[Federal Register Volume 87, Number 170 (Friday, September 2, 2022)]
[Notices]
[Pages 54276-54277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18983]
[[Page 54276]]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-198, OMB Control No. 3235-0279]
Proposed Collection; Comment Request; Extension: Rule 17a-4
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
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 collection of
information provided for in Rule 17a-4 (17 CFR 240.17a-4), 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-4 requires exchange members, brokers, and dealers
(``broker-dealers'') to preserve for prescribed periods of time certain
records required to be made by Rule 17a-3. In addition, Rule 17a-4
requires the preservation of records required to be made by other
Commission rules and other kinds of records which firms make or receive
in the ordinary course of business. These include, but are not limited
to, bank statements, cancelled checks, bills receivable and payable,
originals of communications, and descriptions of various transactions.
Rule 17a-4 also permits broker-dealers to employ, under certain
conditions, electronic storage media to maintain records required to be
maintained under Rules 17a-3 and 17a-4.
There are approximately 3,508 active, registered broker-dealers.
The staff estimates that the average amount of time necessary to
preserve the books and records as required by Rule 17a-4 is 254 hours
per broker-dealer per year. Additionally, the Commission estimates that
paragraph (b)(11) of Rule 17a-4 imposes an annual burden of 3 hours per
year to maintain the requisite records. The Commission estimates that
there are approximately 200 internal broker-dealer systems, resulting
in an annual recordkeeping burden of 600 hours.
The Commission also estimates that there are approximately 2,578
broker-dealers with retail customers resulting in an annual initial
burden of approximately 4,225,342 hours and an annual ongoing burden of
approximately 4,182,947 to comply with Rule 17a-4(e)(5). Moreover the
Commission estimates that these broker-dealers will incur 258 hours in
annual burden to comply with Rule 17a-4(e)(10).
Therefore, the Commission estimates that compliance with Rule 17a-4
requires 9,300,179 hours each year ((3,508 broker-dealers x 254 hours)
+ (200 broker-dealers x 3 hours) + 4,225,342 hours + 4,182,947 hours +
258 hours)). These burdens are recordkeeping burdens. The total burden
hour decrease of 678,217 hours is due to a decrease in the number of
respondents from 3,764 to 3,508.
In addition, the Commission estimates that the telephonic recording
retention provision of paragraph (b)(4) of Rule 17a-4 imposes an
initial burden on broker-dealer SBSDs and broker-dealer MSBSPs of 13
hours per firm in the first year and an ongoing burden of 6 hours per
year (including the first year). Therefore, the Commission estimates
that there are 17 respondents, resulting in an estimated industry-wide
initial burden of 221 hours in the first year and an ongoing burden of
102 hours per year (including the first year) bringing the total
industry burden estimation to 527 hours over a three-year period.
The Commission estimates that the provisions of paragraphs (b)(1),
and (b)(8)(v)-(viii) relating to security-based swap activities and
paragraphs (b)(8)(xvi) and (b)(14) of Rule 17a-4 impose an initial
burden of 65 hours per firm in the first year and an ongoing burden of
30 hours per year (including the first year). The Commission estimates
that there are 42 respondents, resulting in an estimated industry-wide
initial burden of 2,730 hours in the first year and an ongoing burden
of 1,260 hours per year (including the first year) bringing the total
industry burden estimation to 6,510 hours over a three-year period.
The Commission estimates that the provisions of paragraph (b)(1)
applicable to broker-dealer SBSDs and broker-dealer MSBSPs and
paragraphs (b)(15) and (b)(16) of Rule 17a-4 impose an initial burden
of 65 hours per firm in the first year and an ongoing burden of 30
hours per year on broker-dealer SBSDs and broker-dealer MSBSPs
(including the first year). The Commission estimates that there are 17
respondents, resulting in an estimated industry-wide initial burden of
1,105 hours in the first year and an ongoing burden of 510 hours per
year (including the first year) bringing the total industry burden
estimation to 2,635 hours over a three-year period.
The Commission estimates that provisions of paragraph (b)(1) of
Rule 17a-4 that apply only to broker-dealer SBSDs impose an initial
burden of 13 hours per firm in the first year and an ongoing burden of
6 hours per year (including the first year) on broker-dealer SBSDs. The
Commission estimates that there are 16 broker-dealer SBSDs, resulting
in an estimated industry-wide initial burden of 208 hours in the first
year and an ongoing burden of 96 hours per year (including the first
year) bringing the total industry burden estimation to 496 hours over a
three-year period.
The staff believes that compliance personnel would be charged with
ensuring compliance with Commission regulation, including Rule 17a-4.
The staff estimates that the hourly salary of a Compliance Clerk is $78
per hour. Based upon these numbers, the total internal cost of
compliance for 3,508 respondents is the dollar cost of approximately
$749 million ((891,632 yearly hours x $78) + (600 hours x $78) +
(4,225,342 hours x $78) + (4,489,218 hours x $78) + (258 hours x $78)).
Based on conversations with members of the securities industry and
the Commission's experience in the area, the staff estimates that the
average broker-dealer spends approximately $5,000 each year to store
documents required to be retained under Rule 17a-4. Costs include the
cost of physical space, computer hardware and software, etc., which
vary widely depending on the size of the broker-dealer and the type of
storage media employed. The Commission estimates that the annual
reporting and recordkeeping cost burden is $17,540,000. This cost is
calculated by the number of active, registered broker-dealers
multiplied by the reporting and recordkeeping cost for each respondent
(3,508 registered broker-dealers x $5,000).
The Commission estimates that each applicable firm incurs an
ongoing annual cost of approximately $2,000 per firm for server,
equipment, and systems development costs associated with the telephonic
recording retention requirement, which applicable to broker-dealer
SBSDs and broker-dealer MSBSPs. The Commission estimates that there are
17 respondents, resulting in an estimated industry-wide ongoing annual
cost of $34,000 for compliance with the telephonic recording retention
provision of Rule 17a-4(b)(4).
The Commission estimates that provisions of paragraphs (b)(1),
(b)(8)(v)-(viii) relating to security-based swap activities and
paragraphs (b)(8)(xvi) and (b)(14) of Rule 17a-4 impose an ongoing
annual cost of approximately $600 per firm. The Commission estimates
that there are 42
[[Page 54277]]
respondents, resulting in an estimated industry-wide ongoing annual
cost of $25,200.
The Commission estimates that the provisions of paragraph (b)(1)
applicable to broker-dealer SBSDs and broker-dealer MSBSPs and
paragraphs (b)(15) and (b)(16) of Rule 17a-4 impose ongoing annual cost
of approximately $600 per firm. The Commission estimates that there are
17 respondents, resulting in an estimated industry-wide ongoing annual
cost of $10,200.
The Commission estimates that the provisions of paragraph (b)(1) of
Rule 17a-4 that apply only to broker-dealer SBSDs imposes an additional
ongoing annual cost of approximately $120 per firm to broker-dealer
SBSDs. The Commission estimates that there are 16 broker-dealer SBSDs,
resulting in an estimated industry-wide ongoing annual cost of $1,920.
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
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 by November 1, 2022.
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: David Bottom, Director/
Chief Information Officer, Securities and Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington, DC 20549, or send an email to:
[email protected].
Dated: August 29, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-18983 Filed 9-1-22; 8:45 am]
BILLING CODE 8011-01-P