[Federal Register Volume 88, Number 152 (Wednesday, August 9, 2023)]
[Notices]
[Pages 53936-53937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16991]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-495, OMB Control No. 3235-0553]


Proposed Collection; Comment Request; Extension: Rule 19b-7 and 
Form 19b-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 (``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 19b-7 (17 CFR 240.19b-7) 
and Form 19b-7, under the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.) (``Exchange Act''). The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget (``OMB'') for extension and approval.
    The Exchange Act provides a framework for self-regulation under 
which various entities involved in the securities business, including 
national securities exchanges and national securities associations 
(collectively, self-regulatory organizations or ``SROs''), have primary 
responsibility for regulating their members or participants. The role 
of the Commission in this framework is primarily one of oversight; the 
Exchange Act charges the Commission with supervising the SROs and 
assuring that each complies with and advances the policies of the 
Exchange Act.
    The Exchange Act was amended by the Commodity Futures Modernization 
Act of 2000 (``CFMA''). Prior to the CFMA, federal law did not allow 
the trading of futures on individual stocks or on narrow-based stock 
indexes (collectively, ``security futures products''). The CFMA removed 
this restriction and provided that trading in security futures products 
would be regulated jointly by the Commission and the Commodity Futures 
Trading Commission (``CFTC'').
    The Exchange Act requires all SROs to submit to the SEC any 
proposals to amend, add, or delete any of their rules. Certain entities 
(Security Futures Product Exchanges) would be notice-registered 
national securities exchanges only because they trade security futures 
products. Similarly, certain entities (Limited Purpose National 
Securities Associations) would be limited-purpose national securities 
associations only because their members trade security futures 
products. The Exchange Act, as amended by the CFMA, established a 
procedure for Security Futures Product Exchanges and Limited Purpose 
National Securities Associations to provide notice of proposed rule 
changes relating to certain matters.\1\ Rule 19b-7 and Form 19b-7 
implemented this procedure. Effective April 28, 2008, the SEC amended 
Rule 19b-7 and Form 19b-7 to require that Form 19b-7 be submitted 
electronically.\2\
---------------------------------------------------------------------------

    \1\ These matters are higher margin levels, fraud or 
manipulation, recordkeeping, reporting, listing standards, or 
decimal pricing for security futures products; sales practices for 
security futures products for persons who effect transactions in 
security futures products; or rules effectuating the obligation of 
Security Futures Product Exchanges and Limited Purpose National 
Securities Associations to enforce the securities laws. See 15 
U.S.C. 78s(b)(7)(A).
    \2\ See Securities Exchange Act Release No. 57526 (March 19, 
2008), 73 FR 16179 (March 27, 2008).
---------------------------------------------------------------------------

    The collection of information is designed to provide the Commission 
with the information necessary to determine, as required by the 
Exchange Act, whether the proposed rule change is consistent with the 
Exchange Act and the rules thereunder. The information is used to 
determine if the proposed rule change should remain in effect or be 
abrogated.

[[Page 53937]]

    The respondents to the collection of information are SROs. \3\ Two 
respondents file an average total of approximately 2 responses per 
year. Each response takes approximately 12.5 hours to complete and each 
amendment takes approximately 3 hours to complete, which corresponds to 
an estimated annual response burden of 25 hours ((2 rule change 
proposals x 12.5 hours) plus (0 amendments \4\ x 3 hours)). The total 
industry burden for filings is 50 hours.\5\ The average internal cost 
of compliance per response to file a Form 19b-7 is $5,555.\6\ The total 
internal cost of compliance for a respondent is $11,110 per year and 
the total industry internal cost of compliance is $22,220 per year.\7\
---------------------------------------------------------------------------

    \3\ There are currently two Security Futures Product Exchanges 
and one Limited Purpose National Securities Association, the 
National Futures Association. One of the Security Futures Product 
Exchanges, however, is conditionally exempted from filing proposed 
rule changes using Form 19b-7. Therefore, there are currently two 
respondents to Form 19b-7.
    \4\ SEC staff notes that even though no amendments were received 
in the previous three years and that staff does not anticipate the 
receipt of any amendments, calculation of amendments is a separate 
step in the calculation of the PRA burden and it is possible that 
amendments are filed in the future. Therefore, instead of removing 
the calculation altogether, staff has shown the calculation as 
anticipating zero amendments.
    \5\ This estimate is based on 2 respondents x 25 hours per year 
per respondent which equals 50 burden hours for the entire industry.
    \6\ This estimate is based on 11.5 legal hours multiplied by an 
average hourly rate of $462 plus 1 hour of paralegal work multiplied 
by an average hourly rate of $242. The wage data is for an attorney 
and paralegal respectively, from SIFMA's Management & Professional 
Earnings in the Securities Industry 2013, modified by Commission 
staff to account for inflation and an 1,800-hour work-year and then 
multiplied by 5.35 to account for bonuses, firm size, employee 
benefits, and overhead.
    \7\ This estimate is based on 2 responses x $5,555 per response 
equals $11,110 per respondent per year and 2 respondents x $11,110 
equals $22,220 or the total industry cost per year.
---------------------------------------------------------------------------

    In addition to filing its proposed rule changes and any amendments 
thereto with the Commission, a respondent is also required to post each 
of its proposals and any amendments thereto, on its website. This 
process takes approximately 0.5 hours to complete per proposal and 0.5 
hours per amendment. Thus, for approximately 2 responses and no 
amendments,\8\ the total annual reporting burden on a respondent to 
post these on its website is 1 hour and the total industry burden per 
year is 2 hours.\9\ Further, a respondent is required to update its 
rulebook, which it maintains on its website, to reflect the changes 
that it makes in each proposal and any amendment thereto. Thus, for all 
filings that were not withdrawn by a respondent (there were 0 withdrawn 
filings in calendar years 2019-2021) or disapproved by the Commission 
(there were 0 disapproved filings in calendar years 2019-2021), a 
respondent was required to update its online rulebook to reflect the 
effectiveness of 2 filings on average, each of which takes 
approximately 4 hours to complete. Thus, the total annual reporting 
burden for updating an online rulebook is 8 hours and the total 
industry burden is 16 hours.\10\
---------------------------------------------------------------------------

    \8\ See supra note 4.
    \9\ This estimate is based on 2 proposals per year x 0.5 hours 
per filing plus 0 amendments x 0.5 hours.
    \10\ This estimate is based on 2 proposals per year x 4 hours 
which equals 8 hours. As noted, there were 0 withdrawn filings and 0 
disapproved filings. There are 2 respondents x 8 hours per year 
equals a total industry burden of 16 hours.
---------------------------------------------------------------------------

    The total industry burden per year for rule changes, updating and 
posting rule changes and updating the online rulebook is estimated to 
be 68 burden hours.\11\ As described above, the total internal cost of 
compliance for a respondent is estimated to be $11,110 per year and the 
total industry internal cost of compliance is estimated to be $22,220 
per year.\12\ The net change in estimated total aggregate burden hours 
decreased from 102 to 68 (reduction of 34 burden hours). Similarly, 
with respect to the internal dollar cost burden of respondents, the 
total industry internal dollar costs has decreased overall due to one 
less respondent. The total industry internal cost of compliance 
decreased from $30, 300 to $22,220.
---------------------------------------------------------------------------

    \11\ This estimate is the sum of the total industry (2 
respondents) burden hours for rule filings (50 hours), updating and 
posting rule changes (2 hours) and updating rules (16 hours).
    \12\ This estimate is based on 2 responses x $5,555 per response 
equals $11,110 per respondent per year and 2 respondents x $11,110 
equals $22,220 or the total industry cost per year.
---------------------------------------------------------------------------

    Compliance with Rule 19b-7 is mandatory. Information received in 
response to Rule 19b-7 is not kept confidential; the information 
collected is public information.
    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 
estimates 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 by 
October 10, 2023.
    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.
    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 3, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-16991 Filed 8-8-23; 8:45 am]
BILLING CODE 8011-01-P