Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 15007 

1Custody of Investment Company Assets Outside 

the United States, Investment Company Act Release 

No. IC–23815 (April 29, 1999) (64 FR 24489 (May 

6, 1999)). 

2At the start of 2011, 836 investment advisers 

managed or sponsored open-end (including ETFs) 

portfolios and closed-end registered funds. 3These estimates are based on conversations with 

representatives of the fund industry. 4The salaries for a portfolio manager and a trust 

administrator are from SIFMA’s Management & 

Professional Earnings in the Securities Industry 

2010, modified to account for an 1800-hour workyear and multiplied by 5.35 to account for bonuses, 

firm size, employee benefits and overhead. 

foreign securities depositories based on 

conditions that reflect the operations 

and role of these depositories.1 Rule 

17f–7 contains some ‘‘collection of 

information’’ requirements. An eligible 

securities depository has to meet 

minimum standards for a depository. 

The fund or its investment adviser 

generally determines whether the 

depository complies with those 

requirements based on information 

provided by the fund’s primary 

custodian (a bank that acts as global 

custodian). The depository custody 

arrangement has to meet certain risk 

limiting requirements. The fund can 

obtain indemnification or insurance 

arrangements that adequately protect 

the fund against custody risks. The fund 

or its investment adviser generally 

determines whether indemnification or 

insurance provisions are adequate. If the 

fund does not rely on indemnification 

or insurance, the fund’s contract with its 

primary custodian is required to state 

that the custodian will provide to the 

fund or its investment adviser a custody 

risk analysis of each depository, monitor 

risks on a continuous basis, and 

promptly notify the fund or its adviser 

of material changes in risks. The 

primary custodian and other custodians 

also are required to agree to exercise 

reasonable care. 

The collection of information 

requirements in rule 17f–7 are intended 

to provide workable standards that 

protect funds from the risks of using 

securities depositories while assigning 

appropriate responsibilities to the 

fund’s primary custodian and 

investment adviser based on their 

capabilities. The requirement that the 

depository meet specified minimum 

standards is intended to ensure that the 

depository is subject to basic safeguards 

deemed appropriate for all depositories. 

The requirement that the custody 

contract state that the fund’s primary 

custodian will provide an analysis of 

the custody risks of depository 

arrangements, monitor the risks, and 

report on material changes is intended 

to provide essential information about 

custody risks to the fund’s investment 

adviser as necessary for it to approve the 

continued use of the depository. The 

requirement that the primary custodian 

agree to exercise reasonable care is 

intended to provide assurances that its 

services and the information it provides 

will meet an appropriate standard of 

care. The alternative requirement that 

the funds obtain adequate 

indemnification or insurance against the 

custody risks of depository 

arrangements is intended to provide 

another, potentially less burdensome 

means to protect assets held in 

depository arrangements. 

The staff estimates that each of 

approximately 836 investment advisers 2

will make an average of 8 responses 

annually under the rule to address 

depository compliance with minimum 

requirements, any indemnification or 

insurance arrangements, and reviews of 

risk analyses or notifications. The staff 

estimates each response will take 6 

hours, requiring a total of approximately 

48 hours for each adviser. The total 

annual burden associated with these 

requirements of the rule will be 

approximately 40,128 hours (836 

advisers × 48 hours per adviser). The 

staff further estimates that during each 

year, each of approximately 15 global 

custodians will make an average of 4 

responses to analyze custody risks and 

provide notice of any material changes 

to custody risk under the rule. The staff 

estimates that each response will take 

260 hours, requiring approximately 

1040 hours annually per custodian.3

The total annual burden associated with 

these requirements is approximately 

15,600 hours (15 custodians × 1040 

hours). Therefore, the staff estimates 

that the total annual burden associated 

with all collection of information 

requirements of the rule is 55,728 hours 

(40,128 + 15,600). The total annual cost 

of burden hours is estimated to be 

$14,948,736 (40,128 × $287 for a 

portfolio manager, plus 15,600 hours × 

$220/hour for a trust administrator’s 

time).4 The estimate of average burden 

hours is made solely for the purposes of 

the Paperwork Reduction Act. The 

estimate is not derived from a 

comprehensive or even a representative 

survey or study of the costs of 

Commission rules and forms. 

Compliance with the collection of 

information requirements of the rule is 

necessary to obtain the benefit of relying 

on the rule’s permission for funds to 

maintain their assets in foreign 

custodians. 

Written comments are invited on: (a) 

Whether the collection of information is 

necessary for the proper performance of 

the functions of the Commission, 

including whether the information has 

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 Thomas Bayer, Chief Information 

Officer, Securities and Exchange 

Commission, c/o Remi Pavlik-Simon, 

6432 General Green Way, Alexandria, 

VA 22312; or send an e-mail to: 

PRA_Mailbox@sec.gov. 

Dated: March 15, 2011. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–6364 Filed 3–17–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: 

Form N–17D–1; SEC File No. 270– 

231; OMB Control No. 3235–0229. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520), the Securities 

and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collections 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. 

Section 17(d) (15 U.S.C. 80a–17(d)) of 

the Investment Company Act of 1940 

(‘‘Act’’) authorizes the Commission to 

adopt rules that protect funds and their 

security holders from overreaching by 

affiliated persons when the fund and the 

affiliated person participate in any joint 

enterprise or other joint arrangement or 

profit-sharing plan. Rule 17d–1 under 

the Act (17 CFR 270.17d–1) prohibits 

funds and their affiliated persons from 

participating in a joint enterprise, unless 

an application regarding the transaction 

has been filed with and approved by the 


Emcdonald on DSK2BSOYB1PROD with NOTICES
15008 Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 

1As of February 4, 2011, three SBICs were 

registered with the Commission. 

2This estimate of hours is based on past 

conversations with representatives of SBICs and 

accountants that have filed the form. 

3Commission staff estimates that the annual 

burden would be incurred by a senior accountant 

with an average hourly wage rate of $198 per hour. 

See Securities Industry and Financial Markets 

Association, Report on Management and 

Professional Earnings in the Securities Industry 

2010, modified to account for an 1,800-hour work 

year and multiplied by 5.35 to account for bonuses, 

firm size, employee benefits and overhead. 

Commission. Paragraph (d)(3) of the rule 

provides an exemption from this 

requirement for any loan or advance of 

credit to, or acquisition of securities or 

other property of, a small business 

concern, or any agreement to do any of 

the foregoing (‘‘investments’’) made by a 

small business investment company 

(‘‘SBIC’’) and an affiliated bank, 

provided that reports about the 

investments are made on forms the 

Commission may prescribe. Rule 17d–2 

(17 CFR 270.17d–2) designates Form N– 

17D–1 (17 CFR 274.00) (‘‘form’’) as the 

form for reports required by rule 17d– 

1. 

SBICs and their affiliated banks use 

form N–17D–1 to report any 

contemporaneous investments in a 

small business concern. The form 

provides shareholders and persons 

seeking to make an informed decision 

about investing in an SBIC an 

opportunity to learn about transactions 

of the SBIC that have the potential for 

self dealing and other forms of 

overreaching by affiliated persons at the 

expense of shareholders. 

Form N–17D–1 requires SBICs and 

their affiliated banks to report 

identifying information about the small 

business concern and the affiliated 

bank. The report must include, among 

other things, the SBIC’s and affiliated 

bank’s outstanding investments in the 

small business concern, the use of the 

proceeds of the investments made 

during the reporting period, any 

changes in the nature and amount of the 

affiliated bank’s investment, the name of 

any affiliated person of the SBIC or the 

affiliated bank (or any affiliated person 

of the affiliated person of the SBIC or 

the affiliated bank) who has any interest 

in the transactions, the basis of the 

affiliation, the nature of the interest, and 

the consideration the affiliated person 

has received or will receive. 

Up to three SBICs may file the form 

in any year.1 The Commission estimates 

the burden of filling out the form is 

approximately one hour per response 

and would likely be completed by an 

accountant or other professional. Based 

on past filings, the Commission 

estimates that no more than one SBIC is 

likely to use the form each year. Most 

of the information requested on the form 

should be readily available to the SBIC 

or the affiliated bank in records kept in 

the ordinary course of business, or with 

respect to the SBIC, pursuant to the 

recordkeeping requirements under the 

Act. Commission staff estimates that it 

should take approximately one hour for 

an accountant or other professional to 

complete the form.2 The estimated total 

annual burden of filling out the form is 

1 hour, at an estimated total annual cost 

of $198.3 The Commission will not keep 

responses on Form N–17D–1 

confidential. 

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. 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 collection of information is 

necessary for the proper performance of 

the functions of the Commission, 

including whether the information has 

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 Thomas Bayer, Chief Information 

Officer, Securities and Exchange 

Commission, C/O Remi Pavlik-Simon, 

6432 General Green Way, Alexandria, 

VA 22312; or send an e-mail to: 

PRA_Mailbox@sec.gov. 

Dated: March 15, 2011. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–6362 Filed 3–17–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

Extension: 

Rule 15c3–3; SEC File No. 270–087; 

OMB Control No. 3235–0078. 

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 a 

request for approval of extension of the 

previously approved collection of 

information provided for in Rule 15c3– 

3 (17 CFR 240.15c3–3), under the 

Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.). 

Rule 15c3–3 requires that a brokerdealer that hold customer securities 

obtain and maintain possession and 

control of fully-paid and excess margin 

securities they hold for customers. In 

addition, the Rule requires that a brokerdealer that holds customer funds make 

either a weekly or monthly computation 

to determine whether certain customer 

funds need to be segregated in a special 

reserve bank account for the exclusive 

benefit of the firm’s customers. It also 

requires that a broker-dealer maintain a 

written notification from each bank 

where a Special Reserve Bank Account 

is held acknowledging that all assets in 

the account are for the exclusive benefit 

of the broker-dealer’s customers, and to 

provide written notification to the 

Commission (and its designated 

examining authority) under certain, 

specified circumstances. Finally, 

paragraph (o) of Rule 15c3–3, which 

only applies to broker-dealers that sell 

securities futures products (‘‘SFP’’) to 

customers, requires that such brokerdealers provide certain notifications to 

customers, and to make a record of any 

changes of account type. 

There are approximately 279 brokerdealers fully subject to the Rule (i.e., 

broker-dealers that cannot claim any of 

the exemptions enumerated at 

paragraph (k)), of which approximately 

13 make daily, 210 make weekly, and 56 

make monthly, reserve computations. 

On average, each of these respondents 

require approximately 2.5 hours to 

complete a computation. Accordingly, 

Commission staff estimates that the 

resulting burden totals 36,780 hours 

annually ((2.5 hours × 240 computations 

× 13 respondents that calculate daily) + 

(2.5 hours × 52 computations × 210 

respondents that calculate weekly) + 

(2.5 hours × 12 computations × 56 

respondents that calculate monthly)). 

A broker-dealer required to maintain 

the Special Reserve Bank Account 

prescribed by Rule 15c3–3 must obtain 


Emcdonald on DSK2BSOYB1PROD with NOTICES