81 FR 554 - Submission for OMB Review; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 3 (January 6, 2016)

Page Range		554-555
FR Document		2015-33212
Federal Register, Volume 81 Issue 3 (Wednesday, January 6, 2016)
[Federal Register Volume 81, Number 3 (Wednesday, January 6, 2016)]
[Notices]
[Pages 554-555]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-33212]


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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 3a-4
    OMB Control No. 3235-0459, SEC File No. 270-401.

    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'') has submitted to the Office of 
Management and Budget a request for extension of the previously 
approved collection of information discussed below.
    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

[[Page 555]]

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' 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 OMB 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: 
[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 send an email 
to: [email protected]. Comments must be submitted to OMB within 30 
days of this notice.

    Dated: December 30, 2015.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-33212 Filed 1-5-16; 8:45 am]
BILLING CODE 8011-01-P
554 Federal Register / Vol. 81, No. 3 / Wednesday, January 6, 2016 / Notices

cooperatively in a manner never before IV. Solicitation of Comments For the Commission, by the Division of
possible. Multiple market data vendors Trading and Markets, pursuant to delegated
already have the capability to aggregate Interested persons are invited to authority.10
data and disseminate it on a profitable submit written data, views, and Jill M. Peterson,
scale, including Bloomberg and arguments concerning the foregoing, Assistant Secretary.
Thomson Reuters. In Europe, Cinnober including whether the proposed rule [FR Doc. 2015–33206 Filed 1–5–16; 8:45 am]
aggregates and disseminates data from change, as amended, is consistent with BILLING CODE 8011–01–P
over 40 brokers and multilateral trading the Act. Comments may be submitted by
facilities.8 any of the following methods:
SECURITIES AND EXCHANGE
In this environment, a super- Electronic Comments COMMISSION
competitive increase in the fees charged
for either transactions or data has the • Use the Commission’s Internet Submission for OMB Review;
potential to impair revenues from both comment form (http://www.sec.gov/ Comment Request
products. ‘‘No one disputes that rules/sro.shtml); or
Upon Written Request, Copies Available
competition for order flow is ‘fierce’.’’ • Send an email to rule-comments@ From: Securities and Exchange
NetCoalition I at 539. The existence of sec.gov. Please include File Number SR–
fierce competition for order flow Commission, Office of FOIA Services,
Phlx–2015–112 on the subject line. 100 F Street NE., Washington, DC
implies a high degree of price sensitivity
on the part of BDs with order flow, since Paper Comments 20549–2736.
they may readily reduce costs by Extension: Rule 3a–4
• Send paper comments in triplicate OMB Control No. 3235–0459, SEC File No.
directing orders toward the lowest-cost
trading venues. A BD that shifted its to Secretary, Securities and Exchange 270–401.
order flow from one platform to another Commission, 100 F Street NE., Notice is hereby given that, pursuant
in response to order execution price Washington, DC 20549–1090. to the Paperwork Reduction Act of 1995
differentials would both reduce the All submissions should refer to File (44 U.S.C. 3501–3520), the Securities
value of that platform’s market data and Number SR–Phlx–2015–112. This file and Exchange Commission (the
reduce its own need to consume data number should be included on the ‘‘Commission’’) has submitted to the
from the disfavored platform. If a subject line if email is used. To help the Office of Management and Budget a
platform increases its market data fees, Commission process and review your request for extension of the previously
the change will affect the overall cost of approved collection of information
comments more efficiently, please use
doing business with the platform, and discussed below.
only one method. The Commission will Rule 3a–4 (17 CFR 270.3a–4) under
affected BDs will assess whether they post all comments on the Commission’s
can lower their trading costs by the Investment Company Act of 1940
Internet Web site (http://www.sec.gov/ (15 U.S.C. 80a) (‘‘Investment Company
directing orders elsewhere and thereby rules/sro.shtml). Copies of the
lessening the need for the more Act’’ or ‘‘Act’’) provides a nonexclusive
submission, all subsequent safe harbor from the definition of
expensive data.
amendments, all written statements investment company under the Act for
C. Self-Regulatory Organization’s with respect to the proposed rule certain investment advisory programs.
Statement on Comments on the change that are filed with the These programs, which include ‘‘wrap
Proposed Rule Change Received From Commission, and all written fee’’ programs, generally are designed to
Members, Participants, or Others communications relating to the provide professional portfolio
proposed rule change between the management services on a discretionary
Written comments were neither Commission and any person, other than basis to clients who are investing less
solicited nor received. those that may be withheld from the than the minimum investments for
III. Date of Effectiveness of the public in accordance with the individual accounts usually required by
Proposed Rule Change and Timing for provisions of 5 U.S.C. 552, will be the investment adviser but more than
Commission Action available for Web site viewing and the minimum account size of most
printing in the Commission’s Public mutual funds. Under wrap fee and
The foregoing rule change has become Reference Room on official business similar programs, a client’s account is
effective pursuant to Section days between the hours of 10:00 a.m. typically managed on a discretionary
19(b)(3)(A)(ii) of the Act.9 At any time and 3:00 p.m. Copies of such filing also basis according to pre-selected
within 60 days of the filing of the will be available for inspection and investment objectives. Clients with
proposed rule change, the Commission copying at the principal offices of the similar investment objectives often
summarily may temporarily suspend receive the same investment advice and
Exchange. All comments received will
such rule change if it appears to the may hold the same or substantially
be posted without change; the
Commission that such action is similar securities in their accounts.
Commission does not edit personal Because of this similarity of
necessary or appropriate in the public
identifying information from management, some of these investment
interest, for the protection of investors,
or otherwise in furtherance of the submissions. You should submit only advisory programs may meet the
purposes of the Act. If the Commission information that you wish to make definition of investment company under
available publicly. All submissions
mstockstill on DSK4VPTVN1PROD with NOTICES

takes such action, the Commission shall the Act.
institute proceedings to determine should refer to File Number SR–Phlx– In 1997, the Commission adopted rule
whether the proposed rule should be 2015–112, and should be submitted on 3a–4, which clarifies that programs
approved or disapproved. or before January 27, 2016. organized and operated in accordance
with the rule are not required to register
8 See http://www.cinnober.com/boat-trade- under the Investment Company Act or
reporting.
9 15 U.S.C. 78s(b)(3)(a)(ii). 10 17 CFR 200.30–3(a)(12).

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Federal Register / Vol. 81, No. 3 / Wednesday, January 6, 2016 / Notices 555

comply with the Act’s requirements. estimates that 4,918,064 are new clients SECURITIES AND EXCHANGE
These programs differ from investment and 11,619,717 are continuing clients. COMMISSION
companies because, among other things, The staff estimates that each year the
they provide individualized investment investment advisory program sponsors’ [Release No. 34–76796; File No. SR–BX–
advice to the client. The rule’s staff engage in 1.5 hours per new client 2015–084)]
provisions have the effect of ensuring and 1 hour per continuing client to
that clients in a program relying on the prepare, conduct and/or review Self-Regulatory Organizations;
rule receive advice tailored to the interviews regarding the client’s NASDAQ OMX BX, Inc.; Notice of Filing
client’s needs. financial situation and investment and Immediate Effectiveness of
For a program to be eligible for the objectives as required by the rule. Proposed Rule Change To Modify the
rule’s safe harbor, each client’s account Furthermore, the staff estimates that Fees for Managed Data Solutions
must be managed on the basis of the each year the investment advisory
client’s financial situation and program sponsors’ staff spends 1 hour December 30, 2015.
investment objectives and in accordance per client to prepare and mail quarterly Pursuant to section 19(b)(1) of the
with any reasonable restrictions the client account statements, including Securities Exchange Act of 1934
client imposes on managing the notices to update information. Based on
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
account. When an account is opened, the estimates above, the Commission
notice is hereby given that on December
the sponsor (or its designee) must obtain estimates that the total annual burden of
18, 2015, The NASDAQ OMX BX, Inc
information from each client regarding the rule’s paperwork requirements is
(‘‘BX’’) filed with the Securities and
the client’s financial situation and 35,534,594 hours.
The estimate of average burden hours Exchange Commission (‘‘Commission’’)
investment objectives, and must allow the proposed rule change as described
the client an opportunity to impose is made solely for the purposes of the
Paperwork Reduction Act. The estimate in Items I, II, and III below, which Items
reasonable restrictions on managing the have been prepared by BX. The
account. In addition, the sponsor (or its is not derived from a comprehensive or
even a representative survey or study of Commission is publishing this notice to
designee) must contact the client solicit comments on the proposed rule
annually to determine whether the the costs of Commission rules and
forms. An agency may not conduct or change from interested persons.
client’s financial situation or investment
objectives have changed and whether sponsor, and a person is not required to I. Self-Regulatory Organization’s
the client wishes to impose any respond to, a collection of information Statement of the Terms of the Substance
reasonable restrictions on the unless it displays a currently valid OMB of the Proposed Rule Change
management of the account or control number.
The public may view the background BX proposes to modify the charges to
reasonably modify existing restrictions.
documentation for this information be paid for Managed Data Solutions
The sponsor (or its designee) must also
collection at the following Web site, (‘‘MDS’’). While the changes proposed
notify the client quarterly, in writing, to
www.reginfo.gov. Comments should be herein are effective upon filing, the
contact the sponsor (or its designee)
directed to: (i) Desk Officer for the Exchange has designated that the
regarding changes to the client’s
Securities and Exchange Commission, amendments be operative on January 1,
financial situation, investment
Office of Information and Regulatory 2016.
objectives, or restrictions on the Affairs, Office of Management and
account’s management. The text of the proposed rule change
Budget, Room 10102, New Executive
Additionally, the sponsor (or its is below. Proposed new language is
Office Building, Washington, DC 20503,
designee) must provide each client with italicized; proposed deletions are
or by sending an email to: Shagufta_
a quarterly statement describing all bracketed.
Ahmed@omb.eop.gov; and (ii) Pamela
activity in the client’s account during Dyson, Director/Chief Information Rules of NASDAQ OMX BX
the previous quarter. The sponsor and Officer, Securities and Exchange
personnel of the client’s account Equity Rules
Commission, c/o Remi Pavlik-Simon,
manager who know about the client’s 100 F Street NE., Washington, DC 20549 * * * * *
account and its management must be or send an email to: PRA_Mailbox@
reasonably available to consult with the sec.gov. Comments must be submitted to 7026. Distribution Models
client. Each client also must retain OMB within 30 days of this notice.
certain indicia of ownership of all (a) Managed Data Solutions.
securities and funds in the account. Dated: December 30, 2015. Distributors and Subscribers of
The Commission staff estimates that Jill M. Peterson, Managed Data Solutions products
16,537,781 clients participate each year Assistant Secretary. containing BX TotalView data (non-
in investment advisory programs relying [FR Doc. 2015–33212 Filed 1–5–16; 8:45 am] display use only) shall pay the
on rule 3a–4. Of that number, the staff BILLING CODE 8011–01–P following fees:

FEE SCHEDULE FOR MANAGED DATA
Solutions Price

Managed Data Solutions Administration Fee (for the right to offer Managed Data Solutions to client organi- $[750]1,500/mo Per Distributor.
mstockstill on DSK4VPTVN1PROD with NOTICES

zations).
BX Depth Data Professional Managed Data Solutions Subscriber Fee (Internal Use Only and includes BX $1[0]50/mo Per Subscriber.
TotalView).
BX Depth Data Managed Data Solutions Non-Professional Subscriber Fee (Internal Use Only and includes $20/mo Per Subscriber.
BX TotalView).

1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4.

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Document Created: 2016-01-06 04:01:38
Document Modified: 2016-01-06 04:01:38
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		81 FR 554