80 FR 48128 - Submission for OMB Review; Comment Request
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 154 (August 11, 2015)
Federal Register Volume 80, Issue 154 (August 11, 2015)
| Page Range | 48128-48129 | |
| FR Document | 2015-19649 |
[Federal Register Volume 80, Number 154 (Tuesday, August 11, 2015)] [Notices] [Pages 48128-48129] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-19649] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION 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 204; SEC File No. 270-586, OMB Control No. 3235-0647. 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 204 (17 CFR 242.204), under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). Rule 204 requires that, subject to certain limited exceptions, if a participant of a registered clearing agency has a fail to deliver position at a registered clearing agency it must immediately close out the fail to deliver position by purchasing or borrowing securities by no later than the beginning of regular trading hours on the settlement day following the day the participant incurred the fail to deliver position. Rule 204 is intended to help further the Commission's goal of reducing fails to deliver by maintaining the reductions in fails to deliver achieved by the adoption of temporary Rule 204T, as well as other actions taken by the Commission. In addition, Rule 204 is intended to help further the Commission's goal of addressing potentially abusive ``naked'' short selling in all equity securities. The information collected under Rule 204 will continue to be retained and/or provided to other entities pursuant to the specific rule provisions and will be available to the Commission and self- regulatory organization (``SRO'') examiners upon request. The information collected will continue to aid the Commission and SROs in monitoring compliance with these requirements. In addition, the information collected will aid those subject to Rule 204 in complying with its requirements. These collections of information are mandatory. Several provisions under Rule 204 will impose a ``collection of information'' within the meaning of the Paperwork Reduction Act. I. Allocation Notification Requirement: As of December 31, 2014, there were 4,184 registered broker-dealers. Each of these broker- dealers could clear trades through a participant of a registered clearing agency and, therefore, become subject to the notification requirements of Rule 204(d). If a broker-dealer has been allocated a portion of a fail to deliver position in an equity security and after the beginning of regular trading hours on the applicable close-out date, the broker-dealer has to determine whether or not that portion of the fail to deliver position was not closed out in accordance with Rule 204(a). We estimate that a broker-dealer will have to make such determination with respect to approximately 2.44 equity securities per day.\1\ We estimate a total of 2,572,657 notifications in accordance with Rule 204(d) across all broker-dealers (that were allocated responsibility to close out a fail to deliver position) per year (4,184 broker-dealers notifying participants once per day \2\ on 2.44 securities, multiplied by 252 trading days in a year). The total estimated annual burden hours per year will be approximately 411,625 burden hours (2,572,657 multiplied by 0.16 hours/notification). --------------------------------------------------------------------------- \1\ The Commission's Division of Economic and Risk Analysis (``DERA'') estimates that there are approximately 10,208 fail to deliver positions per settlement day as of January 2015. Across 4,184 broker-dealers, the number of securities per broker-dealer per day is approximately 2.44 equity securities. \2\ Because failure to comply with the close-out requirements of Rule 204(a) is a violation of the rule, we believe that a broker- dealer would make the notification to a participant that it is subject to the borrowing requirements of Rule 204(b) at most once per day. --------------------------------------------------------------------------- II. Demonstration Requirement for Fails to Deliver on Long Sales: As of [[Page 48129]] December 31, 2014, there were 175 participants of NSCC, the primary registered clearing agency responsible for clearing U.S. transactions that were registered as broker-dealers.\3\ If a participant of a registered clearing agency has a fail to deliver position in an equity security at a registered clearing agency and determines that such fail to deliver position resulted from a long sale, we estimate that a participant of a registered clearing agency will have to make such determination with respect to approximately 38 securities per day.\4\ We estimate a total of 1,675,800 demonstrations in accordance with Rule 204(a)(1) across all participants per year (175 participants checking for compliance once per day on 38 securities, multiplied by 252 trading days in a year). The total approximate estimated annual burden hour per year will be approximately 268,128 burden hours (1,675,800 multiplied by 0.16 hours/documentation). --------------------------------------------------------------------------- \3\ Those participants not registered as broker-dealers include such entities as banks, U.S.-registered exchanges, and clearing agencies. Although these entities are participants of a registered clearing agency, generally these entities do not engage in the types of activities that will implicate the close-out requirements of the rule. Such activities of these entities include creating and redeeming Exchange Traded Funds, trading in municipal securities, and using NSCC's Envelope Settlement Service or Inter-city Envelope Settlement Service. These activities rarely lead to fails to deliver and, if fails to deliver do occur, they are small in number and are usually closed out within a day. \4\ DERA estimates approximately 65.1% of trades are long sales as of March 2014 and applies this percentage to the number of fail to deliver positions per day. DERA estimates that there are approximately 10,208 fail to deliver positions per settlement day. Across 175 broker-dealer participants of the NSCC, the number of securities per participant per day is approximately 58 equity securities. 65.1% of 58 securities per day is approximately 38 securities per day. --------------------------------------------------------------------------- III. Pre-Borrow Notification Requirement: As of December 31, 2014, there were 175 participants of NSCC, the primary registered clearing agency responsible for clearing U.S. transactions that were registered as broker-dealers.\5\ If a participant of a registered clearing agency has a fail to deliver position in an equity security and after the beginning of regular trading hours on the applicable close-out date, the participant has to determine whether or not the fail to deliver position was closed out in accordance with Rule 204(a). We estimate that a participant of a registered clearing agency will have to make such determination with respect to approximately 58 equity securities per day.\6\ We estimate a total of 2,557,800 notifications in accordance with Rule 204(c) across all participants per year (175 participants notifying broker-dealers once per day on 58 securities, multiplied by 252 trading days in a year). The total estimated annual burden hours per year will be approximately 409,248 burden hours (2,557,800 @0.16 hours/documentation). --------------------------------------------------------------------------- \5\ See supra note 3. \6\ DERA estimates that there are approximately 10,208 fail to deliver positions per day. Across 175 broker-dealer participants of the NSCC, the number of securities per participant per day is approximately 58 equity securities. --------------------------------------------------------------------------- IV. Certification Requirement: If the broker-dealer determines that it has not incurred a fail to deliver position on settlement date in an equity security for which the participant has a fail to deliver position at a registered clearing agency or has purchased securities in accordance with the conditions specified in Rule 204(e), we estimate that a broker-dealer will have to make such determinations with respect to approximately 2.44 securities per day. As of December 31, 2014, there were 4,184 registered broker-dealers. Each of these broker- dealers may clear trades through a participant of a registered clearing agency. We estimate that on average, a broker-dealer will have to certify to the participant that it has not incurred a fail to deliver position on settlement date in an equity security for which the participant has a fail to deliver position at a registered clearing agency or, alternatively, that it is in compliance with the requirements set forth in Rule 204(e), 2,572,657 times per year (4,184 broker-dealers certifying once per day on 2.44 securities, multiplied by 252 trading days in a year). The total approximate estimated annual burden hour per year will be approximately 411,625 burden hours (2,572,657 multiplied by 0.16 hours/certification). V. Pre-Fail Credit Demonstration Requirement: If a broker-dealer purchases or borrows securities in accordance with the conditions specified in Rule 204(e) and determines that it has a net long position or net flat position on the settlement day on which the broker-dealer purchases or borrows securities we estimate that a broker-dealer will have to make such determination with respect to approximately 2.44 securities per day.\7\ As of December 31, 2014, there were 4,184 registered broker-dealers. We estimate that on average, a broker-dealer will have to demonstrate in its books and records that it has a net long position or net flat position on the settlement day for which the broker-dealer is claiming credit, 2,572,657 times per year (4,184 broker-dealers checking for compliance once per day on 2.44 securities, multiplied by 252 trading days in a year). The total approximate estimated annual burden hour per year will be approximately 411,625 burden hours (2,572,657 multiplied by 0.16 hours/demonstration). --------------------------------------------------------------------------- \7\ See supra note 1. --------------------------------------------------------------------------- The total aggregate annual burden for the collection of information undertaken pursuant to all five provisions is thus 1,912,251 hours per year (411,625 + 268,128 + 409,248 + 411,625 + 411,625). 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 review 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: [email protected]; 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 by sending an email to: [email protected]. Comments must be submitted to OMB within 30 days of this notice. Dated: August 5, 2015. Robert W. Errett, Deputy Secretary. [FR Doc. 2015-19649 Filed 8-10-15; 8:45 am] BILLING CODE 8011-01-P
![48128 Federal Register / Vol. 80, No. 154 / Tuesday, August 11, 2015 / Notices
newly issued Shares prior to or 6(b)(5) of the Act 26 and the rules and Commission’s goal of addressing
concurrently with the confirmation of a regulations thereunder applicable to a potentially abusive ‘‘naked’’ short
transaction; and (f) trading information. national securities exchange. selling in all equity securities.
(5) For initial and continued listing, The information collected under Rule
IV. Conclusion 204 will continue to be retained and/or
the Fund must be in compliance with
Rule 10A–3 under the Act.25 It is therefore ordered, pursuant to provided to other entities pursuant to
(6) The Fund’s net assets that are Section 19(b)(2) of the Act,27 that the the specific rule provisions and will be
invested in exchange-traded equities, proposed rule change (SR–NASDAQ– available to the Commission and self-
including ETPs and common stock, will 2015–059), as modified by Amendment regulatory organization (‘‘SRO’’)
be invested in instruments that trade in Nos. 1 and 2, be, and it hereby is, examiners upon request. The
markets that are members of ISG or are approved. information collected will continue to
parties to a comprehensive surveillance For the Commission, by the Division of aid the Commission and SROs in
sharing agreement with the Exchange. Trading and Markets, pursuant to delegated monitoring compliance with these
(7) The Fund may hold up to an authority.28 requirements. In addition, the
aggregate amount of 15% of its net Robert W. Errett, information collected will aid those
assets in illiquid securities and other Deputy Secretary. subject to Rule 204 in complying with
illiquid assets (calculated at the time of [FR Doc. 2015–19646 Filed 8–10–15; 8:45 am] its requirements. These collections of
investment). The Fund will monitor its BILLING CODE 8011–01–P
information are mandatory.
portfolio liquidity on an ongoing basis Several provisions under Rule 204
to determine whether, in light of current will impose a ‘‘collection of
circumstances, an adequate level of SECURITIES AND EXCHANGE information’’ within the meaning of the
liquidity is being maintained, and will COMMISSION Paperwork Reduction Act.
consider taking appropriate steps in I. Allocation Notification
order to maintain adequate liquidity if, Submission for OMB Review; Requirement: As of December 31, 2014,
through a change in values, net assets, Comment Request there were 4,184 registered broker-
or other circumstances, more than 15% dealers. Each of these broker-dealers
Upon Written Request, Copies Available could clear trades through a participant
of the Fund’s net assets are held in From: Securities and Exchange
illiquid securities or other illiquid of a registered clearing agency and,
Commission, Office of FOIA Services, therefore, become subject to the
assets. 100 F Street NE., Washington, DC
(8) Under normal market conditions, notification requirements of Rule
20549–2736.
the Fund will invest not less than 80% 204(d). If a broker-dealer has been
Extension: allocated a portion of a fail to deliver
of its total assets in exchange-listed Rule 204; SEC File No. 270–586, OMB
equity securities of companies in the position in an equity security and after
Control No. 3235–0647.
utility sector. the beginning of regular trading hours
Notice is hereby given that pursuant on the applicable close-out date, the
(9) Under normal market conditions,
to the Paperwork Reduction Act of 1995 broker-dealer has to determine whether
no more than 20% of the value of the
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the or not that portion of the fail to deliver
Fund’s net assets will be invested in any
Securities and Exchange Commission position was not closed out in
combination of cash and cash
(‘‘Commission’’) has submitted to the accordance with Rule 204(a). We
equivalents, which include only money
Office of Management and Budget estimate that a broker-dealer will have
market instruments, short duration
(‘‘OMB’’) a request for approval of to make such determination with
repurchase agreements, and short
extension of the previously approved respect to approximately 2.44 equity
duration commercial paper, and U.S.
collection of information provided for in securities per day.1 We estimate a total
exchange-traded options on securities
Rule 204 (17 CFR 242.204), under the of 2,572,657 notifications in accordance
and securities indexes.
Securities Exchange Act of 1934 (15 with Rule 204(d) across all broker-
(10) The Fund’s investments will be
U.S.C. 78a et seq.). dealers (that were allocated
consistent with its investment objective. Rule 204 requires that, subject to
The Fund does not presently intend to responsibility to close out a fail to
certain limited exceptions, if a deliver position) per year (4,184 broker-
engage in any form of borrowing for participant of a registered clearing
investment purposes, except in the case dealers notifying participants once per
agency has a fail to deliver position at day 2 on 2.44 securities, multiplied by
of short sales and will not be operated a registered clearing agency it must
as a ‘‘leveraged ETF,’’ i.e., it will not be 252 trading days in a year). The total
immediately close out the fail to deliver estimated annual burden hours per year
operated in a manner designed to seek position by purchasing or borrowing
a multiple of the performance of an will be approximately 411,625 burden
securities by no later than the beginning hours (2,572,657 multiplied by 0.16
underlying reference index. of regular trading hours on the
(11) A minimum of 100,000 Shares hours/notification).
settlement day following the day the II. Demonstration Requirement for
will be outstanding at the participant incurred the fail to deliver Fails to Deliver on Long Sales: As of
commencement of trading on the position. Rule 204 is intended to help
Exchange. further the Commission’s goal of 1 The Commission’s Division of Economic and
This approval order is based on all of reducing fails to deliver by maintaining Risk Analysis (‘‘DERA’’) estimates that there are
the Exchange’s representations, approximately 10,208 fail to deliver positions per
asabaliauskas on DSK5VPTVN1PROD with NOTICES
the reductions in fails to deliver settlement day as of January 2015. Across 4,184
including those set forth above and in achieved by the adoption of temporary broker-dealers, the number of securities per broker-
the Notice, and the Exchange’s Rule 204T, as well as other actions dealer per day is approximately 2.44 equity
description of the Fund. taken by the Commission. In addition, securities.
For the foregoing reasons, the Rule 204 is intended to help further the 2 Because failure to comply with the close-out
Commission finds that the proposed requirements of Rule 204(a) is a violation of the
rule change is consistent with Section rule, we believe that a broker-dealer would make
26 15 U.S.C. 78f(b)(5). the notification to a participant that it is subject to
27 15 U.S.C. 78s(b)(2). the borrowing requirements of Rule 204(b) at most
25 See 17 CFR 240.10A–3. 28 17 CFR 200.30–3(a)(12). once per day.
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![Federal Register / Vol. 80, No. 154 / Tuesday, August 11, 2015 / Notices 48129
December 31, 2014, there were 175 per day.6 We estimate a total of dealer is claiming credit, 2,572,657
participants of NSCC, the primary 2,557,800 notifications in accordance times per year (4,184 broker-dealers
registered clearing agency responsible with Rule 204(c) across all participants checking for compliance once per day
for clearing U.S. transactions that were per year (175 participants notifying on 2.44 securities, multiplied by 252
registered as broker-dealers.3 If a broker-dealers once per day on 58 trading days in a year). The total
participant of a registered clearing securities, multiplied by 252 trading approximate estimated annual burden
agency has a fail to deliver position in days in a year). The total estimated hour per year will be approximately
an equity security at a registered annual burden hours per year will be 411,625 burden hours (2,572,657
clearing agency and determines that approximately 409,248 burden hours multiplied by 0.16 hours/
such fail to deliver position resulted (2,557,800 @0.16 hours/documentation). demonstration).
from a long sale, we estimate that a IV. Certification Requirement: If the
The total aggregate annual burden for
participant of a registered clearing broker-dealer determines that it has not
the collection of information undertaken
agency will have to make such incurred a fail to deliver position on
pursuant to all five provisions is thus
settlement date in an equity security for
determination with respect to 1,912,251 hours per year (411,625 +
which the participant has a fail to
approximately 38 securities per day.4 268,128 + 409,248 + 411,625 + 411,625).
deliver position at a registered clearing
We estimate a total of 1,675,800 An agency may not conduct or sponsor,
agency or has purchased securities in
demonstrations in accordance with Rule and a person is not required to respond
accordance with the conditions
204(a)(1) across all participants per year specified in Rule 204(e), we estimate to, a collection of information under the
(175 participants checking for that a broker-dealer will have to make PRA unless it displays a currently valid
compliance once per day on 38 such determinations with respect to OMB control number.
securities, multiplied by 252 trading approximately 2.44 securities per day. The public may review background
days in a year). The total approximate As of December 31, 2014, there were documentation for this information
estimated annual burden hour per year 4,184 registered broker-dealers. Each of collection at the following Web site:
will be approximately 268,128 burden these broker-dealers may clear trades www.reginfo.gov. Comments should be
hours (1,675,800 multiplied by 0.16 through a participant of a registered directed to: (i) Desk Officer for the
hours/documentation). clearing agency. We estimate that on Securities and Exchange Commission,
III. Pre-Borrow Notification average, a broker-dealer will have to Office of Information and Regulatory
Requirement: As of December 31, 2014, certify to the participant that it has not Affairs, Office of Management and
there were 175 participants of NSCC, incurred a fail to deliver position on Budget, Room 10102, New Executive
the primary registered clearing agency settlement date in an equity security for Office Building, Washington, DC 20503,
responsible for clearing U.S. which the participant has a fail to or by sending an email to: Shagufta_
transactions that were registered as deliver position at a registered clearing Ahmed@omb.eop.gov; and (ii) Pamela
broker-dealers.5 If a participant of a agency or, alternatively, that it is in Dyson, Director/Chief Information
registered clearing agency has a fail to compliance with the requirements set Officer, Securities and Exchange
deliver position in an equity security forth in Rule 204(e), 2,572,657 times per Commission, c/o Remi Pavlik-Simon,
and after the beginning of regular year (4,184 broker-dealers certifying 100 F Street NE., Washington DC 20549,
trading hours on the applicable close- once per day on 2.44 securities, or by sending an email to: PRA_
out date, the participant has to multiplied by 252 trading days in a Mailbox@sec.gov. Comments must be
determine whether or not the fail to year). The total approximate estimated submitted to OMB within 30 days of
deliver position was closed out in annual burden hour per year will be this notice.
accordance with Rule 204(a). We approximately 411,625 burden hours Dated: August 5, 2015.
estimate that a participant of a (2,572,657 multiplied by 0.16 hours/
Robert W. Errett,
registered clearing agency will have to certification).
V. Pre-Fail Credit Demonstration Deputy Secretary.
make such determination with respect [FR Doc. 2015–19649 Filed 8–10–15; 8:45 am]
Requirement: If a broker-dealer
to approximately 58 equity securities
purchases or borrows securities in BILLING CODE 8011–01–P
3 Those
accordance with the conditions
participants not registered as broker-
dealers include such entities as banks, U.S.-
specified in Rule 204(e) and determines
registered exchanges, and clearing agencies. that it has a net long position or net flat SECURITIES AND EXCHANGE
Although these entities are participants of a position on the settlement day on which COMMISSION
registered clearing agency, generally these entities the broker-dealer purchases or borrows
do not engage in the types of activities that will securities we estimate that a broker- [Release No. 34–75614; File No. SR–
implicate the close-out requirements of the rule.
Such activities of these entities include creating and dealer will have to make such NYSEMKT–2015–62]
redeeming Exchange Traded Funds, trading in determination with respect to
municipal securities, and using NSCC’s Envelope approximately 2.44 securities per day.7 Self-Regulatory Organizations; NYSE
Settlement Service or Inter-city Envelope As of December 31, 2014, there were MKT LLC; Notice of Filing and
Settlement Service. These activities rarely lead to Immediate Effectiveness of Proposed
fails to deliver and, if fails to deliver do occur, they 4,184 registered broker-dealers. We
are small in number and are usually closed out estimate that on average, a broker-dealer Rule Change Amending the NYSE
within a day. will have to demonstrate in its books Amex Options Fee Schedule To Modify
4 DERA estimates approximately 65.1% of trades
and records that it has a net long the Securities That Are Subject to the
asabaliauskas on DSK5VPTVN1PROD with NOTICES
are long sales as of March 2014 and applies this NYSE Amex Options Market Maker
percentage to the number of fail to deliver positions
position or net flat position on the
per day. DERA estimates that there are settlement day for which the broker- Premium Product Fees
approximately 10,208 fail to deliver positions per
August 5, 2015.
settlement day. Across 175 broker-dealer 6 DERA estimates that there are approximately
participants of the NSCC, the number of securities 10,208 fail to deliver positions per day. Across 175 Pursuant to Section 19(b)(1) 1 of the
per participant per day is approximately 58 equity broker-dealer participants of the NSCC, the number
securities. 65.1% of 58 securities per day is of securities per participant per day is
Securities Exchange Act of 1934 (the
approximately 38 securities per day. approximately 58 equity securities.
5 See supra note 3. 7 See supra note 1. 1 15 U.S.C. 78s(b)(1).
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Document Created: 2016-09-27 22:24:55
Document Modified: 2016-09-27 22:24:55
| 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 | |
| FR Citation | 80 FR 48128 |
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