83 FR 14530 - Submission for OMB Review; Comment Request
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 65 (April 4, 2018)
Federal Register Volume 83, Issue 65 (April 4, 2018)
| Page Range | 14530-14534 | |
| FR Document | 2018-06854 |
[Federal Register Volume 83, Number 65 (Wednesday, April 4, 2018)] [Notices] [Pages 14530-14534] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-06854] ----------------------------------------------------------------------- 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 12d1-1, SEC File No. 270-526, OMB Control No. 3235-0584. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), 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. An investment company (``fund'') is generally limited in the amount of securities the fund (``acquiring fund'') can acquire from another fund (``acquired fund''). Section 12(d) of the Investment Company Act of 1940 (the ``Investment Company Act'' or ``Act'') \1\ provides that a registered fund (and companies it controls) cannot: --------------------------------------------------------------------------- \1\ See 15 U.S.C. 80a. ---------------------------------------------------------------------------Acquire more than three percent of another fund's securities; Invest more than five percent of its own assets in another fund; or Invest more than ten percent of its own assets in other funds in the aggregate.\2\ --------------------------------------------------------------------------- \2\ See 15 U.S.C. 80a-12(d)(1)(A). If an acquiring fund is not registered, these limitations apply only with respect to the acquiring fund's acquisition of registered funds. --------------------------------------------------------------------------- In addition, a registered open-end fund, its principal underwriter, and any registered broker or dealer cannot sell that fund's shares to another fund if, as a result: The acquiring fund (and any companies it controls) owns more than three percent of the acquired fund's stock; or [[Page 14531]] All acquiring funds (and companies they control) in the aggregate own more than ten percent of the acquired fund's stock.\3\ --------------------------------------------------------------------------- \3\ See 15 U.S.C. 80a-12(d)(1)(B). --------------------------------------------------------------------------- Rule 12d1-1 under the Act provides an exemption from these limitations for ``cash sweep'' arrangements in which a fund invests all or a portion of its available cash in a money market fund rather than directly in short-term instruments.\4\ An acquiring fund relying on the exemption may not pay a sales load, distribution fee, or service fee on acquired fund shares, or if it does, the acquiring fund's investment adviser must waive a sufficient amount of its advisory fee to offset the cost of the loads or distribution fees.\5\ The acquired fund may be a fund in the same fund complex or in a different fund complex. In addition to providing an exemption from section 12(d)(1) of the Act, the rule provides exemptions from section 17(a) of the Act and rule 17d-1 thereunder, which restrict a fund's ability to enter into transactions and joint arrangements with affiliated persons.\6\ These provisions would otherwise prohibit an acquiring fund from investing in a money market fund in the same fund complex,\7\ and prohibit a fund that acquires five percent or more of the securities of a money market fund in another fund complex from making any additional investments in the money market fund.\8\ --------------------------------------------------------------------------- \4\ See 17 CFR 270.12d1-1. \5\ See rule 12d1-1(b)(1). \6\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d); 17 CFR 270.17d-1. \7\ An affiliated person of a fund includes any person directly or indirectly controlling, controlled by, or under common control with such other person. See 15 U.S.C. 80a-2(a)(3) (definition of ``affiliated person''). Most funds today are organized by an investment adviser that advises or provides administrative services to other funds in the same complex. Funds in a fund complex are generally under common control of an investment adviser or other person exercising a controlling influence over the management or policies of the funds. See 15 U.S.C. 80a-2(a)(9) (definition of ``control''). Not all advisers control funds they advise. The determination of whether a fund is under the control of its adviser, officers, or directors depends on all the relevant facts and circumstances. See Investment Company Mergers, Investment Company Act Release No. 25259 (Nov. 8, 2001) [66 FR 57602 (Nov. 15, 2001)], at n.11. To the extent that an acquiring fund in a fund complex is under common control with a money market fund in the same complex, the funds would rely on the rule's exemptions from section 17(a) and rule 17d-1. \8\ See 15 U.S.C. 80a-2(a)(3)(A), (B). --------------------------------------------------------------------------- The rule also permits a registered fund to rely on the exemption to invest in an unregistered money market fund that limits its investments to those in which a registered money market fund may invest under rule 2a-7 under the Act, and undertakes to comply with all the other provisions of rule 2a-7.\9\ In addition, the acquiring fund must reasonably believe that the unregistered money market fund (i) operates in compliance with rule 2a-7, (ii) complies with sections 17(a), (d), (e), 18, and 22(e) of the Act \10\ as if it were a registered open-end fund, (iii) has adopted procedures designed to ensure that it complies with these statutory provisions, (iv) maintains the records required by rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-1(b)(9); \11\ and (v) preserves permanently, the first two years in an easily accessible place, all books and records required to be made under these rules. --------------------------------------------------------------------------- \9\ See 17 CFR 270.2a-7. \10\ See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d), 15 U.S.C. 80a-17(e), 15 U.S.C. 80a-18, 15 U.S.C. 80a-22(e). \11\ See 17 CFR 270.31a-1(b)(1), 17 CFR 270.31a-1(b)(2)(ii), 17 CFR 270.31a-1(b)(2)(iv), 17 CFR 270.31a-1(b)(9). --------------------------------------------------------------------------- Rule 2a-7 contains certain collection of information requirements. An unregistered money market fund that complies with rule 2a-7 would be subject to these collection of information requirements. In addition, the recordkeeping requirements under rule 31a-1 with which the acquiring fund reasonably believes the unregistered money market fund complies are collections of information for the unregistered money market fund. The adoption of procedures by unregistered money market funds to ensure that they comply with sections 17(a), (d), (e), 18, and 22(e) of the Act also constitute collections of information. By allowing funds to invest in registered and unregistered money market funds, rule 12d1-1 is intended to provide funds greater options for cash management. In order for a registered fund to rely on the exemption to invest in an unregistered money market fund, the unregistered money market fund must comply with certain collection of information requirements for registered money market funds. These requirements are intended to ensure that the unregistered money market fund has established procedures for collecting the information necessary to make adequate credit reviews of securities in its portfolio, as well as other recordkeeping requirements that will assist the acquiring fund in overseeing the unregistered money market fund (and Commission staff in its examination of the unregistered money market fund's adviser). The number of unregistered money market funds that are affected by rule 12d1-1 is an estimate based on the number of private liquidity funds reported on Form PF as of the fourth calendar quarter 2016.\12\ The hour burden estimates for the condition that an unregistered money market fund comply with rule 2a-7 are based on the burden hours included in the Commission's 2013 PRA submission regarding rule 2a- 7.\13\ The estimated average burden hours in this collection of information are made solely for purposes of the Paperwork Reduction Act and are not derived from a quantitative, comprehensive or even representative survey or study of the burdens associated with Commission rules and forms. --------------------------------------------------------------------------- \12\ See U.S. Securities and Exchange Commission Annual Staff Report Relating to the Use of Form PF Data, Private Fund Statistics, Fourth Calendar Quarter 2016, available at https://www.sec.gov/files/im-private-fund-annual-report-101617.pdf. \13\ See Securities and Exchange Commission, Request for OMB Approval of Extension for Approved Collection for Rule 2a-7 under the Investment Company Act of 1940 (OMB Control No. 3235-0268) (approved Aug. 28, 2013). This was the most recent rule 2a-7 submission that includes certain estimates with respect to aggregate annual hour and cost burdens for collections of information for each existing registered money market fund, fund complexes with registered money market funds, registered money market funds that experience an event of default or insolvency, and newly registered money market funds. --------------------------------------------------------------------------- In the rule 2a-7 submission, Commission staff made the following estimates with respect to aggregate annual hour and cost burdens for collections of information for each existing registered money market fund: Record of credit risk analyses, and determinations regarding adjustable rate securities, asset backed securities, securities subject to a demand feature or guarantee, and counterparties to repurchase agreements: 85 responses, 680 hours of professional time, Cost: $178,160.\14\ --------------------------------------------------------------------------- \14\ This estimate is based on the following calculation: (680 burden hours x $262 per hour for professional time) = $178,160 per fund. --------------------------------------------------------------------------- Public website posting of monthly portfolio information: 12 responses, 7 hours of professional time, Cost: $17,304.\15\ --------------------------------------------------------------------------- \15\ This estimate is based on the following calculation: (12 x 7 burden hours x $206 per hour for a webmaster) = $17,304 per fund. --------------------------------------------------------------------------- Review of procedures and guidelines of any investment adviser to whom the fund's board has delegated responsibility under rule 2a-7 and amendment of such procedures: 1 response, 5 hours of professional and director time, Cost: $5,960.\16\ --------------------------------------------------------------------------- \16\ This estimate is based on the following calculation: (1 hour x $4,500 per hour for board time) + (4 hours x $365 per hour for professional time) = $5,960 per fund. --------------------------------------------------------------------------- Based on census data available on Form PF, the staff believes that the number of private liquidity funds reported on Form PF (69) is the most [[Page 14532]] current and accurate estimate the number of unregistered money market funds affected by rule 12d1-1.\17\ Each of these unregistered money market funds engages in the collections of information described above. Accordingly, the staff estimates that unregistered money market funds complying with the collections of information described above engage in a total of 6,762 annual responses under rule 12d1-1,\18\ the aggregate annual burden hours associated with these responses is 47,748,\19\ and the aggregate annual cost to funds is $13,898,256.\20\ --------------------------------------------------------------------------- \17\ See supra note 12. The staff notes, however, that this estimate may be overstated to the extent that a private liquidity fund reported on Form PF does not follow all of rule 2a-7's requirements (that include collections of information) or because no registered investment companies invest in such a fund. The staff also notes, however, that this estimate may be understated to the extent that there are additional unregistered money market funds that are not required to be reported on Form PF (because Form PF is filed only by certain investments advisers to private funds that have $150 million in private fund assets under management). \18\ The estimate is based on the following calculations: (69 funds x 85 responses for documentation of credit analyses and other determinations) = 5,865 responses. (69 funds x 12 responses for public website posting) = 828 responses. (69 funds x 1 response for policies and procedures related to delegation to an investment adviser) = 69 responses. 5,865 responses + 828 responses + 69 responses = 6,762 responses. \19\ This estimate is based on the following calculations: (69 funds x 680 hours for documentation of credit analyses and other determinations) = 46,920 hours. (69 funds x 7 hours for public website posting) = 483 hours. (69 funds x 5 hours for policies and procedures related to delegation to an investment adviser) = 345 hours. 46,920 hours + 483 hours + 345 hours = 47,748 hours. \20\ This estimate is based on the following calculations: (69 funds x $178,160) = $12,293,040. (69 funds x $17,304) = $1,193,976. (69 funds x $5,960) = $411,240. $12,293,040 + $1,193,976 + $411,240 = $13,898,256. --------------------------------------------------------------------------- In the rule 2a-7 submission, Commission staff further estimated the aggregate annual hour and cost burdens for collections of information for fund complexes with registered money market funds as follows: Review, revise, and approve procedures concerning stress testing: 1 response, 12 burden hours of professional and director time, Cost: $8,021.\21\ --------------------------------------------------------------------------- \21\ This estimate is based on the following calculation: (1 hour x $4,500 per hour for board time) + (5 hours x $322 per hour for a portfolio manager) + (3 hours x $259 per hour for a risk management specialist) + (3 hours x $378 per hour for an attorney) = $8,021 per response. --------------------------------------------------------------------------- Report to fund boards on the results of stress testing: 5 responses, 10 burden hours of professional and support staff time, Cost: $15,490.\22\ --------------------------------------------------------------------------- \22\ This estimate is based on the following calculation: (5 responses x 5 hours x $322 per hour for a portfolio manager) + (5 responses x 2 hours x $279 per hour for a compliance manager) + (5 responses x 2 hours x $378 per hour for an attorney) + (5 responses x 1 hour x $174 per hour for support staff) = $15,490 per fund complex. --------------------------------------------------------------------------- Reporting of rule 17a-9 transactions: \23\ 1 response, 1 burden hour of legal time, Cost: $378.\24\ --------------------------------------------------------------------------- \23\ See 17 CFR 270.17a-9. \24\ The estimate is based on the following calculations: (1 response x $378 per hour for an attorney) = $378 per response. --------------------------------------------------------------------------- Based on the number of liquidity fund advisers reported on Form PF, the staff estimates that there are 39 fund complexes with unregistered money market funds invested in by mutual funds in excess of the statutory limits under rule 12d1-1.\25\ Each of these fund complexes engages in the collections of information described above. Accordingly, the staff estimates that these fund complexes complying with the collections of information described above engage in a total of 273 annual responses under rule 12d1-1,\26\ the aggregate annual burden hours associated with these responses is 897,\27\ and the aggregate annual cost to funds is $931,671.\28\ --------------------------------------------------------------------------- \25\ See supra note 12. \26\ The estimate is based on the following calculations: (39 fund complexes x 1 response for revision of procedures concerning stress testing) = 39 responses. (39 fund complexes x 5 responses to provide stress testing reports) = 195 responses. (39 fund complexes x 1 response for reporting of rule 17a-9 transactions) = 39 responses. 39 responses + 195 responses + 39 responses = 273 responses. \27\ This estimate is based on the following calculations: (39 fund complexes x 12 hours for revision of procedures concerning stress testing) = 468 hours. (39 fund complexes x 10 hours to provide stress testing reports) = 390 hours. (39 fund complexes x 1 hour for reporting of rule 17a-9 transactions) = 39 hours. 468 hours + 390 hours + 39 hours = 897 hours. \28\ This estimate is based on the following calculations: (39 fund complexes x $8,021 for revision of procedures concerning stress testing) = $312,819. (39 fund complexes x $15,490 to provide stress testing reports) = $604,110. (39 fund complexes x $378 for reporting of rule 17a-9 transactions) = $14,742. $312,819 + $604,110 + $14,742 = $931,671. --------------------------------------------------------------------------- In the rule 2a-7 submission, Commission staff further estimated the aggregate annual burdens for registered money market funds that experience an event of default or insolvency as follows: Written record of board determinations and actions related to failure of a security to meet certain eligibility standards or an event of default of default or insolvency: 2 responses, 1 burden hour of legal time, Cost: $378. Notice to Commission of an event of default or insolvency: 1 response, 0.5 burden hours of legal time, Cost: $189. Consistent with the estimate in the rule 2a-7 submissions, Commission staff estimates that approximately 2 percent, or 1, unregistered money market fund experiences an event of default or insolvency each year. Accordingly, the staff estimates that one unregistered money market fund will comply with these collection of information requirements and engage in 3 annual responses under rule 12d1-1,\29\ the aggregate annual burden hours associated with these responses is 1.5,\30\ and the aggregate annual cost to funds is $567.\31\ --------------------------------------------------------------------------- \29\ The estimate is based on the following calculations: (1 fund x 2 responses) + (1 fund x 1 response) = 3 responses. \30\ This estimate is based on the following calculations: (1 fund x 1 hour) + (1 fund x 0.5 hours) = 1.5 hours. \31\ This estimate is based on the following calculations: (1 fund x $378) + (1 fund x $189) = $567. --------------------------------------------------------------------------- In the rule 2a-7 submission, Commission staff further estimated the aggregate annual burdens for newly registered money market funds as follows: Establish written procedures and guidelines designed to stabilize the fund's net asset value and establish procedures for board delegation of authority: 1 response, 15.5 hours of director, legal, and support staff time, Cost: $6,328.\32\ --------------------------------------------------------------------------- \32\ This estimate is based on the following calculation: (0.5 hours x $4,500 per hour for board time) + (7.2 hours x $378 per hour for an attorney) + (7.8 hours x $174 per hour for support staff) = $6,328 per response. --------------------------------------------------------------------------- Adopt procedures concerning stress testing: 1 response per fund complex, 22 burden hours of professional and director time per fund complex, Cost: $19,373 per fund complex.\33\ --------------------------------------------------------------------------- \33\ This estimate is based on the following calculation: (3 hours x $4,500 per hour for board time) + (8 hours x $378 per hour for an attorney) + (11 hours x $259 per hour for a risk management specialist) = $19,373 per response. See also infra note 34. --------------------------------------------------------------------------- Commission staff estimates that the proportion of unregistered money market funds that intend to newly undertake the collection of information burdens of rule 2a-7 will be similar to the proportion of money market funds that are newly registered. Based on a projection of 10 new money market funds per year (in the most recent rule 2a-7 submission), the staff estimates that, similarly, there will be 10 new unregistered money market funds that undertake the above burden to establish written procedures and guidelines designed to stabilize the fund's net asset value and establish procedures for board delegation of authority.\34\ Accordingly, [[Page 14533]] the staff estimates that 10 unregistered money market funds will comply with this collection of information requirement and engage in 10 annual responses under rule 12d1-1,\35\ the aggregate annual burden hours associated with these responses is 155,\36\ and the aggregate annual cost to funds is $62,380.\37\ --------------------------------------------------------------------------- \34\ The staff's estimate is based on historical data provided in Lipper Inc.'s LANA database and projections about the growth of the money market mutual fund industry going forward. The actual number of new money market funds launched may vary significantly from our estimates depending upon developments in market interest rates and other factors. The staff does not estimate any new fund complexes being launched in the next year. \35\ The estimate is based on the following calculations: (10 funds x 1 response) = 10 responses. \36\ This estimate is based on the following calculations: (10 funds x 15.5 hours) = 155 hours. \37\ This estimate is based on the following calculations: (10 funds x $6,238) = $62,380. --------------------------------------------------------------------------- Accordingly, the estimated total number of annual responses under rule 12d1-1 for the collections of information described in the rule 2a-7 submissions is 7,048, the aggregate annual burden hours associated with these responses is 48,801.5, and the aggregate cost to funds is $14,892,874.\38\ --------------------------------------------------------------------------- \38\ These estimates are based upon the following calculations: (6,762 + 273 + 3+ 10) = 7,048 annual responses; (47,748 + 897 + 1.5 + 155) = 48,801.5 burden hours; and ($13,898,256 + $931,671 + $567 + $62,380) = $14,892,874. --------------------------------------------------------------------------- Rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a- 1(b)(9) require registered funds to keep certain records, which include journals and general and auxiliary ledgers, including ledgers for each portfolio security and each shareholder of record of the fund. Most of the records required to be maintained by the rule are the type that generally would be maintained as a matter of good business practice and to prepare the unregistered money market fund's financial statements. Accordingly, Commission staff estimates that the requirements under rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and 31a-1(b)(9) would not impose any additional burden because the costs of maintaining these records would be incurred by unregistered money market funds in any case to keep books and records that are necessary to prepare financial statements for shareholders, to prepare the fund's annual income tax returns, and as a normal business custom. Rule 12d1-1 also requires unregistered money market funds in which registered funds invest to adopt procedures designed to ensure that the unregistered money market funds comply with sections 17(a), (d), (e), and 22(e) of the Act. This is a one-time collection of information requirement that applies to unregistered money market funds that intend to comply with the requirements of rule 12d1-1. As discussed above, based on a projection of 10 new money market funds per year, the staff estimates that, similarly, there will be 10 new unregistered money market funds that undertake the above burden to establish written procedures and guidelines designed to ensure that the unregistered money market funds comply with sections 17(a), (d), (e), and 22(e) of the Act. The staff estimates the burden as follows: Establish written procedures and guidelines designed to ensure that the unregistered money market funds comply with sections 17(a), (d), (e), and 22(e) of the Act: 1 response, 15.5 hours of director, legal, and support staff time, Cost: $6,328.\39\ --------------------------------------------------------------------------- \39\ This estimate is based on the following calculation: (0.5 hours x $4,500 per hour for board time) + (7.2 hours x $378 per hour for an attorney) + (7.8 hours x $174 per hour for support staff) = $6,328 per response. --------------------------------------------------------------------------- Accordingly, the staff estimates that 10 unregistered money market funds will comply with this collection of information requirement and engage in 10 annual responses under rule 12d1-1,\40\ the aggregate annual burden hours associated with these responses is 155,\41\ and the aggregate annual cost to funds is $62,380.\42\ --------------------------------------------------------------------------- \40\ The estimate is based on the following calculations: (10 funds x 1 response) = 10 responses. \41\ This estimate is based on the following calculations: (10 funds x 15.5 hours) = 155 hours. \42\ This estimate is based on the following calculations: (10 funds x $6,238) = $62,380. --------------------------------------------------------------------------- Commission staff also estimates that unregistered money market funds will incur costs to preserve records, as required under rule 2a- 7. These costs will vary significantly for individual funds, depending on the amount of assets under fund management and whether the fund preserves its records in a storage facility in hard copy or has developed and maintains a computer system to create and preserve compliance records. In the rule 2a-7 submission, Commission staff estimated that the amount an individual money market fund may spend ranges from $100 per year to $300,000. We have no reason to believe the range is different for unregistered money market funds. Based on Form PF data as of the fourth calendar quarter 2016, private liquidity funds have $293 billion in gross asset value.\43\ The Commission does not have specific information about the proportion of assets held in small, medium-sized, or large unregistered money market funds. Because private liquidity funds are often used as cash management vehicles, the staff estimates that each private liquidity fund is a ``large'' fund (i.e., more than $1 billion in assets under management). Based on a cost of $0.0000009 per dollar of assets under management (for large funds),\44\ the staff estimates compliance with rule 2a-7 for these unregistered money market funds totals $263,700 annually.\45\ --------------------------------------------------------------------------- \43\ See supra note 12. \44\ The recordkeeping cost estimates are $0.0051295 per dollar of assets under management for small funds, and $0.0005041 per dollar of assets under management for medium-sized funds. The cost estimates are the same as those used in the most recently approved rule 2a-7 submission. \45\ This estimate is based on the following calculation: ($293 billion x $0.0000009) = $263,700 billion for small funds. --------------------------------------------------------------------------- Consistent with estimates made in the rule 2a-7 submission, Commission staff estimates that unregistered money market funds also incur capital costs to create computer programs for maintaining and preserving compliance records for rule 2a-7 of $0.0000132 per dollar of assets under management. Based on the assets under management figures described above, staff estimates annual capital costs for all unregistered money market funds of $3.87 million.\46\ --------------------------------------------------------------------------- \46\ This estimate is based on the following calculation: ($293 billion x 0.0000132) = $3.87 million. --------------------------------------------------------------------------- Commission staff further estimates that, even absent the requirements of rule 2a-7, money market funds would spend at least half of the amounts described above for record preservation ($131,850) and for capital costs ($1.94 million). Commission staff concludes that the aggregate annual costs of compliance with the rule are $131,850 for record preservation and $1.94 million for capital costs. The collections of information required for unregistered money market funds by rule 12d1-1 are necessary in order for acquiring funds to able to obtain the benefits described above. Notices to the Commission 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. The public may view the background documentation for this information collection at the following website, 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. [[Page 14534]] Dated: March 29, 2018. Eduardo Aleman, Assistant Secretary. [FR Doc. 2018-06854 Filed 4-3-18; 8:45 am] BILLING CODE 8011-01-P
![14530 Federal Register / Vol. 83, No. 65 / Wednesday, April 4, 2018 / Notices
price discovery and transparency and public interest, for the protection of submit only information that you wish
enhancing order execution investors, or otherwise in furtherance of to make available publicly. All
opportunities for member organizations. the purposes of the Act. If the submissions should refer to File
The Exchange believes that this could Commission takes such action, the Number SR–NYSE–2018–10 and should
promote competition between the Commission shall institute proceedings be submitted on or before April 25,
Exchange and other execution venues, under Section 19(b)(2)(B) 13 of the Act to 2018.
including those that currently offer determine whether the proposed rule For the Commission, by the Division of
similar order types and comparable change should be approved or Trading and Markets, pursuant to delegated
transaction pricing, by encouraging disapproved. authority.14
additional orders to be sent to the Brent J. Fields,
Exchange for execution. IV. Solicitation of Comments
Secretary.
Finally, the Exchange notes that it Interested persons are invited to
[FR Doc. 2018–06775 Filed 4–3–18; 8:45 am]
operates in a highly competitive market submit written data, views, and
BILLING CODE 8011–01–P
in which market participants can arguments concerning the foregoing,
readily favor competing venues if they including whether the proposed rule
deem fee levels at a particular venue to change is consistent with the Act. SECURITIES AND EXCHANGE
be excessive or rebate opportunities Comments may be submitted by any of COMMISSION
available at other venues to be more the following methods:
favorable. In such an environment, the Electronic Comments Submission for OMB Review;
Exchange must continually adjust its Comment Request
fees and rebates to remain competitive • Use the Commission’s internet
with other exchanges and with comment form (http://www.sec.gov/ Upon Written Request, Copies Available
alternative trading systems that have rules/sro.shtml); or From: Securities and Exchange
been exempted from compliance with • Send an email to rule-comments@ Commission, Office of FOIA Services,
the statutory standards applicable to sec.gov. Please include File Number SR– 100 F Street NE, Washington, DC
exchanges. Because competitors are free NYSE–2018–10 on the subject line. 20549–2736.
to modify their own fees and credits in Paper Comments Extension:
response, and because market Rule 12d1–1, SEC File No. 270–526, OMB
• Send paper comments in triplicate Control No. 3235–0584.
participants may readily adjust their
to Brent J. Fields, Secretary, Securities Notice is hereby given that, pursuant
order routing practices, the Exchange
and Exchange Commission, 100 F Street to the Paperwork Reduction Act of 1995
believes that the degree to which fee
NE, Washington, DC 20549–1090. (44 U.S.C. 3501 et seq.), the Securities
changes in this market may impose any All submissions should refer to File
burden on competition is extremely and Exchange Commission (the
Number SR–NYSE–2018–10. This file
limited. As a result of all of these ‘‘Commission’’) has submitted to the
number should be included on the Office of Management and Budget a
considerations, the Exchange does not subject line if email is used. To help the
believe that the proposed changes will request for extension of the previously
Commission process and review your approved collection of information
impair the ability of member comments more efficiently, please use
organizations or competing order discussed below.
only one method. The Commission will An investment company (‘‘fund’’) is
execution venues to maintain their post all comments on the Commission’s
competitive standing in the financial generally limited in the amount of
internet website (http://www.sec.gov/ securities the fund (‘‘acquiring fund’’)
markets. rules/sro.shtml). Copies of the can acquire from another fund
C. Self-Regulatory Organization’s submission, all subsequent (‘‘acquired fund’’). Section 12(d) of the
Statement on Comments on the amendments, all written statements Investment Company Act of 1940 (the
Proposed Rule Change Received From with respect to the proposed rule ‘‘Investment Company Act’’ or ‘‘Act’’) 1
Members, Participants, or Others change that are filed with the provides that a registered fund (and
No written comments were solicited Commission, and all written companies it controls) cannot:
or received with respect to the proposed communications relating to the • Acquire more than three percent of
rule change. proposed rule change between the another fund’s securities;
Commission and any person, other than • Invest more than five percent of its
III. Date of Effectiveness of the those that may be withheld from the own assets in another fund; or
Proposed Rule Change and Timing for public in accordance with the • Invest more than ten percent of its
Commission Action provisions of 5 U.S.C. 552, will be own assets in other funds in the
The foregoing rule change is effective available for website viewing and aggregate.2
upon filing pursuant to Section printing in the Commission’s Public In addition, a registered open-end
19(b)(3)(A) 11 of the Act and Reference Room, 100 F Street NE, fund, its principal underwriter, and any
subparagraph (f)(2) of Rule 19b–4 12 Washington, DC 20549 on official registered broker or dealer cannot sell
thereunder, because it establishes a due, business days between the hours of that fund’s shares to another fund if, as
fee, or other charge imposed by the 10:00 a.m. and 3:00 p.m. Copies of the a result:
Exchange. filing also will be available for • The acquiring fund (and any
At any time within 60 days of the inspection and copying at the principal companies it controls) owns more than
filing of such proposed rule change, the office of the Exchange. All comments three percent of the acquired fund’s
amozie on DSK30RV082PROD with NOTICES
Commission summarily may received will be posted without change. stock; or
temporarily suspend such rule change if Persons submitting comments are
14 17 CFR 200.30–3(a)(12).
it appears to the Commission that such cautioned that we do not redact or edit
1 See 15 U.S.C. 80a.
action is necessary or appropriate in the personal identifying information from 2 See 15 U.S.C. 80a–12(d)(1)(A). If an acquiring
comment submissions. You should fund is not registered, these limitations apply only
11 15 U.S.C. 78s(b)(3)(A). with respect to the acquiring fund’s acquisition of
12 17 CFR 240.19b–4(f)(2). 13 15 U.S.C. 78s(b)(2)(B). registered funds.
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![Federal Register / Vol. 83, No. 65 / Wednesday, April 4, 2018 / Notices 14531
• All acquiring funds (and companies the other provisions of rule 2a–7.9 In reported on Form PF as of the fourth
they control) in the aggregate own more addition, the acquiring fund must calendar quarter 2016.12 The hour
than ten percent of the acquired fund’s reasonably believe that the unregistered burden estimates for the condition that
stock.3 money market fund (i) operates in an unregistered money market fund
Rule 12d1–1 under the Act provides compliance with rule 2a–7, (ii) complies comply with rule 2a–7 are based on the
an exemption from these limitations for with sections 17(a), (d), (e), 18, and burden hours included in the
‘‘cash sweep’’ arrangements in which a 22(e) of the Act 10 as if it were a Commission’s 2013 PRA submission
fund invests all or a portion of its registered open-end fund, (iii) has regarding rule 2a–7.13 The estimated
available cash in a money market fund adopted procedures designed to ensure average burden hours in this collection
rather than directly in short-term that it complies with these statutory of information are made solely for
instruments.4 An acquiring fund relying provisions, (iv) maintains the records purposes of the Paperwork Reduction
on the exemption may not pay a sales required by rules 31a–1(b)(1), 31a– Act and are not derived from a
load, distribution fee, or service fee on 1(b)(2)(ii), 31a–1(b)(2)(iv), and 31a– quantitative, comprehensive or even
acquired fund shares, or if it does, the 1(b)(9); 11 and (v) preserves representative survey or study of the
acquiring fund’s investment adviser permanently, the first two years in an burdens associated with Commission
must waive a sufficient amount of its easily accessible place, all books and rules and forms.
advisory fee to offset the cost of the records required to be made under these In the rule 2a–7 submission,
loads or distribution fees.5 The acquired rules. Commission staff made the following
fund may be a fund in the same fund Rule 2a–7 contains certain collection estimates with respect to aggregate
complex or in a different fund complex. of information requirements. An annual hour and cost burdens for
In addition to providing an exemption unregistered money market fund that collections of information for each
from section 12(d)(1) of the Act, the rule complies with rule 2a–7 would be existing registered money market fund:
subject to these collection of Record of credit risk analyses, and
provides exemptions from section 17(a)
information requirements. In addition, determinations regarding adjustable rate
of the Act and rule 17d–1 thereunder,
the recordkeeping requirements under securities, asset backed securities,
which restrict a fund’s ability to enter
rule 31a–1 with which the acquiring securities subject to a demand feature or
into transactions and joint arrangements
fund reasonably believes the guarantee, and counterparties to
with affiliated persons.6 These
unregistered money market fund repurchase agreements: 85 responses,
provisions would otherwise prohibit an
complies are collections of information 680 hours of professional time, Cost:
acquiring fund from investing in a
for the unregistered money market fund. $178,160.14
money market fund in the same fund Public website posting of monthly
The adoption of procedures by
complex,7 and prohibit a fund that portfolio information: 12 responses, 7
unregistered money market funds to
acquires five percent or more of the hours of professional time, Cost:
ensure that they comply with sections
securities of a money market fund in $17,304.15
17(a), (d), (e), 18, and 22(e) of the Act
another fund complex from making any Review of procedures and guidelines
also constitute collections of
additional investments in the money of any investment adviser to whom the
information. By allowing funds to invest
market fund.8 fund’s board has delegated
in registered and unregistered money
The rule also permits a registered market funds, rule 12d1–1 is intended responsibility under rule 2a–7 and
fund to rely on the exemption to invest to provide funds greater options for cash amendment of such procedures: 1
in an unregistered money market fund management. In order for a registered response, 5 hours of professional and
that limits its investments to those in fund to rely on the exemption to invest director time, Cost: $5,960.16
which a registered money market fund in an unregistered money market fund, Based on census data available on
may invest under rule 2a–7 under the the unregistered money market fund Form PF, the staff believes that the
Act, and undertakes to comply with all must comply with certain collection of number of private liquidity funds
information requirements for registered reported on Form PF (69) is the most
3 See 15 U.S.C. 80a–12(d)(1)(B). money market funds. These
4 See 17 CFR 270.12d1–1. 12 See U.S. Securities and Exchange Commission
requirements are intended to ensure that
5 See rule 12d1–1(b)(1). Annual Staff Report Relating to the Use of Form PF
6 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d); 17
the unregistered money market fund has Data, Private Fund Statistics, Fourth Calendar
CFR 270.17d–1. established procedures for collecting the Quarter 2016, available at https://www.sec.gov/files/
7 An affiliated person of a fund includes any information necessary to make adequate im-private-fund-annual-report-101617.pdf.
person directly or indirectly controlling, controlled credit reviews of securities in its 13 See Securities and Exchange Commission,
by, or under common control with such other portfolio, as well as other recordkeeping Request for OMB Approval of Extension for
person. See 15 U.S.C. 80a–2(a)(3) (definition of Approved Collection for Rule 2a–7 under the
requirements that will assist the Investment Company Act of 1940 (OMB Control No.
‘‘affiliated person’’). Most funds today are organized
by an investment adviser that advises or provides acquiring fund in overseeing the 3235–0268) (approved Aug. 28, 2013). This was the
administrative services to other funds in the same unregistered money market fund (and most recent rule 2a–7 submission that includes
complex. Funds in a fund complex are generally Commission staff in its examination of certain estimates with respect to aggregate annual
under common control of an investment adviser or hour and cost burdens for collections of information
the unregistered money market fund’s for each existing registered money market fund,
other person exercising a controlling influence over
the management or policies of the funds. See 15 adviser). fund complexes with registered money market
U.S.C. 80a–2(a)(9) (definition of ‘‘control’’). Not all The number of unregistered money funds, registered money market funds that
advisers control funds they advise. The market funds that are affected by rule experience an event of default or insolvency, and
determination of whether a fund is under the newly registered money market funds.
12d1–1 is an estimate based on the 14 This estimate is based on the following
control of its adviser, officers, or directors depends
on all the relevant facts and circumstances. See
number of private liquidity funds calculation: (680 burden hours × $262 per hour for
amozie on DSK30RV082PROD with NOTICES
Investment Company Mergers, Investment professional time) = $178,160 per fund.
9 See 17 CFR 270.2a–7. 15 This estimate is based on the following
Company Act Release No. 25259 (Nov. 8, 2001) [66
FR 57602 (Nov. 15, 2001)], at n.11. To the extent 10 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d), calculation: (12 × 7 burden hours × $206 per hour
that an acquiring fund in a fund complex is under 15 U.S.C. 80a–17(e), 15 U.S.C. 80a–18, 15 U.S.C. for a webmaster) = $17,304 per fund.
common control with a money market fund in the 80a–22(e). 16 This estimate is based on the following
same complex, the funds would rely on the rule’s 11 See 17 CFR 270.31a–1(b)(1), 17 CFR 270.31a– calculation: (1 hour × $4,500 per hour for board
exemptions from section 17(a) and rule 17d–1. 1(b)(2)(ii), 17 CFR 270.31a–1(b)(2)(iv), 17 CFR time) + (4 hours × $365 per hour for professional
8 See 15 U.S.C. 80a–2(a)(3)(A), (B). 270.31a–1(b)(9). time) = $5,960 per fund.
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![14534 Federal Register / Vol. 83, No. 65 / Wednesday, April 4, 2018 / Notices
Dated: March 29, 2018. pursuant to a policy adopted in Securities and Exchange Commission
Eduardo Aleman, accordance with this rule per year. The (‘‘Commission’’) the proposed rule
Assistant Secretary. Commission estimates that the annual change as described in Items I and II
[FR Doc. 2018–06854 Filed 4–3–18; 8:45 am] burden associated with the notice to below, which Items have been prepared
BILLING CODE 8011–01–P shareholders requirement of the rule is by the Exchange. The Commission is
20 hours per response, for annual total publishing this notice to solicit
of 660 hours per year. comments on the proposed rule change
SECURITIES AND EXCHANGE Estimates of average burden hours are from interested persons.
COMMISSION made solely for the purposes of the I. Self-Regulatory Organization’s
Paperwork Reduction Act and are not Statement of the Terms of Substance of
Submission for OMB Review; derived from a comprehensive or even
Comment Request the Proposed Rule Change
representative survey or study of the
costs of Commission rules and forms. The Exchange proposes to amend
Upon Written Request, Copies Available Rule 7034, as described below.
From: Securities and Exchange The collection of information under rule
35d–1 is mandatory. The information The text of the proposed rule change
Commission, Office of FOIA Services, is available on the Exchange’s website at
100 F Street NE, Washington, DC provided under rule 35d–1 will not be
kept confidential. An agency may not http://nasdaq.cchwallstreet.com, at the
20549–2736. principal office of the Exchange, and at
conduct or sponsor, and a person is not
Extension:
required to respond to, a collection of the Commission’s Public Reference
Rule 35d–1, SEC File No. 270–491, OMB Room.
Control No. 3235–0548. information unless it displays a
currently valid OMB control number. II. Self-Regulatory Organization’s
Notice is hereby given that, pursuant The public may view the background Statement of the Purpose of, and
to the Paperwork Reduction Act of 1995 documentation for this information Statutory Basis for, the Proposed Rule
(44 U.S.C. 3501 et seq.), the Securities collection at the following website, Change
and Exchange Commission (the www.reginfo.gov. Comments should be
‘‘Commission’’) has submitted to the In its filing with the Commission, the
directed to: (i) Desk Officer for the Exchange included statements
Office of Management and Budget Securities and Exchange Commission,
(‘‘OMB’’) a request for extension of the concerning the purpose of and basis for
Office of Information and Regulatory the proposed rule change and discussed
previously approved collection of Affairs, Office of Management and
information discussed below. any comments it received on the
Budget, Room 10102, New Executive proposed rule change. The text of these
Rule 35d–1 (17 CFR 270.35d–1) under
Office Building, Washington, DC 20503, statements may be examined at the
the Investment Company Act of 1940
or by sending an email to: Shagufta_ places specified in Item IV below. The
(15 U.S.C. 80a–1 et seq.) defines as
Ahmed@omb.eop.gov; and (ii) Pamela Exchange has prepared summaries, set
‘‘materially deceptive and misleading’’
Dyson, Director/Chief Information forth in sections A, B, and C below, of
for purposes of Section 35(d), among
Officer, Securities and Exchange the most significant aspects of such
other things, a name suggesting that a
Commission, c/o Remi Pavlik-Simon, statements.
registered investment company or series
thereof (a ‘‘fund’’) focuses its 100 F Street NE, Washington, DC 20549
or send an email to: PRA_Mailbox@ A. Self-Regulatory Organization’s
investments in a particular type of Statement of the Purpose of, and
investment or investments, in sec.gov. Comments must be submitted to
OMB within 30 days of this notice. Statutory Basis for, the Proposed Rule
investments in a particular industry or Change
group of industries, or in investments in Dated: March 30, 2018.
a particular country or geographic Eduardo Aleman, 1. Purpose
region, unless, among other things, the Assistant Secretary. The Exchange proposes to amend
fund adopts a certain investment policy. [FR Doc. 2018–06855 Filed 4–3–18; 8:45 am] Rule 7034 pertaining to colocation
Rule 35d–1 further requires either that BILLING CODE 8011–01–P services and fees to harmonize it with
the investment policy is fundamental or the rules of Nasdaq BX, Inc. (‘‘BX’’).
that the fund has adopted a policy to The Exchange first proposes to amend
provide its shareholders with at least 60 SECURITIES AND EXCHANGE Rule 7034(b), under the heading
days prior notice of any change in the COMMISSION ‘‘Market Data Connectivity,’’ to re-
investment policy (‘‘notice to categorize and to update references to
shareholders’’). The rule’s notice to [Release No. 34–82964; File No. SR– the CBOE/Bats/Direct Edge data feeds to
NASDAQ–2018–022]
shareholders provision is intended to reflect their current names. Similarly,
ensure that when shareholders purchase Self-Regulatory Organizations; The the Exchange proposes to delete a
shares in a fund based, at least in part, Nasdaq Stock Market LLC; Notice of $1,000 installation fee that presently
on its name, and with the expectation Filing and Immediate Effectiveness of applies to the Direct Edge feeds because
that it will follow the investment policy Proposed Rule Change To Amend the Direct Edge feeds are now offerings
suggested by that name, they will have Exchange Rule 7034 of CBOE, along with the BZX and BYX
sufficient time to decide whether to feeds. Going forward, a single, one-time
redeem their shares in the event that the March 29, 2018. $1,000 installation fee will apply to
fund decides to pursue a different Pursuant to Section 19(b)(1) of the subscribers to any or all of the CBOE
investment policy. Securities Exchange Act of 1934 data feeds. The Exchange also proposes
amozie on DSK30RV082PROD with NOTICES
The Commission estimates that there (‘‘Act’’),1 and Rule 19b–4 thereunder,2 to correct a typographical error in the
are approximately 9,939 open-end and notice is hereby given that on March 16, name of the TSXV Level 2 Feed. The
closed-end funds that have names that 2018, The Nasdaq Stock Market LLC Exchange notes that this proposal will
are covered by the rule. The (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the render this paragraph of Rule 7034(b)
Commission estimates that of these consistent with BX Rule 7034(b).
9,939 funds, approximately 33 will 1 15 U.S.C. 78s(b)(1). Second, the Exchange proposes to
provide prior notice to shareholders 2 17 CFR 240.19b–4. amend Rule 7034(b), under the heading
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Document Created: 2018-11-01 09:10:44
Document Modified: 2018-11-01 09:10:44
| Category | Regulatory Information | |
| Collection | Federal Register | |
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| FR Citation | 83 FR 14530 |
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