Skip to Content


Submission for OMB Review; Comment Request

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble

Upon Written Request, Copies Available From: U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549-0213.


Rule 8c-1, SEC File No. 270-455 , OMB Control No. 3235-0514.

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 has submitted to the Office of Management and Budget requests for approval of the following rule: Rule 8c-1.

Rule 8c-1 (17 CFR 240.8c-1) under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) generally prohibits a broker-dealer from using its customers' securities as collateral to finance its own trading, speculating, or underwriting transactions. More specifically, the rule states three main principles: first, that a broker-dealer is prohibited from commingling the securities of different customers as collateral for a loan without the consent of each customer; second, that a broker-dealer cannot commingle customers' securities with its own securities under the same pledge; and third, that a broker-dealer can only pledge its customers' securities to the extent that customers are in debt to the broker-dealer.[1] Pursuant to Rule 8c-1, respondents must collect information necessary to prevent the hypothecation of customer accounts in contravention of the rule, issue and retain copies of notices to the pledgee of hypothecation of customer accounts in accordance with the rule, and collect written consents from customers in accordance with the rule. The information is necessary to ensure compliance with the rule, and to advise customers of the rule's protections.

There are approximately 142 respondents per year (i.e., broker-dealers that conducted business with the public, filed Part II of the FOCUS Report, did not claim an exemption from the Reserve Formula computation and reported that they had a bank loan during at least one quarter of the current year) that require an aggregate total of 3,195 hours to comply with the rule. Each of these approximately 142 registered broker-dealers makes an estimated 45 annual responses, for an aggregate total of 6,390 responses per year. Each response takes approximately 0.5 hours to complete. Thus, the total compliance burden per year is 3,195 burden hours. The approximate cost per hour is $56, resulting in a total cost of compliance for the respondents of approximately $178,920 (3,195 hours @ $56 per hour).

The retention period for the recordkeeping requirement under Rule 8c-1 is three years. The recordkeeping requirement under this rule is mandatory to ensure that broker-dealers Start Printed Page 65113do not commingle their securities or use them to finance the broker-dealers' proprietary business. This rule does not involve the collection of confidential information. Persons should be aware that an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a current valid control number.

Comments should be directed to (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or by sending an e-mail to:; and (ii) R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, c/o Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312 or send an e-mail to: Comments must be submitted within 30 days of this notice.

Start Signature

Dated: November 7, 2007.

Florence E. Harmon,

Deputy Secretary.

End Signature End Preamble


1.  See Securities Exchange Act Release No. 2690 (November 15, 1940); Securities Exchange Act Release No. 9428 (December 29, 1971).

Back to Citation

[FR Doc. E7-22511 Filed 11-16-07; 8:45 am]