[Federal Register Volume 66, Number 128 (Tuesday, July 3, 2001)]
[Notices]
[Pages 35285-35286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16633]



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SECURITIES AND EXCHANGE COMMISSION

[Extension: Rule 301 and Forms ATS and ATS-R, SEC File No. 270-451, OMB 
Control No. 3235-0509; Rule 302, SEC File No. 270-453, OMB Control No. 
3235-0510; Rule 303, SEC File No. 270-450, OMB Control No. 3235-0505]


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.
    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.
    Regulation ATS provides a regulatory structure that directly 
addresses issues related to alternative trading systems' role in the 
marketplace. Regulation ATS allows alternative trading systems to 
choose between two regulatory structures. Alternative trading systems 
have the choice between registering as broker-dealers and complying 
with Regulation ATS or registering as national securities exchanges. 
Regulation ATS provides the regulatory framework for those alternative 
trading systems that choose to be regulated as broker-dealers.
    Rule 301 of Regulation ATS contains certain notice and reporting 
requirements, as well as additional obligations that only apply to 
alternative trading systems with significant volume. Rule 301 describes 
the conditions with which an alternative trading system must comply to 
be registered as a broker-dealer. Rule 301 requires all alternative 
trading systems that wish to comply with Regulation ATS to file an 
initial operation report on Form ATS. The initial operation report 
requires information regarding operation of the system including the 
method of operation, access criteria and the types of securities 
traded. Alternative trading systems are also required to supply updates 
on Form ATS to the Commission, describing material changes to the 
system, and quarterly transaction reports on Form ATS-R. Alternative 
trading systems are also required to file cessation of operations 
reports on Form ATS.
    Alternative trading systems with significant volume are required to 
comply with requirements for fair access and systems capacity, 
integrity and security. Under Rule 301, such alternative trading 
systems are required to establish standards for granting access to 
trading on its system. In addition, upon a decision to deny or limit an 
investor's access to the system, an alternative trading system is 
required to provide notice to the investor of the denial or limitation 
and their right to an appeal to the Commission. Regulation ATS requires 
alternative trading systems to preserve any records made in the process 
of complying with the systems' capacity, integrity and security 
requirements. In addition, such alternative trading systems are 
required to notify Commission staff of material systems outages and 
significant systems changes.
    The Commission uses the information provided pursuant to Rule 301 
to comprehensively monitor the growth and development of alternative 
trading systems to confirm that investors effecting trades through the 
systems are adequately protected, and that the systems do not impede 
the maintenance of fair and orderly securities markets or otherwise 
operate in a manner that is inconsistent with the federal securities 
laws. In particular, the information collected and reported to the 
Commission by alternative trading systems enables the Commission to 
evaluate the operation of alternative trading systems with regard to 
national market system goals, and monitor the competitive effects of 
these systems to ascertain whether the regulatory framework remains 
appropriate to the operation of such systems. Without the information 
provided on Forms ATS and ATS-R, the Commission would not have readily 
available information on a regular basis in a format that will allow it 
to determine whether such systems have adequate safeguards.
    Respondents consist of alternative trading systems that choose to 
register as broker-dealers and comply with the requirements of 
Regulation ATS. The Commission estimates that there are currently 
approximately 69 respondents.
    An estimated 69 respondents will file an average total of 493 
responses per year, which corresponds to an estimated annual response 
burden of 1,988.5 hours. At an average cost per burden hour of 
approximately $77.07, the resultant total related cost of compliance 
for these respondents is $153,263.14 per year (1,988.5 burden hours 
multiplied by $77.07/hour).
    Rule 302 of Regulation ATS describes the recordkeeping requirements 
for alternative trading systems that are not national securities 
exchanges. Under Rule 302, alternative trading systems are required to 
make a record of subscribers to the alternative trading system, daily 
summaries of trading in the alternative trading system and records of 
order information in the alternative trading system.
    The information required to be collected under Rule 302 should 
increase the abilities of the Commission, state securities regulatory 
authorities, and the SROs to ensure that alternative trading systems 
are in compliance with Regulation ATS as well as other rules and 
regulations of the Commission and the SROs. If the information is not 
collected or collected less frequently, the Commission would be 
severely limited in its ability to comply with its statutory 
obligations, provide for the protection of investors and promote the 
maintenance of fair and orderly markets.
    Respondents consist of alternative trading systems that choose to 
register as broker-dealers and comply with the requirements of 
Regulation ATS. The Commission estimates that there are currently 
approximately 69 respondents.
    Sixty-nine respondents will spend approximately 2,484 hours per 
year to comply with the recordkeeping requirements of Rule 302. At an 
average cost per burden hour of $86.54, the resultant total related 
cost of compliance for these respondents is $214,965.36 per year (2,484 
burden hours multiplied by $86.54/hour).
    Rule 303 of Regulation ATS describes the record preservation 
requirements for alternative trading systems that are not national 
securities exchanges.
    For alternative trading systems that register as broker-dealers, 
comply with Regulation ATS and meet certain volume thresholds, such 
alternative trading systems would be required to preserve all records 
made pursuant to Rule 302, which includes information relating to 
subscribers, trading summaries and order information. Such alternative 
trading systems would also be required to preserve records of any 
notices communicated to subscribers, a copy of the systems' standards 
for granting access and any documents generated in the course of 
complying with the systems' capacity, integrity and security 
requirements under Regulation ATS. Rule 303 also describes how such 
records must be kept and how long they must be preserved.
    The information contained in the records required to be preserved 
by Rule 303 will be used by examiners and other representatives of the 
Commission, state securities regulatory authorities, and the SROs to 
ensure that alternative trading systems are in compliance with

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Regulation ATS as well as other rules and regulations of the Commission 
and the SROs. Without the data required by Rule 303, the Commission 
would be severely limited in its ability to comply with its statutory 
obligations, provide for the protection of investors and promote the 
maintenance of fair and orderly markets.
    Respondents consist of alternative trading systems that choose to 
register as broker-dealers and comply with the requirements of 
Regulation ATS. The Commission estimates that there are currently 
approximately 69 respondents.
    Sixty-nine respondents will spend approximately 276 hours per year 
(69 respondents at 4 burden hours/respondent) to comply with the record 
preservation requirements of Rule 303. At an average cost per burden 
hour of $86.54, the resultant total related cost of compliance for 
these respondents is $23,885.04 per year (276 burden hours multiplied 
by $86.54/hour).
    Compliance with Rules 301, 302, and 303 is mandatory. The 
information required by the Rules 301, 302, and 303 is 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 (``FOIA''), 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.
    Regulation ATS requires alternative trading systems to preserve any 
records, for at least three years, made in the process of complying 
with the systems capacity, integrity and security requirements.
    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 Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, D.C. 20503; and (b) Michael E. Bartell, Associate 
Executive Director, Office of Information Technology, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
Comments must be submitted to the Office of Management and Budget 
within 30 days of this notice.

    Dated: June 26, 2001.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-16633 Filed 7-2-01; 8:45 am]
BILLING CODE 8010-01-M