60 Day Notice

Federal Register / Vol. 84, No. 156 / Tuesday, August 13, 2019 / Notices

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Commission.37 The commenter states
that ‘‘[t]he Commission’s authority to
temporarily suspend the fee, once
implemented, is no substitute for a
careful consideration at this juncture of
the important issues [it] has raised.’’ 38
Substantively, the commenter states any
fee charged to ITP would be merely a
paper transfer of revenue from one
corporate affiliate to another, while a fee
charged to the commenter, another
Matching Utility, would be a true cost
with real consequences.39
For the following reasons, the
Commission believes that the Proposed
Rule Change would not impose any
burden on competition regarding fees
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As a procedural matter, not including
the fee for Status Information in the
Proposed Rule Change is consistent
with the Act. Sections 19(b)(3)(A) and
(C) of the Act 40 specifically provide for
the process to which the commenter
objects, i.e., a proposed rule change that
establishes a fee imposed by a selfregulatory organization on any person,
whether or not the person is a member
of the organization, shall take effect
upon filing with the Commission and be
subject to potential suspension if the
Commission determines that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of Section 19 of the Act.
Therefore, the Commission believes that
DTC choosing to include any associated
fee in a subsequent proposed rule
change is consistent with the Act.
Substantively, it is consistent with the
Act to charge fees to both affiliates and
third-party competitors of the affiliate.
The commenter argues that the mere
existence of a fee is problematic because
DTC would be charging that fee to its
affiliate which renders the fee a ‘‘paper
transfer’’ of revenue.41 However, the
Commission believes that, under the
Act, any fee charged by DTC for this
service should be equitably allocated
among potential users, including users
that are affiliates of DTC. 42 Therefore,
it would not be reasonable for DTC to
not charge a fee for this service solely
37 See SS&C Letter II at 3; see also 15 U.S.C.
§ 78s(b)(3).
38 See SS&C Letter II at 3–4.
39 See SS&C Letter II at 4.
40 15 U.S.C. § 78s(b)(3)(A) and (C).
41 See SS&C Letter I at 5; SS&C Letter II at 4.
42 Although Section 17A(b)(3)(D) applies to
clearing agency fees on participants, the
Commission believes that it is also instructive here
with respect to fees on users of a service provided
by a clearing agency. 15 U.S.C. 78q–1(b)(D).

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because its affiliate may be a user of the
service.
Finally, the Commission notes that
the Proposed Rule Change would also
provide that a Matching Utility agree to
pay DTC for the reasonable cost of
DTC’s development of the mechanism
necessary for DTC to directly provide
Status Information to a Matching Utility
for each transaction to which a customer
of the Matching Utility is a party and
matched via the Matching Utility. As
noted above, the Commission notes that
this approach, which applies to all
Matching Utilities, is consistent with
Section 17A(b)(3)(D),43 which requires
the equitable allocation of fees among a
clearing agency’s participants. The
Commission also notes that it would
review the future fee filing for
consistency with this provision and all
other relevant Exchange Act provisions,
as well as the standard set forth by DTC
in this filing.
Therefore, for all of the above reasons,
the Commission believes that the
Proposed Rule Change is consistent
with Section 17A(b)(3)(I) of the Act.44
IV. Accelerated Approval of
Amendment Nos. 1 and 2
As noted above, in Amendment No. 1,
as compared to the original proposal,
DTC proposes to provide status
information to a Matching Utility even
if that matching utility did not submit
a transaction to DTC.45 As noted above,
in Amendment No. 2, as compared to
the original proposal, DTC proposes to
delay the implementation timeframe of
the proposal to until DTC has submitted
a subsequent fee filing.46
As discussed above, the Commission
believes that the amendments do not
raise any regulatory issues and are
consistent with the Act because
Amendment No. 1 provides different
methods for Matching Utilities to access
Status Information directly from DTC to
help ensure that Matching Utilities can
access Status Information regardless of
which Matching Utility submits the
transaction to DTC. Likewise,
Amendment No. 2 would provide more
time before the proposal would go into
effect.
Therefore, the Commission finds that
Amendment Nos. 1 and 2 to the
proposal raise no novel regulatory
issues, that they are reasonably designed
to protect investors and the public
interest, and that they are consistent
with the requirements of the Act.
Accordingly, the Commission finds
U.S.C. 78q–1(b)(D).
U.S.C. 78q–1(b)(3)(I).
45 Amendment No. 1, supra note 10.
46 Amendment No. 1, supra note 11.

good cause, pursuant to Section 19(b)(2)
of the Act,47 to approve the proposed
rule change, as modified by Amendment
Nos. 1 and 2, on an accelerated basis.
VI. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change, as modified by Amendment
Nos. 1 and 2, is consistent with the
requirements of the Act, in particular,
with the requirements of Section 17A of
the Act and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,48 that
proposed rule change SR–DTC–2018–
010, as modified by Amendment Nos. 1
and 2, be, and it hereby is, approved on
an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.49
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–17232 Filed 8–12–19; 8:45 am]
BILLING CODE 8011–01–P

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 31a–2, SEC File No. 270–174, OMB
Control No. 3235–0179

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’’) 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.
Section 31(a)(1) of the Investment
Company Act of 1940 (15 U.S.C. 80a–1
et seq.) (the ‘‘Act’’) requires registered
investment companies (‘‘funds’’) and
certain underwriters, broker-dealers,
investment advisers, and depositors to
maintain and preserve records as
prescribed by Commission rules. Rule
31a–1 (17 CFR 270.31a–1) under the Act
specifies the books and records that

43 15
44 15

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47 15

U.S.C. 78s(b)(2).

48 Id.
49 17

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CFR 200.30–3(a)(12).

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Federal Register / Vol. 84, No. 156 / Tuesday, August 13, 2019 / Notices

each of these entities must maintain.
Rule 31a–2 (17 CFR 270.31a–2) under
the Act specifies the time periods that
entities must retain certain books and
records, including those required to be
maintained under rule 31a–1.
The retention of records, as required
by the rule, is necessary to ensure access
to material business and financial
information about funds and certain
related entities. We periodically inspect
the operations of funds to ensure they
are in compliance with the Act and
regulations under the Act. Due to the
limits on our resources, however, each
fund may only be inspected at intervals
of several years. In addition, the
prosecution of persons who have
engaged in certain violations of the
federal securities laws may not be
limited by timing restrictions. For these
reasons, we often need information
relating to events or transactions that
occurred years ago. Without the
requirement to preserve books, records,
and other documents, our staff would
have difficulty determining whether the
fund was in compliance with the law in
such areas as valuation of its portfolio
securities, computation of the prices
investors paid, and, when purchasing
and selling fund shares, types and
amounts of expenses the fund incurred,
kinds of investments the fund
purchased, actions of affiliated persons,
or whether the fund had engaged in any
illegal or fraudulent activities. As part of
our examinations of funds, our staff also
reviews the materials that directors
consider in approving the advisory
contract.
There are 3,160 funds currently
operating as of December 31, 2018, all
of which are required to comply with
rule 31a–2. The Commission staff
estimates that, on average, a fund
spends 220.4 hours annually to comply
with the rule. The Commission therefore
estimates the total annual hour burden
of the rule’s and form’s paperwork
requirements to be 696,464 hours. In
addition to the burden hours, the
Commission staff estimates that the
average yearly cost to each fund that is
subject to rule 31a–2 is about
$36,510.28. The Commission estimates
total annual cost is therefore about
$115.4 million.
Estimates of average burden hours
and costs are made solely for purposes
of the Paperwork Reduction Act and are
not derived from a comprehensive or
even representative survey or study of
the costs of Commission rules and
forms. Compliance with the collection
of information requirements of the rule
is mandatory. Responses to the
disclosure requirements will not be kept
confidential. An agency may not

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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 collection of information is
necessary for the proper performance of
the functions of the Commission,
including whether the information has
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 and
Chief Information Officer, Securities
and Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
All submissions should refer to File
Number 270–174. This file number
should be included on the subject line
if email is used. The Commission will
post all comments on the Commission’s
internet website (http://www.sec.gov).
All comments received will be posted
without change; we do not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
Dated: August 7, 2019.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–17298 Filed 8–12–19; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–026, OMB Control No.
3235–0033]

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 17a–3

Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.) the
Securities and Exchange Commission

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(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17a–3 (17 CFR
240.17a–3), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17a–3 under the Securities
Exchange Act of 1934 establishes
minimum standards with respect to
business records that broker-dealers
registered with the Commission must
make and keep current. These records
are maintained by the broker-dealer (in
accordance with a separate rule), so they
can be used by the broker-dealer and
reviewed by Commission examiners, as
well as other regulatory authority
examiners, during inspections of the
broker-dealer.
The collections of information
included in Rule 17a–3 are necessary to
provide Commission, self-regulatory
organization (‘‘SRO’’) and state
examiners to conduct effective and
efficient examinations to determine
whether broker-dealers are complying
with relevant laws, rules, and
regulations. If broker-dealers were not
required to create these baseline,
standardized records, Commission, SRO
and state examiners could be unable to
determine whether broker-dealers are in
compliance with the Commission’s
antifraud and anti-manipulation rules,
financial responsibility program, and
other Commission, SRO, and State laws,
rules, and regulations.
As of December 31, 2018 there were
3,764 broker-dealers registered with the
Commission. The Commission estimates
that these broker-dealer respondents
incur a total burden of 2,893,773 hours
per year to comply with Rule 17a–3.1
In addition, Rule 17a–3 contains
ongoing operation and maintenance
costs for broker-dealers, including the
cost of postage to provide customers
1 On June 5, 2019, the Commission adopted Rule
151–1 under the Securities Exchange Act of 1934
establishing a standard of conduct for brokerdealers and natural persons who are associated
persons of a broker-dealer when making a
recommendation of any securities. See Securities
Exchange Act Release No. 86031 (Jun. 5, 2019), 84
FR 33318 (Jul. 12, 2019). At the same time, the
Commission adopted Exchange Act Rule 17a–14
(CFR 240.17a–14) and Form CRS (17 CFR 249.640)
under the Exchange Act. See Form CRS
Relationship Summary; Amendments to Form ADV
Exchange Act Release No. 86032, Advisers Act
Release No. 5247, File No. S7–08–18 (June 5, 2019),
84 FR 33492 (July 12, 2019). As part of new Rule
17a–14 and Form CRS, and Regulation Best Interest,
the Commission amended Rule 17a–3 by adding
new paragraphs (a)(24) and (a)(35). The collections
of information and the related burdens associated
with these amendments have been separately
noticed for comment and are currently under
review.

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