83 FR 58663 - Proposed Collection; Comment Request
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 224 (November 20, 2018)
Federal Register Volume 83, Issue 224 (November 20, 2018)
| Page Range | 58663-58663 | |
| FR Document | 2018-25216 |
[Federal Register Volume 83, Number 224 (Tuesday, November 20, 2018)] [Notices] [Page 58663] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-25216] [[Page 58663]] ----------------------------------------------------------------------- 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 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) of the Investment Company Act (15 U.S.C. 80a-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 reasonable and fair 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 266 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 266 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 200 burden hours annually.\3\ --------------------------------------------------------------------------- \1\ Based on data from Morningstar, as of June 30, 2018, there are 12,393 registered funds (open-end funds, closed-end funds, and exchange-traded funds), 4,594 funds of which have subadvisory relationships (approximately 37%). Based on data from the 2018 ICI Factbook, 720 new funds were established in 2017 (705 open-end funds and exchange-traded funds + 15 closed-end funds (from the ICI Research Perspective, April 2018)). 720 new funds x 37% = 266 funds. \2\ 3 hours / 4 rules = 0.75 hours. \3\ This estimate is based on the following calculation: 0.75 hours x 266 funds = 200 burden hours. --------------------------------------------------------------------------- Based on an analysis of fund filings, we estimate that approximately 1,609 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 965 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 48,250 hours \5\ and the total annual burden of the rule's paperwork requirements is 48,450 hours.\6\ --------------------------------------------------------------------------- \4\ 1,609 funds x 0.6 = 965 funds. \5\ 965 funds x 50 hours per fund = 48,250 hours. \6\ 200 hours + 48,250 hours = 48,450 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 Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, C/O Candace Kenner, 100 F Street NE, Washington, DC 20549; or send an email to: [email protected]. Dated: November 14, 2018. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-25216 Filed 11-19-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 224 / Tuesday, November 20, 2018 / Notices 58663
SECURITIES AND EXCHANGE 17e–1 enable the Commission to ensure approximately 50 hours per fund per
COMMISSION that affiliated brokers receive year. This time is spent, for example,
compensation that does not exceed the reviewing the applicable transactions
Proposed Collection; Comment usual and customary broker’s and maintaining records. Accordingly,
Request commission. Without the recordkeeping we calculate the total estimated annual
Upon Written Request, Copies Available requirements, Commission inspectors internal burden of complying with the
From: Securities and Exchange would have difficulty ascertaining review and recordkeeping requirements
Commission, Office of FOIA Services, whether funds were complying with of rule 17e–1 to be approximately
100 F Street NE, Washington, DC rule 17e–1. 48,250 hours 5 and the total annual
Based on an analysis of fund filings,
20549–2736. burden of the rule’s paperwork
the staff estimates that approximately
Extension: 266 funds enter into subadvisory requirements is 48,450 hours.6
Rule 17e–1, SEC File No. 270–224, OMB agreements each year.1 Based on Estimates of average burden hours are
Control No. 3235–0217 made solely for the purposes of the
discussions with industry
Notice is hereby given that, pursuant representatives, the staff estimates that Paperwork Reduction Act and are not
to the Paperwork Reduction Act of 1995 it will require approximately 3 attorney derived from a comprehensive or even
(44 U.S.C. 3501 et seq.) (‘‘Paperwork hours to draft and execute additional a representative survey or study of the
Reduction Act’’), the Securities and clauses in new subadvisory contracts in costs of Commission rules and forms.
Exchange Commission (the order for funds and subadvisers to be The collection of information under rule
‘‘Commission’’) is soliciting comments able to rely on the exemptions in rule 17e–1 is mandatory. The information
on the collection of information 17e–1. Because these additional clauses provided under rule 17e–1 will not be
summarized below. The Commission are identical to the clauses that a fund kept confidential. An agency may not
plans to submit this existing collection would need to insert in their conduct or sponsor, and a person is not
of information to the Office of subadvisory contracts to rely on rules
Management and Budget (‘‘OMB’’) for required to respond to, a collection of
12d3–1, 10f–3, and 17a–10, and because information unless it displays a
extension and approval. we believe that funds that use one such
Rule 17e–1 (17 CFR 270.17e–1) under currently valid OMB control number.
rule generally use all of these rules, we
the Investment Company Act of 1940 apportion this 3 hour time burden Written comments are invited on: (a)
(15 U.S.C. 80a–1 et seq.) (the equally to all four rules. Therefore, we Whether the proposed collection of
‘‘Investment Company Act’’) deems a estimate that the burden allocated to information is necessary for the proper
remuneration as ‘‘not exceeding the rule 17e–1 for this contract change performance of the functions of the
usual and customary broker’s would be 0.75 hours.2 Assuming that all agency, including whether the
commission’’ for purposes of Section 266 funds enter into new subadvisory information will have practical utility;
17(e)(2)(A) of the Investment Company contracts each year make the (b) the accuracy of the Commission’s
Act (15 U.S.C. 80a–17(e)(2)(A)) if, modification to their contract required estimate of the burden of the collection
among other things, a registered by the rule, we estimate that the rule’s of information; (c) ways to enhance the
investment company’s (‘‘fund’s’’) board contract modification requirement will quality, utility, and clarity of the
of directors has adopted procedures result in 200 burden hours annually.3
reasonably designed to provide that the information collected; and (d) ways to
Based on an analysis of fund filings, minimize the burden of the collection of
remuneration to an affiliated broker is we estimate that approximately 1,609
reasonable and fair compared to that information on respondents, including
funds use at least one affiliated broker. through the use of automated collection
received by other brokers in connection Based on staff experience and
with comparable transactions involving techniques or other forms of information
conversations with fund representatives, technology. Consideration will be given
similar securities being purchased or the staff estimates approximately 40
sold on a securities exchange during a to comments and suggestions submitted
percent of transactions (and thus, 40%
comparable period of time and the in writing within 60 days of this
of funds) that occur under the rule 17e–
board makes and approves such changes publication.
1 would be exempt from its
as it deems necessary. In addition, each recordkeeping and review requirements. Please direct your written comments
quarter, the board must determine that to Charles Riddle, Acting Director/Chief
This would leave approximately 965
all transactions effected under the rule Information Officer, Securities and
funds 4 still subject to the rule’s
during the preceding quarter complied
recordkeeping and review requirements. Exchange Commission, C/O Candace
with the established procedures. Rule
Based on staff experience and Kenner, 100 F Street NE, Washington,
17e–1 also requires the fund to (i)
conversations with fund representatives, DC 20549; or send an email to: PRA_
maintain permanently a written copy of
we estimate that the burden of Mailbox@sec.gov.
the procedures adopted by the board for
compliance with rule 17e–1 is
complying with the requirements of the Dated: November 14, 2018.
rule; and (ii) maintain for a period of six 1 Based Eduardo A. Aleman,
on data from Morningstar, as of June 30,
years, the first two in an easily 2018, there are 12,393 registered funds (open-end Assistant Secretary.
accessible place, a written record of funds, closed-end funds, and exchange-traded
[FR Doc. 2018–25216 Filed 11–19–18; 8:45 am]
each transaction subject to the rule, funds), 4,594 funds of which have subadvisory
setting forth the amount and source of relationships (approximately 37%). Based on data BILLING CODE 8011–01–P
from the 2018 ICI Factbook, 720 new funds were
the commission, fee, or other established in 2017 (705 open-end funds and
remuneration received; the identity of exchange-traded funds + 15 closed-end funds (from
the broker; the terms of the transaction; the ICI Research Perspective, April 2018)). 720 new
and the materials used to determine that funds × 37% = 266 funds.
2 3 hours ÷ 4 rules = 0.75 hours.
the transactions were effected in 3 This estimate is based on the following
compliance with the procedures calculation: 0.75 hours × 266 funds = 200 burden
adopted by the board. The hours. 5 965 funds × 50 hours per fund = 48,250 hours.
recordkeeping requirements under rule 4 1,609 funds × 0.6 = 965 funds. 6 200 hours + 48,250 hours = 48,450 hours.
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Document Created: 2018-11-20 07:59:34
Document Modified: 2018-11-20 07:59:34
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| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 83 FR 58663 |
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