Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 15917 

1The staff estimates that the burden to the 10 

vendors to maintain their systems would be 500,000 

hours annually, or 50,000 hours per vendor. The 

staff estimates that the burden allocated to each 

client on a pro rata basis would be 100 hours 

annually per broker, dealer or municipal security 

dealer that uses vendors’ services (500,000 hours/ 

5,000 = 100 hours). The staff estimates, based on 

discussions with industry representatives, that the 

400 brokers, dealers and municipal securities 

dealers that use proprietary confirmation delivery 

systems, on average, would have a burden of 3,750 

hours annually for maintaining systems. Thus, the 

annual burden for maintaining systems is estimated 

to be 2 million hours ((5,000 × 100) + (400 × 3,750) 

= 2,000,000). 

2 (1 billion transactions at one minute per point 

of sale disclosure = 1 billion minutes; 1 billion 

minutes/60 minutes per hour = 16.7 million hours.) 

3 (16.7 million hours per point of sale disclosure 

+ 2 million hours to develop and implement 

compliance procedures = 18.7 million hours.) 

4Based on discussions with industry 

representatives, the staff estimates that the annual 

cost would be $7,400 per broker, dealer or 

municipal securities dealer. (5,400 brokers, dealers 

and municipal securities dealers × $7,400 = 

$39,996,000.) 

demonstrate compliance with the 

delivery requirements of paragraphs (a) 

and (b) of proposed rule 15c2–3. The 

brokers, dealers or municipal securities 

dealers would have to preserve those 

records for the period specified in 

Exchange Act rule 17a–4(b) (17 CFR 

240.17a–4(b)), or, in the case of records 

of oral communications or the 

disclosures, for the period specified in 

Exchange Act rule 17a–4(b) with regard 

to similar written communications and 

records. While this requirement often 

can be satisfied by maintaining a copy 

of the disclosure document that was 

provided to the customer, in the case of 

disclosure solely by means of oral 

communications, this provision would 

require the broker, dealer or municipal 

securities dealer to have compliance 

procedures in place that are adequate to 

demonstrate that it provided the 

required disclosure. Based on 

discussions with industry participants, 

the Commission staff estimates that the 

annual burden to brokers, dealers and 

municipal securities dealers to develop 

and implement such compliance 

procedures would be approximately 2 

million hours.1

Based on discussions with industry 

representatives, the Commission staff 

estimates that there are 1 billion 

confirmations delivered annually to 

customers in connection with securities 

transactions involving mutual fund 

shares, UIT interests and college savings 

plan interests. Proposed rule 15c2–3 

would require brokers, dealers and 

municipal securities dealers to provide 

disclosure to customers about costs and 

conflicts at the point of sale for each of 

these transactions. The information that 

would be required to be delivered 

pursuant to proposed rule 15c2–3 

would be derived from information that 

brokers, dealers and municipal 

securities dealers would otherwise 

prepare in order to fulfill their 

confirmation disclosure requirements 

under proposed rule 15c2–2. 

The Commission staff further 

estimates from information provided by 

industry participants that it will take, on 

average, about one minute to deliver to 

customers the point of sale disclosure 

required under proposed rule 15c2–3. 

The Commission staff also estimates 

from information provided by industry 

participants that the annual burden to 

brokers, dealers and municipal 

securities dealers to deliver at the point 

of sale the disclosure that would be 

required under proposed rule 15c2–3, 

and to maintaining systems that would 

permit such disclosure, would be 16.7 

million hours.2 As a result, the 

Commission staff estimates that the total 

annual burden to brokers, dealers and 

municipal securities dealers to comply 

with the requirements of proposed rule 

15c2–3, would be 18.7 million hours.3

Based on discussions with industry 

participants, the Commission staff 

estimates that the annual cost to 

brokers, dealers and municipal 

securities dealers for call center services 

and other service providers which 

would assist with development and 

implementation of procedures sufficient 

to demonstrate compliance with the 

delivery requirements of paragraphs (a) 

and (b) of proposed rule 15c2–3 would 

be approximately $40 million.4

In summary, the Commission staff 

estimates that the annual burden for 

complying with the requirements of 

proposed rule 15c2–3 would be 18.7 

million hours and that the annual costs 

of complying with the requirements of 

proposed rule 15c2–3, including call 

center services, and recordkeeping and 

compliance costs, would be $40 million. 

Direct your written comments to 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: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 60 days of 

this notice. 

Dated: March 21, 2007. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6126 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon written request, copies available 

from: Securities and Exchange 

Commission, Office of Filings and 

Information Services, Washington, DC 

20549. 

Extension: Rule 15c2–2; SEC File No. 270–

538; OMB Control No. 3235–0598. 

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. 

Proposed rule 15c2–2 (17 CFR 

240.15c2–2) under the Securities 

Exchange Act of 1934 (15 U.S.C. 78a et 

seq.) would provide investors in mutual 

fund shares, UIT interests and college 

savings plan interests with information 

in transaction confirmations, including 

information about certain distributionrelated costs and certain distribution 

arrangements that create conflicts of 

interest for brokers, dealers, municipal 

securities dealers, and their associated 

persons. Proposed rule 15c2–2 

specifically would require confirmation 

disclosure of information about loads 

and other distribution-related costs that 

directly impact the returns earned by 

investors in those securities. It also 

would require brokers, dealers and 

municipal securities dealers to disclose 

their compensation for selling those 

securities, and to disclose information 

about revenue sharing arrangements and 

portfolio brokerage arrangements that 

create conflicts of interest for them. 

Moreover, the proposed rule would 

require brokers, dealers and municipal 

securities dealers to inform customers 

about whether their salespersons or 

other associated persons receive extra 

compensation for selling certain covered 

securities. 

In addition, the Commission, the selfregulatory organizations, and other 

securities regulatory authorities would 

be able to use records of confirmations 

delivered pursuant to proposed rule 

15c2–2 in the course of examinations, 

and investigations, as well as 

enforcement proceedings against 

brokers, dealers and municipal 

securities dealers. However, no 

governmental agency would regularly 

receive any of the information described 

above. 


ycherry on PROD1PC64 with NOTICES
15918 Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 

1The staff estimates that the burden to the 10 

vendors to maintain their systems would be 500,000 

hours annually, or 50,000 hours per vendor. The 

staff estimates that the burden allocated to each 

client on a pro rata basis would be 100 hours 

annually per broker, dealer or municipal security 

dealer that uses vendors’ services (500,000 hours/ 

5,000 = 100 hours). The staff estimates, based on 

discussions with industry representatives, that the 

400 brokers dealers and municipal securities 

dealers that use proprietary confirmation delivery 

systems, on average, would have a burden of 3,750 

hours annually for maintaining systems. Thus, the 

annual burden for maintaining systems is estimated 

to be 2 million hours ((5,000 × 100) + (400 × 3,750) 

= 2,000,000 hours). 

2 (1 billion confirmations at one minute per 

confirmation = 1 billion minutes; 1 billion minutes/ 

60 minutes per hour = 16.7 million hours.) 

3 (16.7 million hours to generate and send 

confirmations to customers + 2 million hours to 

calculate revenue sharing and portfolio brokerage 

amounts and to maintain and further update the 

confirmation delivery systems = 18.7 million 

hours.) 4 (1 billion confirmations at $1.05 per 

confirmation = $1.05 billion.) As noted above, 

confirmations for transactions in covered securities 

are currently required to be delivered pursuant to 

rule 10b–10 or MSRB rule G–15, as applicable. As 

a result, this estimated cost is not entirely a new 

cost, but reflects a shift of costs from rule 10b–10 

to proposed rule 15c2–2. This estimated cost also 

reflects an incremental increase in the cost of 

generating confirmations from 89 cents under rule 

10b–10 to $1.05 under proposed rule 15c2–2. This 

incremental cost is associated with generating the 

two-page confirmation that would be required 

under proposed rule 15c2–2, as compared to a halfpage or one-page confirmation that is currently 

permitted under rule 10b–10. 

5 (1 billion confirmations delivered pursuant to 

rule 10b–10 at $0.89 per confirmation = $890 

million; $1.05 billion¥$890 million = $160 

million.) 

The Commission anticipates on-going 

burdens for complying with the 

requirements of proposed rule 15c2–2, 

including calculating revenue sharing 

and portfolio brokerage amounts 

required under rule 15c2–2. Based upon 

discussions with industry 

representatives, the Commission staff 

understands that, once completed, this 

reprogramming and systems updating 

would permit brokers, dealers, and 

municipal securities dealers to have 

automated access to the information that 

would be required to be disclosed in 

confirmations delivered pursuant to 

proposed rule 15c2–2. As a result, the 

burden associated with obtaining data to 

be included in confirmations would be 

de minimis. The Commission staff 

estimates from information provided by 

industry participants that the annual 

burden to brokers, dealers and 

municipal securities dealers, and their 

vendors, to comply with the 

requirements under proposed rule 

15c2–2 to calculate revenue sharing and 

portfolio brokerage amounts and to 

maintain and further update the 

confirmation delivery systems, would 

be 2 million hours.1

Brokers, dealers and municipal 

securities dealers also would have a 

burden for generating and sending 

confirmations to investors. The 

Commission staff estimates from 

information provided by industry 

participants that it takes about one 

minute to generate and send a 

confirmation. Based on the estimate that 

there are 1 billion transactions annually 

in the covered securities, the 

Commission staff estimates that the 

annual burden to brokers, dealers and 

municipal securities dealers to generate 

and send confirmations to customers 

pursuant to proposed rule 15c2–2 

would be 16.7 million hours.2 It is 

important to note, however, that 

confirmations for transactions in 

covered securities are currently required 

to be delivered pursuant to rule 10b–10 

(17 CFR 240.10b–10) or MSRB rule G–

15, as applicable. As a result, the burden 

for generating and sending 

confirmations would not be entirely 

new, but would reflect a shift of burdens 

from rule 10b–10 to proposed rule 

15c2–2. In addition, brokers, dealers 

and municipal securities dealers 

routinely send customers account 

statements pursuant to self-regulatory 

organizations’ requirements and for 

reasons of prudent business practice. 

Nonetheless, the Commission staff 

estimates that the total annual burden 

for complying with the requirements of 

proposed rule 15c2–2 would be 18.7 

million hours.3 The number of 

confirmations sent and the cost of the 

confirmations vary from firm to firm. 

Smaller firms typically send fewer 

confirmations than larger firms because 

they effect fewer transactions. 

As stated earlier, the Commission staff 

estimates that there are 1 billion 

securities transactions annually 

involving mutual fund shares, UIT 

interests and college savings plan 

interests. According to information 

provided by industry participants, the 

Commission staff estimates that the 

average cost, including postage and 

printing, for a two-page confirmation is 

about $1.05. As a result, the 

Commission staff estimates that the 

annual costs of complying with the 

requirements of proposed rule 15c2–2, 

including the printing and postal costs 

for generating and sending 

confirmations, would be $1.05 billion,4

reflecting an increase of $160 million 

over the cost of the confirmations had 

they been delivered pursuant to rule 

10b–10.5

In summary, proposed rule 15c2–2 

potentially would apply to all of the 

approximately 5,338 brokers, dealers 

and municipal securities dealers that are 

registered with the Commission and that 

are members of NASD. It would also 

potentially apply to approximately 62 

additional municipal securities dealers. 

The staff estimates that the annual 

burden for complying with the 

requirements of proposed rule 15c2–2 

would be 18.7 million hours and that 

the annual costs of complying with the 

requirements of proposed rule 15c2–2, 

including the printing and postal costs 

for generating and sending 

confirmations, would be $1.05 billion. 

We note that, as stated above, many of 

these costs and burdens, including the 

majority of the annual costs and 

burdens, would be shifted from rule 

10b–10 to proposed rule 15c2–2. 

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 shall have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden of the proposed collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information to be 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. 

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. 

Direct your written comments to 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: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 60 days of 

this notice. 

Dated: March 21, 2007. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6127 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 


ycherry on PROD1PC64 with NOTICES