[Federal Register Volume 64, Number 137 (Monday, July 19, 1999)]
[Notices]
[Pages 38697-38698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-18306]


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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-22, SEC File No. 270-202, OMB Control No. 3235-0196
    Rule 17Ab2-1 and Form CA-1, SEC File No. 270-203, OMB Control No. 
3235-0195
    Rule 15c2-5, SEC File No. 270-195, OMB Control No. 3235-0198

    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 a request for extension of the previously approved 
collections of information discussed below.
    Rule 17a-22 under the Securities Exchange Act of 1934 (``Exchange 
Act'') \1\ requires all registered clearing agencies to file with the 
Commission three copies of all materials they issue or make generally 
available to their participants or other entities with whom they have a 
significant relationship. The filings with the Commission must be made 
within ten days after the materials are issued, and when the Commission 
is not the appropriate regulatory agency, the clearing agency must file 
one copy of the material with its appropriate regulatory agency. The 
Commission is responsible for overseeing clearing agencies and uses the 
information filed pursuant to Rule 17a-22 to determine whether a 
clearing agency is implementing procedural or policy changes. The 
information filed aides the Commission in determining whether such 
changes are consistent with the purposes of Section 17A of the Exchange 
Act. Also, the Commission uses the information to determine whether a 
clearing agency has changed its rules without reporting the actual or 
prospective change to the Commission as required under Section 19(b) of 
the Exchange Act.
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    \1\ 15 U.S.C. 78a et seq.
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    The respondents to Rule 17a-22 generally are registered clearing 
agencies.\2\ The frequency of filings made by clearing agencies 
pursuant to Rule 17a-22 varies, but on average there are approximately 
200 filings per year per clearing agency. Because the filings consist 
of materials that have been prepared for widespread distribution, the 
additional cost to the clearing agencies associated with submitting 
copies to the Commission is relatively small. The Commission staff 
estimates that the cost of compliance with Rule 17a-22 to all 
registered clearing agencies is approximately $4,930. This represents 
one dollar per filing in postage, or a total of $3,400. The remaining 
$1,530 (or approximately 31% of the total cost of compliance) is the 
estimated cost of additional printing, envelopes, and other 
administrative expenses. (The estimated total cost per response is 
$1.45 per page representing $1.00 per page in postage plus $0.45 for 
printing, envelopes, and other administrative expenses.)
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    \2\ Respondents include temporarily registered clearing 
agencies. Respondents also may include clearing agencies granted 
exemptions from the registration requirements of Section 17A, 
conditioned upon compliance with Rule 17a-22.
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    Rule 17Ab2-1 and Form CA-1 require clearing agencies to register 
with the Commission and to meet certain requirements with regard to, 
among other things, a clearing agency's organization, capacities, and 
rules. The information is collected from the clearing agency upon the 
initial application for registration on Form CA-1. Thereafter, 
information is collected by amendment to the initial Form CA-1 when 
material changes in circumstances necessitates modification of the 
information previously provided to the Commission.
    The Commission uses the information disclosed on Form CA-1 to (i) 
determine whether an applicant meets the standards for registration set 
forth in Section 17A of the Securities Exchange Act of 1934 (``Exchange 
Act''), (ii) enforce compliance with the Exchange Act's registration 
requirement, and (iii) provide information about specific registered 
clearing agencies for compliance and investigatory purposes. Without 
Rule 17Ab2-1, the Commission could not perform these duties as 
statutorily required.

[[Page 38698]]

    There are currently 15 registered clearing agencies, three clearing 
agencies that have been granted an exemption from registration, and two 
entities with pending applications for an exemption from clearing 
agency registration. The Commission staff estimates that each initial 
Form CA-1 requires approximately 130 hours to complete and submit for 
approval. Hours required for amendments to Form CA-1 that must be 
submitted to the Commission in connection with material changes to the 
initial CA-1 can vary, depending upon the nature and extent of the 
amendment. Since the Commission only receives an average of one 
submission per year, the aggregate annual burden associated with 
compliance with Rule 17Ab2-1 and Form CA-1 is 130 hours. Based upon the 
staff's experience, the average cost to clearing agencies of preparing 
and filing the initial Form CA-1 is estimated to be $16,391.
    Rule 15c2-5 prohibits a broker-dealer from arranging or extending a 
loan to customers, not subject to Regulation T (12 CFR 220), in 
connection with the offer or sale of securities unless, before entering 
the transaction, the broker-dealer: (i) delivers to the customer a 
written statement containing specific information concerning the terms, 
obligations, risks and charges of the loan; (ii) obtains from the 
customer sufficient financial information to determine that the entire 
transaction is suitable for the customer, and (iii) retains on file and 
makes available to the customer a written statement setting forth the 
broker-dealer's basis for determining that the transaction was 
suitable. The collection of information required by the Rule is 
necessary to execute the Commission's mandate under the Exchange Act to 
prevent fraudulent, manipulative, and deceptive acts and practices by 
broker-dealers.
    There are approximately 50 respondents that require an aggregate 
total of 600 hours to comply with the Rule. Each of these approximately 
50 registered broker-dealers makes an estimated 6 annual responses, for 
an aggregate total of 300 responses per year. Each response takes 
approximately 2 hours to complete. Thus, the total compliance burden 
per year is 600 burden hours. The approximate cost per hour is $25.00 
(based on an annual salary of $52,000 for clerical labor), resulting in 
a total compliance cost of $15,000 (600 hours @ $25.00 per hour).
    Although Rule 15c2-5 does not specify a retention period or record 
keeping requirement under the Rule, nevertheless broker-dealers are 
required to preserve the records for a period no less than six years 
pursuant to Rule 17a-4(c). The information required under Rule 15c2-5 
is necessary for broker-dealers to engage in the lending activities 
prescribed in the Rule. Rule 15c2-5 does not assure confidentiality for 
the information retained under the Rule.\3\
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    \3\ The records required by Rule 15c2-5 would be 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 rising 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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    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.
    General Comments regarding the estimated burden hours 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, New Executive Office Building, 
Washington, DC 20503; and (ii) Michael E. Bartell, Associate Executive 
Director, Office of Information Technology, Securities and Exchange 
Commission, 450 5th Street, NW Washington, DC 20549. Comments must be 
submitted to OMB within 30 days of this notice.

    Dated: July 12, 1999.
Margaret H. Mcfarland
Deputy Secretary.
[FR Doc. 99-18306 Filed 7-16-99; 8:45 am]
BILLING CODE 8010-01-M