DGL REVISED 17a-19 PRA 2020 Supporting Statement

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 17a-19: Form X-17A-19 Report by National Securities Exchanges and Registered
National Securities Associations of Changes in the Membership Status of Any of Their
Members
[OMB No. 3235-0133]
A.

JUSTIFICATION
1.

Necessity of Information Collection

Generally, before commencing business activities, a broker-dealer must become a
member of a self-regulatory organization (“SRO”). 1 SROs assist the Securities and Exchange
Commission (“Commission”) in regulating the activities of broker-dealers. 2 In a 1974 study, the
Commission recommended that each broker-dealer be examined by and report to only one SRO
regarding financial responsibility and related recordkeeping. However, the study concluded that,
for this system to be successful, the Commission would have to receive prompt notification of
any change in the broker-dealer’s membership in an SRO. Consequently, the Commission
adopted Rule 17a-19 3 and Form X-17A-19 4 pursuant to the Securities Exchange Act of 1934 5
(“Exchange Act”) to require and facilitate the reporting of this information.
Rule 17a-19 requires every national securities exchange and registered national securities
association to file a Form X-17A-19 with the Commission and the Securities Investor Protection
Corporation (“SIPC”) within 5 business days of the initiation, suspension, or termination of any
member and, when terminating the membership interest of any member, to notify that member of
its obligation to file financial reports as required by Exchange Act Rule 17a-5(b). 6 There are
currently a total of 10 national securities exchanges and registered national securities associations
that are potential respondents under the rule.
2.

Purpose and Use of Information Collection

Upon the Commission’s receipt of a Form X-17A-19 filing, the information is inputted
into a database, which is regularly shared with the SROs. Commission staff use the information
contained in Form X-17A-19 to assign the appropriate SRO as designated examining authority
for the member firms. This information is also used by SIPC in determining which SRO is the
collection agent for the SIPC fund.
1

15 U.S.C. 78o(b)(8).

2

The Financial Industry Regulatory Authority, Inc. (“FINRA”), a registered national securities association,
and the national securities exchanges are all SROs.

3

17 CFR 240.17a-19.

4

17 CFR 249.635.

5

15 U.S.C. 78a et seq.

6

17 CFR 240.17a-5(b).

3.

Consideration Given to Information Technology

While both the Commission and the SROs continue to improve their systems for
information gathering and compilation through increased use of technology, the burden
associated with filing each Form X-17A-19 is negligible. Therefore, improved information
technology will have little effect in reducing the burden.
4.

Duplication

Rule 17a-19 is the only rule that requires the submission of this information, therefore, no
duplication exists.
5.

Effect on Small Entities

The required reports are not extensive; consequently the collection of information is not
unduly burdensome for small entities.
6.

Consequences of Not Conducting Collection

If this information is not collected, the process of assigning the appropriate SRO as
designated examining authority for broker-dealers would be more burdensome.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

There are no special circumstances. This collection is consistent with the guidelines in 5
CFR 1320.5(d)(2).
8.

Consultations Outside the Agency

The required Federal Register notice with a 60-day comment period soliciting comments
on this collection of information was published. No public comments were received.
9.

Payment or Gift

There are no payments or gifts.
10.

Confidentiality

No assurance of confidentiality is provided by Rule 17a-19.
11.

Sensitive Questions

2

The information collection collects basic personally identifiable information (PII) that
may include name, job title, and business contact information, but the information is not
retrieved by a personal identifier. The agency has determined that the information collection does
not constitute a system of record for purposes of the Privacy Act and a PIA is not required
because the collection is a manual collection.
12.

Information Collection Burden

This reporting burden occurs on an ongoing basis. The information requested by Form
X-17A-19 is obtained from the respondent’s membership files. The number of responses per
year per respondent varies, depending on the number of membership changes reported.
Commission staff estimates that the total annual number of Form X-17A-19 filings is
approximately 408. 7 The Commission staff estimates that, in its experience, Form X-17A-19 can
be completed and signed within 15 minutes, resulting in an estimated aggregate annual reporting
burden of 102 hours. 8

13.

Name of Information
Collection

Type of
Burden

Number
of
Responses
per Year

Rule 17a-19

Reporting

408

Annual
Burden per
Response
(Hours)

Total Annual
Industry Burden
(Hours)

0.25

102

Small
Business
Entities
Affected

0

Costs to Respondents

The Commission believes that there are no additional reporting costs associated with the
rule, other than the costs described in Item 12 above.
14.

Costs to Federal Government

There are no additional costs to the Federal Government.
15.

Name of Information
Collection

Changes in Burden

Annual Industry Burden
(Hours)

Annual
Industry
Burden
Previously
Reviewed

Change in
Burden

Reason for Change

7

The Commission received a total of 328 Form X-17A-19 filings in 2017, 395 Form X-17A-19 filings in
2018, and 502 Form X-17A-19 filings in 2019. The average number of yearly filings, therefore, is 408.333,
rounded down to 408 (328 + 395 + 502 / 3 years).

8

408 responses x .25 hours = 102 hours.
3

Rule 17a-19 –
Reporting

16.

102

200

(98)

Industry burden has decreased
based on a lower estimate of
the number of Form X-17A19s that the Commission
receives on an annual basis.

Information Collection Planned for Statistical Purposes

Not applicable. The information collection is not used for statistical purposes.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the 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 employ statistical methods.

4