[Federal Register Volume 87, Number 238 (Tuesday, December 13, 2022)]
[Notices]
[Pages 76221-76222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26961]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-470, OMB Control No. 3235-0529]


Proposed Collection; Comment Request; Extension: Rule 17f-7

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 (44 U.S.C. 3501-3521) (``Paperwork Reduction Act''), the 
Securities and Exchange Commission (the ``Commission'') is soliciting 
comments on the collections of information summarized below. The 
Commission plans to submit these existing collections of information to 
the Office of Management and Budget (``OMB'') for extension and 
approval.
    Rule 17f-7 (17 CFR 270.17f-7) permits a fund under certain 
conditions to maintain its foreign assets with an eligible securities 
depository, which has to meet minimum standards for a depository. The 
fund or its investment adviser generally determines whether the 
depository complies with those requirements based on information 
provided by the fund's primary custodian (a bank that acts as global 
custodian). The depository custody arrangement also must meet certain 
conditions. The fund or its adviser must receive from the primary 
custodian (or its agent) an initial risk analysis of the depository 
arrangements, and the fund's contract with its primary custodian must 
state that the custodian will

[[Page 76222]]

monitor risks and promptly notify the fund or its adviser of material 
changes in risks. The primary custodian and other custodians also are 
required to agree to exercise at least reasonable care, prudence, and 
diligence.
    The collection of information requirements in rule 17f-7 are 
intended to provide workable standards that protect funds from the 
risks of using foreign securities depositories while assigning 
appropriate responsibilities to the fund's primary custodian and 
investment adviser based on their capabilities. The requirement that 
the foreign securities depository meet specified minimum standards is 
intended to ensure that the depository is subject to basic safeguards 
deemed appropriate for all depositories. The requirement that the fund 
or its adviser must receive from the primary custodian (or its agent) 
an initial risk analysis of the depository arrangements, and that the 
fund's contract with its primary custodian must state that the 
custodian will monitor risks and promptly notify the fund or its 
adviser of material changes in risks, is intended to provide essential 
information about custody risks to the fund's investment adviser as 
necessary for it to approve the continued use of the depository. The 
requirement that the primary custodian agree to exercise reasonable 
care is intended to provide assurances that its services and the 
information it provides will meet an appropriate standard of care.
    The staff estimates that each of approximately 1,445 investment 
advisers \1\ will make an average of 8 responses annually under the 
rule to address depository compliance with minimum requirements, any 
indemnification or insurance arrangements, and reviews of risk analyses 
or notifications.\2\ The staff estimates each response will take 6 
hours, requiring a total of approximately 48 hours for each adviser.\3\ 
Thus the total annual burden associated with these requirements of the 
rule is approximately 69,360.\4\
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    \1\ From a review of the Form ADV filings and Form N-CEN 
filings, respectively, as of December 31, 2021 and for filings 
received through August 31, 2022, Commission staff estimated that 
1,445 registered investment advisers managed or sponsored open-end 
registered funds (including exchange-traded funds) and closed-end 
registered funds.
    \2\ 1,445 advisers x 8 responses = 11,560 responses.
    \3\ 8 responses per adviser x 6 hours per response = 48 hours 
per adviser.
    \4\ 1,445 advisers x 48 hours per adviser = 69,360 hours.
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    In addition, based on public filings made with the Commission, we 
estimate that there are approximately 38 global custodians that are 
engaged to perform global custodial services to funds and thus subject 
to the provisions of rule 17f-7.\5\ This estimate is based on 
information that is publicly available on Form N-CEN filings.\6\ The 
staff further estimates that during each year, each of approximately 38 
global custodians will make an average of 4 responses to analyze 
custody risks and provide notice of any material changes to custody 
risk under the rule.\7\ The staff estimates that each response will 
take 260 hours, requiring approximately 1,040 hours annually per global 
custodian.\8\ Thus the total annual burden associated with this 
specific aspect of the rule is approximately 39,520 hours.\9\ The staff 
estimates that the total annual hour burden associated with all 
collection of information requirements of the rule is therefore 108,880 
hours.\10\
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    \5\ We analyzed Form N-CEN filings for registrants as of 
December 31, 2021 and based on these filings, we estimated the 
number of global custodians that have been retained by funds and are 
subject to the provisions of rule 17f-7 to be 38.
    \6\ See Item C.12.a.vii.7 of Form N-CEN.
    \7\ 38 custodians x 4 responses = 152 responses.
    \8\ 260 hours per response x 4 responses per global custodian = 
1,040 hours per global custodian.
    \9\ 38 global custodians x 1,040 hours per global custodian = 
39,520 hours.
    \10\ 69,360 hours + 39,520 hours = 108,880 hours.
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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 and forms. Compliance with the collection of 
information requirements of the rule is necessary to obtain the benefit 
of relying on the rule's permission for funds to maintain their assets 
in foreign custodians. The information provided under rule 17f-7 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.
    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 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 by February 13, 2023.
    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, Acting 
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: December 7, 2022.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-26961 Filed 12-12-22; 8:45 am]
BILLING CODE 8011-01-P