The
Commission staff estimates that the total annual ongoing burden for all
55 respondents will be, on average, 825 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $293,040.
Rule 1003(b)(1) requires each SCI entity to conduct an SCI review
of its compliance with Regulation SCI not less than once each calendar
year, with an exception for penetration test reviews, which are
required to be conducted not less than once every three years. Rule
1003(b)(1) also provides an exception for assessments of SCI systems
directly supporting market regulation or market surveillance, which are
required to be conducted at a frequency based on the risk assessment
conducted as part of the SCI review, but in no case less than once
every three years. Rule 1003(b)(2) requires each SCI entity to submit a
report of the SCI review to senior management no more than 30 calendar
days after completion of the review. The Commission staff estimates
that the total annual ongoing burden for all 55 respondents will be, on
average, 37,950 hours. The Commission staff estimates that all
respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $13,623,225.
Rule 1003(b)(3) requires each SCI entity to submit the report of
the SCI review to the Commission and to its board of directors or the
equivalent of such board, together with any response by senior
management, within 60 calendar days after its submission to senior
management. These reports are required to be submitted on Form SCI. The
Commission staff estimates that the total annual ongoing burden for all
55 respondents will be, on average, 55 hours. The Commission staff
estimates that all respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $25,410.
In addition, the Commission staff estimates that all respondents
will incur, on average, annual costs of $2,750,000 for outside legal
advice in preparation of certain notifications required by Rule
1003(b).
Rule 1006 requires each SCI entity, with a few exceptions, to file
any notification, review, description, analysis, or report to the
Commission required under Regulation SCI electronically on Form SCI
through the EFFS. An SCI entity will submit to the Commission an EAUF
to register each individual at the SCI entity who will access the EFFS
system on behalf of the SCI entity. The Commission staff estimates that
the total annual initial burden for 7 new respondents will be 2 hours,
and the annual ongoing burden for all respondents will be, on average,
8 hours. The Commission staff estimates that the 7 new respondents
would incur an initial internal cost of compliance of $903. In
addition, all 55 respondents will incur, on average, an estimated
ongoing annual internal cost of compliance of $3,795, as well as
outside costs to obtain a digital ID of $2,750.
Rule 1002(a) requires each SCI entity, upon any responsible SCI
personnel having a reasonable basis to conclude that an SCI event has
occurred, to begin to take appropriate corrective action. The
Commission staff estimates that the total annual initial recordkeeping
burden for 7 new respondents will be 741 hours, and the annual ongoing
recordkeeping burden for all 55 respondents will be, on average, 2,145
hours. The Commission staff estimates that the 7 new respondents would
incur an initial internal cost of compliance of $309,868. In addition,
all 55 respondents will incur, on average, an estimated ongoing annual
internal cost of compliance of $949,190.
Rule 1003(a)(1) requires each SCI entity to establish reasonable
written criteria for identifying a change to its SCI systems and the
security of indirect SCI systems as material. The Commission staff
estimates that the total annual initial recordkeeping burden for 7 new
respondents will be 741 hours,
[[Page 106707]]
and the annual ongoing recordkeeping burden for all 55 respondents will
be, on average, 1,485 hours. The Commission staff estimates that the 7
new respondents would incur an initial internal cost of compliance of
$309,868. In addition, all 55 respondents will incur, on average, an
estimated ongoing annual internal cost of compliance of $711,095.
Regulation SCI also requires SCI entities to identify certain types
of events and systems. The Commission staff estimates that the total
annual initial recordkeeping burden for 7 new respondents will be 1,287
hours, and the annual ongoing recordkeeping burden for all 55
respondents will be, on average, 2,145 hours. The Commission staff
estimates that the 7 new respondents would incur an initial internal
cost of compliance of $507,936. In addition, all 55 respondents will
incur, on average, an estimated ongoing annual internal cost of
compliance of $949,190.
Rules 1005 and 1007 establish recordkeeping requirements for SCI
entities other than SROs. The Commission staff estimates that for 6 new
respondents that are not SROs the average annual initial burden would
be 935 hours, and the annual ongoing burden for all 19 respondents will
be, on average, 475 hours. The Commission staff estimates that 6 new
respondents would incur an estimated internal initial internal cost of
compliance of $72,930, as well as a one-time cost of $5,400 to modify
existing recordkeeping systems. In addition, all 19 respondents will
incur, on average, an estimated ongoing internal cost of compliance of
$37,050.
The Commission estimates that the increase in the number of SCI
entities raises the total industry annual burden hours to 150,619 hours
and cost to $3,848,749 respectively.
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.
The public may view and comment on this information collection
request at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202410-3235-003 or send an email comment to
[email protected] within 30 days of the day
after publication of this notice by January 30, 2025.
Dated: December 23, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-31351 Filed 12-27-24; 8:45 am]
BILLING CODE 8011-01-P
