[Federal Register Volume 65, Number 14 (Friday, January 21, 2000)]
[Notices]
[Pages 3501-3504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1479]


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SECURITIES AND EXCHANGE COMMISSION


Request Under Review by Office of Management and Budget

    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 15Ajensp;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'') has submitted to the Office of Management 
and Budget requests for extension of the previously approved 
collections of information discussed below.
    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

[[Page 3502]]

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 12a-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 Rule, 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 to all respondents of $600 ($75 cost/ respondent 
x  8 respondents).
    Compliance with Rule 12a-5 is required to obtain the benefit of the 
temporary exemption from registration offered by the Rule. There are no 
recordkeeping requirements associated with Rule 12a-5. Information 
received in response to Rule 12a-5 shall not be kept confidential; the 
information collected is public information.
    Rule 12f-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 subject 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 could 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).
    Compliance with Rule 12f-1 is mandatory. There are no recordkeeping 
requirements associated with Rule 12f-1. Information received in 
response to Rule 12f-1 shall not be kept confidential; the information 
collected is public information.
    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 or 
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

[[Page 3503]]

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 reporting costs for all potential respondents, therefore, is 
$500 (10 responses x 50/response).
    Compliance with the application requirements of Rule 12f-3 is 
mandatory, though the filing of such applications is undertaken 
voluntarily. There are no recordkeeping requirements associated with 
Rule 12f-3. Information received in response to Rule 12f-1 shall not be 
kept confidential; the information collected is public information.
    Rule 12Aj-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 Form X-15AJ-1 and X-
15AJ-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 15Aj-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.
    Compliance with Rule 15Aj-1 is mandatory. Information received in 
response to Rule 15Aj-1 shall not be kept confidential; the information 
collected is public information.
    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 Rule 15c2-1 is 
necessary to ensure compliance with the Rule, and to advice customers 
of the Rule's protections. In addition, the collection of information 
is necessary to execute the Commission's mandate under the Securities 
Exchange of 1934 (``Exchange 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).
    Although Rule 15c2-1 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 then six years 
pursuant to Rule 17a-4(c). The information required under Rule 15c2-1 
is necessary for broker-dealers to hypothecate customer securities in 
compliance with the Rule. Rule 15c2-1 does not assure confidentiality 
for the information retained under the rule.\2\
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    \2\ The records required by Rule 15c2-1 would be available only 
to the examination of the Commission staff, state securities 
authorities and the Self-Regulatory Organizations (SRO's). Subject 
to the provisions of the Freedom of Information Act, 5 U.S.C. 
Sec. 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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    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: (a) Desk Officer for the Securities and 
Exchange Commission, Office of Information and

[[Page 3504]]

Regulatory Affairs, Office of Management and Budget, Room 10102, New 
Executive Office Building, Washington, DC 20503; and (b) Michael E. 
Bartell, Associated Executive Director, Office of Information 
Technology, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549. Comments must be submitted to Office of 
Management and Budget within 30 days of this notice.

    Dated: January 11, 2000.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-1479 Filed 1-20-00; 8:45 am]
BILLING CODE 8010-01-M