[Federal Register Volume 89, Number 11 (Wednesday, January 17, 2024)]
[Notices]
[Pages 3003-3004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-00702]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-667, OMB Control No. 3235-0745]


Proposed Collection; Comment Request; Extension: Rule 18a-5

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736


[[Page 3004]]


    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 18a-5, 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 18a-5 enumerates the recordkeeping and reporting requirements 
for security-based swap dealers (``SBSDs'') and major security-based 
swap participants (``MSBSPs''). More specifically, Rule 18a-5 
establishes recordkeeping requirements applicable to stand-alone SBSDs, 
stand-alone MSBSPs, bank SBSDs, and bank MSBSPs. Rule 18a-5 was modeled 
on Rule 17a-3 under the Exchange Act, which applies to broker-dealers, 
but Rule 18a-5 does not include a parallel requirement for every 
requirement in Rule 17a-3 because some of the requirements in Rule 17a-
3 relate to activities that are not expected or permitted of SBSDs and 
MSBSPs. The collections of information under Rule 18a-5 include the 
following types of records that are required to be created: trade 
blotters, general ledger, ledgers for customers and non-customer 
accounts, stock record, memoranda of brokerage orders, memoranda of 
proprietary orders, confirmations, accountholder information, options 
positions, trial balances and computation of net capital, associated 
person's employment application, account equity and margin calculations 
under Rule 18a-3, possession or control requirements for security-based 
swap customers, customer reserve requirements for security-based swap 
customers, unverified transactions, political contributions, and 
compliance with business conduct requirements. The purpose of requiring 
stand-alone SBSDs, stand-alone MSBSPs, bank SBSDs, and bank MSBSPs to 
create the records specified in Rule 18a-5 is to enhance regulators' 
ability to protect investors. These records and the information 
contained therein are used by examiners and other representatives of 
the Commission to determine whether stand-alone SBSDs, stand-alone 
MSBSPs, bank SBSDs, and bank MSBSPs are in compliance with the 
Commission's anti-fraud and anti-manipulation rules, financial 
responsibility program, and other laws, rules, and regulations.
    Not all types of records enumerated in Rule 18a-5 are required to 
be made by each of the entities to which Rule 18a-5 applies. For 
example, Rule 18a-5 requires thirteen types of records to be made and 
kept current by stand-alone SBSDs and stand-alone MSBSPs.\1\ Rule 18a-5 
also requires three types of records to be made and kept current by 
stand-alone SBSDs.\2\ Rule 18a-5 requires 10 types of records to be 
made and kept current by bank SBSDs and bank MSBSPs, all of which are 
limited to the firm's business as an SBSD or MSBSP.\3\ Further, Rule 
18a-5 includes paragraphs (b)(9), (b)(10), and (b)(12) which requires 
bank SBSDs to make and keep current various records for security-based 
swaps.\4\
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    \1\ See Rule 18a-5 (paragraph (a)(1) (trade blotters); paragraph 
(a)(2) (general ledgers); paragraph (a)(3) (ledgers of customer and 
non-customer accounts); paragraph (a)(4) (stock record); paragraph 
(a)(5) (memoranda of proprietary orders); paragraph (a)(6) 
(confirmations); paragraph (a)(7) (accountholder information); 
paragraph (a)(8) (options positions); paragraph (a)(9) (trial 
balances and computation of net capital); paragraph (a)(10) 
(associated person's application); paragraph (a)(12) (Rule 18a-3 
calculations); paragraph (a)(15) (unverified transactions); 
paragraph (a)(17) (compliance with business conduct standards)).
    \2\ See Rule 18a-5 (paragraph (a)(13) (compliance with Rule 18a-
4 possession or control requirements); paragraph (a)(14) (Rule 18a-4 
reserve account computations); and paragraph (a)(16) (political 
contributions)).
    \3\ See Rule 18a-5 (paragraph (b)(1) (trade blotters); paragraph 
(b)(2) (general ledgers); paragraph (b)(3) (stock record); paragraph 
(b)(4) (memoranda of brokerage orders); paragraph (b)(5) (memoranda 
of proprietary orders); paragraph (b)(6) (confirmations); paragraph 
(b)(7) accountholder information); paragraph (b)(8) (associated 
person's application); paragraph (b)(11) (unverified transactions); 
and paragraph (b)(13) (compliance with business conduct 
requirements)).
    \4\ See Rule 18a-5 (paragraph (b)(9) (possession or control 
requirements under Rule 18a-4); paragraph (b)(10) (customer reserve 
requirements under Rule 18a-4); and paragraph (b)(12) (political 
contributions)).
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    As of November 30, 2023, there are 11 stand-alone SBSDs, zero 
stand-alone MSBSPs, 29 bank SBSDs, and zero bank MSBSPs registered with 
the Commission. The Commission estimates that each recordkeeping 
provision of Rule 18a-5 imposes on each firm that is subject to the 
provision an initial burden and an ongoing annual burden. The total 
initial industry hour burden attributable to Rule 18a-5 is estimated to 
be 11,060 hours in the first year and the total industry ongoing hour 
burden attributable to Rule 18a-5 is estimated to be 13,825 hours per 
year (including the first year). Over a three-year period, the total 
estimated industry burden is estimated to be 52,535 hours, or about 
17,511 hours per year when annualized. These burdens are recordkeeping 
burdens.
    In addition, the Commission estimates that Rule 18a-5 causes a 
stand-alone SBSD or stand-alone MSBSP to incur an initial dollar cost 
of approximately $1,000 to purchase recordkeeping system software and 
an ongoing dollar cost of $4,650 per year to provide adequate physical 
space and computer hardware and software for storage. As of November 
30, 2023, there are 11 respondents (11 stand-alone SBSDs and zero 
stand-alone MSBSPs), resulting in an estimated industry-wide initial 
burden of $11,000 and an industry-wide ongoing burden of $51,150 per 
year. Over a three-year period, the total estimated industry burden 
would be $164,450, or about $54,817 per year when annualized.
    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 
March 18, 2024.
    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: January 10, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-00702 Filed 1-16-24; 8:45 am]
BILLING CODE 8011-01-P