DGL REVISED 2022 Rule 6a1 and 6a2 PRA Supporting Statement for Form 1

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection
Submission for Rules 6a-1 and 6a-2 and Form 1
(OMB Control No. 3235-0017)
A.

Justification
1.

Necessity of Information Collection

The Securities Exchange Act of 1934 (“Exchange Act”) provides a framework for
self-regulation under which various entities involved in the securities business, including
national securities exchanges, have primary responsibility for regulating their members or
participants. The role of the Securities and Exchange Commission (“SEC” of
“Commission”) in this framework is primarily one of oversight: the Exchange Act
charges the SEC with supervising the national securities exchanges and assuring that each
exchange complies with and advances the policies of the Exchange Act.
Pursuant to Section 6 of the Exchange Act,1 the SEC may not grant registration as a
national securities exchange unless it finds, among other things, that the exchange is so
organized and has the capacity to carry out the purposes of the Exchange Act and to comply
and enforce compliance by members and their associated persons with the Exchange Act,
the rules thereunder, and the exchange’s rules; and, among other things, that the exchange's
rules are designed to protect investors and the public interest. As provided in Rules 6a-1 and
6a-2 under the Exchange Act,2 information that is intended to demonstrate whether the
applicant can satisfy the statutory requirements for registration as a national exchange (or an
exemption from registration) is elicited on Form 1,3 designated as the “Application for, and
Amendments to Application for, Registration as a National Securities Exchange or
Exemption from Registration Pursuant to Section 5 of the Exchange Act.”
2.

Purpose and Use of the Information Collection

Rule 6a-1 generally requires an applicant for initial registration as a national
securities exchange to file an application with the SEC on Form 1. An exchange that seeks
an exemption from registration based on limited volume also must apply for such exemption
on Form 1. Rule 6a-2 requires registered and exempt exchanges: (1) to amend the Form 1 if
there are any material changes to the information provided in the initial Form 1; and (2) to
submit periodic updates of certain information provided in the initial Form 1, whether such
information has changed or not. The information required pursuant to Rules 6a-1 and 6a-2 is
necessary to enable the SEC to maintain accurate files regarding the exchange and to enable
the SEC to exercise its statutory oversight functions. Without the information submitted
1

15 U.S.C. 78f.

2

17 CFR 240.6a-1 and 17 CFR 240.6a-2.

3

17 CFR 249.1.

pursuant to Rule 6a-1 on Form 1, the Commission would not be able to determine whether
the respondent has met the criteria for registration (or an exemption from registration) set
forth in Section 6 of the Exchange Act. Section 19 of the Exchange Act sets forth the SEC’s
process for its consideration of an application for registration as a national securities
exchange. The amendments and periodic updates of information submitted pursuant to Rule
6a-2 are necessary to assist the Commission in determining whether a national securities
exchange or exempt exchange is continuing to operate in compliance with the Exchange
Act.
3.

Consideration Given to Information Technology

Much of the information requested by the Form 1 consists of copies of existing
documents. SEC staff is considering ways to reduce respondents’ paperwork burden,
including using electronic means to submit amendments to Form 1.
4.

Duplication

The information required on Form 1 generally consists of copies of existing
documents. Thus, the SEC does not believe that substantial effort is required to collect this
information for submission on Form 1.
5.

Effects on Small Entities

No small businesses are involved in the procedures of data compilation and filing.
6.

Consequences of Not Conducting Collection

The information provided on the initial Form 1 is filed only when an entity seeks
to become registered as a national securities exchange or if it seeks an exemption from
such registration based on limited volume. Thus, any less frequent collection of
information would be impractical. This information is essential for the SEC to determine
whether registration (or an exemption from registration) is warranted. The amendments
and periodic updates of information required by Rule 6a-2 are necessary to ensure that the
SEC has up-to-date information about national securities exchanges or exchanges that have
a limited volume exemption. Such information is necessary to ensure that such entities
continue to act in compliance with the Exchange Act.
7.

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

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

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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.
10.

Confidentiality

Not applicable. The information is made available to members of the public who
may wish to comment on the information provided.
11.

Sensitive Questions

The information collection collects basic personally identifiable information that
may include name, job title, and work contact information. However, the agency has
determined that the information collection does not constitute a system of record for
purposes of the Privacy Act, because information is not retrieved by a personal identifier.
The EDGAR PIA will cover this information collection.
12.

Burden of Information Collection 4

Initial filings on Form 1 by applicants seeking registration as a national securities
exchange are made on a one-time basis. Based on the number of Form 1 submissions it has
received over the past three years, the SEC estimates that it will continue to receive
approximately one initial Form 1 filing per year. The SEC estimates that each respondent
would incur an average burden of 880 hours5 to file an initial Form 1 at an average internal
compliance cost per response of approximately $340,886. This figure was derived in the
following manner:
704 hours of legal work at $428/hr6 =

$301,312

4

For purposes of entering the data into the OMB ROCIS database, the numbers of
burden hours and respondents have been consolidated from what is specified in
the supporting statement.

5

SEC staff notes that this number represents an average. SEC staff estimates that
the initial burden for an entirely new exchange would be somewhat higher, while
the initial burden for an “add-on” exchange, i.e., an exchange application
submitted by an entity that currently operates one or more exchanges, would be
slightly lower.

6

Figure for an Attorney is from SIFMA’s Management & Professional Earnings in
the Securities Industry 2013, modified by Commission staff to account for an
3

176 hours of clerical work at $224/hr7 =
miscellaneous clerical expenses =

$ 39,424
$
150
$340,886

Therefore, the SEC estimates that the annual burden for all respondents to file the
initial Form 1 would be 880 hours (one response/respondent x one respondent x880
hours/response) and an internal compliance cost of $340,886 (one response/respondent x
one respondent x $340,886/response).
There currently are 24 entities registered as national securities exchanges. The
Commission estimates that each registered (or exempt) exchange files eleven amendments
or periodic updates to Form 1 per year. The Commission continues to estimate that each
exchange will incur an average burden of 25 hours per amendment to comply with Rule 6a2 and file amendments and periodic updates to information provided on the initial Form 1.
The SEC estimates that the average internal compliance cost for a national securities
exchange per response would be approximately $8,480. These figures were derived in the
following manner:
10 hours of legal work at $428/hr =
10 hours of accounting work at $298/hr8 =
5 hours of clerical work at $224/hr=
miscellaneous clerical expenses =

$4,280
$2,980
$1,120
$ 100
$8,480

Therefore, the SEC estimates that the annual burden for all respondents to file
amendments and periodic updates to the Form 1 pursuant to Rule 6a-2 would be 6,600 hours
(24 respondents x 25 hours/response x 11 responses/respondent per year) and an internal
compliance cost of $2,238,720 (24 respondents x $8,480/response x 11
responses/respondent per year).

1800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses,
firm size, employee benefits and overhead.
7

Figure for a Paralegal is from SIFMA’s Office Salaries 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.

8

Figure for a General Accounting Manager is 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.
4

Summary of Hourly Burdens
Rule

Burden
Type

Initial
Rule 6a-1
(Initial Form 1 Reporting
Application)
Periodic
Rule 6a-2
Reporting
(Periodic
Form 1
Amendments)
Total Aggregate Burden
13.

Number of
Number of
Time Per Total Burden
Respondents Annual
Response Per Burden
Reponses Per (Hours)
Type (Hours)
Respondent
1
1
880
880
24

11

25

6,600

7,480

Cost to Respondents

Not applicable. The SEC does not believe that respondents have to incur any capital
or start-up costs, or any operational or maintenance costs to comply with the collection of
information requirements required by Rules 6a-1 and 6a-2 and Form 1.
14.

Cost to Federal Government

Not applicable. Processing and review of initial Form 1 applications and periodic
amendments is done by existing SEC staff as part of their regular duties.
15.

Changes in Burden

The total estimated annual time burden associated with Rules 6a-1 and 6a-2
increased from 5,605 hours to 7,480 hours because the total estimated annual time burden
associated with the filing of amendments under Rule 6a-2 increased. The estimated time
burden associated with the filing of amendments pursuant to Rule 6a-2 increased from
4,725 hours to 6,600 hours because the estimated number of registered national securities
exchanges increased from 21 to 24 and the estimated average number of annual Rule 6a-2
responses per respondent increased from 9 to 11.
16.

Information Collected Planned for Statistical Purposes

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

Approval to Omit OMB Expiration Date

The SEC is not seeking approval to omit the expiration date.
18.

Exceptions to Certification

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There are no exceptions. This collection complies with the requirements in 5 CFR

1320.9.
B.

Collections of Information Employing Statistical Methods
Not applicable. The collection of information will not employ statistical methods.

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