80 FR 67821 - Submission for OMB Review; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 212 (November 3, 2015)

Page Range		67821-67822
FR Document		2015-27916
Federal Register, Volume 80 Issue 212 (Tuesday, November 3, 2015)
[Federal Register Volume 80, Number 212 (Tuesday, November 3, 2015)]
[Notices]
[Pages 67821-67822]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-27916]


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SECURITIES AND EXCHANGE COMMISSION

[Extension: Rule 3a-4; SEC File No. 270-401, OMB Control No. 3235-0459]


Submission for OMB Review; Comment Request

Upon Written Request Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange 
Commission (the ``Commission'') is soliciting comments on the 
collection of information summarized below. The Commission plans to 
submit this existing collection of information to the Office of 
Management and Budget for extension and approval.
    Rule 3a-4 (17 CFR 270.3a-4) under the Investment Company Act of 
1940 (15 U.S.C. 80a) (``Investment Company Act'' or ``Act'') provides a 
nonexclusive safe harbor from the definition of investment company 
under the Act for certain investment advisory programs. These programs, 
which include ``wrap fee'' programs, generally are designed to provide 
professional portfolio management services on a discretionary basis to 
clients who are investing less than the minimum investments for 
individual accounts usually required by the investment adviser but more 
than the minimum account size of most mutual funds. Under wrap fee and 
similar programs, a client's account is typically managed on a 
discretionary basis according to pre-selected investment objectives. 
Clients with similar investment objectives often receive the same 
investment advice and may hold the same or substantially similar 
securities in their accounts. Because of this similarity of management, 
some of these investment advisory programs may meet the definition of 
investment company under the Act.
    In 1997, the Commission adopted rule 3a-4, which clarifies that 
programs organized and operated in accordance with the rule are not 
required to register under the Investment Company Act or comply with 
the Act's requirements. These programs differ from investment companies 
because, among other things, they provide individualized investment 
advice to the client. The rule's provisions have the effect of ensuring 
that clients in a program relying on the rule receive advice tailored 
to the client's needs.
    For a program to be eligible for the rule's safe harbor, each 
client's account must be managed on the basis of the client's financial 
situation and investment objectives and in accordance with any 
reasonable restrictions the client imposes on managing the account. 
When an account is opened, the sponsor (or its designee) must obtain 
information from each client regarding the client's financial situation 
and investment objectives, and must allow the client an opportunity to 
impose reasonable restrictions on managing the account. In addition, 
the sponsor (or its designee) must contact the client annually to 
determine whether the client's financial situation or investment 
objectives have changed and whether the client wishes to impose any 
reasonable restrictions on the management of the account or reasonably 
modify existing restrictions. The sponsor (or its designee) must also 
notify the client quarterly, in writing, to contact the sponsor (or its 
designee) regarding changes to the client's financial situation, 
investment objectives, or restrictions on the account's management.
    Additionally, the sponsor (or its designee) must provide each 
client with a quarterly statement describing all activity in the 
client's account during the previous quarter. The sponsor and personnel 
of the client's account manager who know about the client's account and 
its management must be reasonably available to consult with the client. 
Each client also must retain certain indicia of ownership of all 
securities and funds in the account.
    The Commission staff estimates that 16,537,781 clients participate 
each year in investment advisory programs relying on rule 3a-4. Of that 
number, the staff estimates that 4,918,064 are new clients and 
11,619,717 are continuing clients. The staff estimates that each year 
the investment advisory program sponsors'

[[Page 67822]]

staff engage in 1.5 hours per new client and 1 hour per continuing 
client to prepare, conduct and/or review interviews regarding the 
client's financial situation and investment objectives as required by 
the rule. Furthermore, the staff estimates that each year the 
investment advisory program sponsors' staff spends 1 hour per client to 
prepare and mail quarterly client account statements, including notices 
to update information. Based on the estimates above, the Commission 
estimates that the total annual burden of the rule's paperwork 
requirements is 35,534,594 hours.
    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act. The estimate is not derived 
from a comprehensive or even a representative survey or study of the 
costs of Commission rules and forms. 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.
    Written comments are invited on: (a) whether the collections of 
information are necessary for the proper performance of the functions 
of the Commission, including whether the information has practical 
utility; (b) the accuracy of the Commission's estimate of the burdens 
of the collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burdens of the collections of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. Consideration will be given to 
comments and suggestions submitted in writing within 60 days of this 
publication.
    Please direct your written comments to 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: [email protected].

    Dated: October 28, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-27916 Filed 11-2-15; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 80, No. 212 / Tuesday, November 3, 2015 / Notices 67821

four firms are registered with the An agency may not conduct or Because of this similarity of
Commission as OTC derivatives dealers. sponsor, and a person is not required to management, some of these investment
The staff estimates that approximately respond to, a collection of information advisory programs may meet the
two additional OTC derivatives dealers unless it displays a currently valid OMB definition of investment company under
may become registered within the next control number. the Act.
three years. Thus, the estimated Please direct your written comments In 1997, the Commission adopted rule
annualized burden would be 800 hours to: Pamela Dyson, Director/Chief 3a–4, which clarifies that programs
for the four OTC derivatives dealers Information Officer, Securities and organized and operated in accordance
currently registered with the Exchange Commission, c/o Remi Pavlik- with the rule are not required to register
Commission to maintain their risk Simon, 100 F Street NE., Washington, under the Investment Company Act or
management control systems,2 1,334 DC 20549, or send an email to: PRA_ comply with the Act’s requirements.
hours for the two new OTC derivatives Mailbox@SEC.gov. These programs differ from investment
dealers to establish and document their Dated: October 28, 2015.
companies because, among other things,
risk management control systems,3 and they provide individualized investment
Robert W. Errett,
400 hours for the two new OTC advice to the client. The rule’s
Deputy Secretary. provisions have the effect of ensuring
derivatives dealers to maintain their risk
management control systems.4 [FR Doc. 2015–27904 Filed 11–2–15; 8:45 am] that clients in a program relying on the
Accordingly, the staff estimates the total BILLING CODE 8011–01–P rule receive advice tailored to the
annualized burden associated with Rule client’s needs.
15c3–4 for the six OTC derivatives For a program to be eligible for the
dealers will be approximately 2,534 SECURITIES AND EXCHANGE rule’s safe harbor, each client’s account
hours annually. COMMISSION must be managed on the basis of the
The staff believes that the internal [Extension: Rule 3a–4; SEC File No. 270– client’s financial situation and
cost of complying with Rule 15c3–4 will 401, OMB Control No. 3235–0459] investment objectives and in accordance
be approximately $283 per hour.5 This with any reasonable restrictions the
per hour cost is based upon an annual Submission for OMB Review; client imposes on managing the
average hourly salary for a compliance Comment Request account. When an account is opened,
manager who would be responsible for the sponsor (or its designee) must obtain
Upon Written Request Copies Available information from each client regarding
ensuring compliance with the
From: Securities and Exchange the client’s financial situation and
requirements of Rule 15c3–4.
Commission, Office of Investor investment objectives, and must allow
Accordingly, the total annualized
Education and Advocacy, the client an opportunity to impose
internal cost of compliance for all
Washington, DC 20549–0213. reasonable restrictions on managing the
affected OTC derivatives dealers is
estimated to be $717,122.6 Notice is hereby given that, pursuant account. In addition, the sponsor (or its
Written comments are invited on: (a) to the Paperwork Reduction Act of 1995 designee) must contact the client
Whether the proposed collection of (44 U.S.C. 3501–3520), the Securities annually to determine whether the
information is necessary for the proper and Exchange Commission (the client’s financial situation or investment
performance of the functions of the ‘‘Commission’’) is soliciting comments objectives have changed and whether
Commission, including whether the on the collection of information the client wishes to impose any
information shall have practical utility; summarized below. The Commission reasonable restrictions on the
(b) the accuracy of the Commission’s plans to submit this existing collection management of the account or
estimates of the burden of the proposed of information to the Office of reasonably modify existing restrictions.
collection of information; (c) ways to Management and Budget for extension The sponsor (or its designee) must also
enhance the quality, utility, and clarity and approval. notify the client quarterly, in writing, to
of the information collected; and (d) Rule 3a–4 (17 CFR 270.3a–4) under contact the sponsor (or its designee)
ways to minimize the burden of the the Investment Company Act of 1940 regarding changes to the client’s
collection of information on (15 U.S.C. 80a) (‘‘Investment Company financial situation, investment
respondents, including through the use Act’’ or ‘‘Act’’) provides a nonexclusive objectives, or restrictions on the
of automated collection techniques or safe harbor from the definition of account’s management.
other forms of information technology. investment company under the Act for Additionally, the sponsor (or its
Consideration will be given to certain investment advisory programs. designee) must provide each client with
comments and suggestions submitted in These programs, which include ‘‘wrap a quarterly statement describing all
writing within 60 days of this fee’’ programs, generally are designed to activity in the client’s account during
publication. provide professional portfolio the previous quarter. The sponsor and
management services on a discretionary personnel of the client’s account
Reduction Act collection for Rule 15c3–1, which basis to clients who are investing less manager who know about the client’s
requires ANC firms to comply with specific than the minimum investments for account and its management must be
provisions of Rule 15c3–4 in Appendix E to Rule
15c3–1. See 17 CFR 240.15c3–1(a)(7)(iii), 17 CFR
individual accounts usually required by reasonably available to consult with the
240.15c3–1e(a)(1)(ii), and 17 CFR 240.15c3– the investment adviser but more than client. Each client also must retain
1e(a)(1)(viii)(C). the minimum account size of most certain indicia of ownership of all
2 (200 hours × 4 firms) = 800.
mutual funds. Under wrap fee and securities and funds in the account.
3 ((2,000 hours/3 years) × 2 firms) = 1,334.
mstockstill on DSK4VPTVN1PROD with NOTICES

4 (200 hours × 2 firms) = 400.
similar programs, a client’s account is The Commission staff estimates that
5 The $283 per hour salary figure for a compliance
typically managed on a discretionary 16,537,781 clients participate each year
manager is from SIFMA’s Management & basis according to pre-selected in investment advisory programs relying
Professional Earnings in the Securities Industry investment objectives. Clients with on rule 3a–4. Of that number, the staff
2013, modified by Commission staff to account for similar investment objectives often estimates that 4,918,064 are new clients
an 1800-hour work-year and multiplied by 5.35 to
account for bonuses, firm size, employee benefits receive the same investment advice and and 11,619,717 are continuing clients.
and overhead. may hold the same or substantially The staff estimates that each year the
6 2,534 hours × $283 per hour = $717,122. similar securities in their accounts. investment advisory program sponsors’

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67822 Federal Register / Vol. 80, No. 212 / Tuesday, November 3, 2015 / Notices

staff engage in 1.5 hours per new client SECURITIES AND EXCHANGE ‘‘remove references to odd lot orders in
and 1 hour per continuing client to COMMISSION proposed Rule 7.16P(f)(5)’’
prepare, conduct and/or review Robert W. Errett,
interviews regarding the client’s [Release No. 34–76198A; File No. SR– Deputy Secretary.
financial situation and investment NYSEARCA–2015–58]
[FR Doc. 2015–27877 Filed 11–2–15; 8:45 am]
objectives as required by the rule.
Self-Regulatory Organizations; NYSE BILLING CODE 8011–01–P
Furthermore, the staff estimates that
each year the investment advisory Arca, Inc.; Notice of Filing of
program sponsors’ staff spends 1 hour Amendment No. 1 and Order Granting
Accelerated Approval to a Proposed SECURITIES AND EXCHANGE
per client to prepare and mail quarterly COMMISSION
client account statements, including Rule Change, as Modified by
notices to update information. Based on Amendment No. 1, Adopting New [Release No. 34–76290; File No. SR–NYSE–
the estimates above, the Commission Equity Trading Rules Relating to 2015–49]
Trading Halts, Short Sales, Limit Up-
estimates that the total annual burden of Self-Regulatory Organizations; New
Limit Down, and Odd Lots and Mixed
the rule’s paperwork requirements is York Stock Exchange LLC; Notice of
Lots to Reflect the Implementation of
35,534,594 hours. Pillar, the Exchange’s New Trading Filing and Immediate Effectiveness of
The estimate of average burden hours Technology Platform; Correction Proposed Rule Change Amending Rule
is made solely for the purposes of the 123D To Specify That Exchange
Paperwork Reduction Act. The estimate October 28, 2015. Systems May Open One or More
is not derived from a comprehensive or AGENCY: Securities and Exchange Securities Electronically if a
even a representative survey or study of Commission. Designated Market Maker Registered in
the costs of Commission rules and ACTION: Notice; correction. a Security or Securities Cannot
forms. An agency may not conduct or Facilitate the Opening of Trading as
sponsor, and a person is not required to SUMMARY: The Securities and Exchange Required by Exchange Rules
respond to a collection of information Commission published a document in
October 28, 2015.
unless it displays a currently valid the Federal Register on October 26,
2015, concerning a Notice of Filing of Pursuant to Section 19(b)(1) of the
control number. Securities Exchange Act of 1934
Amendment No. 1 and Order Granting
Written comments are invited on: (a) Accelerated Approval to a Proposed (‘‘Act’’),1 and Rule 19b–4 thereunder,2
whether the collections of information Rule Change, as Modified by notice is hereby given that on October
are necessary for the proper Amendment No. 1, Adopting New 16, 2015, New York Stock Exchange
performance of the functions of the Equity Trading Rules Relating to LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
Commission, including whether the Trading Halts, Short Sales, Limit Up- with the Securities and Exchange
information has practical utility; (b) the Limit Down, and Odd Lots and Mixed Commission (‘‘SEC’’ or ‘‘Commission’’)
accuracy of the Commission’s estimate Lots to Reflect the Implementation of the proposed rule change as described
of the burdens of the collections of Pillar, the Exchange’s New Trading in Items I, II, and III below, which Items
information; (c) ways to enhance the Technology Platform. The document have been prepared by the Exchange.
contained typographical errors. The Commission is publishing this
quality, utility, and clarity of the
notice to solicit comments on the
information collected; and (d) ways to FOR FURTHER INFORMATION CONTACT: proposed rule change from interested
minimize the burdens of the collections Sonia Trocchio, Division of Trading and persons.
of information on respondents, Markets, Securities and Exchange
including through the use of automated Commission, 100 F Street NE., I. Self-Regulatory Organization’s
collection techniques or other forms of Washington, DC 20549, (202) 551–5648. Statement of the Terms of Substance of
information technology. Consideration the Proposed Rule Change
Correction
will be given to comments and The Exchange proposes to amend
suggestions submitted in writing within In the Federal Register of October 26, Rule 123D to specify that Exchange
60 days of this publication. 2015 in FR Doc. 2015–27069, on page systems may open one or more
65274, subsection (iii) of footnote 5, securities electronically if a Designated
Please direct your written comments
change the text, ‘‘amend proposed Rule Market Maker registered in a security or
to Pamela Dyson, Director/Chief
7.16P(f)(5)(C) to clarify that the securities cannot facilitate the opening
Information Officer, Securities and Exchange would treat all odd lot orders
Exchange Commission, C/O Remi of trading as required by Exchange
ranked Priority 2—Display Orders in the rules. The text of the proposed rule
Pavlik-Simon, 100 F Street NE., same manner as Market Orders and change is available on the Exchange’s
Washington, DC 20549; or send an email other non-displayed orders,’’ to the text, Web site at www.nyse.com, at the
to: PRA_Mailbox@sec.gov. ‘‘remove references to odd lot orders in principal office of the Exchange, and at
Dated: October 28, 2015. proposed Rule 7.16P(f)(5)’’. On page the Commission’s Public Reference
Robert W. Errett, 65276, in the 4th sentence of paragraph Room.
3, remove the following language: ‘‘of
Deputy Secretary. II. Self-Regulatory Organization’s
odd-lot orders that are ranked Priority
[FR Doc. 2015–27916 Filed 11–2–15; 8:45 am] Statement of the Purpose of, and
mstockstill on DSK4VPTVN1PROD with NOTICES

2,’’. On page 65277, in the 1st sentence
BILLING CODE 8011–01–P of the first full paragraph, change the Statutory Basis for, the Proposed Rule
text, ‘‘amends proposed Rule Change
7.16P(f)(5)(C) to clarify that the In its filing with the Commission, the
Exchange would treat all odd lot orders self-regulatory organization included
ranked Priority 2—Display Orders in the
same manner as Market Orders and 1 15 U.S.C. 78s(b)(1).
other non-displayed orders,’’ to the text, 2 17 CFR 240.19b–4.

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Document Created: 2018-03-01 11:33:03
Document Modified: 2018-03-01 11:33:03
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 67821