Legal Status
Legal Status
Notice
Proposed Collection; Comment Request
A Notice by the Securities and Exchange Commission on
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Information about this document as published in the Federal Register.
- Printed version:
- Publication Date:
- 03/09/2006
- Agency:
- Securities and Exchange Commission
- Document Type:
- Notice
- Document Citation:
- 71 FR 12223
- Page:
- 12223-12224 (2 pages)
- Document Number:
- E6-3329
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Upon written request, copies available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549.
Extension: Rule 17f-1; File No. 270-236; OMB Control No. 3235-0222.
Form N-17f-1; File No. 270-316; OMB Control No. 3235-0359.
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 (the “Commission”) is soliciting comments on the collection of information summarized below. The Commission plans to submit these existing collections of information to the Office of Management and Budget (“OMB”) for extension and approval.
Rule 17f-1 under the Investment Company Act of 1940 (the “Act”) [17 CFR 270.17f-1] is entitled: “Custody of Securities with Members of National Securities Exchanges.” Rule 17f-1 provides that any registered management investment company (“fund”) that wishes to place its assets in the custody of a national securities exchange member may do so only under a written contract that must be ratified initially and approved annually by a majority of the fund's board of directors. The written contract also must contain certain specified provisions. In addition, the rule requires an independent public accountant to examine the fund's assets in the custody of the exchange member at least three times during the fund's fiscal year. The rule requires the written contract and the certificate of each examination to be transmitted to the Commission. The purpose of the rule is to ensure the safekeeping of fund assets.
Commission staff estimates that each fund makes 1 response and spends an average of 3.5 hours annually in complying with the rule's requirements.[1] Commission staff estimates that on an annual basis it takes: (i) 0.5 hours for the board of directors at a total cost of approximately $1000 to review and ratify the custodial contracts; [2] and (ii) 3 hours for the fund's controller at a total cost of approximately $445 to assist the fund's independent public auditors in verifying the fund's assets.[3] Approximately 60 funds rely on the rule annually.[4] Thus, the total annual burden for rule 17f-1 is estimated to be approximately 210 hours.[5] Based on the total costs per fund listed above, the total cost of the rule 17f-1's collection of information requirements is estimated to be $86,700.[6]
Form N-17f-1 is entitled: “Certificate of Accounting of Securities and Similar Investments of a Management Investment Company in the Custody of Members of National Securities Exchanges.” Form N-17f-1 (17 CFR 274.219) is the cover sheet for accountant examination certificates filed under rule 17f-1 of the Act. Rule 17f-1 requires the accountant's certificate of each examination be attached to Form N-17f-1 and transmitted to the Commission promptly after each examination. The form facilitates the filing of the accountant's certificate, and increases the accessibility of the certificate to both Commission's staff and interested investors.
Commission staff estimates that on an annual basis it takes: (i) On average 1 hour of clerical time at a total cost of $28 to prepare and file the Form N-17f-1; and (ii) 1 hour for the fund's chief compliance officer at a total cost of $137 to review the Form N-17f-1 prior to filing with the Commission. As noted above, approximately 60 funds currently file Form N-17f-1 with the Commission, and each fund is required to make three filings annually for a total annual burden per fund of approximately 6 hours. The total annual hour burden for Form N-17f-1 is therefore estimated to be approximately 360 hours. Based on the total costs per fund listed above, the total cost of Form N-17f-1's collection of information requirements is estimated to be approximately $59,400.[7]
The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act, and is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules. Compliance with the collections of information required by rule 17f-1 and Form N-17f-1 is mandatory for funds that place their assets in the custody of a national securities exchange member. Responses 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 control number.
The Commission requests written comments on: (a) Whether the collections of information are necessary for the proper performance of the Start Printed Page 12224functions of the Commission, including whether the information has practical utility; (b) the accuracy of the Commission's estimate of the burdens 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 R. Corey Booth, Director/Chief Information Officer, Office of Information Technology, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549.
Start SignatureDated: March 2, 2006.
Jill M. Peterson,
Assistant Secretary.
Footnotes
1. The 1 response is the board's approval of the custodial contract.
Back to Citation2. Estimates of the number of hours are based on conversations with individuals in the mutual fund industry. In preparing this submission, Commission staff randomly selected 9 funds from the pool of Form N-17f-1 filers. The actual number of hours may vary significantly depending on individual fund assets. The hour burden for rule 17f-1 does not include preparing the custody contract because that would be part of customary and usual business practice.
Back to Citation3. This estimate is based on the following calculation: 3 × $148.38 (fund controller hourly rate) = $445. This estimate is based on the following calculation: 3 × $148.38 (fund controller hourly rate) = $445. The estimated costs for all fund professional and support staff time are based on the average annual salaries reported for employees in New York City in Securities Industry Association, Management and Professional Earnings in the Securities Industry (2003) and Securities Industry Association, Office Salaries in the Securities Industry (2003), which are adjusted to reflect additional overhead costs and employee benefits.
Back to Citation4. Based on a review of Form N-17f-1 filings in 2004, the Commission staff estimates that 60 funds relied on rule 17f-1 in 2005.
Back to Citation5. This estimate is based on the following calculation: 60 (respondents) × 3.5 (total annual hourly burden per respondent) = 210 hours. The annual burden for rule 17f-1 does not include time spent preparing Form N-17f-1. The burden for Form N-17f-1 is included in a separate collection of information.
Back to Citation6. This estimate is based on the following calculation: 60 hours × $1445 (total annual cost per fund) = $86,700.
Back to Citation7. This estimate is based on the following calculation: 360 hours × $165 (total annual cost per fund) = $59,400.
Back to Citation[FR Doc. E6-3329 Filed 3-8-06; 8:45 am]
BILLING CODE 8010-01-P