Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Investors Education and Advocacy, Washington, DC 20549-0213.
Rule 605 of Regulation NMS; SEC File No. 270-488; OMB Control No. 3235-0542
Rule 606 of Regulation NMS; SEC File No. 270-489; OMB Control No. 3235-0541.
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”) has submitted to the Office of Management and Budget requests for approval of extension of the existing collections of information for the following rules: Rule 605 and Rule 606 (17 CFR 242.605 and 17 CFR 242.606) (formerly Rule 11Ac1-5 and Rule 11Ac1-6) under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) (“Exchange Act”).
Rule 605 of Regulation NMS, formerly known as Rule 11Ac1-5, requires market centers to make available to the public monthly order execution reports in electronic form. The Commission believes that many market centers retain most, if not all, the underlying raw data necessary to generate these reports in electronic format. Once the necessary data is collected, market centers could either program their systems to generate the statistics and reports, or transfer the data to a service provider (such as an independent company in the business of preparing such reports or a self-regulatory organization (“SRO”) that would generate the statistics and reports.
The collection of information obligations of Rule 605 apply to all market centers that receive covered orders in national market system securities. The Commission estimates that approximately 408 market centers are subject to the collection of Start Printed Page 26299information obligations of Rule 605. Each of these respondents is required to respond to the collection of information on a monthly basis.
The Commission staff estimates that, on average, Rule 605 causes respondents to spend 6 hours per month in additional time to collect the data necessary to generate the reports, or 72 hours per year. With an estimated 408 market centers subject to Rule 605, the total data collection cost to comply with the monthly reporting requirement is estimated to be 29,376 hours per year.
Rule 606 of Regulation NMS (“Rule 606”), formerly known as Rule 11Ac1-6, requires broker-dealers to prepare and disseminate quarterly order routing reports. Much of the information needed to generate these reports already should be collected by broker-dealers in connection with their periodic evaluations of their order routing practices. Broker-dealers must conduct such evaluations to fulfill the duty of best execution that they owe their customers.
The collection of information obligations of Rule 606 applies to broker-dealers that route non-directed customer orders in covered securities. The Commission estimates that out of the currently 5178 broker-dealers that are subject to the collection of information obligations of Rule 606, clearing brokers bear a substantial portion of the burden of complying with the reporting and recordkeeping requirements of Rule 606 on behalf of small to mid-sized introducing firms. There currently are approximately 527 clearing brokers. In addition, there are approximately 2426 introducing brokers that receive funds or securities from their customers. Because at least some of these firms also may have greater involvement in determining where customer orders are routed for execution, they have been included, along with clearing brokers, in estimating the total burden of Rule 606.
The Commission staff estimates that each firm significantly involved in order routing practices incurs an average burden of 40 hours to prepare and disseminate a quarterly report required by Rule 606, or a burden of 160 hours per year. With an estimated 2953  broker-dealers significantly involved in order routing practices, the total burden per year to comply with the quarterly reporting requirement in Rule 606 is estimated to be 472,480 hours.
Rule 606 requires broker-dealers to respond to individual customer requests for information on orders handled by the broker-dealer for that customer. Clearing brokers generally bear the burden of responding to these requests. The Commission staff estimates that an average clearing broker incurs an annual burden of 400 hours (2000 responses x 0.2 hours/response) to prepare, disseminate, and retain responses to customers required by Rule 606. With an estimated 527 clearing brokers subject to Rule 606, the total burden per year to comply with the customer response requirement in Rule 606 is estimated to be 210,800 hours.
The collection of information obligations imposed by Rule 605 and Rule 606 are mandatory. The response will be available to the public and will not be kept confidential. Persons should note that an agency may not conduct or sponsor, and a person is not required to comply with, a collection of information unless it displays a currently valid OMB 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: Shagufta_Ahmed@omb.eop.gov; and (ii) 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. Comments must be submitted to OMB within 30 days of this notice.Start Signature
May 5, 2010.
Florence E. Harmon,
1. Regulation NMS, adopted by the Commission in June 2005, redesignated the national market system rules previously adopted under Section 11A of the Exchange Act. Rule 11Ac1-5 under the Exchange Act was redesignated Rule 605 of Regulation NMS, and Rule 11Ac1-6 under the Exchange Act was redesignated Rule 606 of Regulation NMS. No substantive amendments were made to Rule 605 and Rule 606 of Regulation NMS. See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005).Back to Citation
2. 527 clearing brokers + 2426 introducing brokers = 2953.Back to Citation
[FR Doc. 2010-11099 Filed 5-10-10; 8:45 am]
BILLING CODE 8010-01-P