[Federal Register Volume 89, Number 14 (Monday, January 22, 2024)]
[Notices]
[Pages 3960-3961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01125]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-236, OMB Control No. 3235-0222]


Submission for OMB Review; Comment Request; Extension: Rule 17f-1

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 et seq.), 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 17f-1 (17 CFR 270.17f-1) under the Investment Company Act of 
1940 (the ``Act'') (15 U.S.C. 80a) is entitled: ``Custody of Securities 
with Members of National Securities Exchanges.'' Rule 17f-1 provides 
that any registered management investment company (``fund'') that 
wishes to place its assets in the custody of a national securities 
exchange member may do so only under a written contract that must be 
ratified initially and approved annually by a majority of the fund's 
board of directors. The written contract also must contain certain 
specified provisions. In addition, the rule requires an independent 
public accountant to examine the fund's assets in the custody of the 
exchange member at least three times during the fund's fiscal year. The 
rule requires the written contract and the certificate of each 
examination to be transmitted to the Commission. The purpose of the 
rule is to ensure the safekeeping of fund assets.
    Commission staff estimates that each fund makes 1 response and 
spends an average of 3.5 hours annually in complying with the rule's 
requirements. Commission staff estimates that on an annual basis it 
takes: (i) 0.5 hours for the board of directors \1\ to review and 
ratify the custodial contracts; and (ii) 3 hours for the fund's 
controller to assist the fund's independent public auditors in 
verifying the fund's assets. Approximately 8 funds rely on the rule 
annually, with a total of 8 responses.\2\ Thus, the total annual hour 
burden for Rule 17f-1 is approximately 28 hours.\3\
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    \1\ Estimates of the number of hours are based on conversations 
with representatives of mutual funds that comply with the rule; the 
actual number of hours may vary significantly depending on 
individual fund assets; the hour burden for Rule 17f-1 does not 
include preparing the custody contract because that would be part of 
customary and usual business practice.
    \2\ Based on a review of Form N-17f-1 filings over the last 
three years the Commission staff estimates that an average of 8 
funds rely on Rule 17f-1 each year.
    \3\ This estimate is based on the following calculation: (8 
respondents x 3.5 hours = 28 hours); the annual burden for Rule 17f-
1 does not include time spent preparing Form N-17f-1; the burden for 
Form N-17f-1 is included in a separate collection of information.
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    Funds that rely on Rule 17f-1 generally use outside counsel to 
prepare the custodial contract for the board's review and to transmit 
the contract to the Commission. Commission staff estimates the cost of 
outside counsel to perform these tasks for a fund each year is 
$1,130.\4\ Funds also must have an independent public accountant verify 
the fund's assets three times each year and prepare the certificate of 
examination. Commission staff estimates the annual cost for an 
independent public accountant to perform this service is $10,412.\5\ 
Therefore, the total annual cost burden for a fund that relies on Rule 
17f-1 would be approximately $11,542.\6\ As noted above, the staff 
estimates that 8 funds rely on Rule 17f-1 each year, for an estimated 
total annualized cost burden of $92,336.\7\
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    \4\ This estimate is based on the following calculation: (2 
hours of outside counsel time x $565 = $1,130); the staff has 
estimated the average cost of outside counsel at $565 per hour, 
based on information received from funds and their counsel.
    \5\ This estimate is based on information received from fund 
representatives estimating the aggregate annual cost of an 
independent public accountant's periodic verification of assets and 
preparation of the certificate of examination.
    \6\ This estimate is based on the following calculation: $1,130 
+ $10,412 = $11,542.
    \7\ This estimate is based on the following calculation: (8 
funds x $11,542 = $92,336).
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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

[[Page 3961]]

a representative survey or study of the costs of Commission rules. 
Compliance with the collections of information required by Rule 17f-1 
is mandatory for funds that place their assets in the custody of a 
national securities exchange member. Responses 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 control number.
    The public may view background documentation for this information 
collection at the following website: www.reginfo.gov. Find this 
particular information collection by selecting ``Currently under 30-day 
Review--Open for Public Comments'' or by using the search function. 
Written comments and recommendations for the proposed information 
collection should be sent within 30 days of publication of this notice 
by February 21, 2024 to (i) [email protected] 
and (ii) David Bottom, Director/Chief Information Officer, Securities 
and Exchange Commission, c/o John Pezzullo, 100 F Street NE, 
Washington, DC 20549, or by sending an email to: [email protected].

    Dated: January 17, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01125 Filed 1-19-24; 8:45 am]
BILLING CODE 8011-01-P