81_FR_5168 81 FR 5148 - Proposed Collection; Comment Request

81 FR 5148 - Proposed Collection; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 20 (February 1, 2016)

Page Range5148-5149
FR Document2016-01717

Federal Register, Volume 81 Issue 20 (Monday, February 1, 2016)
[Federal Register Volume 81, Number 20 (Monday, February 1, 2016)]
[Notices]
[Pages 5148-5149]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-01717]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; 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 17e-1; SEC File No. 270-224, OMB Control No. 3235-0217.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.) (``Paperwork Reduction Act''), 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

[[Page 5149]]

Management and Budget (``OMB'') for extension and approval.
    Rule 17e-1 (17 CFR 270.17e-1) under the Investment Company Act of 
1940 (15 U.S.C. 80a-1 et seq.) (the ``Investment Company Act'') deems a 
remuneration as ``not exceeding the usual and customary broker's 
commission'' for purposes of Section 17(e)(2)(A) if, among other 
things, a registered investment company's (``fund's'') board of 
directors has adopted procedures reasonably designed to provide that 
the remuneration to an affiliated broker is a reasonable and fair 
amount compared to that received by other brokers in connection with 
comparable transactions involving similar securities being purchased or 
sold on a securities exchange during a comparable period of time and 
the board makes and approves such changes as it deems necessary. In 
addition, each quarter, the board must determine that all transactions 
effected under the rule during the preceding quarter complied with the 
established procedures. Rule 17e-1 also requires the fund to (i) 
maintain permanently a written copy of the procedures adopted by the 
board for complying with the requirements of the rule; and (ii) 
maintain for a period of six years, the first two in an easily 
accessible place, a written record of each transaction subject to the 
rule, setting forth the amount and source of the commission, fee, or 
other remuneration received; the identity of the broker; the terms of 
the transaction; and the materials used to determine that the 
transactions were effected in compliance with the procedures adopted by 
the board. The recordkeeping requirements under rule 17e-1 enable the 
Commission to ensure that affiliated brokers receive compensation that 
does not exceed the usual and customary broker's commission. Without 
the recordkeeping requirements, Commission inspectors would have 
difficulty ascertaining whether funds were complying with rule 17e-1.
    Based on an analysis of fund filings, the staff estimates that 
approximately 320 funds enter into subadvisory agreements each year.\1\ 
Based on discussions with industry representatives, the staff estimates 
that it will require approximately 3 attorney hours to draft and 
execute additional clauses in new subadvisory contracts in order for 
funds and subadvisers to be able to rely on the exemptions in rule 17e-
1. Because these additional clauses are identical to the clauses that a 
fund would need to insert in their subadvisory contracts to rely on 
rules 12d3-1, 10f-3, and 17a-10, and because we believe that funds that 
use one such rule generally use all of these rules, we apportion this 3 
hour time burden equally to all four rules. Therefore, we estimate that 
the burden allocated to rule 17e-1 for this contract change would be 
0.75 hours.\2\ Assuming that all 320 funds enter into new subadvisory 
contracts each year make the modification to their contract required by 
the rule, we estimate that the rule's contract modification requirement 
will result in 240 burden hours annually.\3\
---------------------------------------------------------------------------

    \1\ Based on data from Morningstar, as of September, 2015, there 
are 12,426 registered funds (open-end funds, closed-end funds, and 
exchange-traded funds), 4,683 funds of which have subadvisory 
relationships (approximately 38%). Based on data from the 2015 ICI 
Factbook, 843 new funds were established in 2014 (654 open-end funds 
+ 176 exchange-traded funds + 13 closed-end funds (from the ICI 
Research Perspective, April 2015)). 843 new funds x 38% = 320 funds.
    \2\ 3 hours / 4 rules = 0.75 hours.
    \3\ This estimate is based on the following calculation: 0.75 
hours x 320 funds = 240 burden hours.
---------------------------------------------------------------------------

    Based on an analysis of fund filings, we estimate that 
approximately 1,696 funds use at least one affiliated broker. Based on 
staff experience and conversations with fund representatives, the staff 
estimates approximately 40 percent of transactions (and thus, 40% of 
funds) that occur under the rule 17e-1 would be exempt from its 
recordkeeping and review requirements. This would leave approximately 
1,018 funds \4\ still subject to the rule's recordkeeping and review 
requirements. Based on staff experience and conversations with fund 
representatives, we estimate that the burden of compliance with rule 
17e-1 is approximately 50 hours per fund per year. This time is spent, 
for example, reviewing the applicable transactions and maintaining 
records. Accordingly, we calculate the total estimated annual internal 
burden of complying with the review and recordkeeping requirements of 
rule 17e-1 to be approximately 50,900 hours \5\ and the total annual 
burden of the rule's paperwork requirements is 51,140 hours.\6\
---------------------------------------------------------------------------

    \4\ 1,696 funds x 0.6 = 1,018 funds.
    \5\ 1,018 funds x 50 hours per fund = 50,900 hours.
    \6\ 240 hours + 50,900 hours = 51,140 hours.
---------------------------------------------------------------------------

    Estimates of average burden hours are made solely for the purposes 
of the Paperwork Reduction Act and are not derived from a comprehensive 
or even a representative survey or study of the costs of Commission 
rules and forms. The collection of information under rule 17e-1 is 
mandatory. The information provided under rule 17e-1 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 OMB control number.
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (b) the accuracy of the Commission's estimate 
of the burden of the collection of information; (c) ways to enhance the 
quality, utility, and clarity of the information collected; and (d) 
ways to minimize the burden of the collection of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology. Consideration will 
be given to comments and suggestions submitted 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: January 25, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-01717 Filed 1-29-16; 8:45 am]
 BILLING CODE 8011-01-P



                                               5148                          Federal Register / Vol. 81, No. 20 / Monday, February 1, 2016 / Notices

                                               Arca, NASDAQ OMX, BATS, and Direct                      any particular vendor or data recipient               only one method. The Commission will
                                               Edge.                                                   would achieve through the purchase.                   post all comments on the Commission’s
                                                  The fact that proprietary data from                                                                        Internet Web site (http://www.sec.gov/
                                               ATSs, internalizing broker-dealers, and                 C. Self-Regulatory Organization’s
                                                                                                                                                             rules/sro.shtml). Copies of the
                                               vendors can bypass SROs is significant                  Statement on Comments on the
                                                                                                                                                             submission, all subsequent
                                               in two respects. First, non-SROs can                    Proposed Rule Change Received From
                                                                                                                                                             amendments, all written statements
                                               compete directly with SROs for the                      Members, Participants, or Others
                                                                                                                                                             with respect to the proposed rule
                                               production and sale of proprietary data                   No written comments were solicited                  change that are filed with the
                                               products. By way of example, BATS and                   or received with respect to the proposed              Commission, and all written
                                               NYSE Arca both published proprietary                    rule change.                                          communications relating to the
                                               data on the Internet before registering as                                                                    proposed rule change between the
                                                                                                       III. Date of Effectiveness of the
                                               exchanges. Second, because a single                                                                           Commission and any person, other than
                                                                                                       Proposed Rule Change and Timing for
                                               order or transaction report can appear in                                                                     those that may be withheld from the
                                               an SRO proprietary product, a non-SRO                   Commission Action
                                                                                                                                                             public in accordance with the
                                               proprietary product, or both, the amount                   The foregoing rule change is effective             provisions of 5 U.S.C. 552, will be
                                               of data available via proprietary                       upon filing pursuant to section                       available for Web site viewing and
                                               products is greater in size than the                    19(b)(3)(A) 30 of the Act and                         printing in the Commission’s Public
                                               actual number of orders and transaction                 subparagraph (f)(2) of Rule 19b–4 31                  Reference Room, 100 F Street NE.,
                                               reports that exist in the marketplace.                  thereunder, because it establishes a due,             Washington, DC 20549 on official
                                               Because market data users can find                      fee, or other charge imposed by the                   business days between the hours of
                                               suitable substitutes for most proprietary               Exchange.                                             10:00 a.m. and 3:00 p.m. Copies of the
                                               market data products, a market that                        At any time within 60 days of the                  filing also will be available for
                                               overprices its market data products                     filing of such proposed rule change, the              inspection and copying at the principal
                                               stands a high risk that users may                       Commission summarily may                              office of the Exchange. All comments
                                               substitute another source of market data                temporarily suspend such rule change if               received will be posted without change;
                                               information for its own.                                it appears to the Commission that such                the Commission does not edit personal
                                                  Those competitive pressures imposed                  action is necessary or appropriate in the             identifying information from
                                               by available alternatives are evident in                public interest, for the protection of                submissions. You should submit only
                                               the Exchange’s proposed pricing.                        investors, or otherwise in furtherance of             information that you wish to make
                                                  In addition to the competition and                   the purposes of the Act. If the                       available publicly. All submissions
                                               price discipline described above, the                   Commission takes such action, the                     should refer to File Number SR–NYSE–
                                               market for proprietary data products is                 Commission shall institute proceedings                2016–08 and should be submitted on or
                                               also highly contestable because market                  under section 19(b)(2)(B) 32 of the Act to            before February 22, 2016.
                                               entry is rapid and inexpensive. The                     determine whether the proposed rule
                                               history of electronic trading is replete                change should be approved or                            For the Commission, by the Division of
                                               with examples of entrants that swiftly                                                                        Trading and Markets, pursuant to delegated
                                                                                                       disapproved.                                          authority.33
                                               grew into some of the largest electronic
                                               trading platforms and proprietary data                  IV. Solicitation of Comments                          Robert W. Errett,
                                               producers: Archipelago, Bloomberg                         Interested persons are invited to                   Deputy Secretary.
                                               Tradebook, Island, RediBook, Attain,                    submit written data, views, and                       [FR Doc. 2016–01712 Filed 1–29–16; 8:45 am]
                                               TrackECN, BATS Trading and Direct                       arguments concerning the foregoing,                   BILLING CODE 8011–01–P
                                               Edge. As noted above, BATS launched                     including whether the proposed rule
                                               as an ATS in 2006 and became an                         change is consistent with the Act.
                                               exchange in 2008, while Direct Edge                     Comments may be submitted by any of                   SECURITIES AND EXCHANGE
                                               began operations in 2007 and obtained                   the following methods:                                COMMISSION
                                               exchange status in 2010.
                                                  In determining the proposed change                   Electronic Comments                                   Proposed Collection; Comment
                                               to the fees for NYSE Order Imbalances                     • Use the Commission’s Internet                     Request
                                               and NYSE Alerts, the Exchange                           comment form (http://www.sec.gov/                     Upon Written Request, Copies Available
                                               considered the competitiveness of the                   rules/sro.shtml); or                                   From: Securities and Exchange
                                               market for proprietary data and all of                    • Send an email to rule-comments@                    Commission, Office of FOIA Services,
                                               the implications of that competition.                   sec.gov. Please include File Number SR–                100 F Street NE., Washington, DC
                                               The Exchange believes that it has                       NYSE–2016–08 on the subject line.                      20549–2736.
                                               considered all relevant factors and has
                                               not considered irrelevant factors in                    Paper Comments                                        Extension:
                                               order to establish fair, reasonable, and                  • Send paper comments in triplicate                   Rule 17e–1; SEC File No. 270–224, OMB
                                               not unreasonably discriminatory fees                                                                              Control No. 3235–0217.
                                                                                                       to Brent J. Fields, Secretary, Securities
                                               and an equitable allocation of fees                     and Exchange Commission, 100 F Street                    Notice is hereby given that, pursuant
                                               among all users. The existence of                       NE., Washington, DC 20549–1090.                       to the Paperwork Reduction Act of 1995
                                               numerous alternatives to the Exchange’s                 All submissions should refer to File                  (44 U.S.C. 3501 et seq.) (‘‘Paperwork
                                               products, including proprietary data                    Number SR–NYSE–2016–08. This file                     Reduction Act’’), the Securities and
                                               from other sources, ensures that the                    number should be included on the                      Exchange Commission (the
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                                               Exchange cannot set unreasonable fees,                  subject line if email is used. To help the            ‘‘Commission’’) is soliciting comments
                                               or fees that are unreasonably                           Commission process and review your                    on the collection of information
                                               discriminatory, when vendors and                        comments more efficiently, please use                 summarized below. The Commission
                                               subscribers can elect these alternatives                                                                      plans to submit this existing collection
                                               or choose not to purchase a specific                      30 15 U.S.C. 78s(b)(3)(A).                          of information to the Office of
                                               proprietary data product if the attendant                 31 17 CFR 240.19b–4(f)(2).
                                               fees are not justified by the returns that                32 15 U.S.C. 78s(b)(2)(B).                            33 17   CFR 200.30–3(a)(12).



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                                                                             Federal Register / Vol. 81, No. 20 / Monday, February 1, 2016 / Notices                                                     5149

                                               Management and Budget (‘‘OMB’’) for                     hours to draft and execute additional                  information unless it displays a
                                               extension and approval.                                 clauses in new subadvisory contracts in                currently valid OMB control number.
                                                  Rule 17e–1 (17 CFR 270.17e–1) under                  order for funds and subadvisers to be                    Written comments are invited on: (a)
                                               the Investment Company Act of 1940                      able to rely on the exemptions in rule                 Whether the proposed collection of
                                               (15 U.S.C. 80a–1 et seq.) (the                          17e–1. Because these additional clauses                information is necessary for the proper
                                               ‘‘Investment Company Act’’) deems a                     are identical to the clauses that a fund               performance of the functions of the
                                               remuneration as ‘‘not exceeding the                     would need to insert in their                          agency, including whether the
                                               usual and customary broker’s                            subadvisory contracts to rely on rules                 information will have practical utility;
                                               commission’’ for purposes of Section                    12d3–1, 10f–3, and 17a–10, and because                 (b) the accuracy of the Commission’s
                                               17(e)(2)(A) if, among other things, a                   we believe that funds that use one such                estimate of the burden of the collection
                                               registered investment company’s                         rule generally use all of these rules, we              of information; (c) ways to enhance the
                                               (‘‘fund’s’’) board of directors has                     apportion this 3 hour time burden                      quality, utility, and clarity of the
                                               adopted procedures reasonably                           equally to all four rules. Therefore, we               information collected; and (d) ways to
                                               designed to provide that the                            estimate that the burden allocated to                  minimize the burden of the collection of
                                               remuneration to an affiliated broker is a               rule 17e–1 for this contract change                    information on respondents, including
                                               reasonable and fair amount compared to                  would be 0.75 hours.2 Assuming that all                through the use of automated collection
                                               that received by other brokers in                       320 funds enter into new subadvisory                   techniques or other forms of information
                                               connection with comparable                              contracts each year make the                           technology. Consideration will be given
                                               transactions involving similar securities               modification to their contract required                to comments and suggestions submitted
                                               being purchased or sold on a securities                 by the rule, we estimate that the rule’s               in writing within 60 days of this
                                               exchange during a comparable period of                  contract modification requirement will                 publication.
                                               time and the board makes and approves                   result in 240 burden hours annually.3                    Please direct your written comments
                                               such changes as it deems necessary. In                     Based on an analysis of fund filings,               to Pamela Dyson, Director/Chief
                                               addition, each quarter, the board must                  we estimate that approximately 1,696                   Information Officer, Securities and
                                               determine that all transactions effected                funds use at least one affiliated broker.              Exchange Commission, C/O Remi
                                               under the rule during the preceding                     Based on staff experience and                          Pavlik-Simon, 100 F Street NE.,
                                               quarter complied with the established                   conversations with fund representatives,               Washington, DC 20549; or send an email
                                               procedures. Rule 17e–1 also requires the                the staff estimates approximately 40                   to: PRA_Mailbox@sec.gov.
                                               fund to (i) maintain permanently a                      percent of transactions (and thus, 40%
                                               written copy of the procedures adopted                  of funds) that occur under the rule 17e–                 Dated: January 25, 2016.
                                               by the board for complying with the                     1 would be exempt from its                             Robert W. Errett,
                                               requirements of the rule; and (ii)                      recordkeeping and review requirements.                 Deputy Secretary.
                                               maintain for a period of six years, the                 This would leave approximately 1,018                   [FR Doc. 2016–01717 Filed 1–29–16; 8:45 am]
                                               first two in an easily accessible place, a              funds 4 still subject to the rule’s                    BILLING CODE 8011–01–P
                                               written record of each transaction                      recordkeeping and review requirements.
                                               subject to the rule, setting forth the                  Based on staff experience and
                                               amount and source of the commission,                    conversations with fund representatives,               SECURITIES AND EXCHANGE
                                               fee, or other remuneration received; the                we estimate that the burden of                         COMMISSION
                                               identity of the broker; the terms of the                compliance with rule 17e–1 is
                                                                                                                                                              [Release No. 34–76974; File No. SR–
                                               transaction; and the materials used to                  approximately 50 hours per fund per
                                                                                                                                                              NYSEArca–2015–110]
                                               determine that the transactions were                    year. This time is spent, for example,
                                               effected in compliance with the                         reviewing the applicable transactions                  Self-Regulatory Organizations; NYSE
                                               procedures adopted by the board. The                    and maintaining records. Accordingly,                  Arca, Inc.; Notice of Filing of
                                               recordkeeping requirements under rule                   we calculate the total estimated annual                Amendment No. 2 to Proposed Rule
                                               17e–1 enable the Commission to ensure                   internal burden of complying with the                  Change Amending NYSE Arca Equities
                                               that affiliated brokers receive                         review and recordkeeping requirements                  Rule 8.600 To Adopt Generic Listing
                                               compensation that does not exceed the                   of rule 17e–1 to be approximately                      Standards for Managed Fund Shares
                                               usual and customary broker’s                            50,900 hours 5 and the total annual
                                               commission. Without the recordkeeping                   burden of the rule’s paperwork                         January 26, 2016.
                                               requirements, Commission inspectors                     requirements is 51,140 hours.6                           On November 6, 2015, NYSE Arca,
                                               would have difficulty ascertaining                         Estimates of average burden hours are               Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
                                               whether funds were complying with                       made solely for the purposes of the                    with the Securities and Exchange
                                               rule 17e–1.                                             Paperwork Reduction Act and are not                    Commission (‘‘Commission’’), pursuant
                                                  Based on an analysis of fund filings,                derived from a comprehensive or even                   to section 19(b)(1) of the Securities
                                               the staff estimates that approximately                  a representative survey or study of the                Exchange Act of 1934 (‘‘Act’’) 1 and Rule
                                               320 funds enter into subadvisory                        costs of Commission rules and forms.                   19b–4 thereunder,2 a proposed rule
                                               agreements each year.1 Based on                         The collection of information under rule               change to adopt generic listing
                                               discussions with industry                               17e–1 is mandatory. The information                    standards for Managed Fund Shares.
                                               representatives, the staff estimates that               provided under rule 17e–1 will not be                  The proposed rule change was
                                               it will require approximately 3 attorney                kept confidential. An agency may not                   published for comment in the Federal
                                                                                                       conduct or sponsor, and a person is not                Register on November 27, 2015.3 On
                                                  1 Based on data from Morningstar, as of
                                                                                                       required to respond to, a collection of                November 23, 2015, after issuance of the
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                                               September, 2015, there are 12,426 registered funds
                                               (open-end funds, closed-end funds, and exchange-                                                               Notice but before its publication, the
                                                                                                         23  hours ÷ 4 rules = 0.75 hours.
                                               traded funds), 4,683 funds of which have                  3 This
                                                                                                                                                              Exchange filed Amendment No. 1 to the
                                               subadvisory relationships (approximately 38%).                   estimate is based on the following
                                               Based on data from the 2015 ICI Factbook, 843 new       calculation: 0.75 hours × 320 funds = 240 burden
                                               funds were established in 2014 (654 open-end            hours.                                                   1 15 U.S.C. 78s(b)(1).
                                                                                                         4 1,696 funds × 0.6 = 1,018 funds.                     2 17
                                               funds + 176 exchange-traded funds + 13 closed-end                                                                     CFR 240.19b–4.
                                                                                                         5 1,018 funds × 50 hours per fund = 50,900 hours.      3 See Securities Exchange Act Release No. 76486
                                               funds (from the ICI Research Perspective, April
                                               2015)). 843 new funds × 38% = 320 funds.                  6 240 hours + 50,900 hours = 51,140 hours.           (Nov. 20, 2015), 80 FR 74169 (‘‘Notice’’).



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Document Created: 2016-01-30 01:17:22
Document Modified: 2016-01-30 01:17:22
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 5148 

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