    [Federal Register Volume 91, Number 58 (Thursday, March 26, 2026)]
    [Notices]
    [Page 14736]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 2026-05891]

    [[Page 14736]]

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    SECURITIES AND EXCHANGE COMMISSION

    [OMB Control No. 3235-0214]

    Agency Information Collection Activities; Proposed Collection;
    Comment Request; Extension: Rule 17a-7--Exemption of Certain Purchase
    or Sale Transactions Between an Investment Company and Certain
    Affiliated Persons Thereof

    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 (SEC or ``Commission'') is soliciting comments on the
    proposed collection of information under rule 17a-7 [17 CFR 270.17a-
    7].\1\ Rule 17a-7, as subsequently amended on several occasions,
    provides an exemption from section 17(a) of the Act for purchases and
    sales of securities between funds that are affiliated persons \2\
    (``first-tier affiliate'') of a registered investment company
    (``fund'') or an affiliated person of that first-tier affiliate
    (``second-tier affiliate''), or between a fund and a first- or second-
    tier affiliate other than another fund, when the affiliation arises
    solely because of a common investment adviser (or advisers that are
    affiliated persons of each other), director, or officer. The exemption
    is subject to conditions intended to eliminate the likelihood of
    overreaching. The rule permits funds and other companies under common
    management to trade securities with each other and thus to avoid
    brokerage commissions.\3\ The rule also limits the prices at which
    purchase and sale transactions may occur, to prevent inequitable
    pricing practices that could harm a participating fund.\4\
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        \1\ See Exemption of Certain Purchase or Sale Transactions
    Between Affiliated Registered Investment Companies; Investment
    Company Act Release No. 4697 (Sept. 8, 1966) [31 FR 12092 (Sept. 16,
    1966)].
        \2\ Under section 2(a)(3) of the Act, ``affiliated person'' of
    another person means:
        ``(A) any person directly or indirectly owning, controlling, or
    holding with power to vote, 5 per centum or more of the outstanding
    voting securities of such other person; (B) any person 5 per centum
    or more of whose outstanding voting securities are directly or
    indirectly owned, controlled, or held with power to vote, by such
    other person; (C) any person directly or indirectly controlling,
    controlled by, or under common control with, such other person; (D)
    any officer, director, partner, copartner, or employee of such other
    person; (E) if such other person is an investment company, any
    investment adviser thereof or any member of an advisory board
    thereof; and (F) if such other person is an unincorporated
    investment company not having a board of directors, the depositor
    thereof.''
        \3\ See rule 17a-7(d).
        \4\ See rule 17a-7(b).
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        Rule 17a-7(e) requires the board of directors of a fund to make,
    adopt, and approve changes to procedures reasonably designed to ensure
    that the conditions of the rule have been satisfied for purchases and
    sales effected in reliance on the rule. In addition, the rule requires
    that the fund maintain and preserve permanently a written copy of the
    procedures adopted by the board. Under the rule, the board is required
    to determine, at least on a quarterly basis, that all affiliated
    transactions effected during the preceding quarter in reliance on the
    rule were made in compliance with these established procedures. The
    rule requires the fund to maintain written records of this board
    determination and each rule 17a-7 transaction for a period of not less
    than six years.\5\ The Commission's examination staff uses these
    records to evaluate for compliance with the rule. Compliance with rule
    17a-7 is required to obtain or retain benefits.
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        \5\ Rule 17a-7(g) requires the written record of the affiliated
    transaction to include the following information: a description of
    the security purchased or sold, the identity of the person on the
    other side of the transaction, the terms of the purchase or sale
    transaction, and the information or materials upon which the board
    determined that the purchase or sale complied with the procedures
    set by the board.
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        We estimate that approximately 446 funds use rule 17a-7 to make
    cross trades annually.\6\ Based on conversations with fund
    representatives and the Commission's experience with the use of rule
    17a-7, we estimate that the recordkeeping burden of compliance with
    rule 17a-7 is approximately 5 hours per respondent. This time is spent,
    for example, maintaining various records of rule 17a-7 transactions and
    materials connected to the board's determination of compliance.
    Accordingly, we calculate the total estimated annual internal burden of
    complying with rule 17a-7 to be approximately 2,230 hours. We estimate
    the annual external costs to be $1,659,120.
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        \6\ This estimate is based on the average of the number of
    active registrants/trusts as of December 2023, 2024, and 2025 that
    indicated on Form N-CEN filings received through March 15, 2026 that
    at least one of their funds/series rely on rule 17a-7.
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        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.
        Written comments are invited on: (a) whether this proposed
    collection of information is necessary for the proper performance of
    the functions of the SEC, including whether the information will have
    practical utility; (b) the accuracy of the SEC's estimate of the burden
    imposed by the proposed collection of information, including the
    validity of the methodology and the assumptions used; (c) ways to
    enhance the quality, utility, and clarity of the information to be
    collected; and (d) ways to minimize the burden of the collection of
    information on respondents, including through the use of automated,
    electronic collection techniques or other forms of information
    technology.
        Please direct your written comments on this 60-Day Collection
    Notice to Austin Gerig, Director/Chief Data Officer, Securities and
    Exchange Commission, c/o Tanya Ruttenberg via email to
    PaperworkReductionAct@sec.gov by May 26, 2026. There will be a second
    opportunity to comment on this SEC request following the Federal
    Register publishing a 30-Day Submission Notice.

        Dated: March 24, 2026.
    Sherry R. Haywood,
    Assistant Secretary.
    [FR Doc. 2026-05891 Filed 3-25-26; 8:45 am]
    BILLING CODE 8011-01-P