[Federal Register Volume 83, Number 242 (Tuesday, December 18, 2018)]
[Notices]
[Page 64910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27270]
[[Page 64910]]
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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 15c3-4, SEC File No. 270-441, OMB Control No. 3235-0497
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.) (``PRA''), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget (``OMB'') a request for approval of extension of the
previously approved collection of information provided for in Rule
15c3-4 (17 CFR. 240.15c3-4) (the ``Rule'') under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.).
Rule 15c3-4 requires certain broker-dealers that are registered
with the Commission as OTC derivatives dealers, or who compute their
net capital charges under Appendix E to Rule 15c3-1 (17 CFR 240.15c3-1)
(``ANC firms''), to establish, document, and maintain a system of
internal risk management controls. The Rule sets forth the basic
elements for an OTC derivatives dealer or an ANC firm to consider and
include when establishing, documenting, and reviewing its internal risk
management control system, which are designed to, among other things,
ensure the integrity of an OTC derivatives dealer's or an ANC firm's
risk measurement, monitoring, and management process, to clarify
accountability at the appropriate organizational level, and to define
the permitted scope of the dealer's activities and level of risk. The
Rule also requires that management of an OTC derivatives dealer or an
ANC firm must periodically review, in accordance with written
procedures, the firm's business activities for consistency with its
risk management guidelines.
The staff estimates that the average amount of time a new OTC
derivatives dealer will spend establishing and documenting its risk
management control system is 2,000 hours and that, on average, a
registered OTC derivatives dealer will spend approximately 200 hours
each year to maintain (e.g., reviewing and updating) its risk
management control system.\1\ Currently, three firms are registered
with the Commission as OTC derivatives dealers. The staff estimates
that approximately six additional entities may become registered as OTC
derivatives dealers within the next three years. Thus, the estimated
annualized burden would be 600 hours for the three OTC derivatives
dealers currently registered with the Commission to maintain their risk
management control systems,\2\ 4,000 hours for the six new OTC
derivatives dealers to establish and document their risk management
control systems,\3\ and 1,200 hours for the six new OTC derivatives
dealers to maintain their risk management control systems.\4\
Accordingly, the staff estimates the total annualized burden associated
with Rule 15c3-4 for the six OTC derivatives dealers will be
approximately 5,800 hours annually.
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\1\ This notice does not cover the hour burden associated with
ANC firms, because the hour burden for ANC firms is included in the
Paperwork Reduction Act collection for Rule 15c3-1, which requires
ANC firms to comply with specific provisions of Rule 15c3-4 in
Appendix E to Rule 15c3-1. See 17 CFR 240.15c3-1(a)(7)(iii), 17 CFR
240.15c3-1e(a)(1)(ii), and 17 CFR 240.15c3-1e(a)(1)(viii)(C).
\2\ (200 hours x 3 firms) = 600.
\3\ ((2,000 hours/3 years) x 6 firms) = 4,000.
\4\ (200 hours x 6 firms) = 600.
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The staff believes that the internal cost of complying with Rule
15c3-4 will be approximately $314 per hour.\5\ This per hour cost is
based upon an annual average hourly salary for a compliance manager who
would be responsible for ensuring compliance with the requirements of
Rule 15c3-4. Accordingly, the total annualized internal cost of
compliance for all affected OTC derivatives dealers is estimated to be
$1,821,200.\6\
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\5\ The $314 per hour salary figure for a compliance manager is
from SIFMA's Management & Professional Earnings in the Securities
Industry 2013, modified by Commission staff to account for an 1800-
hour work-year and multiplied by 5.35 to account for bonuses, firm
size, employee benefits and overhead.
\6\ 5,800 hours x $314 per hour = $1,821,200.
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The records required to be made by OTC derivatives dealers pursuant
to the Rule and the results of the periodic reviews conducted under
paragraph (d) of Rule 15c3-4 must be preserved under Rule 17a-4 of the
Exchange Act (17 CFR 240.17a-4) for a period of not less than three
years, the first two years in an easily accessible place. The
Commission will not generally publish or make available to any person
notice or reports received pursuant to the Rule. The statutory basis
for the Commission's refusal to disclose such information to the public
is the exemption contained in section (b)(4) of the Freedom of
Information Act (5 U.S.C. 552), which essentially provides that the
requirement of public dissemination does not apply to commercial or
financial information which is privileged or confidential.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
The public may view 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: (i)
[email protected]; and (ii) Charles Riddle, Acting Director/
Chief Information Officer, Securities and Exchange Commission, c/o
Candace Kenner, 100 F Street NE Washington, DC 20549, or by sending an
email to: [email protected]. Comments must be submitted to OMB within
30 days of this notice.
Dated: December 12, 2018.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27270 Filed 12-17-18; 8:45 am]
BILLING CODE 8011-01-P