[Federal Register Volume 90, Number 146 (Friday, August 1, 2025)]
[Notices]
[Pages 36245-36246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-14554]
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SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0413]
Agency Information Collection Activities; Submission for OMB
Review; Comment Request; Extension: Rule 17Ad-16
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'') has submitted to the Office of Management
and Budget (``OMB'') a request for approval of extension of the
previously approved collection of information provided for in Rule
17Ad-16 (17 CFR 240.17Ad-16) under the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.).
Rule 17Ad-16 requires a registered transfer agent to provide
written notice to the appropriate qualified registered securities
depository when assuming or terminating transfer agent services on
behalf of an issuer or when changing its name or address. The
appropriate qualified registered securities depository must deliver
such notices to qualified registered securities depositories, and they
must then deliver such notices to their own participants. In addition,
transfer agents that provide such notices, and qualified registered
securities depositories that receive such notices, shall maintain such
notices for a period of at least two years, with the first six months
in an easily accessible place. This rule addresses the problem of
certificate transfer delays caused by transfer requests that are
directed to the wrong transfer agent or the wrong address.
The Commission published a 60-day notice in the Federal Register
soliciting comments on the existing collection of information provided
for in Rule 17Ad-16.\1\ The Commission received comments regarding the
existing collection of information.\2\
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\1\ Proposed Collection; Comment Request; Extension: Rule 17Ad-
16, 90 FR 11198 (Mar. 4, 2025) (60-Day Notice'').
\2\ See letters from Dale Baker, Vice President, American
Bankers Association (May 5, 2025) (``ABA''); Douglas Hare, Senior
Vice President, UMB Bank, N.A. (May 5, 2025) (``UMB''); and Twyla
Lehto, Executive Vice President, Zions Bancorporation, N.A., (May 5,
2025) (Zions Bank'').
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In the 60-Day Notice, the Commission estimated that transfer agents
submit approximately 16,412 Rule 17Ad-16 notices to appropriate
qualified registered securities depositories; that the average amount
of time necessary to create and submit each notice is approximately 15
minutes per notice; and that, accordingly, the estimated total industry
burden is 4,103 hours per year (.25 hours multiplied by 16,412 notices
filed annually).\3\
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\3\ 318 Respondents x 51.61 Responses/Year x .25 Hours/Response
= 4,103 Hours/Year.
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The Commission further estimated that the internal compliance cost
\4\ to prepare and send a notice is approximately $96 (.25 hours at
$385 per hour), based on hourly compliance cost estimates for an
internal compliance manager's time. These internal cost estimates were
derived from the Securities Industry and Financial Markets
Association's Management & Professional Earnings in the Securities
Industry 2013, as adjusted by Commission staff for inflation and other
factors.\5\ This yielded an industry-wide internal compliance cost
estimate of $1,575,552 (16,412 notices multiplied by $96 per notice).
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\4\ The ``internal compliance cost'' is the annualized cost to
respondents for the hour burdens. The annualized cost to respondents
for the hour burden is included for informational purposes and is
not submitted to OMB for approval.
\5\ Hourly compliance cost estimates were derived from the
Securities Industry and Financial Markets Association'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 multiplied by 5.35 to account for bonuses, firm size,
employee benefits, and overhead.
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One commenter stated that transfer agents submit approximately 20%
more notices than the amount estimated by the Commission because
transfer agents also send notices to securities depositories other than
The Depository Trust Company (``DTC'') (approximately 19,700 instead of
16,412).\6\ However, while transfer agents may send notices to
securities depositories other than DTC, such notices are not within the
scope of the current collection of information. As noted above, Rule
17Ad-16 requires a registered transfer agent to provide written notice
to the appropriate qualified registered securities depository. The
appropriate qualified registered securities depository means the
qualified registered securities depository that the Commission so
designates by order.\7\ To date, DTC is the only appropriate qualified
registered securities depository the Commission has designated.\8\
Thus, Rule 17Ad-16 requires a registered transfer agent to provide
written notice to DTC but does not include in its scope written notices
to other securities depositories. Accordingly, we are not including
these notices in the estimate for Rule 17Ad-16.
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\6\ See ABA at 4.
\7\ 17 CFR 240.17Ad-16(f).
\8\ See Self-Regulatory Organizations; The Depository Trust
Company; Notice of Filing and Order Granting Accelerated Approval of
Proposed Rule Change Concerning Procedures Relating to Rule 17Ad-16
and Order Designating the Depository Trust Company as the Approved
Qualified Registered Securities Depository, Exchange Act Release No.
35378 (Feb. 15, 1995), 60 FR 9875 (Feb. 22, 1995).
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This commenter also stated that, due to ``internal counsel
salaries, compliance infrastructure investments, and routine post-
filing expenses,'' the estimated internal cost of sending notice is
``closer to'' $500 per notice. The commenter stated that the average
internal counsel base salary for transfer agents is approximately
$200,000, resulting in estimated compliance costs ``closer to'' $149
per notice. Moreover, the commenter stated that transfer agents
routinely incur post-notice expenses.\9\ While we recognize that
transfer agents may incur such expenses, we believe such expenses are
outside of the scope of the information collection in Rule 17Ad-16. The
rule concerns the notice creation, delivery, and record requirements
and does not require or otherwise provide for a registered transfer
agent to engage in the post-notice activities or other actions
identified by the commenter. However, we appreciate the information
provided by the commenter regarding the costs of compliance generally.
The Commission originally estimated that the relevant functions would
be completed by an internal compliance manager, at $385 per hour.
However, we now recognize the estimated annualized cost of the hour
burden for Rule 17Ad-16 may be higher than the Commission's initial
estimate and we estimate that notices would be prepared by an attorney,
at $517 per hour.\10\ Accordingly, the Commission is increasing its
estimate of the cost per notice, from $96 per notice to $129.25 per
notice (.25 hours at $517 per hour). This yields an industry-wide
internal compliance cost estimate of $2,121,251 (16,412 notices
multiplied by $129.25 per notice).
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\9\ See ABA at 3.
\10\ Hourly compliance cost estimates were derived from the
Securities Industry and Financial Markets Association's Management &
Professional Earnings in the Securities Industry 2013, modified by
SEC staff to account for inflation and an 1,800-hour work-year, and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead.
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Commenters further requested that the Commission issue guidance:
(i) that Rule 17Ad-16 does not apply at a security's issuance; (ii)
that examination sampling and testing should only be
[[Page 36246]]
performed for a post-issuance change of a transfer agent and 90%
compliance should be considered a ``passing'' score; and (iii) that
Rule 17Ad-16 applies only to securities which are made eligible at
issuance with a recognized depository or, alternatively, does not apply
to privately placed securities unless they are made eligible at
issuance with a recognized depository.\11\ We appreciate the request
for guidance; however, we are not addressing it in this PRA submission
as it relates to an interpretation of the rule and not to the existing
collection of information requirements.
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\11\ See ABA at 2 and 4; see also UMB at 1-2 and Zions Bank at
1-2.
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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.
The public may view and comment on this information collection
request at: https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202502-3235-009 or email comment to
[email protected] within 30 days of the day
after publication of this notice, by September 2, 2025.
Dated: July 29, 2025.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-14554 Filed 7-31-25; 8:45 am]
BILLING CODE 8011-01-P