[Federal Register Volume 69, Number 182 (Tuesday, September 21, 2004)]
[Notices]
[Pages 56466-56467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2263]


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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 8c-1, SEC File No. 270-455, OMB Control No. 3235-
0514.

    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 approval of the following rule: Rule 8c-1.
    Rule 8c-1 generally prohibits a broker-dealer from using its 
customers' securities as collateral to finance its own trading, 
speculating, or underwriting transactions. More specifically, the rule 
states three main principles: first, that a broker-dealer is prohibited 
from commingling the securities of different customers as collateral 
for a loan without the consent of each customer; second, that a broker-
dealer cannot commingle customers' securities with its own securities 
under the same pledge; and third, that a broker-dealer can only pledge 
its customers' securities to the extent that customers are in debt to 
the broker-dealer. See Securities Exchange Act Release No. 2690 
(November 15, 1940); Securities Exchange Act Release No. 9428 (December 
29, 1971). Pursuant to Rule 8c-1, respondents must collect information 
necessary to prevent the hypothecation of customer accounts in 
contravention of the rule, issue and retain copies of notices to the 
pledgee of hypothecation of customer accounts in accordance with the 
rule, and collect written consents from customers in accordance with 
the rule. The information is necessary to ensure compliance with the 
rule, and to advise customers of the rule's protections.
    There are approximately 163 respondents per year (i.e., broker-
dealers that conducted business with the public, filed Part II of the 
FOCUS Report, did not claim an exemption from the Reserve Formula 
computation, and reported that they had a bank loan during at least one 
quarter of the current

[[Page 56467]]

year) that require an aggregate total of 3,668 hours to comply with the 
rule. Each of these approximately 163 registered broker-dealers makes 
an estimated 45 annual responses, for an aggregate total of 7,335 
responses per year. Each response takes approximately 0.5 hours to 
complete. Thus, the total compliance burden per year is 3,668 burden 
hours. The approximate cost per hour is $22, resulting in a total cost 
of compliance for the respondents of $80,696 (3,668 hours @ $22 per 
hour).
    The retention period for the recordkeeping requirement under Rule 
8c-1 is three years. The recordkeeping requirement under this Rule is 
mandatory to ensure that broker-dealers do not commingle their 
securities or use them to finance the broker-dealers' proprietary 
business. This rule does not involve the collection of confidential 
information. Persons should be aware 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 current valid control number.
    General comments regarding the estimated burden hours should be 
directed to the following persons: (1) Desk Officer for the Securities 
and Exchange Commission by sending an e-mail to [email protected]; and (2) R. Corey Booth, Director/Chief Information 
Officer, 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: September 13, 2004.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-2263 Filed 9-20-04; 8:45 am]
BILLING CODE 8010-01-P