[Federal Register Volume 61, Number 249 (Thursday, December 26, 1996)]
[Notices]
[Pages 68072-68073]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32718]
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SECURITIES AND EXCHANGE COMMISSION
Submission for OMB Review; Comment Request
Proposed Amendments
Rule 2a-7, SEC File No. 270-258, OMB Control No. 3235-0268
Rule 34b-1, SEC File No. 270-305, OMB Control No. 3235-0346
Regulation C, SEC File No. 270-68, OMB Control No. 3235-0074
Form N-1A, SEC File No. 270-21, OMB Control No. 3235-0307
Form N-3, SEC File No. 270-281, OMB Control No. 3235-0316
Form N-4, SEC File No. 270-282, OMB Control No. 3235-0318
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Filings and Information Services, Washington,
D.C. 20549
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 (``Commission'') has submitted to the Office of Management
and Budget requests for approval of proposed amendments on previously
approved collections of information:
Proposed Technical Amendments to Rule 2a-7
Rule 2a-7 [17 CFR 270.2a-7] under the Investment Company Act of
1940 (15 U.S.C. 80a-1, et seq.) (``1940 Act''), governs money market
funds. The rule exempts money market funds from the valuation
requirements of the 1940 Act, and, subject to certain risk-limiting
conditions, permits money market funds to use the ``amortized cost
method'' of asset valuation or the ``penny rounding method'' of share
pricing. On March 21, 1996, the Commission adopted amendments to rule
2a-7 (Investment Company Act Rel. No. 21837 (Mar. 21, 1996)) (``March
Amendments''). The proposed technical amendments to rule 2a-7 would
clarify the application of the March Amendments, revise terminology
used in the rule to reflect common market usage and codify a number of
interpretive positions taken by the staff of the Division of Investment
Management.
Rule 2a-7 imposes certain recordkeeping and reporting obligations
upon money market funds.\1\ Because the proposed technical amendments
to rule 2a-7 would clarify existing recordkeeping obligations, it is
estimated that the amendments would have no effect on the annual
reporting burden of money market funds. It is estimated that
approximately 1,345 money market funds are subject to the rule each
year. It is further estimated that compliance with the rule's
recordkeeping and reporting requirements imposes an average annual
burden per money market fund of approximately 146 hours, so that the
total annual burden for all money market funds would be 196,371 hours.
These estimates of burden hours are made solely for purposes of the
Paperwork Reduction Act, and are not derived from a comprehensive or
even a representative survey or study.
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\1\ Rule 2a-7 requires the board of directors of a money market
fund, in supervising the fund's operations and delegating certain
responsibilities to the fund's investment adviser, to establish
written procedures designed to stabilize the fund's net asset value.
These procedures typically address various aspects of the fund's
operations. The fund must maintain and preserve for six years a
written record of the board's considerations and actions taken in
connection with the discharge of its responsibilities, to be
included in the board's minutes. The fund must also maintain and
preserve for three years written records of certain credit risk
analyses, evaluations with respect to securities subject to certain
types of liquidity enhancements and conditional and unconditional
credit enhancements, and determinations with respect to adjustable
rate securities and asset backed securities. If the board takes
action with respect to defaulted securities, events of insolvency,
or deviations in share price, the fund must file with the Commission
an exhibit to Form N-SAR describing the nature and circumstances of
such action. In the event of certain default or insolvency events,
the fund must notify the Commission of the events and the actions
the fund intends to take in response to the situation. As a matter
of sound business practice, the board must develop and maintain
certain additional procedures and records to ensure compliance with
the risk-limiting conditions of rule 2a-7.
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Proposed Amendments to the Sales Literature and Advertising Rules
Applicable to Money Market Funds
Proposed amendments to the sales literature and advertising rules
applicable to money market funds (1) would clarify that income included
in a money market fund's yield calculated in accordance with a uniform
formula is limited to investment income, and (2) would require that
total return used by money market funds in sales literature and
advertisements must be accompanied by a quotation of current yield,
computed in accordance with Commission rules, and set forth with equal
prominence. It is estimated that the proposed amendments would not
result in an increase in the total annual burden for all money market
funds because the majority of money market funds include only
investment income in calculating yield, and do not use total return
based on short periods of time in sales literature and advertisements.
The estimated burden hours appearing below are made solely for the
purposes of the Paperwork Reduction Act and are not derived from a
comprehensive or even representative survey or study of the cost of
Commission rules and forms.
Rule 34b-1 under the 1940 Act governs sales material that
accompanies or follows the delivery of a statutory prospectus (``sales
literature''). It is estimated that there are approximately 287
respondents (including money market funds) that file approximately five
responses annually pursuant to rule 34b-1. The burden from rule 34b-1
requires approximately 2.4 hours per response resulting from the
collection of information.
Regulation C provides standard instructions to guide registrants
filing registration statements under the Securities Act of 1933 (15
U.S.C. 77a, et seq.) (``1933 Act''). Regulation C is assigned one
burden hour for administrative convenience because the rule simply
prescribes the disclosure that must appear in other filings under the
1933 Act.
The 1940 Act requires investment companies to register with the
Commission before they conduct any business in interstate commerce. The
registration statement required under Section 8(b) of the 1940 Act must
contain such information as the Commission has determined to be
necessary or appropriate in the public interest or for the protection
of investors. The various investment company registration forms state
that if a money market fund wishes to
[[Page 68073]]
advertise its yield, it must calculate yield according to a
standardized Commission formula set forth in the forms, and provide a
quotation of yield in its registration statement.\2\ The proposed
amendments to Forms N-1A, N-3 and N-4 would conform the applicable
items on each form to the proposed amendments to rule 34b-1 under the
1940 Act and rule 482 under the 1933 Act. The proposed amendments would
not result in an increase in burden hours.
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\2\ See Item 22(a) of Form N-1A [17 CFR 239.15A and 274.11A];
Item 25(a) of Form N-3 [17 CFR 239.17a and 274.11b]; and Item 21(a)
of Form N-4 [17 CFR 239.17b and 274.11c].
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General comments regarding the estimated burden hours should be
directed to the Desk Officer for the Securities and Exchange Commission
at the address below. Any comments concerning the accuracy of the
estimated average burden hours for compliance with Commission rules and
forms should be directed to Michael E. Bartell, Associate Executive
Director, Office of Information Technology, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 and Desk
Officer for the Securities and Exchange Commission, Office of
Information and Regulatory Affairs, Office of Management and Budget,
Room 3208, New Executive Office Building, Washington, D.C. 20503.
Dated: December 18, 1996.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-32718 Filed 12-24-96; 8:45 am]
BILLING CODE 8010-01-M