DGL REVISED FINAL 2021 12f-1 Supporting Statement

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 12f-1 (OMB Control No. 3235-0128)
A.

Justification
1.

Necessity of Information Collection

Section 12(f) of the Securities Exchange Act of 1934 (the “Act”) governs when a national
securities exchange may trade a security that is not listed and registered on that exchange, i.e., by
extending unlisted trading privileges to the security. 1 Under Section 12(f)(2) of the Act, the
Commission may, at any time within 60 days of commencement of trading on a national
securities exchange of a security pursuant to unlisted trading privileges, suspend such unlisted
trading privileges (“UTP”) on the exchange. Upon such suspension, the exchange shall, if it
seeks to extend unlisted trading privileges to the security, file an application with the
Commission to reinstate its ability to do so pursuant to such procedures as the Commission may
prescribe by rule or order for the maintenance of fair and orderly markets, the protection of
investors and the public interest, or otherwise in furtherance of the purposes of the Act.
Rule 12f-1 (the “Rule”), originally adopted in 1979 pursuant to Sections 12(f) and 23(a)
of the Act, and as further modified in 1995 and 2005, sets forth the requirements for filing an
exchange application to reinstate unlisted trading privileges in a security in which UTP has been
suspended by the Commission pursuant to Section 12(f)(2)(A) of the Act. Under Rule 12f-1, an
exchange must submit one copy of an application for reinstatement of UTP to the Commission
that contains specified information, as set forth in the Rule. The application for reinstatement,
pursuant to the Rule, must provide the name of the issuer, the title of the security, the name of
each national securities exchange, if any, on which the security is listed or admitted to unlisted
trading privileges, whether transaction information concerning the security is reported pursuant
to an effective transaction reporting plan contemplated by Rule 601 of Regulation NMS, the date
of the Commission’s suspension of unlisted trading privileges in the security on the exchange,
and any other pertinent information related to whether the reinstatement of UTP in the subject
security is consistent with the maintenance of fair and orderly markets and the protection of
investors. Rule 12f-1 further requires a national securities exchange seeking to reinstate its
ability to extend unlisted trading privileges in a security to indicate that it has provided a copy of
such application to the issuer of the security, as well as to any other national securities exchange
on which the security is listed or admitted to unlisted trading privileges.

1

Section 12(f) of the Act and Rule 12f-1 thereunder were modified in 1995 after the
Unlisted Trading Privileges Act of 1994 (“UTP Act”) took effect on October 22, 1994.
Prior to such modification and the UTP Act, Section 12(f) and Rule 12f-1 thereunder
required exchanges to apply to the Commission before extending unlisted trading
privileges to a particular security. See Securities Exchange Act Release No. 35637 (Apr.
21, 1995). See also Securities Exchange Act Release No. 51808 (Jun. 9, 2005) (making
conforming amendments to Rule 12f-1 relating to the adoption of Regulation NMS).

2.

Purpose and Use of Information Collection

The information required by Rule 12f-1 enables the Commission to make the necessary
findings under the Act prior to granting applications to reinstate unlisted trading privileges. This
information is also made available to members of the public who may wish to comment upon the
applications. Without the Rule, the Commission would be unable to fulfill these statutory
responsibilities.
3.

Consideration Given to Information Technology

Not applicable.
4.

Duplication

Not applicable; there is no duplication of information. Each reinstatement of unlisted
trading privileges must be handled individually.
5.

Effect on Small Entities

None. The only potential respondents are national securities exchanges, and no exchange
is a small business as that term applies to this Item 5.
6.

Consequences of Not Conducting Collection

The information is collected at a time determined by the respondent and there is no way
to require less frequent collection without undermining the purposes of the Rule.
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

Not applicable; no payments or gifts are required to be made or are made to respondents.

10.

Confidentiality

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Not applicable; the Rule contains no assurance of confidentiality. The information
collected is public information.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be required under
this collection of information. 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.

12.

Burden of Information Collection

There are 24 national securities exchanges subject to Rule 12f-1. The burden of
complying with Rule 12f-1 arises when a potential respondent seeks to reinstate its ability to
extend unlisted trading privileges to any security for which unlisted trading privileges have been
suspended by the Commission, pursuant to Section 12(f)(2)(A) of the Act. The staff estimates
that each application would require approximately one hour to complete. Thus each potential
respondent would incur on average one burden hour in complying with the Rule.
The Commission staff estimates that there could be as many as 24 responses annually for
an aggregate annual hour burden for all respondents of approximately 24 hours (24 responses x 1
hour per response). Each respondent’s related internal cost of compliance for Rule 12f-1 would
be approximately $221 or, the cost of one hour of professional work of a paralegal needed to
complete the application. 2 The total annual cost of compliance for all potential respondents,
therefore, is approximately $5,304 (24 responses x $221 per response).
Rule

Burden
Type

Rule 12f-1

Number of
Number of
Respondents Annual
Reponses Per
Respondent
Reporting 24
1

Total Aggregate Burden

13.
2

Time Per Total Burden
Response Per Burden
(Hours)
Type (Hours)
1

24
24

Costs to Respondents

$221 per hour figure for a paralegal is from Securities Industry and Financial Markets
Association’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.
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Not applicable; (a) it is not anticipated that respondents will have to incur any capital and
start-up costs to comply with the Rule; (b) it is not anticipated that the respondents will have to
incur any additional operational or maintenance costs (other than as provided in Item 12) to
comply with the Rule.
14.

Costs to Federal Government

Not applicable. All Commission review and processing would be conducted by existing
Commission staff so there are no additional Federal government costs involved.
15.

Explanation of Changes in Burden

The increase in burden from 21 to 24 hours reflects an increase in the overall number of
national securities exchanges from 21 to 24.
16.

Information Collection Planned for Statistical Purposes

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

Approval to Omit the 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.

Collection of Information Employing Statistical Methods
This collection does not involve statistical methods.

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