3235-0279 Supporting Statement (Rule 17a-4-- Partial Revision 2021)

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 17a-4
OMB Control No. 3235-0279
Partial Revision
A.

JUSTIFICATION
1.

Information Collection Necessity

All brokers and dealers in the ordinary course of their businesses need to maintain certain
books and records reflecting, among other things, income and expenses, assets and liabilities,
daily trading activity, and the status of customer and firm accounts. These books and records
are, for the most part, standard and would be kept by any prudent individual engaging in a
securities business.
The Commission is statutorily authorized by Sections 17(a) 1 and 23(a) 2 of the Securities
Exchange Act of 1934 (“Exchange Act”) to promulgate rules and regulations regarding the
maintenance and preservation of books and records of exchange members, brokers, and dealers
(“broker-dealers”). Section 17(a)(1) provides in pertinent part:
“[all members of a national securities exchange and registered brokers and dealers] shall
make and keep for prescribed periods such records...as the Commission, by rule,
prescribes as necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the [Exchange Act].”
To standardize recordkeeping practices throughout the industry, the Commission, in
1940, adopted Rules 17a-3 and 17a-4 (one of the “Books and Records Rules”), 3 which codified
and specified minimum standards with respect to business records that broker-dealers must
create and maintain. Rule 17a-3 requires exchange members, brokers and dealers to make and
keep current certain records relating to a broker’s or dealer’s financial condition and operations.
For example, broker-dealers are required to maintain, among other things, blotters containing an
itemized daily record of all purchases and sales of securities; ledgers reflecting all assets and
liabilities, income and expense, and capital accounts; a securities record or ledger reflecting
separately for each security as of the clearance dates all “long” or “short” positions; a
memorandum of each brokerage order; a memorandum of each purchase or sale of a security for
the account of the broker-dealer; copies of confirmations; certain account holder information, as
well as information regarding employees; and customer complaints, among other records.
Rule 17a-4, which is the subject of this Supporting Statement, requires broker-dealers to
preserve, for prescribed periods of time, the records required to be created under Rule 17a-3 and
1
2
3

15 U.S.C. 78q(a).
15 U.S.C. 78w(a).
17 CFR 240.17a-3 and 17 CFR 240.17a-4.

2
certain other Commission rules. In addition, Rule 17a-4 requires broker-dealers to preserve
other records that may be created or received by the broker-dealer in the ordinary course of its
business for prescribed periods of time.
On June 5, 2019, the Commission adopted Rule 151-1 under the Securities Exchange Act of
1934 (“Exchange Act”) establishing a standard of conduct for broker-dealers and natural persons
who are associated persons of a broker-dealer (unless otherwise indicated, together referred to as
“broker-dealer” or “BD”) when making a recommendation of any securities transaction or
investment strategy involving securities to a retail customer (“Regulation Best Interest”). 4 As part of
Regulation Best Interest, the Commission amended Rule 17a-4 by revising paragraph (e)(5) added
paragraph (e)(10) to Rule 17a-4. In August 2019, the Commission amended the annual burden hours
for paragraph (e)(5) and added the annual burden hours for new paragraph (e)(10) of Rule 17a-4 in
order to aggregate the entire burden of Rule 17a-4 into one information collection and OMB
number. 5
On July 21, 2010, President Obama signed the Dodd-Frank Act into law. 6 Title VII of the
Dodd-Frank Act (“Title VII”) established a new regulatory framework for the over-the-counter
derivatives markets. 7 Title VII was enacted, among other reasons, to provide for the registration
and regulation of security-based swap dealers (“SBSDs”) and major security-based swap
participants (“MSBSPs”), and create recordkeeping and reporting regimes for such entities.
Section 764 of the Dodd-Frank Act added Section 15F to the Exchange Act, which directs the
Commission to adopt rules governing reporting and recordkeeping for SBSDs and MSBSPs. 8
Additionally, Section 17(a)(1) of the Securities Exchange Act of 1934 provides the Commission
with authority to adopt rules requiring broker-dealers – which would include broker-dealer
security-based swap dealers (“broker-dealer SBSDs”) and broker-dealer major security-based
swap participants (“broker-dealer MSBSPs”) – to make and keep for prescribed periods such
records, furnish such copies thereof, and make and disseminate such reports as the Commission,
by rule, prescribes as necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Exchange Act. 9

Partial Revision to Collection of Information
As discussed further below, the Commission adopted amendments to Rule 17a-3 in 2019
pursuant to authority in the Dodd-Frank Act. The 2019 amendments are not required to be
4

See Securities Exchange Act Release No. 86031 (Jun. 5, 2019), 84 FR 33318 (Jul. 12, 2019)
(“Regulation Best Interest Adopting Release”); see also Securities Exchange Act Release No.
83062 (Apr. 18, 2018) [83 FR 21574] (May 9, 2018) (“Regulation Best Interest Proposing
Release”).

5

See https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201908-3235-003.

6

See Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. 111–203, 124 Stat.
1376 (2010).

7

Pursuant to section 701 of the Dodd-Frank Act, Title VII may be cited as the “Wall Street Transparency
and Accountability Act of 2010.” See Pub. L. 111–203, 701.

8

See 15 U.S.C. 78o-10(f)(2).

9

See 15 U.S.C. 78q(a)(1).

3
complied with until October 6, 2021 and this partial revision provides new or updated burden
estimates in connection with the 2019 rule amendments.
On September 19, 2019, the Commission adopted amendments to its recordkeeping and
reporting rules for broker-dealers as well as new recordkeeping and reporting rules (the “SBS
Recordkeeping Release”) 10 SBSDs and MSBSPs pursuant to its authority in sections 17(a) and
15F(f) of the Exchange Act. 11 More specifically, the amendments to Rule 17a-4 (in conjunction
with the amendments to Rule 17a-3) establish additional recordkeeping maintenance
requirements applicable to broker-dealers, including those that are dually registered as an SBSD
or MSBSP, to the extent they engage in security-based swap or swap activities. These
amendments were originally proposed in April 2014, 12 and the proposed burdens associated with
the proposed rule changes were submitted for review in March 2016. 13
In October 2020, the Commission submitted an extension request for Rule 17a-4, which
was approved in December 2019. The extension request did not include the burdens associated
with the amendments to Rule 17-4 adopted as part of the recordkeeping and reporting
rulemaking. 14
This Supporting Statement addresses only the collections of information that are
being revised or added as a result of the rule amendments adopted in September 2019
regarding recordkeeping and reporting requirements related to security-based swap activities
because those collections have not yet been submitted for review.
2.

Information Collection Purpose and Use

The purpose of requiring that broker-dealers, broker-dealer SBSDs, and broker-dealer
MSBSPs to maintain the records specified in Rule 17a-4 is to help ensure that examiners and
other representatives of the Commission, State securities regulatory authorities, and selfregulatory organizations (“SROs”) have access to the information and documents necessary to
determine whether broker-dealers, broker-dealer SBSDs, and broker-dealer MSBSPs 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. Without Rule 17a10

See Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based
Swap Participants, and Broker-Dealers; Final Rules, Exchange Act Release No. 34-87005 (Sept. 19,
2019), 84 FR 68550 (Dec. 16, 2019).

11

Section 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”)
added section 15F to the Exchange Act. See Public Law 111-203, § 764; 15 U.S.C. 78o-10. Section
15F(f)(2) provides that the Commission shall adopt rules governing reporting and recordkeeping for SBSDs
and MSBSPs. See 15 U.S.C. 78o-10(f)(2).

12

See Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based
Swap Participants; Capital Rule for Certain Security-Based Swap Dealers, and Broker-Dealers; Capital
Rule for Certain Security-Based Swap Dealers, Proposed Rule, Release No. 71958 (Apr. 17, 2014), 79 FR
25194 (May 2, 2014).

13

See https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201603-3235-006.

14

See https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201910-3235-004.

4
4, it would be impossible for the Commission to determine whether a broker-dealer, brokerdealer SBSD, or broker-dealer MSBSP that chose not to preserve records was in compliance
with these rules. Such a situation would not be in the public interest and would be detrimental to
investors and the financial community as a whole.
3.

Consideration Given to Information Technology

Rule 17a-4 specifically allows brokers and dealers, including broker-dealer SBSDs, and
broker-dealer MSBSPs, to use electronic storage media to comply with the record-keeping
requirements under the Securities and Exchange Act of 1934. In fact, because it simply sets
minimum standards for the electronic storage media employed, Rule 17a-4 does not limit brokerdealers, including broker-dealer SBSDs, and broker-dealer MSBSPs, to using forms of electronic
storage which may become obsolete as new technology is developed. The Commission believes
that improvements in telecommunications and data processing technology may reduce any
burdens that result from Rule 17a-4.
4.

Duplication

There is no duplication.
5.

Effects on Small Entities

Because number and complexity of records required to be preserved by Rule 17a-4 vary
proportionately with the volume and complexity of the broker-dealer's business, broker-dealers,
including broker-dealer SBSDs, and broker-dealer MSBSPs, may choose which media (hardcopy, microfiche, electronic storage, etc.) is most appropriate given their size and the type of
business they do. The books and records required under Rule 17a-4 are normally retained by
small broker-dealers. Additionally, with respect to the amendments associated with the
rulemaking implementing the recordkeeping requirements mandated under the Dodd-Frank Act
with respect to broker-dealer SBSDs and broker-dealer MSBSPs, and to account for the securitybased swap and swap activities of stand-alone broker-dealers, the Commission does not
anticipate that many small broker-dealers will be affected by the SBS Recordkeeping Release’s
amendments to Rule 17a-4 as most of these firms generally do not hold positions in securitybased swaps..
6.

Consequences of Not Conducting Collection

Rule 17a-4 is a record preservation rule. Without Rule 17a-4, it would be impossible for
the Commission to determine whether a broker-dealer, including a broker-dealer SBSD, or a
broker-dealer MSBSP, that chose not to preserve records was in compliance with the
Commission’s antifraud and anti-manipulation rules, financial responsibility program, and other
Commission, SRO, and State laws, rules, and regulations. Such a situation would not be in the
public interest and would be detrimental to investors and the financial community as a whole.

5
7.

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

Certain provisions of Rule 17a-4 require respondents to retain records for more than three
years. Specifically, Rule 17a-4(a) requires broker-dealers to preserve for a period of not less
than six years:
1.
2.
3.
4.
5.
6.

Purchase and sales blotters, securities and cash receipts, and disbursements blotters;
Ledgers of a broker-dealer’s assets, liabilities, income and expense, and capital accounts;
Customer account ledgers;
Securities position reports;
Lists of office employees able to explain records to examiners; and
A record of persons responsible for establishing policies and procedures designed to
ensure that the broker-dealer is compliant with applicable rules and regulations.

After the closing of any customer’s account, broker-dealers must preserve for at least six years
any account cards or records which relate to the terms and conditions of opening and maintaining
the account. Broker-dealers are required to maintain and preserve in an easily accessible place:
1. Employment records of associated persons until at least three years after the employment
has terminated;
2. Processed fingerprint cards and other related information until at least three years after
the termination of employment or association;
3. All records required pursuant to paragraph (a)(15) of Rule 17a-3 for the life of the
enterprise;
4. All account record information required pursuant to Rule 17a-3(a)(17) and Rule 17a3(a)(35) until at least six years after the earlier of the date the account was closed or the
date on which the information was replaced or updated;
5. All records required pursuant to Rule 17a-3(a)(24) and a copy of each Form CRS, until at
least six years after such record or Form CRS is created; and
6. Each compliance, supervisory, and procedures manual, including any updates,
modifications, and revisions to the manual, describing the policies and practices of the
member, broker, or dealer with respect to compliance with applicable laws and rules, and
supervision of the activities of each natural person associated with the member, broker, or
dealer until three years after the termination of the use of the manual.
In addition, Rule 17a-4(d) requires that a broker-dealer maintain specified organizational
documents for the life of the enterprise and any successor enterprise.
These extended retention periods are necessary with respect to the records itemized above
in order to provide regulators with sufficient time to conduct comprehensive inspections and
investigations. Due to budget constraints, regulators only examine broker-dealers and office
locations periodically. Further, certain of these documents do not become obsolete (e.g.,
organizational documents).

6
8.

Consultations Outside the Agency

The Commission requested comment on the partial revision to the collection of
information requirements when the 2019 amendments were proposed in April 2014. 15 The
Commission received no comments regarding the Paperwork Reduction Act burden and cost
estimates. The Commission consulted with staff from the prudential regulators and the CFTC in
completing the amendments to Rule 17a-4. The proposed revisions to the collection of
information was submitted to OMB in 2016 (ICR Ref. No. 201603-3235-006).
9.

Payment or Gift

The Commission did not provide any payment or gift to respondents.
10.

Confidentiality

The records required to be maintained by Rule 17a-4 are available only to the
examination staffs of the Commission, State regulatory authorities, and the SROs. Subject to the
provisions of the Freedom of Information Act, 5 U.S.C. § 552 (“FOIA”) and the Commission’s
rules thereunder (17 CFR 200.80(b)(4)(iii)), the Commission generally does not publish or make
available information contained in reports, summaries, analyses, letters, or memoranda arising
out of, in anticipation of, or in connection with an examination or inspection of the books and
records of any person or any other investigation.
11.

Sensitive Questions

Rule 17a-4 requires that broker-dealers maintain records as prescribed by Commission
rules; however, this information collection does not collect personally identifiable information
(“PII”). No information of a sensitive nature, including social security numbers, will be required
under this collection of information. The agency has determined that a system of records notice
(“SORN”) and privacy impact assessment (“PIA”) are not required in connection with the
collection of information.
12.

Information Collection Burden

Rule 17a-4 establishes the records that must be preserved by all broker-dealers, as well as
records that must be preserved only by certain broker-dealers. All of these burdens are
recordkeeping burdens.
Currently Approved Burdens

15

See Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based
Swap Participants, and Broker-Dealers; Capital Rule for Certain Security-Based Swap Dealers; Proposed
Rule, Exchange Act Release No. 71958 (Apr. 17, 2014), 79 FR 25193 (May 2, 2014).

7
This section summarizes the burdens that have been reviewed and approved as of the
most recent extension. 16 These burdens are not changing at this time.
Records Preserved by All Broker-Dealers
The Commission estimates that, on average, each broker-dealer spends 254 hours each
year to ensure that it preserves the records Rule 17a-4 requires all broker-dealers to preserve. As
of December 31, 2018, there were 3,764 broker-dealers registered with the Commission.
Therefore, the Commission estimates that all brokers will spend a combined total of 956,056
hours each year ((3,764 broker-dealers x 254 hours) to comply with the Rule 17a-4
requirements applicable to all broker-dealers.
Rule 17a-4(b)(11)
Paragraph (b)(11) of Rule 17a-4 requires any broker-dealer that sponsors an internal brokerdealer system to maintain certain records relating to such system for at least three years, the first two
years in an easily accessible place.17 The Commission estimates that paragraph (b)(11) of Rule 17a4 imposes an annual burden of 3 hours per year to maintain the requisite records. The Commission
estimates that there are approximately 200 internal broker-dealer systems,18 resulting in an annual
recordkeeping burden of 600 hours.19
Rule 17a-4(e)(5) and Rule 17a-4(e)(10)
In June 2019, the Commission amended Rule 17a-4 by revising paragraph (e)(5) and by
adding new paragraph (e)(10). These revisions to the collection of information were approved
by OMB on October 3, 2019. Because these revisions were approved so recently, we do not
have any changes to the estimated burdens.
Based on data obtained from Form BR, the Commission estimates that approximately
73.5% of the 3,764 broker-dealers registered with the Commission as of December 31, 2018, or
2,766 broker-dealers, have retail customers and therefore are subject to the requirements of Rule
17a-4 (e)(5) and Rule 17a-4(e)(10). 20
16

See https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201910-3235-004.

17

An internal broker-dealer system is any facility that provides a mechanism for collecting, receiving,
disseminating, or displaying system orders and facilitating agreement to the basic terms of a purchase
or sale of a security between a customer and the sponsor, but excludes a national securities exchange,
an exchange exempt from registration based on limited volume, and an alternative trading system.
See 17 C.F.R. 240.17a-3(a)(16)(ii)(A). Because an internal broker-dealer system is not included in
the definition of an exchange, it is regulated under the broker-dealer regulatory scheme.

18

The Commission believes that most over-the-counter (“OTC”) market makers maintain an
internal broker-dealer system. In 2018, the Commission estimated that there are approximately
200 OTC market makers. See Disclosure of Order Handling Information, Exchange Act Release
No. 84528 (Nov. 2, 2018), 83 FR 58338 (Nov. 19, 2018).

19

3 hours x 200 internal broker-dealer systems = 600 hours.

20

On June 5, 2019, the Commission adopted Rule 151-1 under the Exchange Act establishing a
standard of conduct for broker-dealers and natural persons who are associated persons of a

8

Rule 17a-4(e)(5) requires broker-dealers to retain all records of the information collected
from or provided to each retail customer for at least six years after the earlier of the date the
account was closed or the date on which the information was last replaced or updated. 21 Rule
17a-4(e)(10) requires broker-dealers subject to Form CRS to maintain each record made pursuant
to Rule 17a-3(a)(24) for at least six years.
Based on the assumption that broker-dealers will rely on existing infrastructures to satisfy
the recordkeeping obligations of Rule 17a-4(e)(5), the Commission estimates the one-time
initial burden for broker-dealers to add new documents or modify existing documents to the
broker-dealer’s existing retention system would be 1,639 hours per broker-dealer or 4,533,476
burden hours for all broker-dealers 22 (put another way, each broker-dealer would incur the
burden for each of the 36,876 retail customer accounts) 23 assuming a broker-dealer would need
to upload or file each of the four account documents discussed above for each retail customer
account. 24 Furthermore, the Commission estimates that the approximate ongoing burden
associated with the recordkeeping requirement of Rule 17a-4(e)(5) is 1,622.555 hours per
broker-dealer or 4,487,987 burden hours per year. 25
Rule 17a-4(e)(10) requires broker-dealers subject to Form CRS to maintain each record
made pursuant to Rule 17a-3(a)(24) for at least six years. The Commission estimates this
increases the burden for each such broker-dealer by 0.10 hours, or an estimated aggregate burden

broker-dealer when making a recommendation of any securities transaction or investment
strategy involving securities to a retail customer (“Regulation Best Interest”). See Securities
Exchange Act Release No. 86031 (June 5, 2019), 84 FR 33318 (July 12, 2019) (“Regulation Best
Interest Adopting Release”). At the same time, the Commission adopted Exchange Act Rule 17a14 (CFR 240.17a-14) and Form CRS (17 CFR 249.640) under the Exchange Act. In connection
with these rulemakings, the Commission amended Rule 17a-4 by revising paragraph (e)(5) and
adding paragraph (e)(10).
21

The Commission believes the following records will likely need to be retained by broker-dealers
under Rule 17a-4(e)(5): (1) existing account disclosure documents; (2) comprehensive fee
schedules; (3) disclosures identifying material conflicts; and (4) memorialized oral disclosures
under the circumstances outlined in Section II.C.1 of the Regulation Best Interest Adopting
Release, Oral Disclosure or Disclosure After a Recommendation.

22

This estimate is based on the following calculation: 2,766 broker-dealers x 1,639.00009 hours
per broker-dealer = 4,533,476 burden hours for all broker-dealers.

23

This estimate is based on the following calculation: (102 million retail customer accounts)/(2766
broker-dealers) = 36,876 retail customer accounts per broker-dealer.

24

This estimate is based on the following calculation: (4 documents per customer account) x (102
million retail customer accounts) x (2 minutes per document) / 60 minutes = 13,600,000
aggregate burden hours.

25

This estimate is based on the following calculation: (2,766 broker-dealers) x 1,622.555 hours per
broker-dealer) = 4,489,218 burden hours for all broker-dealers.

9
of 277 hours on an annual basis. 26 This estimate results in a total annual estimated
recordkeeping burden for Form CRS records for all BDs of 277 hours.
The estimated burdens associated with Rule 17a-4 are summarized in the following table:
Summary of Hourly Burdens
Name of
Information
Collection
Rule 17a-4

Type of Burden
Recordkeeping

Rule 17a-4(b)(11)
Rule 17a-4(e)(5) Initial One-Time
Rule 17a-4(e)(5) Ongoing
Rule 17a-4(e)(10)

Number of
Respondents
3,764

Annual
Responses per
Respondent
1

Hourly
Burden per
Response
254

Annual
Burden Per
Entity
254

Annual Burden
for all
Respondents
956,056

Recordkeeping

200

1

3

3

600

Recordkeeping

2,766

244,627

0.0067

1639.0009 27

4,533,476

Recordkeeping

2,766

147,505

0.011

1622.555

4,487,987

Recordkeeping

2,766

1

0.1

0.1

277

TOTAL

9,979,627

The Commission believes that requirements resulting from Rule 17a-4 would be
performed by individuals in a broker-dealer’s compliance department. A Compliance Clerk
earns an average of $70 per hour, 28 resulting in a total internal cost of compliance of
approximately $699 million ((956,056 x $70) + (600 x $70) + (4,533,476 x $70) + (4,489,218 x
$70) + (277 x $70)).
PARTIAL REVISION: New Burdens Associated with Amendments to Rule 17a-3 Related
to Security-Based Swap Activities
The following section describes the revised and newly added burdens associated with
amendments to Rule 17a-4 adopted in September 2019.
Telephonic Communications: The Commission amended paragraph (b)(4) of Rule 17a4 to require broker-dealer SBSDs and broker-dealer MSBSPs to retain telephone calls that have
already been recorded and are related to the broker-dealer SBSD’s and broker-dealer MSBSP’s
security-based swap business. 29 Paragraph (b)(4) of Rule 17a-4, as amended, only requires the
retention of telephonic recordings the broker-dealer SBSD or broker-dealer MSBSP voluntarily
chooses to record, so the Commission’s burden estimate does not include the cost of recording
26

2,766 broker-dealers x 0.1 hours = 277 hours in aggregate.

27

This estimate is based on the following calculation: (4 documents per customer account) x (102
million retail customer accounts) x (2 minutes per document) / 60 minutes = 13,600,000
aggregate burden hours. (13,600,000/2766 broker-dealers) / 3 = 1,639 hours per year.

28

This figure is based on SIFMA’s Office Salaries in the Securities Industry 2013, modified by
Commission staff to account for inflation and an 1,800-hour work-year multiplied by 2.93 to
account for bonuses, firm size, employee benefits, and overhead.

29

See paragraph (b)(4) of Rule 17a-4, as amended.

10
phone calls. Therefore, the burden imposed by the amendment is to provide adequate physical
space and computer hardware and software for storage. The Commission estimates that the
amendment to paragraph (b)(4) of Rule 17a-4 imposes an initial burden of 13 hours per firm in
the first year and an ongoing burden of 6 hours per year (including the first year). The
Commission estimates that there are 17 respondents, 30 resulting in an estimated industry-wide
initial burden of 221 hours 31 in the first year and an ongoing burden of 102 hours per year
(including the first year). 32 Over a three year period, the total industry burden is estimated to be
527 hours, 33 or 176 hours per year when annualized. 34
Security-Based Swap Activities: The Commission is amending paragraphs (b)(1), and
(b)(8)(v)-(viii), and adding paragraphs (b)(8)(xvi) and (b)(14) of Rule 17a-4 that add five types
of records to be preserved by broker-dealers. 35 Because the burden to create these records is
already accounted for in the Paperwork Reduction Act (“PRA”) estimates for Rule 17a-3, Rule
15c3-1, or in Regulation SBSR, the burdens imposed by these new requirements are to ensure
there is adequate physical space and computer hardware and software for storage, ensure these
records are preserved for the requisite time period, and produce them when requested. The
Commission estimates that these amendments to Rule 17a-4 impose an initial burden of 65 hours
per firm in the first year and an ongoing burden of 30 hours per year (including the first year).
The Commission estimates that there are 42 respondents, 36 resulting in an estimated industrywide initial burden of 2,730 hours 37 in the first year and an ongoing burden of 1,260 hours per
year (including the first year). 38 Over a three year period, the total industry burden is estimated
to be 6,510 hours, 39 or 2,170 hours per year when annualized. 40

30

16 broker-dealer SBSDs + 1 broker-dealer MSBSP = 17 respondents.

31

13 hours x 17 broker-dealer SBSDs and broker-dealer MSBSPs = 221 hours.

32

6 hours x 17 broker-dealer SBSDs and broker-dealer MSBSPs = 102 hours.

33

(221 hours in first year + 102 hours in first year) + 102 hours in second year + 102 hours in third year = 527
hours.

34

527 hours / 3 years = 175.67 hours per year or 10.33 hours per respondent per year.

35

See Rule 17a-4, as amended (paragraph (b)(1) (cross-referencing paragraphs (a)(26) (compliance with
possession or control requirements) and (a)(27) (records of reserve computations under Rule 15c3-3(p)(3))
of Rule 17a-3, as amended; paragraph (b)(8)(v) through (viii) (identifying information about swaps);
paragraph (b)(8)(xvi) (risk margin calculation); and paragraph (b)(14) (Regulation SBSR information)).

36

16 broker-dealer SBSDs + 1 broker-dealer MSBSP + 25 non-SBSD/MSBSP broker-dealers engaged in
security-based swap activities = 42 respondents.

37

65 hours x 42 respondents = 2,730 hours.

38

30 hours x 42 respondents = 1,260 hours.

39

(2,730 hours in first year + 1,260 hours in first year) + 1,260 hours in second year + 1,260 hours in third
year = 6,510 hours.

40

6,510 hours / 3 years = 2,170 hours per year or 51.67 hours per respondent per year.

11

Broker-Dealer SBSDs and Broker-Dealer MSBSPs: The Commission is amending
paragraph (b)(1) and adopting paragraphs (b)(15) and (b)(16) of Rule 17a-4 to add five types of
records to be preserved by broker-dealer SBSDs and broker-dealer MSBSPs. 41 Because the
burden to create these records is accounted for in the PRA estimates for Rule 17a-3, or Rules
15Fh-1 through 15Fh-5 and 15Fk-1, the burdens imposed by these amendments are to ensure
there is adequate physical space and computer hardware and software for storage, ensure these
records are preserved for the requisite time period, and produce them when requested. The
Commission estimates that these amendments to Rule 17a-4 impose an initial burden of 65 hours
per firm in the first year and an ongoing burden of 30 hours per year (including the first year).
The Commission estimates that there are 17 respondents, 42 resulting in an estimated industrywide initial burden of 1,105 hours 43 in the first year and an ongoing burden of 510 hours per year
(including the first year). 44 Over a three year period, the total industry burden is estimated to be
2,635 hours, 45 or 878 hours per year when annualized. 46
Broker-Dealer SBSDs Only: The Commission is amending paragraph (b)(1) of Rule
17a-4 that requires records relating to political contributions to be preserved by broker-dealer
SBSDs only. 47 Because the burden to create this record is accounted for in the PRA estimate for
Rule 17a-3, as amended, the burden imposed by this new requirement is to ensure there is
adequate physical space and computer hardware and software for storage, ensure the record is
preserved for the requisite time period, and produce it when requested. The Commission
estimates that this amendment to Rule 17a-4 imposes an initial burden of 13 hours per firm in the
first year and an ongoing burden of 6 hours per year (including the first year). The Commission
estimates that there are 16 broker-dealer SBSDs, resulting in an estimated industry-wide initial
burden of 208 hours 48 in the first year and an ongoing burden of 96 hours per year (including the

41

See Rule 17a-4, as amended (paragraph (b)(1), cross-referencing paragraph (a)(25) of Rule 17a-3, as
amended (Rule 18a-3 calculations); paragraph (b)(1), cross-referencing paragraph (a)(28) of Rule 17a-3, as
amended (unverified transactions); paragraph (b)(1), cross-referencing paragraph (a)(30) of Rule 17a-3, as
amended (compliance with business conduct standards); paragraph (b)(15) (documents and notices related
to the business conduct standards); and paragraph (b)(16) (special entity documents)).

42

16 broker-dealer SBSDs + 1 broker-dealer MSBSP = 17 respondents.

43

65 hours x 17 broker-dealer SBSDs and broker-dealer MSBSPs = 1,105 hours.

44

30 hours x 17 broker-dealer SBSDs and broker-dealer MSBSPs = 510 hours.

45

(1,105 hours in first year + 510 hours in first year) + 510 hours in second year + 510 hours in third year =
2,635 hours.

46

2,635 hours / 3 years = 878.33 hours per year or 51.67 hours per respondent per year.

47

See paragraph (b)(1) of Rule 17a-4, as amended (cross-referencing paragraph (a)(29) of Rule 17a-3, as
amended (political contributions)).

48

13 hours x 16 broker-dealer SBSDs = 208 hours.

12
first year). 49 Over a three year period, the total industry burden is estimated to be 496 hours, 50 or
165.33 hours per year when annualized. 51
The table below summarizes these new estimated burdens:

Summary of Hourly Burdens
A.
Name of Information
Collection

Type of Burden

Number
of
Entities
Impacted

B.

C.

D.

E.

F.

G.

Annual
Responses
per Entity

Initial
Burden
per
Entity
per
Response

Initial
Burden
Annualized
per Entity
per
Response

Ongoing
Burden
per
Entity
per
Response

Annual
Burden
Per
Entity
per
Response

Total
Annual
Burden
Per
Entity

Total Industry Burden

[ D + E]

[F *
B]

[G * A]

[C ÷ 3
years]

Small
Business
Entities
Affected

Telephonic
Communications:
Amendment to
paragraph (b)(4)

Recordkeeping

17

1

13

4.333

6

10.333

10.333

175.61

0

Security-Based
Swap Activities:
Amendments to
paragraphs (b)(1),
(b)(8)(v)-(viii) and
new paragraphs
(b)(8)(xvi) and
(b)(14)

Recordkeeping

42

1

65

21.67

30

51.67

51.67

2,170

0

Broker-Dealer
SBSDs and BrokerDealer MSBSPs:
Amendments to
paragraph (b)(1) and
new paragraphs
(b)(15) and (b)(16)

Recordkeeping

17

1

65

21.67

30

51.67

51.67

878

0

Broker-Dealer
SBSDs Only:
Amendments to
paragraph (b)(1)

Recordkeeping

16

1

13

4.333

6

10.333

10.333

165.33

0

TOTAL HOURLY BURDEN FOR ALL RESPONDENTS

3,388.94

49

6 hours x 16 broker-dealer SBSDs = 96 hours.

50

(208 hours in first year + 96 hours in first year) + 96 hours in second year + 96 hours in third year =
496hours.

51

496 hours / 3 years = 165.33 hours per year or 9.73 hours per respondent per year.

13

The total industry burden associated with the amendments to Rule 17a-4 related to
security-based swap activities is approximately 3,389 hours. 52 When added to the burden of
956,056 currently approved, the estimated burden for Rule 17a-4 is revised to be 959,445 hours.
13.

Costs to Respondents

Currently Approved Costs
Based on conversations with members of the securities industry and the Commission’s
experience in the area, we estimate that the average broker-dealer spends approximately $5,000
each year to store documents required to be retained under Rule 17a-4. Costs include the cost of
physical space, computer hardware and software, etc., which vary widely depending on the size
of the broker-dealer and the type of storage media employed. The Commission estimates that the
annual reporting and recordkeeping cost burden is $18,820,000. This cost is calculated by
the number of active, registered broker-dealers multiplied by the recordkeeping cost for each
respondent (3,764 active, registered broker-dealers x $5,000). This is a recordkeeping cost.
Summary of Cost Burdens
Name of Information Collection
Rule 17a-4 – Document Storage
Costs

Type of Burden
Recordkeeping

Number of
Respondents

Annual Cost Burden
per Respondent

3,764

Annual Burden for all
Respondents

$5,000

$18,820,000

TOTAL

$18,820,000

New Cost Burdens Associated with Amendments to Rule 17a-3 Related to SecurityBased Swap Activities
Telephonic Communications: The Commission estimates that each applicable firm
incurs an ongoing annual cost of approximately $2,000 per firm for server, equipment, and
systems development costs. The Commission estimates that there are 17 respondents, 53 resulting
in an estimated industry-wide ongoing annual cost of $34,000. 54
Security-Based Swap Activities: The Commission estimates that the amendments to
paragraphs (b)(1), (b)(8)(v)-(viii) and new paragraphs (b)(8)(xvi) and (b)(14) of Rule 17a-4
impose an ongoing annual cost of approximately $600 per firm. The Commission estimates that
there are 42 respondents, 55 resulting in an estimated industry-wide ongoing annual cost of
$25,200. 56
52
53

175.61 hours + 2,170 hours + 878 hours + 165.33 hours = 3.388.94 hours.
16 broker-dealer SBSDs + 1 broker-dealer MSBSP = 17 respondents.

54

$2,000 per firm x 17 respondents = $34,000.

55

16 broker-dealer SBSDs + 1 broker-dealer MSBSP + 25 non-SBSD/MSBSP broker-dealers engaged in
security-based swap activities = 42 respondents.

56

$600 per firm x 42 respondents = $25,200.

14

Broker-Dealer SBSDs and Broker-Dealer MSBSPs: The Commission estimates that
the amendments to paragraph (b)(1) and new paragraphs (b)(15) and (b)(16) of Rule 17a-4
impose ongoing annual cost of approximately $600 per firm. The Commission estimates that
there are 17 respondents, 57 resulting in an estimated industry-wide ongoing annual cost of
$10,200. 58
Broker-Dealer SBSDs Only: The Commission estimates that the amendments to
paragraph (b)(1) of Rule 17a-4 impose an ongoing annual cost of approximately $120 per firm.
The Commission estimates that there are 16 broker-dealer SBSDs, resulting in an estimated
industry-wide ongoing annual cost of $1,920.59
The estimated cost burdens associated with the amendments to Rule 17a-4 are
summarized in the table below:
Summary of Cost Burdens
Name of Information Collection

Type of Burden

Number of
Respondents

Annual Cost Burden
per Respondent

Annual Burden for all
Respondents

Telephonic Communications

Recordkeeping

17

$2,000

$34,000

Security-Based Swap Activities

Recordkeeping

42

$600

$25,200

Broker-Dealer SBSDs and
Broker-Dealer MSBSPs

Recordkeeping

17

$600

$10,200

Broker-Dealer SBSDs Only

Recordkeeping

16

$120

$1,920

TOTAL

$71,320

14.

Costs to the Federal Government

The federal government does not incur a cost for this collection of information since it
relates to a recordkeeping burden for the respondents.
15.

Changes in Burden

There were three changes in the estimated burdens from the proposing stage to the
adopting stage. Specifically, certain burdens originally proposed to be estimated as part of the
“Broker-Dealer SBSDs Only” burden category were reallocated to the “Security-Based Swap
Activities” burden category. As a result, the estimated burdens associated with the “BrokerDealer SBSDs Only” category were reduced while the estimated burdens associated with the
“Security-Based Swap Activities” burden category were increased.

57

16 broker-dealer SBSDs + 1 broker-dealer MSBSP = 17 respondents.

58

$600 per firm x 17 respondents = $10,200.

59

$120 per firm x 16 broker-dealer SBSDs = $1,920.

15
With respect to the estimated burdens associated with the “Broker-Dealer SBSDs Only”
burden category, the Commission proposed, but ultimately did not adopt the rule associated with
that burden category. As a result, there are no burdens with respect to that proposed rule, and it
has been removed. The changes in the estimated burdens are summarized in the table below:
Changes in Hourly Burden
Name of Information
Collection
Security-Based Swap
Activities

Broker-Dealer
SBSDs Only

ANC Broker-Dealers

Estimated
Industry Burden
at Adopting
Stage
2,170 per year

Annual Industry
Burden Previously
Reviewed at Proposing
Stage
1,302 hours per year

Change in Burden

165.33 hours per
year

496 hour per year

(330.67)

0

103 hours per year

(103)

868

Reason for Change

The estimated burden
associated with the
“Security-Based Swap
Activities” burden category
was revised up as a result of
reallocating certain burdens
associated with another
category of estimated
burdens (“Broker-Dealer
SBSDs and Broker-Dealer
MSBSPs”) to the “SecurityBased Swap Activities”
Category. (See next line
item in this table.)
The estimated burden
associated with the “BrokerDealer SBSD Only” burden
category was revised down
as a result of reallocating
certain burdens associated
with this category to another
burden category (“SecurityBased Swap Activities”).
This estimated burdens
relates to a provision that
was proposed but was not
adopted as part of the final
rules. As a result, there is no
burden associated with this
provision.

As noted above, the total industry burden associated with the amendments to Rule 17a-4
related to security-based swap activities is approximately 3,389 hours. 60 When added to the
currently approved burden of 956,056 hours, the estimated burden for Rule 17a-4 is revised to be
959,445 hours. This change is summarized in the table below:
Summary of Changes in Burden Hours

60

175.61 hours + 2,170 hours + 878 hours + 165.33 hours = 3.388.94 hours.

16

Rule

Total
Estimated
Annual
Industry
Burden
Associated
after
Amendments
to Rule 17a-

Annual Industry
Burden Currently
Approved

Change in
Burden

Rule 17a-4

959,445

956,056

3,389

Reason for Change in Burden

The estimated burden hours have increased as a result of amendments to Rule 17a4.

Similar to the changes in estimated burdens, there were three changes in the estimated
costs from the proposing stage to the adopting stage. As with the changes in burdens, the
changes in costs originally proposed to be estimated as part of the “Broker-Dealer SBSDs Only”
cost category were reallocated to the “Security-Based Swap Activities” cost category. As a
result, the estimated costs associated with the “Broker-Dealer SBSDs Only” cost category were
reduced while the estimated costs associated with the “Security-Based Swap Activities” cost
category were increased.
Additionally, the estimated costs associated with the “Broker-Dealer SBSDs Only”
burden category, which the Commission proposed but ultimately did not adopt were eliminated
as there are no longer any costs with respect to that proposed rule. The changes in the estimated
costs are summarized in the table below:

Changes in Hourly Cost
Name of Information
Collection

Security-Based Swap
Activities

Broker-Dealer
SBSDs Only

Annual Industry
Cost at the
Adopting Stage

Annual Industry
Cost Previously
Reviewed at
Proposing Stage

Change in Cost

$25,200

$15,120

$10,080

$1,920

$5,760

($3,840)

Reason for Change

The estimated costs associated
with the “Security-Based Swap
Activities” cost category was
revised up as a result of
reallocating certain costs
associated with another category
of estimated costs (“BrokerDealer SBSDs and BrokerDealer MSBSPs”) to the
“Security-Based Swap
Activities” Category. (See next
line item in this table.)
The estimated costs associated
with the “Broker-Dealer SBSD
Only” burden category were
revised down as a result of
reallocating certain costs
associated with this category to
another cost category (“SecurityBased Swap Activities”).

17
$0

ANC Broker-Dealers

$1,200

($1,200)

This estimated cost relates to a
provision that was proposed but
was not adopted as part of the
final rules. As a result, there is
no cost associated with this
provision.

Based on the estimated costs associated with the amendments to Rule 17a-4, the total cost
burden is being revised. When the estimated cost burden of $71,320 associated with the
amendments to Rule 17a-4 is added to the currently approved cost burden of $18,820,000, the
revised estimated cost burden associated with Rule 17a-4 is $18,891,320. This change is
summarized in the table below:
Summary of Changes in Cost Burden

Rule

Total
Estimated
Annual
Industry
Burden
Associated
after
Amendments
to Rule 17a-

Annual Industry
Burden Currently
Approved

Change in
Burden

Rule 17a-4

18,891,320

18,820,000

$71,320

16.

Reason for Change in Burden

The estimated burden hours have increased as a result of amendments to Rule 17a4.

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 involve statistical methods.