Proposed Rule 17i-5 would require that
an SIBHC create and maintain certain records for at least three
years. An SIBHC is required to make and keep records reflecting (i)
the results of quarterly stress tests; (ii) that the firm had
created a contingency plan to respond to certain possible funding
and liquidity difficulties; and (iii) the basis for credit risk
weights. Further, Rule 17i-5 requires that an SIBHC maintain these
and other records for at least three years in an easily accessible
place. On average, an SIBHC will spend approximately 64 hours each
quarter to create a record regarding stress tests, or approximately
256 hours each year. In addition, an SIBHC will generally spend
about 40 hours to create and document a contingency plan regarding
funding and liquidity of the affiliate group. Further, an SIBHC
will establish approximately 20 new counterparty arrangements each
year, and will take, on average, about 30 minutes to create a
record regarding the basis for credit risk weights for each such
counterparty. Finally, an SIBHC will generally require about 24
hours per year to maintain the specified records. Consequently, the
total burden relating to Rule 17i-5 is approximately 330 hours in
the first year and approximately and 290 hours each year thereafter
for each SIBHC, and approximately 990 hours in the first year and
870 hours each year thereafter for all three SIBHCs combined. We
estimate that it would cost each SIBHC about $10,520 to document a
contingency plan regarding funding and liquidity of the affiliate
group. We estimate that an SIBHC would incur an annual cost of
about $104,192 to create a record regarding stress tests as
required by Rule 17i-5. Further, we estimate that, on average, an
SIBHC would incur an annual cost of approximately $1,620 to create
a record regarding the basis for credit risk weights. Further, we
estimate that, on average, an SIBHC would incur an annual cost of
$6,264 to maintain records pursuant to Rule 17i-5. Thus, we
estimate that the total dollar cost of the one-time and ongoing
paperwork burden associated with Rule 17i-5 for all SIBHCs would be
approximately $367,788. 13. Estimate of Total Annualized Cost
Burden The information technology (IT) systems used by IBHCs to
manage risk, make and retain records and reports, and calculate
capital differ widely based on the types of business and the size
of the IBHC. We believe that an IBHC will upgrade its IT systems
with relation to four of the SIBHC framework Rules: Rule 17i-4
(requires an SIBHC to document its internal risk management control
systems), Rule 17i-5 (requires an SIBHC to create and maintain
records), Rule 17i-6 (requires an SIBHC to create and make reports
to the Commission), and Rule 17i-7 (requires that an SIBHC compute
allowable capital and allowances for market, credit, and
operational risk). It is impossible to determine what percentage of
these IT systems costs may be attributable to any particular SIBHC
framework Rule, so we will allocate them equally (i.e., 25% of the
total cost to each of these four Rules). We believe the costs to
upgrade IT systems would be one-time costs. These IBHCs IT systems
may be in varying stages of readiness to meet the requirements of
the rules. The staff estimated, when these rules were proposed,
that it would cost an IBHC between $1 million and $10 million to
upgrade its IT systems to comply with the SIBHC framework of rules,
depending on the state of development of its IT systems. We believe
this estimate to be fairly sound because no commenter disagreed
with it. Thus, on average, it would cost each of the three SIBHCs
about $5.5 million to upgrade their IT systems, or approximately
$16.5 million in total. As described above, we allocate
approximately 25% of this cost, or $4,125,000, as attributable to
Rule 17i-5.
On behalf of this Federal agency, I certify that
the collection of information encompassed by this request complies
with 5 CFR 1320.9 and the related provisions of 5 CFR
1320.8(b)(3).
The following is a summary of the topics, regarding
the proposed collection of information, that the certification
covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a
benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control
number;
If you are unable to certify compliance with any of
these provisions, identify the item by leaving the box unchecked
and explain the reason in the Supporting Statement.
Rule 17i-5 SuppState.doc
Rule 17i-5 (17 CFR 240.17i-5): Record Creation, Maintenance, and Access Requirements for Supervised Investment Bank Holding Companies.