[Federal Register Volume 64, Number 75 (Tuesday, April 20, 1999)]
[Notices]
[Pages 19391-19392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9817]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, DC 
20549.

Extension:
    Rule 17a-3, SEC File No. 270-27, OMB Control No. 3235-0035
    Rule 11Ab2-1 and Form SIP, SEC File No. 270-23, OMB Control No. 
3235-0043

    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 (OMB) a request for the extension of the previously approved 
collections of information on the following:
    Rule 17a-13(b) generally requires that at least once each calendar 
quarter, all registered brokers and dealers physically examine and 
count all

[[Page 19392]]

securities held and account for all other securities not in their 
possession, but subject to the broker-dealer's control or direction. 
Any discrepancies between the broker-dealer's securities count and the 
firm's records must be noted and, within seven days, the unaccounted 
for difference must be recorded in the firm's records. Rule 17a-13(c) 
provides that under specified conditions, the securities count, 
examination and verification of the broker-dealer's entire list of 
securities may be conducted on a cyclical basis rather than on a 
certain date. Although Rule 17a-13 does not require filing a report 
with the Commission, the discrepancies must be reported on Form X-17a-5 
as required by Rule 17a-5. Rule 17a-13 exempts broker-dealers that 
limit their business to the sale and redemption of securities of 
registered investment companies and interests or participation in an 
insurance company separate account and those who solicit accounts for 
federally insured savings and loan associations, provided that such 
persons promptly transmit all funds and securities and hold no customer 
funds and securities.
    The information obtained from Rule 17a-13 is used as an inventory 
control device to monitor a broker-dealer's ability to account for all 
securities held, in transfer, in transit, pledged, loaned, borrowed, 
deposited or otherwise subject to the firm's control or direction. 
Discrepancies between the securities counts and the broker-dealer's 
records alert the Commission and the Self Regulatory Organizations 
(SROs) to those firms having problems in their back offices.
    Because of the many variations in the amount of securities that 
broker-dealers are accountable for, it is difficult to develop a 
meaningful figure for the cost of compliance with Rule 17a-13. 
Approximately 92% of all registered broker-dealers are subject to Rule 
17a-13. Accordingly, approximately 7,156 broker-dealers have 
obligations under the Rule, and the average time it would take each 
broker-dealer to comply with the Rule is 100 hours per year, for a 
total estimated annualized burden of 715,600 hours. It should be noted 
that a significant number of firms subject to Rule 17a-13 have minimal 
obligations under the Rule because they do not hold securities. It 
should further be noted that most broker-dealers would engage in the 
activities required by Rule 17a-13 even if they were not required to do 
so.
    Security counts under Rule 17a-13 are mandatory for broker-dealers. 
If a broker-dealer has security discrepancies that must be recorded in 
its records, such records must be preserved for a period of no less 
than three years pursuant to Rule 17a-4(b)(1). Rule 17a-13 does not 
assure confidentiality for security discrepancy records and reports on 
Form X-17a-5.\1\
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    \1\ The records required by Rule 17a-13 are available only to 
the examination of the Commission staff, state securities 
authorities and the SROs. Subject to the provisions of the Freedom 
of Information Act, 5 U.S.C. 522, and the Commission's rules 
thereunder (17 CFR 200.80(b)(4)(iii)), the Commission does not 
generally publish or make available information contained in any 
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.
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    Rule 11Ab2-1 and Form SIP establish the procedures by which a 
Securities Information Processor (SIP) files and amends its SIP 
registration form. The information filed with the Commission pursuant 
to Rule 11Ab2-1 and Form SIP is designed to provide the Commission with 
the information necessary to make the required findings under the 
Securities Exchange Act of 1934 (Act) before granting the SIP's 
application for registration. In addition, the requirement that a SIP 
file an amendment to correct any inaccurate information is designed to 
assure that the Commission has current, accurate information with 
respect to the SIP. This information is also made available to members 
of the public.
    Only exclusive SIP's are required to register with the Commission. 
An exclusive SIP is a SIP that engages on an exclusive basis on behalf 
of any national securities exchange or registered securities 
association, or any national securities exchange or registered 
securities association which engages on an exclusive basis on its own 
behalf, in collecting, processing, or preparing for distribution or 
publication, any information with respect to (i) transactions or 
quotations on or effected or made by means of any facility of such 
exchange or (ii) quotations distributed or published by means of any 
electronic quotation system operated by such association. The federal 
securities laws require that before the Commission may approve the 
registration of an exclusive SIP, it must make certain mandatory 
findings. It takes a SIP applicant approximately 400 hours to prepare 
documents which include sufficient information to enable the Commission 
to make those findings. Currently, there are only two exclusive SIPs 
registered with the Commission; The Securities Information Automation 
Corporation (SIAC) and The Nasdaq Stock Market, Inc. (Nasdaq). SIAC and 
Nasdaq are required to keep the information on file with the Commission 
current, which entails filing a form SIP annually to update 
information. Accordingly, the annual reporting and recordkeeping burden 
for Rule 11Ab2-1 and Form SIP is 400 hours. This annual reporting and 
recordkeeping burden does not include the burden hours or cost of 
amending a Form SIP because the Commission has already overstated the 
compliance burdens by assuming that the Commission will receive one 
initial registration pursuant to Rule 11Ab2-1 on Form SIP a year.
    Rule 11Ab2-1 and Form SIP do not impose a retention period for any 
recordkeeping requirements. Completing and filing Form SIP is mandatory 
before an entity may become an exclusive SIP. Except in cases where 
confidential treatment is requested by an applicant and granted by the 
Commission pursuant to the Freedom of Information Act and the rules of 
the Commission thereunder, information provided in the Form SIP will be 
routinely available for public inspection.
    Please note that an agency may not conduct or sponsor, and a person 
is not required to respond to, a collection of information unless it 
displays a currently valid control number.
    Written Comments regarding the above information should be directed 
to the following persons: (i) Desk Officer for the Securities And 
Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10202, New Executive Office 
Building, Washington, DC 20503; and (ii) Michael E. Bartell, Associate 
Executive Director, Office of Information Technology, Securities and 
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549. 
Comments must be submitted to OMB within 30 days of this notice.

    Dated: April 12, 1999.
Jonathan G. Katz,
Secretary.
[FR Doc. 99-9817 Filed 4-19-99; 8:45 am]
BILLING CODE 8010-01-M