[Federal Register Volume 70, Number 116 (Friday, June 17, 2005)]
[Notices]
[Pages 35315-35316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3116]


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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-13, SEC File No. 270-27, OMB Control No. 3235-0035.

    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 (``OMB'') a request for the extension of the previously 
approved collection of information on the following rule: 17 CFR 
240.17a-13 Quarterly Security Counts to be Made by Certain Exchange 
Members, Brokers, and Dealers.
    Rule 17a-13(b) generally requires that at least once each calendar 
quarter, all registered brokers and dealers physically examine and 
count all securities held and account for all other securities not in 
their possession, but subject to the broker-dealer's control or 
direction. Any discrepancies between the broker-dealer's securities 
count and the firm's records must be noted and, within seven days, the 
unaccounted for difference must be recorded in the firm's records. Rule 
17a-13(c) provides that under specified conditions, the securities 
counts, examination and verification of the broker-dealer's entire list 
of securities may be conducted on a cyclical basis rather than on a 
certain date. Although Rule 17a-13 does not require filing a report 
with the Commission, the discrepancies must be reported on Form X-17a-5 
as required by Rule 17a-5. Rule 17a-13 exempts broker-dealers that 
limit their business to the sale and redemption of securities of 
registered investment companies and interests or participation in an 
insurance company separate account and those who solicit accounts for 
federally insured savings and loan associations, provided that such 
persons promptly transmit all funds and securities and hold no customer 
funds and securities.
    The information obtained from Rule 17a-13 is used as an inventory 
control device to monitor a broker-dealer's ability to account for all 
securities held, in transfer, in transit, pledged, loaned, borrowed, 
deposited or otherwise subject to the firm's control or direction. 
Discrepancies between the securities counts and the broker-dealer's 
records alert the Commission and the Self Regulatory Organizations 
(``SROs'') to those firms having problems in their back offices.
    Currently, there are approximately 5,907 respondents that must 
comply with Rule 17a-13. However, given the variability in their 
businesses, it is difficult to quantify how many hours per year each 
respondent spends on the rule. As noted, the rule requires a respondent 
to account for all securities in its possession. Many respondents hold 
few, if any, securities; while others hold large quantities. Therefore, 
the time burden of complying with the rule will depend on respondent-
specific factors, including size, number of customers, and proprietary 
trading activity. The staff estimates that the average time spent per 
respondent on the rule is 100 hours per year. This estimate takes into 
account the fact that more than half the 5,907 respondents--according 
to financial reports filed with the SEC--may spend little or no time in 
complying with the rule, given that they do not do a public securities 
business or do not hold inventories of securities. For these reasons, 
the staff estimates that the total compliance burden per year is 
590,700 hours (5,907 respondents x 100 hours/respondent). It should be 
noted that most broker-dealers would engage in the activities required 
by Rule 17a-13 even if they were not required to do so.
    Security counts under Rule 17a-13 are mandatory for broker-dealers. 
If a broker-dealer has security discrepancies that must be recorded in 
its records, such records must be preserved for a period of no less 
than three years pursuant to Rule 17a-4(b)(1). Rule 17a-13 does not 
assure confidentiality for security discrepancy records and reports on 
Form X-17a-5.\1\ Please note 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 currently valid control number.
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    \1\ The records required by Rule 17a-13 are 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 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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    Written comments regarding the above information should be directed 
to the following persons: (i) Desk Officer for the Securities and 
Exchange Commission, Office of Information and

[[Page 35316]]

Regulatory Affairs, Office of Management and Budget, Room 10202, New 
Executive Office Building, Washington, DC 20503 or e-mail to [email protected]; and (ii) R. Corey Booth, Director/CIO, Office of 
Information Technology, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549. Comments must be submitted to OMB 
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within 30 days of this notice.

    Dated: June 6, 2005.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-3116 Filed 6-16-05; 8:45 am]
BILLING CODE 8010-01-P