80 FR 16710 - Submission for OMB Review; Comment Request
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 60 (March 30, 2015)
Federal Register Volume 80, Issue 60 (March 30, 2015)
| Page Range | 16710-16713 | |
| FR Document | 2015-07128 |
[Federal Register Volume 80, Number 60 (Monday, March 30, 2015)] [Notices] [Pages 16710-16713] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-07128] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270-526, OMB Control No. 3235-0584] Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549-2736. Extension: Rule 12d1-1. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (the ``Commission'') has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below. An investment company (``fund'') is generally limited in the amount of securities the fund (``acquiring fund'') can acquire from another fund (``acquired fund''). Section 12(d) of the Investment Company Act of 1940 (the ``Investment Company Act'' or ``Act'') \1\ provides that a registered fund (and companies it controls) cannot: --------------------------------------------------------------------------- \1\ See 15 U.S.C. 80a. ---------------------------------------------------------------------------Acquire more than three percent of another fund's securities; invest more than five percent of its own assets in another fund; or invest more than ten percent of its own assets in other funds in the aggregate.\2\ --------------------------------------------------------------------------- \2\ See 15 U.S.C. 80a-12(d)(1)(A). If an acquiring fund is not registered, these limitations apply only with respect to the acquiring fund's acquisition of registered funds. --------------------------------------------------------------------------- In addition, a registered open-end fund, its principal underwriter, and any registered broker or dealer cannot sell that fund's shares to another fund if, as a result: The acquiring fund (and any companies it controls) owns more than three percent of the acquired fund's stock; or all acquiring funds (and companies they control) in the aggregate own more than ten percent of the acquired fund's stock.\3\ --------------------------------------------------------------------------- \3\ See 15 U.S.C. 80a-12(d)(1)(B). --------------------------------------------------------------------------- Rule 12d1-1 under the Act provides an exemption from these limitations for ``cash sweep'' arrangements in which a fund invests all or a portion of its available cash in a money market fund rather than directly in short-term instruments.\4\ An acquiring fund relying on the exemption may not pay a sales load, distribution fee, or service fee on acquired fund shares, or if it does, the acquiring fund's investment adviser must waive a sufficient amount of its advisory fee to offset the cost of the loads or distribution fees.\5\ The acquired fund may be a fund in the same fund complex or in a different fund complex. In addition to providing an exemption from section 12(d)(1) of the Act, the rule provides exemptions from section 17(a) of the Act and rule 17d-1 thereunder, which restrict a fund's ability to enter into transactions and joint arrangements with affiliated persons.\6\ These provisions would otherwise prohibit an acquiring fund from investing in a money market fund in the same fund complex,\7\ and prohibit a fund that acquires five percent or more of the securities of a money market fund in another fund complex from making any additional investments in the money market fund.\8\ --------------------------------------------------------------------------- \4\ See 17 CFR 270.12d1-1. \5\ See rule 12d1-1(b)(1). \6\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d); 17 CFR 270.17d-1. \7\ An affiliated person of a fund includes any person directly or indirectly controlling, controlled by, or under common control with such other person. See 15 U.S.C. 80a-2(a)(3) (definition of ``affiliated person''). Most funds today are organized by an investment adviser that advises or provides administrative services to other funds in the same complex. Funds in a fund complex are generally under common control of an investment adviser or other person exercising a controlling influence over the management or policies of the funds. See 15 U.S.C. 80a-2(a)(9) (definition of ``control''). Not all advisers control funds they advise. The determination of whether a fund is under the control of its adviser, officers, or directors depends on all the relevant facts and circumstances. See Investment Company Mergers, Investment Company Act Release No. 25259 (Nov. 8, 2001) [66 FR 57602 (Nov. 15, 2001)], at n.11. To the extent that an acquiring fund in a fund complex is under common control with a money market fund in the same complex, the funds would rely on the rule's exemptions from section 17(a) and rule 17d-1. \8\ See 15 U.S.C. 80a-2(a)(3)(A), (B). --------------------------------------------------------------------------- The rule also permits a registered fund to rely on the exemption to invest in an unregistered money market fund that limits its investments to those in which a registered money market fund may invest under rule 2a-7 under the Act, and undertakes to comply with all the other provisions of rule 2a-7.\9\ In addition, the acquiring fund must reasonably believe that the unregistered money market fund (i) operates in compliance with rule 2a-7, (ii) complies with sections 17(a), (d), (e), 18, and 22(e) of the Act \10\ as if it were a registered open-end fund, (iii) has adopted procedures designed to ensure that it complies with these statutory provisions, (iv) maintains the records required by rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-1(b)(9); \11\ and (v) preserves permanently, the first two years in an easily accessible place, all books and records required to be made under these rules. --------------------------------------------------------------------------- \9\ See 17 CFR 270.2a-7. \10\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d), 15 U.S.C. 80a-17(e), 15 U.S.C. 80a-18, 15 U.S.C. 80a-22(e). \11\ See 17 CFR 270.31a-1(b)(1), 17 CFR 270.31a-1(b)(2)(ii), 17 CFR 270.31a-1(b)(2)(iv), 17 CFR 270.31a-1(b)(9). --------------------------------------------------------------------------- Rule 2a-7 contains certain collection of information requirements. An unregistered money market fund that complies with rule 2a-7 would be subject to these collection of information requirements. In addition, the recordkeeping requirements under rule 31a-1 with which the acquiring fund reasonably believes the unregistered money market fund complies are collections of information for the unregistered money market fund. The adoption of procedures by unregistered money market funds to ensure that they comply with sections 17(a), (d), (e), 18, and 22(e) of the Act also constitute collections of information. By allowing funds to invest in registered and unregistered money market funds, rule 12d1-1 is intended to provide funds greater options for cash management. In order for a registered fund to rely on the exemption to invest in an unregistered money market fund, the unregistered money market fund must comply with certain collection of information requirements for registered money market funds. These requirements are intended to ensure that the unregistered money market fund has established procedures for collecting the information necessary to make adequate credit reviews of securities in its portfolio, as well as other recordkeeping [[Page 16711]] requirements that will assist the acquiring fund in overseeing the unregistered money market fund (and Commission staff in its examination of the unregistered money market fund's adviser). The number of unregistered money market funds that would be affected by the proposal is an estimate based on the number of Commission exemptive applications that the Commission received in the past that sought relief for registered funds to purchase shares in an unregistered money market fund in excess of the section 12(d)(1) limits. The hour burden estimates for the condition that an unregistered money market fund comply with rule 2a-7 are based on the burden hours included in the Commission's 2009 and 2010 PRA submissions regarding rule 2a-7 (``rule 2a-7 submissions'').\12\ The estimated average burden hours in this collection of information are made solely for purposes of the Paperwork Reduction Act and are not derived from a quantitative, comprehensive or even representative survey or study of the burdens associated with Commission rules and forms. --------------------------------------------------------------------------- \12\ Securities and Exchange Commission, Request for OMB Approval of Extension for Approved Collection for Rule 2a-7 under the Investment Company Act of 1940 (OMB Control No. 3235-0268) (approved October 13, 2009); Securities and Exchange Commission, Request for OMB Approval of Revision for Approved Collection for Rule 2a-7 under the Investment Company Act of 1940 (OMB Control No. 3235-0268) (approved April 18, 2010). --------------------------------------------------------------------------- In the rule 2a-7 submissions, Commission staff made the following estimates with respect to aggregate annual hour and cost burdens for collections of information for each existing registered money market fund: Documentation of credit risk analyses, and determinations regarding adjustable rate securities, asset backed securities, and securities subject to a demand feature or guarantee: 81 responses 410 hours of professional time Cost: $79,130. Public Web site posting of monthly portfolio information: 12 responses 4.4 burden hours of professional time Cost: $12,584 The staff estimates that registered funds currently invest in 30 unregistered money market funds in excess of the statutory limits under rule 12d1-1.\13\ Each of these unregistered money market funds engages in the collections of information described above. Accordingly, the staff estimates that unregistered money market funds complying with the collections of information described above engage in a total of 2790 annual responses under rule 12d1-1,\14\ the aggregate annual burden hours associated with these responses is 12,432,\15\ and the aggregate annual cost to funds is $2.75 million.\16\ --------------------------------------------------------------------------- \13\ This estimate is based on the number of applications seeking exemptions to invest in unregistered money market funds filed with the Commission in 2005 (40), adjusted by the percentage change in registered money market funds from 2005 to November 2011 (870 to 641, according to the Investment Company Institute). This estimate may be understated because applicants generally did not identify the name or number of unregistered money market funds in which registered funds intended to invest, and each application also applies to unregistered money market funds to be organized in the future. Because the Commission adopted rule 12d1-1 in June 2006, 2005 is the last full year in which the Commission received applications seeking an exemption to invest in unregistered money market funds. \14\ The estimate is based on the following calculations: (30 funds x 81 responses for documentation of credit analyses and other determinations) = 2,340 responses. (30 funds x 12 responses for public Web site posting) = 360 responses. 2,340 responses + 360 responses = 2,790 responses. \15\ This estimate is based on the following calculations: (30 funds x 410 hours for documentation of credit analyses and other determinations) = 12,300 hours. (30 funds x 4.4 hours for public Web site posting) = 132 hours. 12,300 hours + 132 hours = 12,432 hours. \16\ This estimate is based on the following calculations: (30 funds x $79,130) = $2,373,900. (30 funds x $12,584) = $377,520. $2,373,900 + $377,520 = $2,751,420. --------------------------------------------------------------------------- In the rule 2a-7 submissions, Commission staff further estimated the aggregate annual hour and cost burdens for collections of information for fund complexes with registered money market funds as follows: Review and revise procedures concerning stress testing: 1 response 7 burden hours of professional and director time Cost: $5,650 Draft, compile, and provide stress testing reports to board of directors: 10 responses 27 burden hours of director, professional, and support staff time Cost: $69,990 Maintain records of stress testing reports to board of directors: 10 responses 0.2 burden hours of support staff time Cost: $103 Maintain records of creditworthiness evaluations of repurchase counterparties: 1 response 2 burden hours of support staff time Cost: $124 Reporting of rule 17a-9 transactions: \17\ --------------------------------------------------------------------------- \17\ See 17 CFR 270.17a-9. --------------------------------------------------------------------------- 1 response 1 burden hour of legal time Cost: $305 In the rule 2a-7 submissions, Commission staff estimated that there are 163 fund complexes with 719 registered money market funds subject to rule 2a-7. The staff estimates that there are 30 fund complexes with unregistered money market funds invested in by mutual funds in excess of the statutory limits under rule 12d1-1.\18\ Each of these fund complexes engages in the collections of information described above. Accordingly, the staff estimates that these fund complexes complying with the collections of information described above engage in a total of 690 annual responses under rule 12d1-1,\19\ the aggregate annual burden hours associated with these responses is 1116,\20\ and the aggregate annual cost to funds is $2,285,160.\21\ --------------------------------------------------------------------------- \18\ Given the fact that exemptive applications are generally filed on behalf of fund complexes rather than individual funds, the staff estimates that each of the exemptive applications upon which its estimates of the number of unregistered money market funds is based represents a separate fund complex. See supra note 13. \19\ The estimate is based on the following calculations: (30 fund complexes x 1 response for revision of procedures concerning stress testing) = 30 responses. (30 fund complexes x 10 responses to provide stress testing reports) = 300 responses. (30 fund complexes x 10 responses to maintain stress testing reports) = 300 responses. (30 fund complexes x 1 response to maintain records of creditworthiness) = 30 responses. (30 fund complexes x 1 response for reporting of rule 17a-9 transactions) = 30 responses. 30 responses + 300 responses + 300 responses + 30 responses + 30 responses = 690 responses. \20\ This estimate is based on the following calculations: (30 fund complexes x 7 hours for revision of procedures concerning stress testing) = 210 hours. (30 fund complexes x 27 hours to provide stress testing reports) = 810 hours. (30 fund complexes x 0.2 hours to maintain stress testing reports) = 6 hours. (30 fund complexes x 2 hours to maintain records of creditworthiness) = 60 hours. (30 fund complexes x 1 hour for reporting of rule 17a-9 transactions) = 30 hours. 210 hours + 810 hours + 6 hours + 60 hours + 30 hours = 1,116 hours. \21\ This estimate is based on the following calculations: (30 fund complexes x $5,650 for revision of procedures concerning stress testing) = $169,500. (30 fund complexes x $69,990 to provide stress testing reports) = $2,099,700. (30 fund complexes x $103 to maintain stress testing reports) = $3,090. (30 fund complexes x $124 to maintain records of creditworthiness) = $3,720. (30 fund complexes x $305 for reporting of rule 17a-9 transactions) = $9,150. $169,500 + $2,099,700 + $3,090 + $3,720 + $9,150 = $2,285,160. --------------------------------------------------------------------------- In the rule 2a-7 submissions, the staff further estimated the aggregate annual burdens for registered money market funds that amend their board procedures as follows: Amendment of procedures designed to stabilize the fund's net asset value: 1 response 2.4 burden hours of director time Cost: $2,340 Consistent with the estimate in the rule 2a-7 submissions, Commission [[Page 16712]] staff estimates that approximately \1/4\, or 8, unregistered money market funds review and amend their board procedures each year. Accordingly, the staff estimates that unregistered money market funds complying with this collection of information requirement engage in a total of 8 annual responses under rule 12d1-1,\22\ the aggregate annual burden hours associated with these responses is 19,\23\ and the aggregate annual cost to funds to comply with this collection of information is $18,720.\24\ --------------------------------------------------------------------------- \22\ The estimate is based on the following calculation: (8 funds x 1 response for board review and amendment of procedures) = 8 responses. \23\ This estimate is based on the following calculation: (8 funds x 2.4 hours for review and amendment of procedures) = 19.2 hours. \24\ This estimate is based on the following calculation: (8 funds x $2,340) = $18,720. --------------------------------------------------------------------------- In the rule 2a-7 submissions, Commission staff further estimated the aggregate annual burdens for registered money market funds that experience an event of default or insolvency as follows: Written record of board determinations and actions related to failure of a security to meet certain eligibility standards or an event of default of default or insolvency: 2 responses 1 burden hour of legal time Cost: $270 Notice to Commission of an event of default or insolvency: 1 response 1.5 burden hours of legal time Cost: $405 Consistent with the estimate in the rule 2a-7 submissions, Commission staff estimates that approximately 2 percent, or 1, unregistered money market fund experiences an event of default or insolvency each year. Accordingly, the staff estimates that one unregistered money market fund will comply with these collection of information requirements and engage in 3 annual responses under rule 12d1-1,\25\ the aggregate annual burden hours associated with these responses is 2.5,\26\ and the aggregate annual cost to funds is $675.\27\ --------------------------------------------------------------------------- \25\ The estimate is based on the following calculations: (1 fund x 2 responses) + (1 fund x 1 response) = 3 responses. \26\ This estimate is based on the following calculations: (1 fund x 1 hour) + (1 fund x 1.5 hours) = 2.5 hours. \27\ This estimate is based on the following calculations: (1 fund x $270) + (1 fund x $405) = $675. --------------------------------------------------------------------------- In the rule 2a-7 submissions, Commission staff further estimated the aggregate annual burdens for newly registered money market funds as follows: Establishment of written procedures designed to stabilize the fund's net asset value and guidelines for delegating board authority for determinations under the rule: 1 response 15.5 hours of director, legal, and support staff time Cost: $5,610. Adopt procedures concerning stress testing: 1 response per fund complex 8.33 burden hours of professional and director time per fund complex Cost: $6,017 per fund complex Commission staff estimates that the proportion of unregistered money market funds that intend to newly undertake the collection of information burdens of rule 2a-7 will be similar to the proportion of money market funds that are newly registered. Because of the recent decrease in registered money market funds and the lack of newly registered money market funds, the staff believes that there will be no unregistered money market funds that will undertake the collections of information required for newly registered money market funds.\28\ As a result, the staff estimates that there will be no burdens associated with these collection of information requirements. --------------------------------------------------------------------------- \28\ See supra note 13. --------------------------------------------------------------------------- Accordingly, the estimated total number of annual responses under rule 12d1-1 for the collections of information described in the rule 2a-7 submissions is 3,491, the aggregate annual burden hours associated with these responses is 13,570, and the aggregate cost to funds is $5.1 million.\29\ --------------------------------------------------------------------------- \29\ These estimates are based upon the following calculations: 2790 + 690 + 8+ 3 = 3,491 annual responses; 12,432 + 1116 + 19 + 2.5 = 13,569.5 burden hours; and $2,751,420 + $2,285,160 + $18,720 + $675 = $5,055,975. --------------------------------------------------------------------------- Rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a- 1(b)(9) require registered funds to keep certain records, which include journals and general and auxiliary ledgers, including ledgers for each portfolio security and each shareholder of record of the fund. Most of the records required to be maintained by the rule are the type that generally would be maintained as a matter of good business practice and to prepare the unregistered money market fund's financial statements. Accordingly, Commission staff estimates that the requirements under rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-1(b)(9) would not impose any additional burden because the costs of maintaining these records would be incurred by unregistered money market funds in any case to keep books and records that are necessary to prepare financial statements for shareholders, to prepare the fund's annual income tax returns, and as a normal business custom. Rule 12d1-1 also requires unregistered money market funds in which registered funds invest to adopt procedures designed to ensure that the unregistered money market funds comply with sections 17(a), (d), (e), and 22(e) of the Act. This is a one-time collection of information requirement that applies to unregistered money market funds that intend to comply with the requirements of rule 12d1-1. As discussed above, Commission staff estimates that because of the recent decrease in registered money market funds and the lack of newly registered money market funds there will be no unregistered money market funds that will undertake the collections of information required for newly registered money market funds.\30\ For similar reasons, the Commission staff estimates that there will be no registered money market funds that will adopt procedures designed to ensure that the unregistered money market funds comply with sections 17(a), (d), (e), and 22(e) of the Act. The staff concludes that there will be no burdens associated with these collection of information requirements. --------------------------------------------------------------------------- \30\ See supra text accompanying note 28. --------------------------------------------------------------------------- Commission staff further estimates that unregistered money market funds will incur costs to preserve records, as required under rule 2a- 7. These costs will vary significantly for individual funds, depending on the amount of assets under fund management and whether the fund preserves its records in a storage facility in hard copy or has developed and maintains a computer system to create and preserve compliance records. In the rule 2a-7 submissions, Commission staff estimated that the amount an individual money market fund may spend ranges from $100 per year to $300,000. We have no reason to believe the range is different for unregistered money market funds. The Commission does not have specific information on the amount of assets managed by unregistered money market funds or the proportion of those assets held in small, medium-sized, or large unregistered money market funds. Accordingly, Commission staff estimates that unregistered money market funds in which registered funds invest in reliance on rule 12d1-1 are similar to registered money market funds in terms of amount and distribution of assets under [[Page 16713]] management.\31\ Based on a cost of $0.0051295 per dollar of assets under management for small funds, $0.0005041 per dollar of assets under management for medium-sized funds and $0.0000009 per dollar of assets under management for large funds, the staff estimates compliance with rule 2-7 for these unregistered money market funds totals $3.9 million annually.\32\ --------------------------------------------------------------------------- \31\ In the rule 2a-7 submissions, the staff estimated that 757 registered money market funds have $3.8 trillion in assets under management, or $5 billion in assets under management per registered money market fund. The staff further estimated that 0.2% of those assets are held in small money market funds (funds with less than $50 million in assets under management), 3% are held in medium-sized money market funds (funds with $50 million to $1 billion in assets under management), and the remaining assets are held in large money market funds (funds with more than $1 billion in assets under management). \32\ This estimate is based on the following calculations: 30 unregistered money market funds x $5 billion = $150 billion. ($150 billion x 0.2% x $0.0051295) = $1.5 million for small funds. ($150 billion x 3% x 0.0005041) = $2.3 million for medium-sized funds. ($150 billion x 96.8% x 0.0000009) = $0.1 million for large funds. $1.5 million + $2.3 million + $0.1 million = $3.9 million. The estimate of cost per dollar of assets is the same as that used in the rule 2a-7 submissions. See supra note 12. --------------------------------------------------------------------------- Consistent with estimates made in the rule 2a-7 submissions, Commission staff estimates that unregistered money market funds also incur capital costs to create computer programs for maintaining and preserving compliance records for rule 2a-7 of $0.0000132 per dollar of assets under management. Based on the assets under management figures described above, staff estimates annual capital costs for all unregistered money market funds of $1.98 million.\33\ --------------------------------------------------------------------------- \33\ This estimate is based on the following calculation: $150 billion x 0.0000132 = $1.98 million. --------------------------------------------------------------------------- Commission staff further estimates that, even absent the requirements of rule 2a-7, money market funds would spend at least half of the amounts described above for record preservation ($2.0 million) and for capital costs ($0.99 million). Commission staff concludes that the aggregate annual costs of compliance with the rule are $2.0 million for record preservation and $0.99 million for capital costs. The collections of information required for unregistered money market funds by rule 12d1-1 are necessary in order for acquiring funds to able to obtain the benefits described above. Notices to the Commission will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view the background documentation for this information collection at the following Web site, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: March 24, 2015. Brent J. Fields, Secretary. [FR Doc. 2015-07128 Filed 3-27-15; 8:45 am] BILLING CODE 8011-01-P
![16710 Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Notices
filing will also be available for In addition, a registered open-end additional investments in the money
inspection and copying at the NYSE’s fund, its principal underwriter, and any market fund.8
principal office and on its Internet Web registered broker or dealer cannot sell The rule also permits a registered
site at www.nyse.com. All comments that fund’s shares to another fund if, as fund to rely on the exemption to invest
received will be posted without change; a result: in an unregistered money market fund
the Commission does not edit personal that limits its investments to those in
• The acquiring fund (and any
identifying information from which a registered money market fund
companies it controls) owns more than
submissions. You should submit only may invest under rule 2a–7 under the
three percent of the acquired fund’s
information that you wish to make Act, and undertakes to comply with all
stock; or
available publicly. All submissions the other provisions of rule 2a–7.9 In
should refer to File Number SR– • all acquiring funds (and companies addition, the acquiring fund must
NYSEMKT–2015–19 and should be they control) in the aggregate own more reasonably believe that the unregistered
submitted on or before April 20, 2015. than ten percent of the acquired fund’s money market fund (i) operates in
stock.3 compliance with rule 2a–7, (ii) complies
For the Commission, by the Division of
Trading and Markets, pursuant to delegated Rule 12d1–1 under the Act provides with sections 17(a), (d), (e), 18, and
authority.22 an exemption from these limitations for 22(e) of the Act 10 as if it were a
Brent J. Fields, ‘‘cash sweep’’ arrangements in which a registered open-end fund, (iii) has
fund invests all or a portion of its adopted procedures designed to ensure
Secretary.
available cash in a money market fund that it complies with these statutory
[FR Doc. 2015–07135 Filed 3–27–15; 8:45 am] provisions, (iv) maintains the records
rather than directly in short-term
BILLING CODE 8011–01–P
instruments.4 An acquiring fund relying required by rules 31a–1(b)(1), 31a–
on the exemption may not pay a sales 1(b)(2)(ii), 31a–1(b)(2)(iv), and 31a–
load, distribution fee, or service fee on 1(b)(9); 11 and (v) preserves
SECURITIES AND EXCHANGE permanently, the first two years in an
COMMISSION acquired fund shares, or if it does, the
acquiring fund’s investment adviser easily accessible place, all books and
[SEC File No. 270–526, OMB Control No. must waive a sufficient amount of its records required to be made under these
3235–0584]
advisory fee to offset the cost of the rules.
Rule 2a–7 contains certain collection
Submission for OMB Review; loads or distribution fees.5 The acquired
of information requirements. An
Comment Request fund may be a fund in the same fund
unregistered money market fund that
complex or in a different fund complex.
Upon Written Request, Copies Available complies with rule 2a–7 would be
In addition to providing an exemption
From: Securities and Exchange subject to these collection of
from section 12(d)(1) of the Act, the rule information requirements. In addition,
Commission, Office of FOIA Services, provides exemptions from section 17(a) the recordkeeping requirements under
100 F Street NE., Washington, DC of the Act and rule 17d–1 thereunder, rule 31a–1 with which the acquiring
20549–2736. which restrict a fund’s ability to enter fund reasonably believes the
Extension: into transactions and joint arrangements unregistered money market fund
Rule 12d1–1. with affiliated persons.6 These complies are collections of information
Notice is hereby given that, pursuant provisions would otherwise prohibit an for the unregistered money market fund.
to the Paperwork Reduction Act of 1995 acquiring fund from investing in a The adoption of procedures by
(44 U.S.C. 3501 et seq.), the Securities money market fund in the same fund unregistered money market funds to
and Exchange Commission (the complex,7 and prohibit a fund that ensure that they comply with sections
‘‘Commission’’) has submitted to the acquires five percent or more of the 17(a), (d), (e), 18, and 22(e) of the Act
Office of Management and Budget a securities of a money market fund in also constitute collections of
request for extension of the previously another fund complex from making any information. By allowing funds to invest
approved collection of information in registered and unregistered money
discussed below. 3 See 15 U.S.C. 80a–12(d)(1)(B). market funds, rule 12d1–1 is intended
4 See 17 CFR 270.12d1–1.
An investment company (‘‘fund’’) is to provide funds greater options for cash
5 See rule 12d1–1(b)(1).
generally limited in the amount of 6 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d); 17
management. In order for a registered
securities the fund (‘‘acquiring fund’’) CFR 270.17d–1. fund to rely on the exemption to invest
can acquire from another fund 7 An affiliated person of a fund includes any in an unregistered money market fund,
(‘‘acquired fund’’). Section 12(d) of the person directly or indirectly controlling, controlled the unregistered money market fund
Investment Company Act of 1940 (the by, or under common control with such other must comply with certain collection of
‘‘Investment Company Act’’ or ‘‘Act’’) 1 person. See 15 U.S.C. 80a–2(a)(3) (definition of
‘‘affiliated person’’). Most funds today are organized
information requirements for registered
provides that a registered fund (and by an investment adviser that advises or provides money market funds. These
companies it controls) cannot: administrative services to other funds in the same requirements are intended to ensure that
• Acquire more than three percent of complex. Funds in a fund complex are generally the unregistered money market fund has
another fund’s securities; under common control of an investment adviser or
established procedures for collecting the
• invest more than five percent of its other person exercising a controlling influence over
information necessary to make adequate
the management or policies of the funds. See 15
own assets in another fund; or U.S.C. 80a–2(a)(9) (definition of ‘‘control’’). Not all credit reviews of securities in its
• invest more than ten percent of its advisers control funds they advise. The portfolio, as well as other recordkeeping
own assets in other funds in the determination of whether a fund is under the
mstockstill on DSK4VPTVN1PROD with NOTICES
aggregate.2 control of its adviser, officers, or directors depends 8 See
on all the relevant facts and circumstances. See 15 U.S.C. 80a–2(a)(3)(A), (B).
9 See 17 CFR 270.2a–7.
Investment Company Mergers, Investment
22 17 CFR 200.30–3(a)(59). 10 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d),
Company Act Release No. 25259 (Nov. 8, 2001) [66
1 See 15 U.S.C. 80a. 15 U.S.C. 80a–17(e), 15 U.S.C. 80a–18, 15 U.S.C.
FR 57602 (Nov. 15, 2001)], at n.11. To the extent
2 See 15 U.S.C. 80a–12(d)(1)(A). If an acquiring that an acquiring fund in a fund complex is under 80a–22(e).
fund is not registered, these limitations apply only common control with a money market fund in the 11 See 17 CFR 270.31a–1(b)(1), 17 CFR 270.31a–
with respect to the acquiring fund’s acquisition of same complex, the funds would rely on the rule’s 1(b)(2)(ii), 17 CFR 270.31a–1(b)(2)(iv), 17 CFR
registered funds. exemptions from section 17(a) and rule 17d–1. 270.31a–1(b)(9).
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![Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Notices 16713
management.31 Based on a cost of The public may view the background 2015, Financial Industry Regulatory
$0.0051295 per dollar of assets under documentation for this information Authority, Inc. (‘‘FINRA’’) filed with the
management for small funds, collection at the following Web site, Securities and Exchange Commission
$0.0005041 per dollar of assets under www.reginfo.gov. Comments should be (‘‘SEC’’ or ‘‘Commission’’) the proposed
management for medium-sized funds directed to: (i) Desk Officer for the rule change as described in Items I, II,
and $0.0000009 per dollar of assets Securities and Exchange Commission, and III below, which Items have been
under management for large funds, the Office of Information and Regulatory prepared by FINRA. FINRA has
staff estimates compliance with rule Affairs, Office of Management and designated the proposed rule change as
2–7 for these unregistered money Budget, Room 10102, New Executive ‘‘establishing or changing a due, fee or
market funds totals $3.9 million Office Building, Washington, DC 20503, other charge’’ under Section
annually.32 or by sending an email to: Shagufta_ 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
Consistent with estimates made in the Ahmed@omb.eop.gov; and (ii) Pamela 4(f)(2) thereunder, 4 which renders the
rule 2a–7 submissions, Commission Dyson, Director/Chief Information proposal effective upon receipt of this
staff estimates that unregistered money Officer, Securities and Exchange filing by the Commission. The
market funds also incur capital costs to Commission, c/o Remi Pavlik-Simon, Commission is publishing this notice to
create computer programs for 100 F Street NE., Washington, DC 20549 solicit comments on the proposed rule
maintaining and preserving compliance or send an email to: PRA_Mailbox@ change from interested persons.
records for rule 2a–7 of $0.0000132 per sec.gov. Comments must be submitted to
dollar of assets under management. OMB within 30 days of this notice. I. Self-Regulatory Organization’s
Based on the assets under management Statement of the Terms of Substance of
Dated: March 24, 2015. the Proposed Rule Change
figures described above, staff estimates Brent J. Fields,
annual capital costs for all unregistered Secretary. FINRA is proposing to amend Section
money market funds of $1.98 million.33 [FR Doc. 2015–07128 Filed 3–27–15; 8:45 am] 4(c) of Schedule A to the FINRA By-
Commission staff further estimates Laws to increase qualification
BILLING CODE 8011–01–P
that, even absent the requirements of examination fees.
rule 2a–7, money market funds would Below is the text of the proposed rule
spend at least half of the amounts SECURITIES AND EXCHANGE change. Proposed new language is in
described above for record preservation COMMISSION italics; proposed deletions are in
($2.0 million) and for capital costs brackets.
($0.99 million). Commission staff [Release No. 34–74568; File No. SR–FINRA–
2015–006] * * * * *
concludes that the aggregate annual
costs of compliance with the rule are SCHEDULE A TO THE BY-LAWS OF
Self-Regulatory Organizations;
$2.0 million for record preservation and Financial Industry Regulatory THE CORPORATION
$0.99 million for capital costs. Authority, Inc.; Notice of Filing and * * * * *
The collections of information
Immediate Effectiveness of Proposed Section 4—Fees
required for unregistered money market
Rule Change To Amend Section 4(c) of (a) through (b) No Change.
funds by rule 12d1–1 are necessary in
Schedule A to the FINRA By-Laws To
order for acquiring funds to able to Increase Qualification Examination (c) The following fees shall be
obtain the benefits described above. Fees assessed to each individual who
Notices to the Commission will not be registers to take an examination as
kept confidential. An agency may not March 24, 2015. described below. These fees are in
conduct or sponsor, and a person is not Pursuant to Section 19(b)(1) of the addition to the registration fee described
required to respond to, a collection of Securities Exchange Act of 1934 in paragraph (b) and any other fees that
information unless it displays a (‘‘Act’’) 1 and Rule 19b–4 thereunder, 2 the owner of an examination that FINRA
currently valid control number. notice is hereby given that on March 10, administers may assess.
Series 4 Registered Options Principal ............................................................................................................................................. [$100] $105
Series 6 Investment Company Products/Variable Contracts Representative ................................................................................ [$95] $100
Series 7 General Securities Representative ..................................................................................................................................... [$290] $305
Series 9 General Securities Sales Supervisor—Options Module ................................................................................................... [$75] $80
Series 10 General Securities Sales Supervisor—General Module ................................................................................................... [$120] $125
Series 11 Assistant Representative—Order Processing .................................................................................................................... [$75] $80
Series 14 Compliance Official ........................................................................................................................................................... [$335] $350
Series 16 Supervisory Analyst ........................................................................................................................................................... [$230] $240
Series 17 Limited Registered Representative .................................................................................................................................... [$75] $80
Series 22 Direct Participation Programs Representative .................................................................................................................. [$95] $100
Series 23 General Securities Principal Sales Supervisor Module ................................................................................................... [$95] $100
Series 24 General Securities Principal .............................................................................................................................................. [$115] $120
Series 26 Investment Company Products/Variable Contracts Principal ......................................................................................... [$95] $100
Series 27 Financial and Operations Principal .................................................................................................................................. [$115] $120
31 In the rule 2a–7 submissions, the staff large money market funds (funds with more than The estimate of cost per dollar of assets is the same
mstockstill on DSK4VPTVN1PROD with NOTICES
estimated that 757 registered money market funds $1 billion in assets under management). as that used in the rule 2a–7 submissions. See supra
have $3.8 trillion in assets under management, or 32 This estimate is based on the following note 12.
$5 billion in assets under management per calculations: 30 unregistered money market funds 33 This estimate is based on the following
registered money market fund. The staff further calculation: $150 billion × 0.0000132 = $1.98
× $5 billion = $150 billion. ($150 billion × 0.2% ×
estimated that 0.2% of those assets are held in small million.
money market funds (funds with less than $50 $0.0051295) = $1.5 million for small funds. ($150
billion × 3% × 0.0005041) = $2.3 million for
1 15 U.S.C. 78s(b)(1).
million in assets under management), 3% are held
in medium-sized money market funds (funds with medium-sized funds. ($150 billion × 96.8% × 2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
$50 million to $1 billion in assets under 0.0000009) = $0.1 million for large funds. $1.5
management), and the remaining assets are held in million + $2.3 million + $0.1 million = $3.9 million. 4 17 CFR 240.19b–4(f)(2).
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Document Created: 2015-12-18 11:32:34
Document Modified: 2015-12-18 11:32:34
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | \17\ | |
| FR Citation | 80 FR 16710 |
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