Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549-0213.
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 (“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 for extension and approval.
Rule 15c3-4 (17 CFR 240.15c3-4) (the “Rule”) under the Securities Exchange Act of 1934 (17 U.S.C. 78a et seq.) (the “Exchange Act”) requires certain broker-dealers that are registered with the Commission as OTC derivatives dealers to establish, document, and maintain a system of internal risk management controls. The Rule sets forth the basic elements for an OTC derivatives dealer to consider and include when establishing, documenting, and reviewing its internal risk management control system, which are designed to, among other things, ensure the integrity of an OTC derivatives dealer's risk measurement, monitoring, and management process, to clarify accountability at the appropriate organizational level, and to define the permitted scope of the dealer's activities and level of risk. The Rule also requires that management of an OTC derivatives dealer must periodically review, in accordance with written procedures, the OTC derivatives dealer's business activities for consistency with its risk management guidelines.Start Printed Page 54861
The staff estimates that the average amount of time a new OTC derivatives dealer will spend establishing and documenting its risk management control system is 2,000 hours and that, on average, a registered OTC derivatives dealer will spend approximately 200 hours each year to maintain (e.g., reviewing and updating) its risk management control system. Currently, four firms are registered with the Commission as OTC derivatives dealers. The staff estimates that approximately one additional OTC derivatives dealer may become registered within the next three years. Accordingly, the staff estimates that the total annualized burden associated with Rule 15c3-4 for five OTC derivatives dealers will be approximately 1,567 hours annually.
The staff believes that the cost of complying with Rule 15c3-4 will be approximately $258 per hour. This per hour cost is based upon the annual average hourly salary for a compliance manager, who would generally be responsible for initially establishing, documenting, and maintaining an OTC derivatives dealer's internal risk management control system. Accordingly, the total annualized cost for all affected OTC derivatives dealers is estimated to be $404,200.
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 agency'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.
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.Start Signature
Dated: October 19, 2009.
Florence E. Harmon,
1. ((One new OTC derivatives dealer × 2,000 hours to establish and document its internal risk management control system) + (One new OTC derivatives dealer × 200 hours to maintain an internal risk management control system × (3 years/2)) + (Four registered OTC derivatives dealers × 200 hours to maintain an internal risk management control system × 3 years))/3 years = 1,567 hours.Back to Citation
2. The $258 per hour salary figure for a Compliance Manager is from SIFMA's Management & Professional Earnings in the Securities Industry 2008, modified by Commission staff to account for an 1800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits and overhead.Back to Citation
3. 1,567 hours × $258 = $404,200.Back to Citation
[FR Doc. E9-25482 Filed 10-22-09; 8:45 am]
BILLING CODE 8011-01-P