[Federal Register Volume 76, Number 171 (Friday, September 2, 2011)]
[Notices]
[Pages 54813-54814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-22572]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; 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-1, SEC File No. 270-236, OMB Control No. 3235-0222.

    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 (the ``Commission'') is soliciting comments on the 
collections of information summarized below. The Commission plans to 
submit these existing collection of information to the Office of 
Management and Budget for extension and approval.
    Rule 17f-1 (17 CFR 270.17f-1) under the Investment Company Act of 
1940 (the ``Act'') (15 U.S.C. 80a) is entitled: ``Custody of Securities 
with Members of National Securities Exchanges.'' Rule 17f-1 provides 
that any registered management investment company (``fund'') that 
wishes to place its assets in the custody of a national securities 
exchange member may do so only under a written contract that must be 
ratified initially and approved annually by a majority of the fund's 
board of directors. The written contract also must contain certain 
specified provisions. In addition, the rule requires an independent 
public accountant to examine the fund's assets in the custody of the 
exchange member at least three times during the fund's fiscal year. The 
rule requires the written contract and the certificate of each 
examination to be transmitted to the Commission. The purpose of the 
rule is to ensure the safekeeping of fund assets.
    Commission staff estimates that each fund makes 1 response and 
spends an average of 3.5 hours annually in complying with the rule's 
requirements. Commission staff estimates that on an annual basis it 
takes: (i) 0.5 hours for the board of directors \1\ to review and 
ratify the custodial contracts; and (ii) 3 hours for the fund's 
controller to assist the fund's independent public auditors in 
verifying the fund's assets. Approximately 5 funds rely on the rule 
annually, with a total of 5 responses.\2\ Thus, the total annual hour 
burden for rule 17f-1 is approximately 17.5 hours.\3\
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    \1\ Estimates of the number of hours are based on conversations 
with representatives of mutual funds that comply with the rule. The 
actual number of hours may vary significantly depending on 
individual fund assets. The hour burden for rule 17f-1 does not 
include preparing the custody contract because that would be part of 
customary and usual business practice.
    \2\ Based on a review of Form N-17f-1 filings in over the last 
three years, the Commission staff estimates that an average of 5 
funds rely on rule 17f-1 each year.
    \3\ This estimate is based on the following calculation: (5 
respondents x 3.5 hours = 17.5 hours). The annual burden for rule 
17f-1 does not include time spent preparing Form N-17f-1. The burden 
for Form N-17f-1 is included in a separate collection of 
information.
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    Funds that rely on rule 17f-1 generally use outside counsel to 
prepare the custodial contract for the board's review and to transmit 
the contract to the Commission. Commission staff estimates the cost of 
outside counsel to perform these tasks for a fund each year is $800.\4\ 
Funds also must have an independent public accountant verify the fund's 
assets three times each year and prepare the certificate of 
examination. Commission staff estimates the annual cost for an 
independent public accountant to perform this service is $8000.\5\ 
Therefore, the total annual cost burden for a fund that relies on rule 
17f-1 would be approximately $8800.\6\ As noted above, the staff 
estimates that 5 funds rely on rule 17f-1 each year, for an estimated 
total annualized cost burden of $44,000.\7\
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    \4\ This estimate is based on the following calculation: (2 
hours of outside counsel time x $400 = $800). The staff has 
estimated the average cost of outside counsel at $400 per hour, 
based on information received from funds, fund intermediaries, and 
their counsel.
    \5\ This estimate is based on information received from fund 
representatives estimating the aggregate annual cost of an 
independent public accountant's periodic verification of assets and 
preparation of the certificate of examination.
    \6\ This estimate is based on the following calculation: ($800 + 
$8000 = $8800).
    \7\ This estimate is based on the following calculation: (5 
funds x $8800 = $44,000).
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even

[[Page 54814]]

a representative survey or study of the costs of Commission rules. 
Compliance with the collections of information required by rule 17f-1 
is mandatory for funds that place their assets in the custody of a 
national securities exchange member. Responses will not be kept 
confidential. 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.
    The Commission requests written comments on: (a) Whether the 
collections of information are necessary for the proper performance of 
the functions of the Commission, including whether the information has 
practical utility; (b) the accuracy of the Commission's estimate of the 
burdens of the collection of information; (c) ways to enhance the 
quality, utility, and clarity of the information collected; and (d) 
ways to minimize the burden of the collection of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology. Consideration will 
be given to comments and suggestions submitted in writing within 60 
days of this publication.
    Please direct your written comments to 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].

     Dated: August 29, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-22572 Filed 9-1-11; 8:45 am]
BILLING CODE 8011-01-P