[Federal Register Volume 84, Number 156 (Tuesday, August 13, 2019)]
[Notices]
[Pages 40112-40113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17236]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-026, OMB Control No. 3235-0033]
Proposed Collection; 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 17a-3
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.) the Securities and Exchange
Commission (``Commission'') is soliciting comments on the existing
collection of information provided for in Rule 17a-3 (17 CFR 240.17a-
3), under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
The Commission plans to submit this existing collection of information
to the Office of Management and Budget (``OMB'') for extension and
approval.
Rule 17a-3 under the Securities Exchange Act of 1934 establishes
minimum standards with respect to business records that broker-dealers
registered with the Commission must make and keep current. These
records are maintained by the broker-dealer (in accordance with a
separate rule), so they can be used by the broker-dealer and reviewed
by Commission examiners, as well as other regulatory authority
examiners, during inspections of the broker-dealer.
The collections of information included in Rule 17a-3 are necessary
to provide Commission, self-regulatory organization (``SRO'') and state
examiners to conduct effective and efficient examinations to determine
whether broker-dealers are complying with relevant laws, rules, and
regulations. If broker-dealers were not required to create these
baseline, standardized records, Commission, SRO and state examiners
could be unable to determine whether broker-dealers are in compliance
with the Commission's antifraud and anti-manipulation rules, financial
responsibility program, and other Commission, SRO, and State laws,
rules, and regulations.
As of December 31, 2018 there were 3,764 broker-dealers registered
with the Commission. The Commission estimates that these broker-dealer
respondents incur a total burden of 2,893,773 hours per year to comply
with Rule 17a-3.\1\
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\1\ On June 5, 2019, the Commission adopted Rule 151-1 under the
Securities Exchange Act of 1934 establishing a standard of conduct
for broker-dealers and natural persons who are associated persons of
a broker-dealer when making a recommendation of any securities. See
Securities Exchange Act Release No. 86031 (Jun. 5, 2019), 84 FR
33318 (Jul. 12, 2019). At the same time, the Commission adopted
Exchange Act Rule 17a-14 (CFR 240.17a-14) and Form CRS (17 CFR
249.640) under the Exchange Act. See Form CRS Relationship Summary;
Amendments to Form ADV Exchange Act Release No. 86032, Advisers Act
Release No. 5247, File No. S7-08-18 (June 5, 2019), 84 FR 33492
(July 12, 2019). As part of new Rule 17a-14 and Form CRS, and
Regulation Best Interest, the Commission amended Rule 17a-3 by
adding new paragraphs (a)(24) and (a)(35). The collections of
information and the related burdens associated with these amendments
have been separately noticed for comment and are currently under
review.
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In addition, Rule 17a-3 contains ongoing operation and maintenance
costs for broker-dealers, including the cost of postage to provide
customers
[[Page 40113]]
with account information, and costs for equipment and systems
development. The Commission estimates that under Rule 17a-3(a)(17),
approximately 45,633,482 customers will need to be provided with
information regarding their account on a yearly basis. The Commission
estimates that the postage costs associated with providing those
customers with copies of their account record information would be
approximately $16,321,719 per year (45,633,482 x $0.35).\2\ The staff
estimates that broker-dealers establishing liquidity, credit, and
market risk management controls pursuant to Rule 17a-3(a)(23) incur
one-time startup costs of $912,000, or $304,000 amortized over a three-
year approval period, to hire outside counsel to review the controls.
The staff further estimates that the ongoing equipment and systems
development costs relating to Rule 17a-3 for the industry would be
about $37,446,686 per year. Consequently, the total cost burden
associated with Rule 17a-3 would be approximately $54,072,405 per year.
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\2\ Estimates of postage costs are derived from past
conversations with industry representatives and have been adjusted
to account for inflation and increases in postage costs.
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Written comments are invited on: (a) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
estimate of the burden of the proposed collection of information; (c)
ways to enhance the quality, utility, and clarity of the information to
be 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.
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.
Please direct your written comments to: Charles Riddle, Acting
Director/Chief Information Officer, Securities and Exchange Commission,
c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or send an
email to: [email protected].
Dated: August 7, 2019.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-17236 Filed 8-12-19; 8:45 am]
BILLING CODE 8011-01-P