[Federal Register Volume 76, Number 96 (Wednesday, May 18, 2011)]
[Notices]
[Page 28823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-12205]


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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 Investor Education and Advocacy, Washington, DC 
20549-0213.

Extension:
    Rule 17f-7; SEC File No. 270-470; OMB Control No. 3235-0529.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange 
Commission (``Commission'') has submitted to the Office of Management 
and Budget (``OMB'') requests for extension of the previously approved 
collections of information discussed below.
    Rule 17f-7 (17 CFR 270.17f-7) permits funds to maintain their 
assets in foreign securities depositories based on conditions that 
reflect the operations and role of these depositories.\1\ Rule 17f-7 
contains some ``collection of information'' requirements. An eligible 
securities depository has to meet minimum standards for a depository. 
The fund or its investment adviser generally determines whether the 
depository complies with those requirements based on information 
provided by the fund's primary custodian (a bank that acts as global 
custodian). The depository custody arrangement has to meet certain risk 
limiting requirements. The fund can obtain indemnification or insurance 
arrangements that adequately protect the fund against custody risks. 
The fund or its investment adviser generally determines whether 
indemnification or insurance provisions are adequate. If the fund does 
not rely on indemnification or insurance, the fund's contract with its 
primary custodian is required to state that the custodian will provide 
to the fund or its investment adviser a custody risk analysis of each 
depository, monitor risks on a continuous basis, and promptly notify 
the fund or its adviser of material changes in risks. The primary 
custodian and other custodians also are required to agree to exercise 
reasonable care.
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    \1\ Custody of Investment Company Assets Outside the United 
States, Investment Company Act Release No. IC-23815 (April 29, 1999) 
(64 FR 24489 (May 6, 1999)).
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    The collection of information requirements in rule 17f-7 are 
intended to provide workable standards that protect funds from the 
risks of using securities depositories while assigning appropriate 
responsibilities to the fund's primary custodian and investment adviser 
based on their capabilities. The requirement that the depository meet 
specified minimum standards is intended to ensure that the depository 
is subject to basic safeguards deemed appropriate for all depositories. 
The requirement that the custody contract state that the fund's primary 
custodian will provide an analysis of the custody risks of depository 
arrangements, monitor the risks, and report on material changes is 
intended to provide essential information about custody risks to the 
fund's investment adviser as necessary for it to approve the continued 
use of the depository. The requirement that the primary custodian agree 
to exercise reasonable care is intended to provide assurances that its 
services and the information it provides will meet an appropriate 
standard of care. The alternative requirement that the funds obtain 
adequate indemnification or insurance against the custody risks of 
depository arrangements is intended to provide another, potentially 
less burdensome means to protect assets held in depository 
arrangements.
    The staff estimates that each of approximately 836 investment 
advisers \2\ will make an average of 8 responses annually under the 
rule to address depository compliance with minimum requirements, any 
indemnification or insurance arrangements, and reviews of risk analyses 
or notifications. The staff estimates each response will take 6 hours, 
requiring a total of approximately 48 hours for each adviser. The total 
annual burden associated with these requirements of the rule will be 
approximately 40,128 hours (836 advisers x 48 hours per adviser). The 
staff further estimates that during each year, each of approximately 15 
global custodians will make an average of 4 responses to analyze 
custody risks and provide notice of any material changes to custody 
risk under the rule. The staff estimates that each response will take 
260 hours, requiring approximately 1040 hours annually per 
custodian.\3\ The total annual burden associated with these 
requirements is approximately 15,600 hours (15 custodians x 1040 
hours). Therefore, the staff estimates that the total annual time 
burden associated with all collection of information requirements of 
the rule is 55,728 hours (40,128 + 15,600). The total annual cost of 
the burden is estimated to be $14,948,736 (40,128 x $287 for a 
portfolio manager, plus 15,600 hours x $220/hour for a trust 
administrator's time).\4\ The estimate of average time burden is made 
solely for the purposes of the Paperwork Reduction Act. The estimate is 
not derived from a comprehensive or even a representative survey or 
study of the costs of Commission rules and forms. Compliance with the 
collection of information requirements of the rule is necessary to 
obtain the benefit of relying on the rule's permission for funds to 
maintain their assets in foreign custodians.
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    \2\ At the start of 2011, 836 investment advisers managed or 
sponsored open-end (including ETFs) portfolios and closed-end 
registered funds.
    \3\ These estimates are based on conversations with 
representatives of the fund industry.
    \4\ The salaries for a portfolio manager and a trust 
administrator are from SIFMA's Management & Professional Earnings in 
the Securities Industry 2010, modified to account for an 1800-hour 
work-year and multiplied by 5.35 to account for bonuses, firm size, 
employee benefits and overhead.
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    The public may view the background documentation for this 
information collection at the following Web site, http://www.reginfo.gov. Comments should be directed to: (i) 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, DC 20503, or by sending an e-
mail to: [email protected]; and (ii) Thomas Bayer, Director/
Chief Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312 or send an 
e-mail to: [email protected]. Comments must be submitted to OMB 
within 30 days of this notice.

    Dated: May 13, 2011.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-12205 Filed 5-17-11; 8:45 am]
BILLING CODE 8011-01-P