[Federal Register Volume 90, Number 9 (Wednesday, January 15, 2025)]
[Notices]
[Pages 3983-3984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00664]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-489, OMB Control No. 3235-0541]
Submission for OMB Review; Comment Request; Extension: Rule 606
of Regulation NMS
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.) (``PRA''), the Securities and
Exchange Commission (``Commission'') has submitted to the Office of
Management and Budget (``OMB'') a request for approval of extension on
the previously approved
[[Page 3984]]
collection of information provided for in Rule 606 of Regulation NMS
(``Rule 606'') (17 CFR 242.606), under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
Rule 606 (formerly known as Rule 11Ac1-6) requires require
disclosure by broker-dealers of, (1) pursuant to Rule 606(a)(1), a
quarterly aggregated public report on the handling of orders in NMS
stocks that are submitted on a held basis and orders in NMS securities
that are option contracts with a market value less than $50,000; (2)
pursuant to Rule 606(b)(1), a report, upon request of a customer, on
the routing of that customer's orders in NMS stocks that are submitted
on a held basis; orders in NMS stocks that are submitted on a not held
basis and do not qualify for two de minimis exceptions; and orders in
NMS securities that are option contracts, containing certain
information on the broker-dealer's routing of such orders for that
customer for the prior six months; and (3) pursuant to Rule 606(b)(3),
a report, upon request of a customer that places with the broker-
dealer, directly or indirectly, NMS stock orders of any size that are
submitted on a not held basis (subject to two de minimis exceptions),
containing certain information on the broker-dealer's handling of such
orders for that customer for the prior six months.
The Commission estimates that out of the currently 3,399 broker-
dealers that are subject to the collection of information obligations
of Rule 606(a)(1), clearing brokers bear a substantial portion of the
burden of complying with the reporting and recordkeeping requirements
of Rule 606 on behalf of small to mid-sized introducing firms. There
currently are approximately 179 clearing brokers. In addition, there
are approximately 61 introducing brokers that receive funds or
securities from their customers. Because at least some of these firms
also may have greater involvement in determining where customer orders
are routed for execution, they have been included, along with clearing
brokers, in estimating the total burden of Rule 606(a)(1).
As described in more detail, below, the total annual time burden
associated with rule 606 is approximately 183,000 hours per year and
the total annual cost burden is approximately $1,300,000 per year.
The Commission staff estimates that each firm significantly
involved in order routing practices incurs an average burden of 40
hours to prepare and disseminate the quarterly report required by Rule
606(a)(1), or a burden of 160 hours per year. With an estimated 240
broker-dealers significantly involved in order routing practices, the
total industry-wide burden per year to comply with the quarterly
reporting requirement in Rule 606 is estimated to be 38,400 hours (160
x 240). Additionally, for each of the 240 broker-dealers subject to
disclosure requirements of Rule 606(a)(1), the Commission estimates the
annual burden under Rule 606(a)(1)(iv) to monitor payment for order
flow and profit-sharing relationships and potential self-regulatory
organization rule changes that could impact their order routing
decisions and incorporate any new information into their reports to be
10 hours and the annual burden for each broker-dealers to describe and
update any terms of payment for order flow arrangements and profit-
sharing relationships with a Specified Venue that may influence their
order routing decisions to be 15 hours, for a total annual burden of
6,000 hours (25 x 240). Therefore, the estimated total annual burden to
comply with Rule 606(a)(1) is 44,400 hours.
Clearing brokers generally bear the burden of responding to
individual customer requests under Rule 606(b)(1) for order handling
information. The Commission staff estimates that an average clearing
broker incurs an annual burden of 400 hours (2000 responses x 0.2
hours/response) to prepare, disseminate, and retain responses to
customers required by Rule 606. With an estimated 179 clearing brokers
subject to Rule 606(b)(1), the total industry-wide burden per year to
comply with the customer response requirement in Rule 606 is estimated
to be 71,600 hours (179 x 400).
The Commission estimates that approximately 200 broker-dealers are
involved in routing orders subject to the disclosure requirements of
Rule 606(b)(3). The Commission believes that some such broker-dealers
will respond to requests for customer-specific reports in house, while
others will engage a third-party service provider to do so. The
Commission estimates that approximately 135 broker-dealers will respond
in-house to individual customer requests for information on order
handling under Rule 606(b)(3), and that for each, the individual annual
burden will be 400 hours (200 responses x 2 hours/response), with a
total annual burden of 54,000 hours (400 x 135).
The Commission estimates that approximately 65 broker-dealers will
engage a third party to respond to individual customer requests, and
that for each, the individual annual burden will be 200 hours (200
responses x 1 hour/response), with a total annual burden of 13,000
hours (200 x 65). The total annual cost burden associated with engaging
such third parties is approximately $1,300,000 (65 x 200 annual
requests x $100 per request to engage a third-party service provider).
Therefore, the estimated total annual burden to comply with Rule
606(b)(3) is 67,000 hours and $1,300,000.
The public may view and comment on this information collection
request at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202411-3235-001 or send an email comment to
[email protected] within 30 days of the day
after publication of this notice by February 18, 2025.
Dated: January 8, 2025.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-00664 Filed 1-14-25; 8:45 am]
BILLING CODE 8011-01-P