[Federal Register Volume 85, Number 1 (Thursday, January 2, 2020)]
[Notices]
[Pages 159-160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28320]


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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 22c-1; SEC File No. 270-793, OMB Control No. 3235-0734

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501-3520), 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 22c-1 (17 CFR 270.22c-1) under the Investment Company Act of 
1940 (15 U.S.C. 80a) (the ``Investment Company Act'' or ``Act'') 
enables a fund to choose to use ``swing pricing'' as a tool to mitigate 
shareholder dilution. Rule 22c-1 is intended to promote investor 
protection by providing funds with an additional tool to mitigate the 
potentially dilutive effects of shareholder purchase or redemption 
activity and a set of operational standards that allow funds to gain 
comfort using swing pricing as a means of mitigating potential 
dilution.
    The respondents to amended rule 22c-1 are open-end management 
investment companies (other than money market funds or exchange-traded 
funds) that engage in swing pricing. Compliance with rule 22c-1(a)(3) 
is mandatory for any fund that chooses to use swing pricing to adjust 
its NAV in reliance on the rule.
    While we are not aware of any funds that have engaged in swing 
pricing,\1\ we are estimating for the purpose of this analysis that 5 
fund complexes have funds that may adopt swing pricing policies and 
procedures in the future pursuant to the rule. We estimate that the 
total burden associated with the preparation and approval of swing 
pricing policies and procedures by those fund complexes that would use 
swing pricing will be 280 hours.\2\ We also estimate that it will cost 
a fund complex $43,406 to document, review and initially approve these 
policies and procedures, for a total cost of $217,030.\3\
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    \1\ No funds have engaged in swing pricing as reported on Form 
N-CEN as of August 14, 2019.
    \2\ This estimate is based on the following calculation: (48 + 2 
+ 6) hours x 5 fund complexes = 280 hours.
    \3\ These estimates are based on the following calculations: 24 
hours x $201 (hourly rate for a senior accountant) = $4,824; 24 
hours x $463 (blended hourly rate for assistant general counsel 
($433) and chief compliance officer ($493)) = $11,112; 2 hours (for 
a fund attorney's time to prepare materials for the board's 
determinations) x $340 (hourly rate for a compliance attorney) = 
$680; 6 hours x $4,465 (hourly rate for a board of 8 directors) = 
$26,790; ($4,824 + $11,112 + $680 + $26,790) = $43,406; $43,406 x 5 
fund complexes = $217,030. The hourly wages used are from SIFMA's 
Management & Professional Earnings in the Securities Industry 2013, 
modified by Commission staff to account for an 1800-hour work-year 
and inflation, and multiplied by 5.35 to account for bonuses, firm 
size, employee benefits, and overhead. The staff previously 
estimated in 2009 that the average cost of board of director time 
was $4,000 per hour for the board as a whole, based on information 
received from funds and their counsel. Adjusting for inflation, the 
staff estimates that the current average cost of board of director 
time is approximately $4,465.
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    Rule 22c-1 requires a fund that uses swing pricing to maintain the 
fund's swing policies and procedures that are in effect, or at any time 
within the past six years were in effect, in an easily accessible 
place.\4\ The rule also requires a fund to retain a written copy of the 
periodic report provided to the board prepared by the swing pricing 
administrator that describes, among other things, the swing pricing 
administrator's review of the adequacy of the fund's swing pricing 
policies and procedures and the effectiveness of their implementation, 
including the impact on mitigating dilution and any back-testing 
performed.\5\ The retention of these records is necessary to allow the 
staff during examinations of funds to determine whether a fund is in 
compliance with its swing pricing policies and procedures and with rule 
22c-1. We estimate a time cost per fund complex of $292.\6\ We estimate 
that the total for recordkeeping related to swing pricing will be 20 
hours, at an aggregate cost of $1,460, for all fund complexes that we 
believe include funds that have adopted swing pricing policies and 
procedures.\7\
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    \4\ See rule 22c-1(a)(3)(iii).
    \5\ See id.
    \6\ This estimate is based on the following calculations: 2 
hours x $58 (hourly rate for a general clerk) = $116; 2 hours x $88 
(hourly rate for a senior computer operator) = $176. $116 + $176 = 
$292.
    \7\ These estimates are based on the following calculations: 4 
hours x 5 fund complexes = 20 hours. 5 fund complexes x $292 = 
$1,460.
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    Amortized over a three-year period, we believe that the hour 
burdens and time costs associated with rule 22c-1, including the burden 
associated with the requirements that funds adopt policies and 
procedures, obtain board approval, and periodic review of an annual 
written report from the swing pricing administrator, and retain certain 
records and written reports related to swing pricing, will result in an 
average aggregate annual burden of 113.3 hours, and average aggregate 
time costs of $73,803.\8\
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    \8\ These estimates are based on the following calculations: 
(280 hours (year 1) + (3 x 20 hours) (years 1, 2 and 3)) / 3 = 113.3 
hours; ($217,030 (year 1) + (3 x $1,460) (years 1, 2 and 3)) / 3 = 
$73,803.
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    These estimates of average costs are made solely for the purposes 
of the

[[Page 160]]

Paperwork Reduction Act. The estimate is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules.
    This collection of information is necessary to obtain a benefit and 
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 OMB 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) 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]. Comments must be submitted to OMB within 30 
days of this notice.

    Dated: December 27, 2019.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019-28320 Filed 12-31-19; 8:45 am]
BILLING CODE 8011-01-P