[Federal Register Volume 83, Number 50 (Wednesday, March 14, 2018)]
[Notices]
[Page 11262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05170]
[[Page 11262]]
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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 FOIA Services, 100 F Street NE, Washington, DC
20549-2736
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'') has submitted to the Office of
Management and Budget a request for extension of the previously
approved collection of information discussed below.
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 6 funds rely on the rule
annually, with a total of 6 responses.\2\ Thus, the total annual hour
burden for rule 17f-1 is approximately 21 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 over the last
three years the Commission staff estimates that an average of 4
funds rely on rule 17f-1 each year.
\3\ This estimate is based on the following calculation: (6
respondents x 3.5 hours = 21 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 $8,500.\5\
Therefore, the total annual cost burden for a fund that relies on rule
17f-1 would be approximately $9,300.\6\ As noted above, the staff
estimates that 4 funds rely on rule 17f-1 each year, for an estimated
total annualized cost burden of $55,800.\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 +
$8,500 = $9,300).
\7\ This estimate is based on the following calculation: (6
funds x $9,300 = $55,800).
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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 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 public may view the background documentation for this
information collection at the following website, 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 email to:
[email protected]; and (ii) Pamela Dyson, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 100 F Street NE, Washington, DC 20549 or send an email
to: [email protected]. Comments must be submitted to OMB within 30
days of this notice.
Dated: March 9, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-05170 Filed 3-13-18; 8:45 am]
BILLING CODE 8011-01-P