2011 17A-22 Justification (3)

SUPPORTING STATEMENT
for the Paperwork Reduction Act Current Information Collection Submission for
“Rule 17A-22”
A. JUSTIFICATION
1. Necessity of Information Collection
As a result of the paperwork crisis that occurred in the late 1960s, during which the
number of securities transactions exceeded the securities industry’s capacity to process those
transactions, Congress enacted the Securities Acts Amendments of 1975,2 which amended the
Securities Exchange Act of 1934 (“Exchange Act”) in order to establish a national system for the
prompt and accurate clearance and settlement of securities transactions.
As part of those amendments, Congress authorized and directed the Commission to
oversee clearing agencies, which play a central role in the development and functioning of the
national clearance and settlement system. In 1980, the Commission adopted Rule 17a-22 under
the Exchange Act pursuant to authority in Sections 2, 17, 17A, and 23(a) of the Exchange Act
(15 U.S.C. Sections 78b, 78q, 78q-1, and 78w(a), respectively). The rule requires registered
clearing agencies to file with the Commission copies of any materials (such as manuals, notices,
circulars, bulletins, lists, and periodicals) that it issues or makes generally available to its
participants and other interested persons.
2. Purpose and Use of the Information Collection
The Commission uses the information filed pursuant to Rule 17a-22 to determine whether
a clearing agency (1) is implementing procedural or policy changes and, if so, to determine
whether such changes are consistent with the purposes of Section 17A of the Exchange Act, and
(2) has changed its rules without reporting the actual or prospective change to the Commission as
required by Section 19(b) of the Exchange Act. Without Rule 17a-22, the Commission could not
perform these duties as statutorily required.
3. Consideration Given to Information Technology
Rule 17a-22 requires registered transfer agents to file three hard copies of any materials
(such as manuals, notices, circulars, bulletins, lists, and periodicals) that it issues or makes
generally available to its participants and other interested persons. Nonetheless, the clearing
agencies typically utilize computer systems to identify and collect the required materials.
4. Duplication

2

Pub. L. No. 94-29, 89 Stat. 97 (June 4, 1975).

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Rule 17a-22 requires duplicate filings when the Commission is not a registered clearing
agency’s “appropriate regulatory agency.” 3 However, since the rule applies only to already
published material, the additional cost of making such duplicative filing is minimal.
5. Effect on Small Entities
No information is requested from small entities.
6. Consequences of Not Conducting Collection
If information were collected less frequently, the Commission’s ability to monitor
compliance of registered clearing agencies would be weakened.
7. Inconsistencies with Guidelines in 5 CFR 1320.8(d)
There are no special circumstances. This collection is consistent with the guidelines in 5
CFR 1320.8(d).
8. Consultations Outside the Agency
Rule 17a-22 was adopted by the Commission after notice and comment. No comments
were received during the 60 day comment period. Since the rule remains unchanged, there has
been no need for additional consultation outside the agency.
9. Payment or Gift
There were no payments or gifts to respondents.
10. Confidentiality
Not applicable; no assurance of confidentiality is provided by Rule 17a-22. The rule does
not require respondents to submit personally-identifying information.
11. Sensitive Questions
No questions of a sensitive nature are asked.
12.

Burden of Information Collection

Rule 17a-22 requires registered clearing agencies to file with the Commission copies of
any materials (such as manuals, notices, circulars, bulletins, lists, and periodicals) that it issues or
makes generally available to its participants and other interested persons. Thus, Rule 17a-22
3

“Appropriate regulatory agency” is defined in Section 3(a)(22) of the Exchange Act, 15 U.S.C.
78a22.

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imposes an ongoing reporting burden for registered clearing agencies to solely to the
Commission.
The Commission receives approximately 800 responses per year pursuant to Rule 17a-22.
This figure is based upon sample responses from four active registered clearing agencies. The
most active clearing agency sent the Commission approximately 500 responses and the least
active sent less than fifty. We think that an average of 200 annual responses per active clearing
agency is a reasonable figure. The Commission staff estimates that each response requires
approximately .25 hours (fifteen minutes), which represents the time it takes for a staff person at
the clearing agency to properly identify a document subject to the rule, print and makes copies,
and mail that document to the Commission. Thus, the total annual burden for all active clearing
agencies is 200 hours (4 active clearing agencies multiplied by 200 responses multiplied by .25
hours) and a total of 50 hours (800 total responses multiplied by .25 hour, divided by 4 active
clearing agencies) per year are expended by each respondent to comply with the rule.
13. Costs to Respondents
The work associated with the respondent reporting burden of 200 hours per year is
typically performed by the registered clearing agencies’ staff. Because these costs consist of
materials that have been prepared for widespread distribution, the additional cost to the clearing
agencies associated with submitted copies to the Commission is relatively small. The
Commission staff estimates that the aggregate cost of compliance with Rule 17a-22 to all
clearing agencies is $3,200 per year. There is no capital or start up component to this amount.
Rather, this estimate includes postage ($1,600), which we estimate to be about $2 per filing (800
responses multipled by $2) plus the estimated cost of additional printing, envelopes, and other
administrative expenses (800 responses multiplied by $2).
14. Costs to Federal Government
The annualized cost to the Federal Government is zero because the rule only requires
normal full-time employees to review the materials.
15. Changes in Burden
The reduction in the estimated respondent reporting and total annualized cost burdens
from the previous submission in 2008 is due to the reduction in the number of active registered
clearing agencies.
16. Information Collection Planned for Statistical Purposes
The collections of information statistics for Rule 17a-22 will not be published.

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17. Display of OMB Approval Date
The Commission is not seeking approval to not display the OMB approval expiration
date.
18. Exceptions to Certification for Paperwork Reduction Act Submissions
This collection complies with the requirements in 5 CFR 1320.9.
B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
This collection does not involve statistical methods.