74 FR 204 pgs. 54864-54865 - Proposed Collection; Comment Request
Type: NOTICEVolume: 74Number: 204Pages: 54864 - 54865
FR document: [FR Doc. E9-25486 Filed 10-22-09; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549-0213.
Extension:
Rule 17i-6; SEC File No. 270-532; OMB Control No. 3235-0588.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 19951the Securities and Exchange Commission ("Commission") has submitted to the Office of Management and Budget requests for extension of the previously approved collections of information discussed below. The Code of Federal Regulations citation to this collection of information is the following: 17 CFR 240.17i-6.
Footnotes:
1 44 U.S.C. 3501 et seq .
Section 231 of the Gramm-Leach-Bliley Act of 19992(the "GLBA") amended Section 17 of the Securities Exchange Act of 1934 to create a regulatory framework under which a holding company of a broker-dealer ("investment bank holding company" or "IBHC") may voluntarily be supervised by the Commission as a supervised investment bank holding company (or "SIBHC").3In 2004, the Commission promulgated rules, including Rule 17i-6, to create a framework for the Commission to supervise SIBHCs.4This framework includes qualification criteria for SIBHCs, as well as recordkeeping and reporting requirements. Among other things, this regulatory framework for SIBHCs is intended to provide a basis for non-U.S. financial regulators to treat the Commission as the principal U.S. consolidated home-country supervisor for SIBHCs and their affiliated broker-dealers.5
Footnotes:
2 Pub. L. No. 106-102, 113 Stat. 1338 (1999).
3 See 15 U.S.C. 78q(i).
4 See Exchange Act Release No. 49831 (Jun. 8, 2004), 69 FR 34472 (Jun. 21, 2004).
5 See H.R. Conf. Rep. No. 106-434, 165 (1999). See also Exchange Act Release No. 49831, at 6 (Jun. 8, 2004), 69 FR 34472, at 34473 (Jun. 21, 2004).
Pursuant to Section 17(i)(3)(A) of the Exchange Act, an SIBHC must make and keep records, furnish copies thereof, and make such reports as the Commission may require by rule.6Rule 17i-6 requires that an SIBHC file with the Commission certain monthly and quarterly reports and an annual audit report. The reports and notices required to be filed pursuant to Rule 17i-6 must be preserved for a period of not less than three years.7
Footnotes:
6 15 U.S.C. 78q(i)(3)(A).
7 17 CFR 240.17i-5(b)(3).
The collections of information required by Rule 17i-6 are necessary to allow the Commission adequately to supervise the activities of these SIBHCs and to effectively determine whether supervision of an IBHC as an SIBHC is necessary or appropriate in furtherance of the purposes of Section 17 of the Act. Rule 17i-6 also enhances the Commission's supervision of an SIBHC's subsidiary broker-dealers through collection of additional information and inspections of affiliates of those broker-dealers. Without these reports, the Commission would be unable to adequately supervise an SIBHC, nor would it be able to determine whether continued supervision of an IBHC as an SIBHC were necessary and appropriate in furtherance of the purposes of Section 17 of the Act.
We estimate that three IBHCs will file Notices of Intention with the Commission to be supervised by the Commission as SIBHCs. An SIBHC will require about 8 hours to prepare and file each monthly report required by this rule (or approximately 96 hours per year).8On average, it will take an SIBHC about 16 hours each quarter (or 64 hours each year)9to prepare and file the quarterly reports required by this rule. An SIBHC will require about 200 hours to prepare and file the annual audit reports required by this rule. Consequently, the total annual burden of Rule 17i-6 on all SIBHCs is approximately 984 hours.10
Footnotes:
8 The SIBHC must file with the Commission a monthly report within 30 calendar days after the end of each month that does not coincide with a fiscal quarter end. Consequently, the SIBHC must file a monthly report 8 times each year. (8 hours × 8 months) = 64 hours/year.
9 (16 hours × 4 quarters in a year) = 64 hours/year.
10 (64 hours per year to prepare and file monthly reports + 64 hours each year to prepare and file quarterly reports + 200 hours each year to prepare and file annual audit reports) × 3 SIBHCs = 984 hours.
Rule 17i-6 requires that an SIBHC file certain monthly and quarterly reports with the Commission, as well as an annual audit report. The average cost for an SIBHC to prepare and file the monthly reports is about $1,424 per month, and thus approximately $11,392 per year.11On average, an SIBHC will incur a quarterly cost of $2,848 to prepare and file the required quarterly reports, and thus will incur an annual cost of $11,392 to file these reports.12Finally, an SIBHC, on average, will incur an annual cost of $40,400 to prepare and file an annual audit.13Thus, the total dollar cost of the ongoing paperwork burden associated with Rule 17i-6 is approximately $189,552.14
Footnotes:
11 We believe that an SIBHC would have a Senior Accountant prepare and file these reports. According to the Securities Industry Financial Management Association (or "SIFMA"), the hourly cost of a Senior Accountant is $178, as reflected in the SIFMA's Report on Management and Professional Earnings for 2008, and modified to account for an 1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. ($178 × 8 hours) = $1,424. ($1,424 × 8 months) = $11,392.
12 We believe that an SIBHC would have a Senior Accountant prepare and file these reports. The hourly cost of a Senior Accountant is $178. ($178 × 16 hours) = $2,848. ($2,848 × 4 quarters) = $11,392.
13 We believe that an SIBHC would have a Senior Internal Auditor work with accountants to prepare and file these reports. According to the SIFMA, the hourly cost of a Senior Internal Auditor is $202, as reflected in its Report on Management and Professional Earnings for 2008 , and modified to account for an 1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead. ($202 × 200 hours) = $40,400.
14 (($11,392 + $11,392 + $40,400) × 3 SIBHCs) = $189,552.
We believe that an IBHC likely will upgrade its information technology ("IT") systems in order to more efficiently comply with certain of the SIBHC framework rules (including Rules 17i-4, 17i-5, 17i-6 and 17i-7), and that this would be a one-time cost. Depending on the state of development of the IBHC's IT systems, it would cost an IBHC between $1 million and $10 million to upgrade its IT systems to comply with the SIBHC framework of rules. Thus, on average, it would cost each of the three IBHCs about $5.5 million to upgrade their IT systems, or approximately $16.5 million in total. It is impossible to determine what percentage of the IT systems costs would be attributable to each Rule, so we allocated the total estimated upgrade costs equally (at 25% for each of the above-mentioned Rules), with $4,125,000 attributable to Rule 17i-6.
Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (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 collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication.
Comments should be directed to Charles Boucher, Director/Chief Information Officer, Securities and Exchange Commission, c/o Shirley Martinson, 6432 General Green Way, Alexandria, Virginia 22312 or send an e-mail to: PRA_Mailbox@sec.gov .
Dated: October 19, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-25486 Filed 10-22-09; 8:45 am]
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