Form S-6 Supporting Statement_2018 ETFs proposal_Updated 2.11.19

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form S-6
A. JUSTIFICATION
1. Necessity for the Information Collection
Form S-6 1 is a form used for registration under the Securities Act of 1933
(“Securities Act”) 2 of securities of any unit investment trust (“UIT”) registered under
the Investment Company Act of 1940 (“Investment Company Act”) 3 on Form
N-8B-2. 4 Section 5 of the Securities Act requires the filing of a registration statement
prior to the offer of securities to the public and that the statement be effective before
any securities are sold. 5 Section 5(b) of the Securities Act requires that investors be
provided with a prospectus containing the information required in a registration
statement prior to the sale or at the time of confirmation or delivery of the securities.
Section 10(a)(3) of the Securities Act provides that when a prospectus is used
more than nine months after the effective date of the registration statement, the
information therein shall be as of a date not more than sixteen months prior to such
use. 6 As a result, most UITs update their registration statements under the Securities
Act on an annual basis in order that their sponsors may continue to maintain a
secondary market in the units. UITs that are registered under the Investment
Company Act on Form N-8B-2 file post-effective amendments to their registration
statements on Form S-6 in order to update their prospectuses.
On June 28, 2018, the Commission issued a release proposing amendments to
Form N-8B-2 to include disclosures designed to provide investors who purchase
shares of exchange-traded funds structured as UITs (“UIT-ETFs”) in secondary
market transactions with information regarding UIT-ETFs, including information
regarding costs associated with an investment in UIT-ETFs.
1

17 CFR 239.16.

2

15 U.S.C. 77a et seq.

3

15 U.S.C. 80a-1 et seq.

4

17 CFR 274.12. Form N-8B-2 is the form used by UITs other than separate accounts
that are currently issuing securities, including UITs that are issuers of periodic
payment plan certificates and UITs of which a management investment company is
the sponsor or depositor to register under the Investment Company Act pursuant to
Section 8 thereof.

5

15 U.S.C. 77e.

6

15 U.S.C. 77j(a)(3).

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Specifically, the proposed amendments to Form N-8B-2 would require new
disclosures regarding UIT-ETF-related costs, such as bid-ask spreads, brokerage
commissions for buying and selling shares of a UIT-ETF through a broker-dealer,
and potential costs related to purchasing UIT ETF shares at a premium or discount
to the UIT-ETF’s net-asset value (“NAV”) per share. The Commission believes that
the proposed amendments will provide effective disclosure that better informs
investors regarding the costs of investing in UIT-ETFs.
As noted above, UITs file Form N-8B-2 to register under the Investment
Company Act when the UIT is initially created and use Form S-6 to file all posteffective amendments to their registration statements in order to update their
prospectuses. Therefore, while there were no specific amendments proposed to Form
S-6, the information required under the proposed disclosure amendments to Form
N-8B-2 also will be reflected in the UIT’s Form S-6 filings.
2. Purpose and Use of the Information Collection
The purpose of Form S-6 is to meet the filing and disclosure requirements of the
Securities Act and to enable filers to provide investors with information necessary to
evaluate an investment in the security. This information collection differs
significantly from many other federal information collections, which are primarily
for the use and benefit of the collecting agency. The information required to be filed
with the Commission permits verification of compliance with securities law
requirements and assures the public availability and dissemination of the
information.
3. Consideration Given to Information Technology
The Commission’s Electronic Data Gathering, Analysis and Retrieval
(“EDGAR”) automates the filing, processing, and dissemination of full disclosure
filings. This automation has increased the speed, accuracy, and availability of
information, generating benefits to investors and financial markets. Form S-6 is
required to be filed with the Commission electronically on EDGAR. 7 The public
may access filings on EDGAR through the Commission’s website
(http://www.sec.gov) or at EDGAR terminals located at the Commission’s public
reference rooms. Prospectuses may be sent to investors by electronic means so long
as certain requirements are met. 8

7

See rule 101(a)(1)(i) of Regulation S-T [17 CFR 232.101(a)(1)(i)].

8

See Investment Company Act Release No. 21399 (Oct. 6, 1995) [60 FR 53458 (Oct.
13, 1995)].

2

4. Duplication
The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it proposes a rule or a
change in a rule. Form S-6 requires a prospectus that includes much of the
information requested in Form N-8B-2. Form N-8B-2, however, is filed only once to
register the UIT under the Investment Company Act. 9
5. Effect on Small Entities
The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, 10 to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses. The current disclosure requirements for
registration statements on Form S-6 do not distinguish between small entities and
other investment companies. The burden on smaller investment companies of
preparing and filing registration statements may be proportionately greater than for
larger investment companies. This burden includes the cost of producing, printing,
filing, and disseminating prospectuses. The Commission believes, however, that
imposing different requirements on smaller investment companies would not be
consistent with investor protection and the purposes of the registration statements.
6. Consequences of Not Conducting Collection
The purpose of Form S-6 is to meet the filing and disclosure requirements of
the Securities Act and to enable filers to provide investors with information necessary
to evaluate an investment in the security. Less frequent filing would be inconsistent
with the filing and disclosure requirements of the Securities Act. In addition, if the

9

To eliminate the duplicative information presented in the registration forms used by
UITs, the Commission has proposed and reproposed, but has not yet adopted, Form
N-7, an integrated disclosure form under the Securities Act and the Investment
Company Act. See Investment Company Act Release No. 14513 (May 14, 1985)
[50 FR 21282 (May 23, 1985)]; Investment Company Act Release No. 15612 (Mar.
9, 1987) [52 FR 8268 (March 17, 1987)].
Duplication has been lessened for insurance company separate accounts organized as
UITs that offer variable annuity or variable life insurance contracts, because each
such entity registers offerings of securities under the Securities Act and registers as an
investment company under the Investment Company Act using a single form, Form
N-4 (for insurance company separate accounts organized as UITs that offer variable
annuity contracts) or Form N-6 (for insurance company separate accounts organized
as UITs that offer variable life insurance contracts).

10

5 U.S.C. 601 et seq.

3

form were to be filed less frequently, investors may not be provided with the
information necessary to evaluate an investment in the security.
7. Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
This collection is not inconsistent with 5 CFR 1320.5(d)(2).
8. Consultation Outside the Agency
Before adopting the proposed amendments to Form N-8B-2, which, as discussed
above, also will affect Form S-6, the Commission will receive and evaluate public
comments on the proposal and its collection of information requirements.
Moreover, the Commission and the staff of the Division of Investment Management
participate in an ongoing dialogue with representatives of the investment company
industry through public conferences, meetings, and informal exchanges. These
various forums provide the Commission and staff with a means of ascertaining and
acting upon paperwork burdens confronting the industry.
9. Payment or Gift
No payment or gift to respondents was provided.
10. Confidentiality
No assurance of confidentiality was provided.
11. Sensitive Questions
No information of a sensitive nature, including social security numbers, will be
required under this collection of information. The information collection collects
basic Personally Identifiable Information (PII) that may include names, job titles and
work addresses. However, the agency has determined that the information collection
does not constitute a system of record for purposes of the Privacy Act. Information
is not retrieved by a personal identifier. In accordance with Section 208 of the EGovernment Act of 2002, the agency has conducted a Privacy Impact Assessment
(PIA) of the EDGAR system, in connection with this collection of information. The
EDGAR PIA, published on January 29, 2016, is provided as a supplemental
document and is also available at https://www.sec.gov/privacy.
12/13 Burden of Information Collection & Cost to Respondents
The following estimates of average burden hours and costs are made solely for
purposes of the Paperwork Reduction Act of 1995 11 and are not derived from a
11

44 U.S.C. 3501 et seq.

4

comprehensive or representative survey or study of the cost of Commission rules and
forms. Compliance with Form S-6 is mandatory. Responses to the collection of
information will not be kept confidential.
The estimated number of annual initial registration statements filed on Form S-6
and the estimated number of annual post-effective amendments to previously
effective registration statements filed on Form S-6 are based on filings with the
Commission in 2014. The hour burden estimates for preparing and filing Form S-6
are based on the Commission’s experience with the contents of the form. The
number of burden hours may vary depending on, among other things, the complexity
of the filing and whether preparation of the forms is performed by internal staff or
outside counsel.
Form S-6 imposes two types of reporting burdens on UITs that are registered
under the Investment Company Act on Form N-8B-2: (1) the burden of preparing
and filing the initial registration statement; and (2) the burden of preparing and filing
post-effective amendments to a previously effective registration statement.
In our most recent Paperwork Reduction Act submission for Form S-6,
Commission staff estimated the annual compliance burden to comply with the
collection of information requirement of Form S-6 is 106,620 hours, with an internal
cost burden of approximately $34,000,000, and an external cost burden estimate of
$67,359,556. 12
We estimate that, as a result of the proposed amendments to Form N-8B-2
(which will affect the disclosures provided on Form S-6), each UIT-ETF would incur
a one-time burden of an additional 20 hours, at a time cost of an additional $6,710,
to draft and finalize the required disclosure and amend its Form S-6. 13 Amortizing
this one-time burden for UIT-ETFs over a three-year period results in an average
annual burden of an additional 6.67 hours, at a time cost of an additional $2,236.67,

12

This estimate is based on the last time the rule’s information collection was
submitted for PRA renewal in 2014.

13

This estimate is based on the following calculation: 20 hours x $335.50 (blended rate
for a compliance attorney ($352) and a senior programmer ($319)) = $6,710. These
per-hour figures are from SIFMA’s Management & Professional Earnings in the
Securities Industry 2013, modified by Commission staff to account for an 1800-hour
work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead.

5

for each UIT-ETF. In total, we estimate that existing UIT-ETFs would incur a total
annual burden of an additional 53 hours, at a time cost of an additional $17,893. 14
We estimate that each UIT ETF would incur an ongoing burden of an additional
10 hours, at a time cost of an additional $3,355, each year to review and update the
proposed disclosures on Form S-6. 15 In the aggregate, we estimate that UIT-ETFs
would incur an annual burden of an additional 80 hours, 16 at a time cost of an
additional $26,840, 17 to comply with the proposed Form N-8B-2 disclosure
requirements on Form S-6.
In total, therefore, we estimate that UIT-ETFs would incur an annual burden of
an additional 133 hours, at a time cost of an additional $44,733.
Table 1: Summary of Revisions to Annual Responses, Burden Hours, and
Burden-Hour Costs Estimates for Information Collections
Information
Collection

Annual No. of Responses
Previously
approved

Requested

Form S-6

2,498

2,056

Annual Time Burden (Hrs.)

Burden Cost Burden ($)

Change

Previously
approved

Requested

Change

Previously
approved

Requested

Change

-442

106,620

106,753

133

67,359,556

67,404,289

44,733

14. Costs to Federal Government
The annual cost of reviewing and processing disclosure documents, including
new registration statements, post-effective amendments, proxy statements,
shareholder reports, and other filings of investment companies amounted to
approximately $22.2 million in fiscal year 2017, based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead.
15. Changes in Burden
The estimated hourly burden associated with Form S-6 has increased from
106,620 to 106,753 (an increase of 133). In addition, the cost burden associated with
14

These estimates are based on the following calculations: 6.67 hours x 8 UIT-ETFs =
53.36 hours (rounded to nearest hour = 53 hours); $2,236.67 x 8 UIT-ETFs =
$17,893.36 (rounded to nearest dollar = $17,893).

15

This estimate is based on the same $335.50 per-hour rate discussed supra in footnote
13 (blended rate for a compliance attorney ($352) and a senior programmer ($319)).

16

This estimate is based on the following calculation: 10 hours x 8 UIT-ETFs = 80
hours.

17

This estimate is based on the following calculation: $3,355 x 8 UIT-ETFs = $26,840.

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Form S-6 has increased from $67,359,556 to $67,404,289 (an increase of $44,733).
The changes in burden hours and external cost burdens are due to the staff’s
estimates of the time costs and external costs that would result from our proposed
amendments to Form N-8B-2 for UIT-ETFs.
16. Information Collection Planned for Statistical Purposes
The results of any information collected will not be published.
17. Approval to Omit OMB Expiration Date
The Commission is not seeking approval to not display the expiration date for
OMB approval.
18. Exceptions to Certification for Paperwork Reduction Act Submission
The Commission is not seeking an exception to the certification statement.
B. COLLECTION OF INFORMATION EMPLOYING STATISTICAL
METHODS
The collection of information will not employ statistical methods.

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