76902 Federal Register / Vol. 89, No. 182 / Thursday, September 19, 2024 / Notices 

17 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Cboe Global Markets, U.S. Equities Market 

Volume Summary, Month-to-Date (August 22, 

2024), available at https://www.cboe.com/us/ 

equities/market_statistics/. 4See BYX Equities Fee Schedule, Standard Rates. 

5 Id. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CboeBZX–2024–083 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–CboeBZX–2024–083. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–CboeBZX–2024–083 and should be 

submitted on or before October 10, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–21284 Filed 9–18–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101022; File No. SR– 

CboeBYX–2024–033] 

Self-Regulatory Organizations; Cboe 

BYX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule Regarding Add Volume 

Tiers 

September 13, 2024. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on 

September 3, 2024, Cboe BYX Exchange, 

Inc. (the ‘‘Exchange’’ or ‘‘BYX’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BYX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX’’) proposes to 

amend its Fee Schedule. The text of the 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/BYX/), 

at the Exchange’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Fee Schedule applicable to its equities 

trading platform (‘‘BYX Equities’’) by 

modifying the criteria of Add Volume 

Tiers 1 and 2 and the rate associated 

with Add Volume Tier 1. The Exchange 

proposes to implement these changes 

effective September 3, 2024. 

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues 

that do not have similar self-regulatory 

responsibilities under the Securities 

Exchange Act of 1934 (the ‘‘Act’’), to 

which market participants may direct 

their order flow. Based on publicly 

available information,3 no single 

registered equities exchange has more 

than 16% of the market share. Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow. 

The Exchange in particular operates a 

‘‘Taker-Maker’’ model whereby it pays 

credits to members that remove 

liquidity and assesses fees to those that 

add liquidity. The Exchange’s Fee 

Schedule sets forth the standard rebates 

and rates applied per share for orders 

that remove and provide liquidity, 

respectively. Currently, for orders in 

securities priced at or above $1.00, the 

Exchange provides a standard rebate of 

$0.00200 per share for orders that 

remove liquidity and assesses a fee of 

$0.00200 per share for orders that add 

liquidity.4 For orders in securities 

priced below $1.00, the Exchange does 

not assess any fees for orders that add 

liquidity, and provides a rebate in the 

amount of 0.10% of the total dollar 

value for orders that remove liquidity.5

Additionally, in response to the 

competitive environment, the Exchange 

also offers tiered pricing which provides 

Members opportunities to qualify for 

higher rebates or reduced fees where 

certain volume criteria and thresholds 


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Federal Register / Vol. 89, No. 182 / Thursday, September 19, 2024 / Notices 76903 

6Fee code B is appended to displayed orders that 

add liquidity to BYX in Tape B securities. 

7Fee code V is appended to displayed orders that 

add liquidity to BYX in Tape A securities. 

8Fee code Y is appended to displayed orders that 

add liquidity to BYX in Tape C securities. 

9Fee code AD is appended to displayed orders 

that execute in a Periodic Auction. 

10 ‘‘Auction ADV’’ means average daily auction 

volume calculated as the number of shares executed 

in an auction per day. 

11 ‘‘ADAV’’ means average daily added volume 

calculated as the number of shares added per day. 

ADAV is calculated on a monthly basis. 

12 ‘‘TCV’’ means total consolidated volume 

calculated as the volume reported by all exchanges 

and trade reporting facilities to a consolidated 

transaction reporting plan for the month for which 

the fees apply. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

15 Id. 

16 15 U.S.C. 78f(b)(4). 

17See e.g., EDGA Equities Fee Schedule, Footnote 

7, Add/Remove Volume Tiers. 

18See e.g., BYX Equities Fee Schedule, Footnote 

1, Add/Remove Volume Tiers. 

are met. Tiered pricing provides an 

incremental incentive for Members to 

strive for higher tier levels, which 

provides increasingly higher benefits or 

discounts for satisfying increasingly 

more stringent criteria. 

Add/Remove Volume Tiers 

Under footnote 1 of the Fee Schedule, 

the Exchange currently offers various 

Add/Remove Volume Tiers. In 

particular, the Exchange offers five Add 

Volume Tiers that each provide a 

reduced fee for Members’ qualifying 

orders yielding fee codes B,6 V,7 Y,8 and 

AD 9 where a Member reaches certain 

add volume-based criteria. The 

Exchange now proposes to amend the 

criteria of Add Volume Tiers 1 and 2. 

The Exchange also proposes to lower 

the reduced fee associated with Add 

Volume Tier 1. The current criteria for 

Add Volume Tiers 1 and 2 is as follows: 

• Add Volume Tier 1 provides a 

reduced fee of $0.0017 per share in 

securities priced at or above $1.00 to 

qualifying orders (i.e., orders yielding 

fee codes B, V, Y, or AD) where Member 

has a combined Auction ADV 10 and 

ADAV 11 ≥ 0.20% of the TCV.12

• Add Volume Tier 2 provides a 

reduced fee of $0.0014 per share in 

securities priced at or above $1.00 to 

qualifying orders (i.e., orders yielding 

fee codes B, V, Y, or AD) where Member 

has a combined Auction ADV and 

ADAV ≥ 0.25% of the TCV. 

The proposed criteria for Add Volume 

Tiers 1 and 2 is as follows: 

• Proposed Add Volume Tier 1 

provides a reduced fee of $0.0016 per 

share in securities priced at or above 

$1.00 to qualifying orders (i.e., orders 

yielding fee codes B, V, Y, or AD) where 

Member has a combined Auction ADV 

and ADAV ≥ 0.10% of the TCV or has 

a combined Auction ADV and ADAV ≥ 

11,000,000. 

• Proposed Add Volume Tier 2 

provides a reduced fee of $0.0014 per 

share in securities priced at or above 

$1.00 to qualifying orders (i.e., orders 

yielding fee codes B, V, Y, or AD) where 

Member has a combined Auction ADV 

and ADAV ≥ 0.15% of the TCV or has 

a combined Auction ADV and ADAV ≥ 

16,000,000. 

The Exchange believes that the 

proposed modifications to current Add 

Volume Tiers 1 and 2 will continue to 

incentivize Members to add displayed 

liquidity to the Exchange, thereby 

contributing to a deeper and more liquid 

market, which benefits all market 

participants and provides greater 

execution opportunities on the 

Exchange. While the proposed criteria 

in Add Volume Tiers 1 and 2 is less 

difficult to achieve than the current 

criteria, the revised criteria continue to 

remain commensurate with the lower 

fees (including the proposed lower fee 

of Add Volume Tier 1) that will be 

assessed to a Member satisfying the 

proposed criteria. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.13 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 14 requirements that the rules of 

an exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 15 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers as 

well as Section 6(b)(4) 16 as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members and 

other persons using its facilities. 

As described above, the Exchange 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. The 

Exchange believes that its proposal to 

modify the criteria of Add Volume Tiers 

1 and 2 reflects a competitive pricing 

structure designed to incentivize market 

participants to direct their order flow to 

the Exchange, which the Exchange 

believes would enhance market quality 

to the benefit of all Members. 

Additionally, the Exchange notes that 

relative volume-based incentives and 

discounts have been widely adopted by 

exchanges,17 including the Exchange,18

and are reasonable, equitable and nondiscriminatory because they are open to 

all Members on an equal basis and 

provide additional benefits or discounts 

that are reasonably related to (i) the 

value to an exchange’s market quality 

and (ii) associated higher levels of 

market activity, such as higher levels of 

liquidity provision and/or growth 

patterns. Competing equity exchanges 

offer similar tiered pricing structures, 

including schedules or rebates and fees 

that apply based upon members 

achieving certain volume and/or growth 

thresholds, as well as assess similar fees 

or rebates for similar types of orders, to 

that of the Exchange. 

In particular, the Exchange believes 

its proposal to modify the criteria of 

Add Volume Tiers 1 and 2 is reasonable 

because the tiers will be available to all 

Members and provide all Members with 

an opportunity to receive a lower fee. 

The Exchange further believes that 

proposed Add Volume Tiers 1 and 2 

will provide a reasonable means to 

encourage adding displayed orders in 

Members’ order flow to the Exchange 

and to incentivize Members to continue 

to provide volume to the Exchange by 

offering them an opportunity to receive 

a lower assessed fee on qualifying 

orders. An overall increase in activity 

would deepen the Exchange’s liquidity 

pool, offers additional cost savings, 

support the quality of price discovery, 

promote market transparency and 

improve market quality, for all 

investors. 

The Exchange believes proposed Add 

Volume Tiers 1 and 2 are reasonable as 

they do not represent a significant 

departure from the criteria currently 

offered in the Fee Schedule and the 

proposed lower fee associated with Add 

Volume Tier 1 is commensurate with 

the proposed lower volume thresholds. 

The Exchange also believes that the 

proposal represents an equitable 

allocation of fees and rebates and is not 

unfairly discriminatory because all 


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76904 Federal Register / Vol. 89, No. 182 / Thursday, September 19, 2024 / Notices 

19Supra note 3. 

20See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

21NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSEArca–2006–21)). 

22 15 U.S.C. 78s(b)(3)(A). 

23 17 CFR 240.19b–4(f). 

Members will be eligible for the tiers 

and have the opportunity to meet the 

tiers’ criteria and receive the 

corresponding reduced fee if such 

criteria are met. Without having a view 

of activity on other markets and offexchange venues, the Exchange has no 

way of knowing whether these proposed 

rule changes would definitely result in 

any Members qualifying for the new 

proposed tiers. While the Exchange has 

no way of predicting with certainty how 

the proposed changes will impact 

Member activity, based on the prior 

month’s volume, the Exchange 

anticipates that no Member will be able 

to satisfy proposed Add Volume Tier 1 

and at least one Member will be able to 

satisfy proposed Add Volume Tier 2. 

The Exchange also notes that the 

proposed changes will not adversely 

impact any Member’s ability to qualify 

for reduced fees or enhanced rebates 

offered under other tiers. Should a 

Member not meet the proposed new 

criteria, the Member will merely not 

receive that corresponding enhanced 

rebate. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Rather, as 

discussed above, the Exchange believes 

that the proposed change would 

encourage the submission of additional 

order flow to a public exchange, thereby 

promoting market depth, execution 

incentives and enhanced execution 

opportunities, as well as price discovery 

and transparency for all Members. As a 

result, the Exchange believes that the 

proposed changes further the 

Commission’s goal in adopting 

Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 

The Exchange believes the proposed 

rule change does not impose any burden 

on intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Particularly, 

proposed Add Volume Tiers 1 and 2 

will apply to all Members equally in 

that all Members are eligible for the tiers 

and reduced fees, have a reasonable 

opportunity to meet the proposed tiers’ 

criteria and will receive the enhanced 

rebate on their qualifying orders if such 

criteria is met. The Exchange does not 

believe the proposed change burdens 

competition, but rather, enhances 

competition as it is intended to increase 

the competitiveness of BYX by 

amending existing pricing incentives in 

order to attract order flow and 

incentivize participants to increase their 

participation on the Exchange, 

providing for additional execution 

opportunities for market participants 

and improved price transparency. 

Greater overall order flow, trading 

opportunities, and pricing transparency 

benefits all market participants on the 

Exchange by enhancing market quality 

and continuing to encourage Members 

to send orders, thereby contributing 

towards a robust and well-balanced 

market ecosystem. 

Next, the Exchange believes the 

proposed rule changes does not impose 

any burden on intermarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

As previously discussed, the Exchange 

operates in a highly competitive market. 

Members have numerous alternative 

venues that they may participate on and 

direct their order flow, including other 

equities exchanges, off-exchange 

venues, and alternative trading systems. 

Additionally, the Exchange represents a 

small percentage of the overall market. 

Based on publicly available information, 

no single equities exchange has more 

than 16% of the market share.19

Therefore, no exchange possesses 

significant pricing power in the 

execution of order flow. Indeed, 

participants can readily choose to send 

their orders to other exchange and offexchange venues if they deem fee levels 

at those other venues to be more 

favorable. Moreover, the Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 20 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’. . . .’’.21 Accordingly, the 

Exchange does not believe its proposed 

fee change imposes any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 22 and paragraph (f) of Rule 

19b–4 23 thereunder. At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CboeBYX–2024–033 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 


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Federal Register / Vol. 89, No. 182 / Thursday, September 19, 2024 / Notices 76905 

24 17 CFR 200.30–3(a)(12). 

1Staff estimate is based on a three-year average 

of funds reporting reliance on rule 17e–1 covering 

calendar years 2022–2024. 

2 1,614 funds × 50 hours per fund = 80,700 hours. 

3The Commission’s estimates concerning the 

allocation of burden hours and the relevant wage 

rates are based on consultations with industry 

representatives and on salary information for the 

securities industry compiled by the Securities 

Industry and Financial Markets Association; the 

estimated wage figures are also based on published 

rates for senior accountants and in-house attorneys, 

modified to account for an 1800-hour work-year 

and multiplied by 5.35 to account for bonuses, firm 

size, employee benefits, and overhead, yielding 

effective hourly rates of $266 and $511, 

respectively; see Securities Industry and Financial 

Markets Association, Report on Management & 

Professional Earnings in the Securities Industry 

2013. 

4 48,420 hours × $266 per hour = $12,879,720. 

5 24,210 hours × $511 per hour = $12,371,310. 

6 8,070 hours × $4,770 per hour = $38,493,900; 

the estimate for the cost of board time as a whole 

is derived from estimates made by the staff 

regarding typical board size and compensation that 

is based on information received from fund 

representatives and publicly available sources. 

7 $12,879,720 + $12,371,310 + $38,493,900 = 

$63,744,930. 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–CboeBYX–2024–033. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–CboeBYX–2024–033 and should be 

submitted on or before October 10, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–21286 Filed 9–18–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–224, OMB Control No. 

3235–0217] 

Proposed Collection; Comment 

Request; Extension: Rule 17e–1 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.) (‘‘Paperwork 

Reduction Act’’), the Securities and 

Exchange Commission (the 

‘‘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 (‘‘OMB’’) for 

extension and approval. 

Rule 17e–1 (17 CFR 270.17e–1) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a–1 et seq.) (the 

‘‘Investment Company Act’’) deems a 

remuneration as ‘‘not exceeding the 

usual and customary broker’s 

commission’’ for purposes of Section 

17(e)(2)(A) of the Investment Company 

Act (15 U.S.C. 80a–17(e)(2)(A)) if, 

among other things, a registered 

investment company’s (‘‘fund’s’’) board 

of directors, including a majority of the 

directors who are not interested persons 

of the fund, has adopted procedures 

reasonably designed to provide that the 

remuneration to an affiliated broker is 

reasonable and fair compared to that 

received by other brokers in connection 

with comparable transactions involving 

similar securities being purchased or 

sold on a securities exchange during a 

comparable period of time and the 

board makes and approves such changes 

as it deems necessary. In addition, each 

quarter, the board must determine that 

all transactions effected under the rule 

during the preceding quarter complied 

with the established procedures 

(‘‘review requirement’’). Rule 17e–1 also 

requires the fund to (i) maintain 

permanently in an easily accessible 

place a written copy of the procedures 

adopted by the board for complying 

with the requirements of the rule; and 

(ii) maintain for a period of six years, 

the first two in an easily accessible 

place, a written record of each 

transaction subject to the rule, setting 

forth the amount and source of the 

commission, fee, or other remuneration 

received; the identity of the broker; the 

terms of the transaction; and the 

materials used to determine that the 

transactions were effected in 

compliance with the procedures 

adopted by the board (‘‘recordkeeping 

requirement’’). The review and 

recordkeeping requirements of rule 17e– 

1 permit Commission staff to monitor 

the reasonableness and fairness of 

remuneration received by affiliated 

persons of the fund. Without the 

recordkeeping requirement, 

Commission inspectors would have 

difficulty ascertaining whether funds 

were complying with rule 17e–1. 

Based upon an analysis of fund filings 

on Form N–CEN, approximately 1,614 

funds report reliance on rule 17e–1.1

Based on staff experience and 

conversations with fund representatives, 

we estimate that the burden of 

compliance with rule 17e–1 is 

approximately 50 hours per fund per 

year. This time is spent, for example, 

reviewing the applicable transactions 

and maintaining records. Accordingly, 

we calculate the total estimated annual 

internal burden of complying with the 

review and recordkeeping requirements 

of rule 17e–1 to be approximately 

80,700 hours.2 We further estimate that, 

of these: 

• 60 percent (48,420 hours) are spent 

by senior accountants, at an estimated 

hourly wage of $266,3 for a total of 

approximately $12,879,720 per year; 4

• 30 percent (24,210 hours) are spent 

by in-house attorneys at an estimated 

hourly wage of $511, for a total of 

approximately $12,371,310 per year; 5

and 

• 10 percent (8,070) are spent by the 

funds’ board of directors at an hourly 

cost of $4,770, for a total of 

approximately $38,493,900 per year.6

Based on these estimated wage rates, 

the total cost to the industry of the hour 

burden for complying with the review 

and recordkeeping requirements of rule 

17e–1 is approximately $63,744,930.7

The Commission staff estimates that 

there is no cost burden associated with 

the information collection requirement 

of rule 17e–1 other than this cost. 

Estimates of average burden hours are 

made solely for the purposes of the 

Paperwork Reduction Act and are not 

derived from a comprehensive or even 


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