Proposed Collection; Comment Request; Extension: Rule 17e-1

CourtSecurities And Exchange Commission
Citation87 FR 2190
Record Number2022-00582
Publication Date13 January 2022
2190
Federal Register / Vol. 87, No. 9 / Thursday, January 13, 2022 / Notices
1
15 U.S.C. 78s(b)(1).
2
17 CFR 240.19b–4.
3
See Securities Exchange Act Release No. 90677
(December 15, 2020), 85 FR 83119 (December 21,
2020).
4
15 U.S.C. 78s(b)(2).
5
See Securities Exchange Act Release No. 91025
(February 1, 2021), 86 FR 8420 (February 5, 2021).
6
15 U.S.C. 78s(b)(2)(B).
7
See Securities Exchange Act Release No. 91359
(March 18, 2021), 86 FR 15734 (March 24, 2021).
8
15 U.S.C. 78s(b)(2).
9
See Securities Exchange Act Release No. 92154
(June 11, 2021), 86 FR 32301 (June 17, 2021).
10
17 CFR 200.30–3(a)(12).
11
See Securities Exchange Act Release No. 92700
(August 18, 2021), 86 FR 47351 (August 24, 2021).
12
17 CFR 201.430.
13
17 CFR 201.431(e).
14
17 CFR 201.431.
1
1,604 funds × 50 hours per fund = 82,000 hours.
2
The Commission’s estimates concerning the
allocation of burden hours and the relevant wage
rates are based on consultations with industry
representatives and on salary information for the
securities industry compiled by the Securities
Industry and Financial Markets Association. The
estimated wage figures are also based on published
rates for senior accountants and in-house attorneys,
modified to account for an 1800-hour work-year
and multiplied by 5.35 to account for bonuses, firm
size, employee benefits, and overhead, yielding
effective hourly rates of $221 and $425,
respectively. See Securities Industry and Financial
Markets Association, Report on Management &
Professional Earnings in the Securities Industry
2013.
3
49,200 hours × $221 per hour = $10,873,200.
of 1934 (‘‘Exchange Act’’)
1
and Rule
19b–4
2
thereunder.
3
On February 1,
2021, pursuant to Section 19(b)(2) of the
Exchange Act,
4
a longer time period was
designated within which to act on the
proposed rule change.
5
On March 18,
2021, proceedings were instituted under
Section 19(b)(2)(B) of the Exchange Act
6
to determine whether to approve or
disapprove the proposed rule change.
7
On June 11, 2021, pursuant to Section
19(b)(2) of the Exchange Act,
8
a longer
time period was designated for
Commission action on the proceedings
to determine whether to approve or
disapprove the proposed rule change.
9
On August 18, 2021, after consideration
of the record for the proposed rule
change, the Division of Trading and
Markets (‘‘Division’’), pursuant to
delegated authority,
10
issued an order
disapproving the proposed rule change
(‘‘Disapproval Order’’).
11
Pursuant to Rule 430 of the
Commission’s Rules of Practice,
12
on
August 25, 2021, the Exchange filed a
notice of intention to petition for review
of the Disapproval Order, and on
September 1, 2021, the Exchange filed a
petition for review of the Disapproval
Order. Pursuant to Rule 431(e) of the
Commission Rules of Practice,
13
a notice
of intention to petition for review
results in an automatic stay of the action
by delegated authority.
Pursuant to Rule 431 of the
Commission’s Rules of Practice,
14
the
Exchange’s petition for review of the
Disapproval Order is granted. Further,
the Commission hereby establishes that
any party to the action or other person
may file a written statement in support
of or in opposition to the Disapproval
Order on or before February 3, 2022.
For the reasons stated above, it is
hereby:
Ordered that the Exchange’s petition
for review of the Division’s action to
disapprove the proposed rule change by
delegated authority is granted; and
It is further ordered that any party or
other person may file a statement in
support of or in opposition to the action
made pursuant to delegated authority on
or before February 3, 2022.
It is further ordered that the automatic
stay of delegated action pursuant to
Commission Rule of Practice 431(e) is
hereby discontinued.
The order disapproving the proposed
rule change (File No. SR–NYSE–2020–
96) shall remain in effect.
By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–00500 Filed 1–12–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–224, OMB Control No.
3235–0217]
Proposed Collection; Comment
Request; Extension: Rule 17e–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.) (‘‘Paperwork
Reduction Act’’), the Securities and
Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 17e–1 (17 CFR 270.17e–1) under
the Investment Company Act of 1940
(15 U.S.C. 80a–1 et seq.) (the
‘‘Investment Company Act’’) deems a
remuneration as ‘‘not exceeding the
usual and customary broker’s
commission’’ for purposes of Section
17(e)(2)(A) of the Investment Company
Act (15 U.S.C. 80a–17(e)(2)(A)) if,
among other things, a registered
investment company’s (‘‘fund’s’’) board
of directors has adopted procedures
reasonably designed to provide that the
remuneration to an affiliated broker is
reasonable and fair compared to that
received by other brokers in connection
with comparable transactions involving
similar securities being purchased or
sold on a securities exchange during a
comparable period of time and the
board makes and approves such changes
as it deems necessary. In addition, each
quarter, the board must determine that
all transactions effected under the rule
during the preceding quarter complied
with the established procedures
(‘‘review requirement’’). Rule 17e–1 also
requires the fund to (i) maintain
permanently a written copy of the
procedures adopted by the board for
complying with the requirements of the
rule; and (ii) maintain for a period of six
years, the first two in an easily
accessible place, a written record of
each transaction subject to the rule,
setting forth the amount and source of
the commission, fee, or other
remuneration received; the identity of
the broker; the terms of the transaction;
and the materials used to determine that
the transactions were effected in
compliance with the procedures
adopted by the board (‘‘recordkeeping
requirement’’). The review and
recordkeeping requirements under rule
17e–1 enable the Commission to ensure
that affiliated brokers receive
compensation that does not exceed the
usual and customary broker’s
commission. Without the recordkeeping
requirement, Commission inspectors
would have difficulty ascertaining
whether funds were complying with
rule 17e–1.
Based upon an analysis of fund filings
on Form N–CEN, approximately 1,640
funds report reliance on rule 17e–1.
Based on staff experience and
conversations with fund representatives,
we estimate that the burden of
compliance with rule 17e–1 is
approximately 50 hours per fund per
year. This time is spent, for example,
reviewing the applicable transactions
and maintaining records. Accordingly,
we calculate the total estimated annual
internal burden of complying with the
review and recordkeeping requirements
of rule 17e–1 to be approximately
82,000 hours.
1
We further estimate that,
of these:
60 percent (49,200 hours) are spent
by senior accountants, at an estimated
hourly wage of $221,
2
for a total of
approximately $10,873,200 per year;
3
30 percent (24,600 hours) are spent
by in-house attorneys at an estimated
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2191
Federal Register / Vol. 87, No. 9 / Thursday, January 13, 2022 / Notices
4
24,600 hours × $425 per hour = $10,455,000.
5
8,200 hours × $4,770 per hour = $39,114,000.
The estimate for the cost of board time as a whole
is derived from estimates made by the staff
regarding typical board size and compensation that
is based on information received from fund
representatives and publicly available sources.
6
$10,873,200 + $10,455,000 + $39,114,000 =
$60,442,200.
1
15 U.S.C. 78s(b)(1).
2
17 CFR 240.19b–4.
3
See Exchange Rule 1.5(p).
hourly wage of $425, for a total of
approximately $10,455,000 per year;
4
and
10 percent (8,200) are spent by the
funds’ board of directors at an hourly
cost of $4,770, for a total of
approximately $39,114,000 per year.
5
Based on these estimated wage rates,
the total cost to the industry of the hour
burden for complying with the review
and recordkeeping requirements of rule
17e–1 is approximately $60,442,200.
6
The Commission staff estimates that
there is no cost burden associated with
the information collection requirement
of rule 17e–1 other than this cost.
Estimates of average burden hours are
made solely for the purposes of the
Paperwork Reduction Act and are not
derived from a comprehensive or even
a representative survey or study of the
costs of Commission rules and forms.
The collection of information under rule
17e–1 is mandatory. The information
provided under rule 17e–1 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 OMB control number.
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 will have practical utility;
(b) the accuracy of the Commission’s
estimate of the burden of the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information 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.
Please direct your written comments
to David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O John R.
Pezzullo, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
Dated: January 10, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–00582 Filed 1–12–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93927; File No. SR–MEMX–
2021–19]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend the Exchange’s Fee
Schedule To Establish a Monthly
Membership Fee
January 7, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),
1
and Rule 19b–4 thereunder,
2
notice is hereby given that on December
28, 2021, MEMX LLC (‘‘MEMX’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing with the
Commission a proposed rule change to
amend the Exchange’s fee schedule
applicable to Members
3
(the ‘‘Fee
Schedule’’) pursuant to Exchange Rules
15.1(a) and (c). The Exchange proposes
to implement the changes to the Fee
Schedule pursuant to this proposal on
January 3, 2022. The text of the
proposed rule change is provided in
Exhibit 5.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to
establish a Monthly Membership Fee for
Members of the Exchange of $200. The
Monthly Membership Fee is proposed to
be assessed to each active Member at the
close of business on the first day of each
month. For example, the Monthly
Membership Fee for January 2022 will
be assessed to all active Members at the
close of business on January 3, 2022, the
first business day of the month.
However, if a Member is pending a
voluntary termination of rights as a
Member pursuant to Rule 2.8 prior to
the time any Monthly Membership Fee
will be assessed (i.e., the close of
business on January 3, 2022) and the
Member does not utilize the facilities of
the Exchange while such voluntary
termination of rights is pending, then
the Member will not be obligated to pay
the Monthly Membership Fee, as such
Member will not be considered to have
an ‘‘active’’ Membership. The Exchange
believes this to be appropriate because
there are several pre-conditions and
then a 30-day waiting period before a
voluntary resignation shall take effect
pursuant to Rule 2.8.
As proposed, the Monthly
Membership Fee for a firm will not be
prorated, which the Exchange believes
is reasonable based on the frequency
that the fee is assessed (i.e., monthly
instead of applying to a longer period)
and the relatively low proposed fee of
$200 for the Monthly Membership Fee.
The Exchange does not presently
contemplate proposing any application
fees, trading rights or trading permit
fees, market participant identifier
(‘‘MPID’’) fees or so-called ‘‘headcount’’
fees.
To reflect the implementation of the
Monthly Membership Fee proposed
herein, the Exchange also proposes to
delete the following sentence from the
Fee Schedule: ‘‘MEMX does not charge
for membership, market data products,
physical connectivity or application
sessions.’’ The Exchange notes that it is
not proposing to adopt fees for market
data products at this time. The
Exchange further notes that it is
separately filing a proposal to adopt fees
for physical connectivity and
application sessions (with the same
implementation date as the proposed
changes in this filing) and that such
separate proposal will also propose to
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