[Federal Register Volume 64, Number 215 (Monday, November 8, 1999)]
[Notices]
[Pages 60857-60859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29154]


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SECURITIES AND EXCHANGE COMMISSION


Request for Public Comment

    Upon Written Request, Copies Available from: Securities and 
Exchange Commission, Office of Filings and Information Services, 
Washington, D.C. 20549.
    Extension:

Rule 12a-5, Form 26--SEC File No. 270-85, OMB Control No. 3235-0079
Rule 12f-1--SEC File No. 270-139, OMB Control No. 3235-0128
Rule 12f-3--SEC File No. 270-141, OMB Control No. 3235-0249
Rule 15Aj-1, Forms X-15AJ-1 and X-15AJ-2--SEC File No. 270-25, OMB 
Control No. 3235-0044
Rule 15c2-1--SEC File No. 270-418, OMB Control No. 3235-0485

    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'') is soliciting comments on the collections 
of information summarized below. The Commission plans to submit these 
existing collections of information to the Office of Management and 
Budget for extension and approval.
    Rule 12a-5 of the Securities Exchange Act of 1934 (the ``Act'') 
generally makes it unlawful for any security to be traded on a national 
securities exchange unless such security is registered on the exchange 
in accordance with the provisions of the Act and the rules and 
regulations thereunder.
    Rule 12a-5 under the Act and Form 26 were adopted by the Commission 
in 1936 and 1955, respectively, pursuant to Sections 3(a)(12), 10(b), 
and 23(a) of the Act. Subject to certain conditions, Rule 21a-5 affords 
a temporary exemption (generally for up to 120 days) from the 
registration requirements of Section 12(a) of the Act for a new 
security when the holders of a security admitted to trading on a 
national securities exchange obtain the right (by operation of law or 
otherwise) to acquire all or any part of a class of another or 
substitute security of the same or another issuer, or an additional 
amount of the original security. The purpose of the exemption is to 
avoid an interruption of exchange trading to afford time for the issuer 
of the new security to list and register it, or for the exchange to 
apply for unlisted trading privileges.
    Under paragraph (d) of Rule 12a-5, after an exchange has taken 
action to admit any security to trading pursuant to the provisions of 
the Rules, the exchange is required to file with the Commission a 
notification on Form 26. Form 26 provides the Commission with certain 
information regarding a security admitted to trading on an exchange 
pursuant to Rule 12a-5, including: (1) The name of the exchange, (2) 
the name of the issuer, (3) a description of the security, (4) the 
date(s) on which the security was or will be admitted to when-issued 
and/or regular trading, and (5) a brief description of the transaction 
pursuant to which the security was or will be issued.
    The Commission generally oversees the national securities 
exchanges. This mission requires that, under Section 12(a) of the Act 
specifically, the Commission receive notification of any securities 
that are permitted to trade on an exchange pursuant to the temporary 
exemption under Rule 12a-5. Without the Rule and the Form, the 
Commission would be unable fully to implement these statutory 
responsibilities.
    There are currently eight national securities exchanges subject to 
Rule 12a-5. While approximately 40 Forms 26 are filed annually, the 
reporting burdens are not typically spread evenly among the 
exchanges.\1\ For purposes of this analysis of burden, however, the 
staff has assumed that each exchange files an equal number (five) of 
Form 26 notifications. Each notification requires approximately 20 
minutes to complete. Each respondent's compliance burden, then, in a 
given year would be approximately 100 minutes (20 minutes/report  x  5 
reports = 100 minutes), which translates to just over 13 hours in the 
aggregate for all respondents (8 respondents  x  100 minutes/respondent 
= 800 minutes, or 13-\1/3\ hours).
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    \1\ In fact, some exchanges do not file any notifications on 
Form 26 with the Commission in a given year.
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    Based on the most recent available information, the Commission 
staff estimates that the cost to respondents of completing a 
notification on Form 26 is, on average, $15 per response. The staff 
estimates that the total annual related reporting cost per respondent 
is $75 (5 responses/respondent  x  $15 cost/response), for a total 
annual related cost

[[Page 60858]]

to all respondents of $600 ($75 cost/respondent  x  8 respondents).
    Rule 121f-1, originally adopted in 1934 pursuant to Sections 12(f) 
and 23(a) of the Act and as modified in 1995, sets forth the 
information which an exchange must include in an application to 
reinstate its ability to extend unlisted trading privileges to any 
security for which such unlisted trading privileges have been suspended 
by the Commission, pursuant to Section 12(f)(2)(A) of the Act. An 
application must provide the name of the issuer, the title of the 
security, the name of each national securities exchange, if any, on 
which the security is listed or admitted to unlisted trading 
privileges, whether transaction information concerning the security is 
reported in the consolidated transaction reporting system contemplated 
by Rule 11Aa3-1 under the Act, and any other pertinent information. 
Rule 12f-1 further requires a national securities exchange seeking to 
reinstate its ability to extend unlisted trading privileges to a 
security to indicate that it has provided a copy of such application to 
the issuer of the security, as well as to any other national securities 
exchange on which the security is listed or admitted to unlisted 
trading privileges.
    The information required by Rule 12f-1 enables the Commission to 
make the necessary findings under the Act prior to granting 
applications to reinstate unlisted trading privileges. This information 
is also made available to members of the public who may wish to comment 
upon the applications. Without the Rule, the Commission would be unable 
to fulfill these statutory responsibilities.
    There are currently eight national securities exchanges to Rule 
12f-1. The burden of complying with Rule 12f-1 arises when a potential 
respondent seeks to reinstate its ability to extend unlisted trading 
privileges to any security for which unlisted trading privileges have 
been suspended by the Commission, pursuant to Section 12(f)(2)(A) of 
the Act. The staff estimates that each application would require 
approximately one hour to complete. Thus each potential respondent 
would incur on average one burden hour in complying with the Rule.
    The Commission staff estimates that there would be as many as eight 
responses annually and that each respondent's related cost of 
compliance with Rule 12f-1 would be $50, or, the cost of one hour of 
professional work needed to complete the application. The total annual 
related reporting cost for all potential respondents, therefore, is 
$400 (8 responses  x  $50 response).
    Rule 12f-3, which was originally adopted in 1934 pursuant to 
Sections 12(f) and 23(a) of the Act, prescribes the information which 
must be included in applications for and notices of termination of 
suspension of unlisted trading privileges for a security as 
contemplated in Section 12(f)(4) of the Act. An application must 
provide, among other things, the name of the applicant; a brief 
statement of the applicant's interest in the question of termination of 
suspension of such unlisted trading privileges; the title of the 
security; the name of the issuer; certain information regarding the 
size of the class of security and its recent trading history; and a 
statement indicating that the applicant has provided a copy of such 
application to the exchange from which the suspension or termination of 
unlisted trading privileges are sought, and to any other exchange on 
which the security is listed or admitted to unlisted trading 
privileges.
    The information required to be included in applications submitted 
pursuant to Rule 12f-3, is intended to provide the Commission with 
sufficient information to make the necessary findings under the Act to 
terminate or suspend by order the unlisted trading privileges granted a 
security on a national securities exchange. Without the Rule, the 
Commission would be unable to fulfill these statutory responsibilities.
    The burden of complying with Rule 12f-3 arises when a potential 
respondent, having a demonstrable bona fide interest in the question of 
termination or suspension of the unlisted trading privileges of a 
security, determines to seek such termination or suspension. The staff 
estimates that each such application to terminate or suspend unlisted 
trading privileges requires approximately one hour to complete. Thus 
each potential respondent would incur on average one burden hour in 
complying with the Rule.
    The Commission staff estimates that there could be as many as ten 
responses annually and that each respondent's related cost of 
compliance with Rule 12f-3 would be $50, or, the cost of one hour of 
professional work needed to complete the application. The total annual 
related reported cost for all potential respondents, therefore, is $500 
(10 responses  x  $50/response).
    Rule 15Aj-1 implements the requirements of Sections 15A, 17, and 19 
of the Act by requiring every association registered as, or applying 
for registration as, a national securities association or as an 
affiliated securities association to keep its registration statement 
up-to-date by making periodic filings with the Commission on Form X-
15AJ-1 and Form X-15AJ-2.
    Rule 15Aj-1 requires a securities association to promptly notify 
the Commission after the discovery of any inaccuracy in its 
registration statement or in any amendment or supplement thereto by 
filing an amendment to its registration statement on Form X-15AJ-1 
correcting such inaccuracy. The Rule also requires an association to 
promptly notify the Commission of any change which renders no longer 
accurate any information contained or incorporated in its registration 
statement or in any amendment or supplement thereto by filing a current 
supplement on Form X-15AJ-1. Rule 15Aj-1 further requires an 
association to file each year with the Commission an annual 
consolidated supplement on Form X-15AJ-2.
    The information required by Rule 15Aj-1 and Forms X-15AJ-1 and 
X15AJ-2 is intended to enable the Commission to carry out its 
statutorily mandated oversight functions and to assure that registered 
securities associations are in compliance with the Act. This 
information is also made available to members of the public. Without 
the requirements imposed by the Rule, the Commission would be unable to 
fulfill its regulatory responsibilities.
    There is presently only one registered securities association, 
which registered in 1939, subject to the Rule. The burdens associated 
with Rule 15Aj-1 requirements have been borne by only one securities 
association since Rule 15Aj-1 was adopted. Furthermore, the burdens 
associated with Rule 15A-1 vary depending on whether amendments and 
current supplements are filed on Form X-15AJ-1 in addition to an annual 
consolidated supplement filed on Form X-15AJ-2. The Commission staff 
estimates the burden in hours necessary to comply with the Rule by 
filing an amendment or a current supplement on Form X-15AJ-1 to be 
approximately one-half hour, with a related cost of $11, per response. 
The Commission staff estimates the burden in hours necessary to comply 
with the Rule by filing an annual consolidated supplement on Form X-
15AJ-2 to be approximately three hours, with a related cost of $90. 
Therefore, the Commission staff estimates that the total annual related 
reporting cost associated with the Rule to be upwards of $90, assuming 
a minimum filing of an annual consolidated statement on Form X-15AJ-2, 
with additional filings on Form X-15AJ-1 correspondingly increasing 
such reporting cost.

[[Page 60859]]

    Rule 15c2-1 generally prohibits a broker-dealer from using its 
customers' securities as collateral to finance its own transactions. 
Subject to certain exceptions and exemptions, Rule 15c2-1 prohibits a 
broker-dealer from: (1) Commingling under the same lien customer 
securities with other customer securities, without the written consent 
of each customer; (2) commingling under the same lien customer 
securities with non-customer securities (including those of the broker-
dealer) for a loan made to the broker-dealer; and (3) hypothecating 
customer securities for a loan amount which exceeds all customers' 
aggregate indebtedness relating to securities carried in their 
accounts. Under Rule 15c2-1, a broker-dealer must collect information 
necessary to prevent the rehypothecation of customer securities in 
contravention of the Rule, (issue and retain copies of notices to) the 
pledgee of hypothecation of customer securities in accordance with the 
Rule, and collect written consents from customers in accordance with 
the Rule. The collection of information required by the Rule is 
necessary to ensure compliance with the Rule, and to advise customers 
of the Rule's protections. In addition, the collection of information 
is necessary to execute the Commission's mandate under the Act to 
prevent fraudulent, manipulative, and deceptive acts and practices by 
broker-dealers.
    There are approximately 177 respondents (i.e. broker-dealers that 
carry or clear customer accounts that also have bank loans) that must 
comply with the Rule. Each of these approximately 177 respondents make 
an estimated 45 annual responses, for an aggregate total of 7,965 
responses per year. Each response takes approximately 0.5 hours to 
complete. Thus, the total compliance burden per year is 3,983 burden 
hours. The approximate cost per hour is $25 (based on an annual salary 
of $52,000 for clerical labor), resulting in a total compliance cost of 
$99,575 (3,983 hours @ $25 per hour).
    Written comments are invited on: (1) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; (b) the accuracy of the Commission's estimate 
of the burden of the proposed collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and (d) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology. 
Consideration will be given to comments and suggestions submitted in 
writing within 60 days of this publication.
    Direct your written comments to Michael E. Bartell, Associate 
Executive Director, Office of Information Technology, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.

    Dated: November 1, 1999.
Margaret H. McFarland,
Deputy Secretary
[FR Doc. 99-29154 Filed 11-5-99; 8:45 am]
BILLING CODE 8010-01-M