83 FR 10758 - Proposed Collection; Comment Request

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 48 (March 12, 2018)

Page Range		10758-10759
FR Document		2018-04904
Federal Register, Volume 83 Issue 48 (Monday, March 12, 2018)
[Federal Register Volume 83, Number 48 (Monday, March 12, 2018)]
[Notices]
[Pages 10758-10759]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-04904]


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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 17f-2, SEC File No. 270-233, OMB Control No. 3235-0223

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 350l et seq.), 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 17f-2 (17 CFR 270.17f-2), entitled ``Custody of Investments by 
Registered Management Investment Company,'' was adopted in 1940 under 
section 17(f) of the Investment Company Act of 1940 (15 U.S.C. 80a-
17(f)) (the ``Act''), and was last amended materially in 1947. Rule 
17f-2 establishes safeguards for arrangements in which a registered 
management investment company (``fund'') is deemed to maintain custody 
of its own assets, such as when the fund maintains its assets in a 
facility that provides safekeeping but not custodial services.\1\ The 
rule includes several recordkeeping or reporting requirements. The 
fund's directors must prepare a resolution designating not more than 
five fund officers or responsible employees who may have access to the 
fund's assets. The designated access persons (two or more of whom must 
act jointly when handling fund assets) must prepare a written notation 
providing certain information about each deposit or withdrawal of fund 
assets, and must transmit the notation to another officer or director 
designated by the directors. An independent public accountant must 
verify the fund's assets three times each year, and two of those 
examinations must be unscheduled.\2\
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    \1\ The rule generally requires all assets to be deposited in 
the safekeeping of a ``bank or other company whose functions and 
physical facilities are supervised by Federal or State authority.'' 
The fund's securities must be physically segregated at all times 
from the securities of any other person.
    \2\ The accountant must transmit to the Commission promptly 
after each examination a certificate describing the examination on 
Form N-17f-2. The third (scheduled) examination may coincide with 
the annual verification required for every fund by section 30(g) of 
the Act (15 U.S.C. 80a-29(g)).
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    Rule 17f-2's requirement that directors designate access persons is 
intended to ensure that directors evaluate the trustworthiness of 
insiders who handle fund assets. The requirements that access persons 
act jointly in handling fund assets, prepare a written notation of each 
transaction, and transmit the notation to another designated person are 
intended to reduce the risk of misappropriation of fund assets by 
access persons, and to ensure that adequate records are prepared, 
reviewed by a responsible third person, and available for examination 
by the Commission. The requirement that auditors verify fund assets 
without notice twice each year is intended to provide an additional 
deterrent to the misappropriation of fund assets and to detect any 
irregularities.
    The Commission staff estimates that each fund makes 974 responses 
and spends an average of 252 hours annually in complying with the 
rule's requirements.\3\ Commission staff estimates that on an annual 
basis it takes: (i) 0.5 hours of fund accounting personnel at a total 
cost of $102 to draft director resolutions;\4\ (ii) 0.5 hours of the 
fund's board of directors at a total cost of $2,233 to adopt the 
resolution; \5\ (iii) 244 hours for the fund's accounting personnel at 
a total cost of $65,745 to prepare written notations of transactions; 
\6\ and (iv) 7 hours for the fund's accounting personnel at a total 
cost of $1,428 to assist the independent public accountants when they 
perform verifications of fund assets.\7\ Commission staff estimates 
that approximately 206 funds file Form N-17f-2 each year.\8\ Thus, the 
total annual hour burden for rule 17f-2 is estimated to be 51,912 
hours.\9\ Based on the total costs per fund listed above, the total 
cost of rule 17f-2's collection of information requirements is 
estimated to be approximately $13.5 million.\10\
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    \3\ The 974 responses are: 1 (one) response to draft and adopt 
the resolution and 973 notations. Estimates of the number of hours 
are based on conversations with individuals in the fund industry. 
The actual number of hours may vary significantly depending on 
individual fund assets.
    \4\ This estimate is based on the following calculation: 0.5 
(burden hours per fund) x $204 (senior accountant's hourly rate) = 
$102. Unless otherwise indicated, the hourly wage figures used 
herein are from the Securities Industry and Financial Markets 
Association's Management & Professional Earnings in the Securities 
Industry 2013, modified by Commission staff to account for an 1,800-
hour work-year and inflation, and multiplied by 5.35 to account for 
bonuses, firm size, employee benefits and overhead.
    \5\ The estimate for the cost of board time as a whole is 
derived from estimates made by the staff regarding typical board 
size and compensation that is based on information received from 
fund representatives and publicly available sources.
    \6\ Respondents estimated that each fund makes 974 responses on 
an annual basis and spends a total of 0.25 hours per response. The 
fund personnel involved are Accounts Payable Manager ($192 hourly 
rate), Operations Manager ($345 hourly rate) and Accounting Manager 
($274 hourly rate). The average hourly rate of these personnel is 
$270. The estimated cost of preparing notations is based on the 
following calculation: 974 x 0.25 x $270 = $65,745.
    \7\ This estimate is based on the following calculation: 7 x 
$204 (senior accountant's hourly rate) = $1,428.
    \8\ On average, each year approximately 206 funds filed Form N-
17f-2 with the Commission during calendar years 2015-2017.
    \9\ This estimate is based on the following calculation: 206 
(funds) x 252 (total annual hourly burden per fund) = 51,912 hours 
for rule. The annual burden for rule 17f-2 does not include time 
spent preparing Form N-17f-2. The burden for Form N-17f-2 is 
included in a separate collection of information.
    \10\ This estimate is based on the following calculation: 
$65,745 (total annual cost per fund) x 206 funds = $13,543,470.
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules and forms. Complying with the collections of 
information required by rule 17f-2 is mandatory for those funds that 
maintain custody of their own assets. Responses will not be kept 
confidential. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a currently valid control number.
    Written comments are invited on: (a) Whether the collection of 
information is 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 burden of 
the collection of information; (c) ways to

[[Page 10759]]

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: PRA_Mailbox@sec.gov.


    Dated: March 6, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-04904 Filed 3-9-18; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 48 / Monday, March 12, 2018 / Notices 10759

enhance the quality, utility, and clarity at the Commission’s Public Reference Order Flow Provider. While these terms
of the information collected; and (d) Room. are currently used in the Schedule of
ways to minimize the burden of the Fees, in capitalized or non-capitalized
II. Self-Regulatory Organization’s
collection of information on form, and are described in either the
Statement of the Purpose of, and
respondents, including through the use Schedule of Fees or the Nasdaq MRX
Statutory Basis for, the Proposed Rule
of automated collection techniques or Rules, as well as the proposed rule
Change
other forms of information technology. changes that adopted the relevant
Consideration will be given to In its filing with the Commission, the terminology, the Exchange believes that
comments and suggestions submitted in Exchange included statements including these definitions in the
writing within 60 days of this concerning the purpose of and basis for Preface to the Schedule of Fees will
publication. the proposed rule change and discussed make the Schedule of Fees easier for
Please direct your written comments any comments it received on the members to understand. In connection
to Pamela Dyson, Director/Chief proposed rule change. The text of these with the above changes, the Exchange
Information Officer, Securities and statements may be examined at the also proposes to delete references to the
Exchange Commission, C/O Remi places specified in Item IV below. The 75% common ownership requirement in
Pavlik-Simon, 100 F Street NE, Exchange has prepared summaries, set the Qualifying Tier Thresholds section
Washington, DC 20549; or send an email forth in sections A, B, and C below, of of the Schedule of Fees, as this concept
to: PRA_Mailbox@sec.gov. the most significant aspects of such is now included in the definition of
statements. Affiliated Member.
Second, the Exchange proposes to
Dated: March 6, 2018. A. Self-Regulatory Organization’s
amend language under the Qualifying
Eduardo A. Aleman, Statement of the Purpose of, and
Tier Thresholds section of the Schedule
Assistant Secretary. Statutory Basis for, the Proposed Rule
of Fees to reference more explicitly how
[FR Doc. 2018–04904 Filed 3–9–18; 8:45 am] Change
the Exchange aggregates volume
BILLING CODE 8011–01–P 1. Purpose executed by Affiliated Members and
The purpose of the proposed rule Appointed Members for purposes of
change is to clarify certain terms used various average daily volume (‘‘ADV’’)
SECURITIES AND EXCHANGE categories. Currently, this section
COMMISSION in the Schedule of Fees, and to make
certain other non-substantive changes to contains bullets that describe ‘‘Total
[Release No. 34–82817; File No. SR–MRX– the Schedule of Fees. These proposed Affiliated Priority Customer ADV’’ and
2018–07] changes are designed to make it easier ‘‘Total Affiliated Member ADV,’’ and
to understand how the Exchange separate bullets that describe how the
Self-Regulatory Organizations; Nasdaq charges fees under the Schedule of Fees, Exchange aggregates this volume with
MRX, LLC; Notice of Filing and and have no impact on the actual fees Appointed Members. The Exchange
Immediate Effectiveness of Proposed charged to members, which will remain now proposes to incorporate the
Rule Change To Clarify Certain Terms unchanged. While the Exchange Appointed Member concept into the
Used in the Schedule of Fees bullets that define these ADV categories
believes that its members understand
by adding the words ‘‘and/or
March 6, 2018. the concepts being clarified in this
Appointed’’ to the ADV category
Pursuant to Section 19(b)(1) of the proposed rule change, which have been
descriptions, and including language
Securities Exchange Act of 1934 included in the Schedule of Fees in
that indicates that these categories
(‘‘Act’’),1 and Rule b–4 thereunder,2 some cases since the Exchange began
include volume executed by Affiliated
notice is hereby given that on February aggregating volume from affiliated/
Members and/or Appointed Members,
20, 2018, Nasdaq MRX, LLC (‘‘MRX’’ or appointed firms in 2016,3 the Exchange
which will be aggregated with the
‘‘Exchange’’) filed with the Securities believes that this proposed rule change
Member’s volume in the manner
and Exchange Commission will avoid any future potential for described in the Schedule of Fees. In
(‘‘Commission’’) the proposed rule member confusion. connection with these changes, the
First, the Exchange proposes to adopt
change as described in Items I and II Exchange proposes to indicate that these
explicit definitions for the following
below, which Items have been prepared terms ‘‘mean’’ rather than ‘‘include’’ the
terms: (1) Market Maker, (2) Affiliated
by the Exchange. The Commission is ADV described in the bullets to
Member, and (3) Appointed Member. As
publishing this notice to solicit reinforce that no other volume is
proposed, a ‘‘Market Maker’’ is a market
comments on the proposed rule change included in these calculations. In
maker as defined in Nasdaq MRX Rule
from interested persons. addition, the Exchange proposes to
100(a)(30); an ‘‘Affiliated Member’’ is a
remove language indicating that volume
I. Self-Regulatory Organization’s Member that shares at least 75% executed in the PIM, Facilitation, and
Statement of the Terms of Substance of common ownership with a particular QCC mechanisms is included in the
the Proposed Rule Change Member as reflected on the Member’s ADV category based on Priority
The Exchange proposes to a proposed Form BD, Schedule A; 4 and an Customer volume, as the current
rule change to clarify certain terms used ‘‘Appointed Member’’ is either an language already indicates that all
in the Schedule of Fees, and to make Appointed Market Maker or Appointed Priority Customer volume in all symbols
certain other non-substantive changes to 3 See Securities Exchange Act Release No. 77412
and order types is included.
the Schedule of Fees. (March 21, 2016), 81 FR 16238 (March 25, 2016)
Third, the Exchange proposes non-
amozie on DSK30RV082PROD with NOTICES

The text of the proposed rule change (SR–ISEMercury–2016–06); 77841 (May 16, 2016), substantive changes to the defined terms
is available on the Exchange’s website at 81 FR 31986 (May 20, 2016) (SR–ISEMercury– ‘‘Nasdaq MRX Appointed Market
http://nasdaqmrx.cchwallstreet.com/, at 2016–11). Maker,’’ ‘‘Nasdaq MRX Appointed
4 If a firm has multiple exchange memberships
the principal office of the Exchange, and Order Flow Provider,’’ and ‘‘Flash
housed in a single legal entity (e.g., a Primary
Market Maker and an Electronic Access Member)
Order.’’ Nasdaq MRX Appointed Market
1 15 U.S.C. 78s(b)(1). those memberships would be Affiliated Members Maker and Nasdaq MRX Appointed
2 17 CFR 240.b–4 . due to sharing 100% common ownership. Order Flow Provider will now be

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Document Created: 2018-11-01 08:51:15
Document Modified: 2018-11-01 08:51:15
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		83 FR 10758