Federal Register / Vol. 80, No. 51 / Tuesday, March 17, 2015 / Notices 13943 

31 15 U.S.C. 78s(b)(2). 

32 15 U.S.C. 78s(b)(2). 

33 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3NOM is a facility of NASDAQ. References in 

this proposal to Chapter and Series refer to NOM 

rules, unless otherwise indicated. 

4The term ‘‘Professional’’ means any person or 

entity that (i) is not a broker or dealer in securities, 

and (ii) places more than 390 orders in listed 

options per day on average during a calendar month 

for its own beneficial account(s) pursuant to 

Chapter I, Section 1(a)(48). All Professional orders 

shall be appropriately marked by Participants. The 

Exchange initially established Professional pricing 

in order to ‘‘. . . bring additional revenue to the 

Exchange.’’ See Securities Exchange Act Release 

No. 64494 (May 13, 2011), 76 FR 29014 (May 19, 

2011) (SR–NASDAQ–2011–066). In this filing, the 

Exchange addressed the perceived favorable pricing 

of Professionals who were assessed fees and paid 

rebates like a Customer prior to the filing; and noted 

that a Professional, unlike a retail Customer, has 

access to sophisticated trading systems that contain 

functionality not available to retail Customers. 

5The term ‘‘Firm’’ applies to any transaction that 

is identified by a member or member organization 

for clearing in the Firm range at The Options 

Clearing Corporation (‘‘OCC’’). 

6The term ‘‘NOM Market Maker’’ means a 

Participant that has registered as a Market Maker on 

NOM pursuant to Chapter VII, Section 2, and must 

also remain in good standing pursuant to Chapter 

VII, Section 4. In order to receive NOM Market 

Maker pricing in all securities, the Participant must 

be registered as a NOM Market Maker in at least one 

security. See Chapter XV. ‘‘Participant’’ means a 

firm, or organization that is registered with the 

Exchange pursuant to Chapter II of these Rules for 

purposes of participating in options trading on 

NOM as a ‘‘Nasdaq Options Order Entry Firm’’ or 

‘‘Nasdaq Options Market Maker’’. See Chapter I, 

Section (a)(40). 

7The term ‘‘Non-NOM Market Maker’’ is a 

registered market maker on another options 

exchange that is not a NOM Market Maker. A NonNOM Market Maker must append the proper NonNOM Market Maker designation to orders routed to 

NOM. 

8The term ‘‘Broker-Dealer’’ applies to any 

transaction which is not subject to any of the other 

transaction fees applicable within a particular 

category. 

9The Penny Pilot was established in March 2008 

and was last extended in 2014. See Securities 

Exchange Act Release Nos. 57579 (March 28, 2008), 

73 FR 18587 (April 4, 2008) (SR–NASDAQ–2008– 

026) (notice of filing and immediate effectiveness 

establishing Penny Pilot); and 73686 (November 25, 

2014), 79 FR 71477 (December 2, 2014) (SR– 

NASDAQ–2014–115) (notice of filing and 

immediate effectiveness extending the Penny Pilot 

through June 30, 2015). All Penny Pilot Options 

listed on the Exchange can be found at http://

www.nasdaqtrader.com/Micro.aspx?id=phlx. 

of such transactions that meet the 

Suppression Criteria. FINRA stated that 

this additional information would 

facilitate a more effective surveillance 

program and improve post-trade 

transparency. The Commission believes 

that these new requirements are 

reasonably designed to carry out these 

objectives and are therefore consistent 

with the Act. Furthermore, the 

Commission does not believe that 

commenters raised any issue that would 

preclude approval of this proposal, and 

that FINRA reasonably responded to the 

comments in Amendment No. 1. 

VI. Accelerated Approval 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,31 for approving the proposed rule 

change, as modified by Amendment No. 

1 thereto, prior to the 30th day after 

publication of Amendment No. 1 in the 

Federal Register. Amendment No. 1 

responds to the specific issue regarding 

the implementation timeframe raised by 

both comment letters. Furthermore, 

Amendment No. 1 clarifies when the 

Suppression Indicator should be 

included as well as when to determine 

non-member affiliate status. The 

Commission notes that the rest of the 

proposed rule change is not being 

amended and was subject to a full 

notice-and-comment period. These 

revisions add clarity to the proposal and 

do not raise any novel regulatory 

concerns. Accordingly, the Commission 

finds that good cause exists to approve 

the proposal, as modified by 

Amendment No. 1, on an accelerated 

basis. 

VII. Conclusion 

IT IS THEREFORE ORDERED 

pursuant to Section 19(b)(2) of the Act 32

that the proposed rule change (SR– 

FINRA–2014–050), as modified by 

Amendment No. 1, be and hereby is 

approved on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–06012 Filed 3–16–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74475; File No. SR– 

NASDAQ–2015–019] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Penny Pilot Options 

March 11, 2015. 

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 February 

27, 2015, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I, II, and III, below, which Items 

have been prepared by NASDAQ. 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 

NASDAQ proposes to modify Chapter 

XV, entitled ‘‘Options Pricing,’’ at 

Section 2 governing pricing for 

NASDAQ members using the NASDAQ 

Options Market (‘‘NOM’’),3 NASDAQ’s 

facility for executing and routing 

standardized equity and index options. 

Specifically, NOM proposes to amend 

certain Fees for Removing Liquidity. 

While the changes proposed herein 

are effective upon filing, the Exchange 

has designated that the amendments be 

operative on March 2, 2015. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://

www.nasdaq.cchwallstreet.com, at the 

principal office of the Exchange, 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 

NASDAQ proposes to modify Chapter 

XV, entitled ‘‘Options Pricing,’’ at 

Section 2(1) governing the fees assessed 

for option orders entered into NOM. 

Specifically, the Exchange proposes to 

increase the Professional,4 Firm,5 NOM 

Market Maker,6 Non-NOM Market 

Maker,7 and Broker-Dealer 8 Penny Pilot 

Options 9 Fees for Removing Liquidity. 

mstockstill on DSK4VPTVN1PROD with NOTICES

13944 Federal Register / Vol. 80, No. 51 / Tuesday, March 17, 2015 / Notices 

10The term ‘‘Customer’’ applies to any 

transaction that is identified by a Participant for 

clearing in the Customer range at the OCC which 

is not for the account of broker or dealer or for the 

account of a ‘‘Professional’’ (as that term is defined 

in Chapter I, Section 1(a)(48)). 

11 In addition, note d states that Participants that 

qualify for Customer or Professional Rebate to Add 

Liquidity Tiers 7 or 8 (the highest rebate tiers) in 

a given month will be assessed a Professional, Firm, 

Non-NOM Market Maker, NOM Market Maker, or 

Broker-Dealer Fee for Removing Liquidity in Penny 

Pilot Options of $0.48 per contract and a Customer 

Fee for Removing Liquidity in Penny Pilot Options 

of $0.47 per contract. See Chapter XV, Section 2(1). 

12Customers will continue to be assessed a Penny 

Pilot Option Fee for Removing Liquidity of $0.48 

per contract. 

13The Customer and Professional Rebate to Add 

Liquidity in Penny Pilot Options is earned pursuant 

to eight Monthly Volume Tiers. The NOM Market 

Maker Rebate to Add Liquidity in Penny Pilot 

Options is earned pursuant to six different Monthly 

Volume Tiers. The concept of ‘‘Common 

Ownership’’ (Participants under 75% common 

ownership or control) applies to pricing in Chapter 

XV, Section 2 for which a volume threshold or 

volume percentage is required to obtain the pricing. 

See Chapter XV, Section 2(1). 

14 15 U.S.C. 78f. 

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

16For obligations of Market Makers, see Chapter 

VII, Section 5. For Market Maker quotations (e.g. 

firm quotes, continuous quotes), see Chapter VII, 

Section 6. 

17See, for example, the Miami International 

Securities Exchange LLC (‘‘MIAX’’) Fee Schedule. 

Specifically, orders executed for the account of nonMIAX market makers will be assessed $0.55 per 

contract in options overlying EEM, GLD, IWM, 

QQQ, and SPY. 

18See supra note 16 regarding continuous 

quoting and the commitment of capital by NOM 

Market Makers. 

No change is proposed to Customer 10

Penny Pilot Options Fees for Removing 

Liquidity. 

Section 2 NASDAQ Options Market— 

Fees and Rebates 

Penny Pilot Fees for Removing Liquidity 

The Exchange proposes to amend the 

Fees for Removing Liquidity in Penny 

Pilot Options in Chapter IV, Section 2(1) 

as follows: 

(1) FEES FOR EXECUTION OF CONTRACTS ON THE NASDAQ OPTIONS MARKET

Fees and rebates (per executed contract) 

Customer Professional Firm 

Non-NOM 

market 

maker 

NOM 

market 

maker 

Brokerdealer 

Penny Pilot Options: 

Fee for Removing Liquidity ....................................... $0.48 $0.50 d $0.50 d $0.50 d $0.50 d $0.50 d

Today, Professionals, Firms, NonNOM Market Makers, NOM Market 

Makers, and Broker-Dealers are assessed 

a $0.49 per contract Fee for Removing 

Liquidity in a Penny Pilot Option.11

The Exchange proposes to increase 

the Penny Pilot Fee for Removing 

Liquidity for Professionals, Firms, NonNOM Market Makers, NOM Market 

Makers, and Broker-Dealers by a penny, 

from $0.49 to $0.50 per contract.12 The 

Exchange is increasing the Fees for 

Removing Liquidity in Penny Pilot 

Options so that it will be able to 

continue to offer rebates to Customers, 

Professionals, Firms, Non-NOM Market 

Makers, NOM Market Makers, and 

Broker-Dealers to attract liquidity and 

encourage order interaction on NOM.13

The Exchange will still allow 

participants that qualify for Customer or 

Professional Rebate to Add Liquidity 

Tiers 7 or 8 in a given month to be 

assessed a Professional, Firm, Non-NOM 

Market Maker, NOM Market Maker, or 

Broker-Dealer Fee for Removing 

Liquidity in Penny Pilot Options of 

$0.48 per contract. 

2. Statutory Basis 

NASDAQ believes that the proposed 

fee changes are consistent with the 

provisions of Section 6 of the Act,14 in 

general, and with Section 6(b)(4) of the 

Act,15 in particular, in that they provide 

for the equitable allocation of reasonable 

dues, fees and other charges among 

members and issuers and other persons 

using any facility or system which 

NASDAQ operates or controls as 

described in detail below. 

Penny Pilot Fees for Removing Liquidity 

The Exchange’s proposal to increase 

the Professional, Firm, Non-NOM 

Market Maker, NOM Market Maker, and 

Broker-Dealer Fees for Removing 

Liquidity in Penny Pilot Options from 

$0.49 to $0.50 per contract is reasonable 

because the increase will afford the 

Exchange the opportunity to offer 

additional and increased rebates to 

these Exchange participants, which 

should benefit all market participants 

through increased liquidity and order 

interaction. The Exchange believes that 

rebates incentivize Participants to select 

the Exchange as a venue to post 

liquidity and attract additional order 

flow to the benefit of all market 

participants. Incentivizing Participants 

to post liquidity will also benefit 

Participants through increased order 

interaction. Increased liquidity, and in 

particular Customer liquidity (as noted, 

the fee for removing Customer liquidity 

continues to be lower than for removing 

other liquidity) provides more trading 

opportunities, which attracts other 

Participants, including NOM Market 

Makers.16 An increase in the activity of 

these market participants in turn 

facilitates tighter spreads, which may 

cause an additional corresponding 

increase in order flow from other market 

participants. Moreover, in constructing 

the Exchange’s fee and rebate program, 

the Exchange aims to remain 

competitive with other venues so that it 

is a superior choice for market 

participants when posting orders. The 

Exchange believes that the fee resulting 

from the proposed increase is still less 

than the rates assessed by other options 

for certain Penny Pilot Options.17

The Exchange believes that it is 

equitable and not unfairly 

discriminatory to increase Fees for 

Removing Liquidity in Penny Pilot 

Options for Professionals, Firms, NonNOM Market Makers, NOM Market 

Makers, and Broker-Dealers because all 

market participants, other than 

Customers, will continue to be assessed 

a uniform fee. As explained herein, 

order flow brings unique benefits to the 

market through increased liquidity 

which benefits all NOM Participants.18

Further, the Exchange believes it is 

reasonable, equitable and not unfairly 

discriminatory to offer Participants that 

qualify for Customer or Professional 

Rebate to Add Liquidity Tiers 7 or 8 in 

a given month to be assessed a 

Professional, Firm, Non-NOM Market 

Maker, NOM Market Maker, or BrokerDealer Fee for Removing Liquidity in 

Penny Pilot Options of $0.48 per 

contract instead of the proposed $0.50 

per contract. The increase in the 

differential from $0.01 to $0.02 is 

reasonable, equitable and not unfairly 

discriminatory because it is consistent 

with differentials at competing options 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 80, No. 51 / Tuesday, March 17, 2015 / Notices 13945 

19See PHLX’s Pricing Schedule. 20See supra note 16. 21 15 U.S.C. 78s(b)(3)(A)(ii). 

exchanges. For example, NASDAQ 

OMX PHLX (‘‘PHLX’’) provides that any 

member or member organization under 

Common Ownership with another 

member or member organization that 

qualifies for Customer Rebate Tiers 2, 3, 

4 or 5 in Section B of the Pricing 

Schedule will be assessed $0.60 per 

contract, a reduction of $0.10 from the 

standard rate of $0.70 assessed 

Professional, Firm and Broker-Dealer.19

The Exchange, and its facility NOM, 

operates in a highly competitive market, 

comprised of twelve exchanges, in 

which market participants can easily 

and readily direct order flow to 

competing venues if they deem fee 

levels at a particular venue to be 

excessive or rebates to be inadequate. 

Accordingly, the fees that are assessed 

and the rebates paid by the Exchange, as 

described in the proposal, are 

influenced by these robust market forces 

and therefore must remain competitive 

with fees charged and rebates paid by 

other venues and therefore must 

continue to be reasonable and equitably 

allocated to those members that opt to 

direct orders to the Exchange rather 

than competing venues. 

The proposed fees are designed to 

ensure a fair and reasonable use of 

Exchange resources by allowing the 

Exchange to recoup costs while 

continuing to attract liquidity and offer 

connectivity at competitive rates to 

Exchange members and member 

organizations. 

By offering competitive pricing, the 

Exchange desires to incentivize 

members and member organizations, 

through the Exchange’s rebate and fee 

structure, to select NOM as a venue for 

bringing liquidity to the Exchange and 

trading. Such competitive, differentiated 

pricing exists today on other options 

exchanges. The Exchange’s goal is 

creating and increasing incentives to 

attract orders that will, in turn, benefit 

all market participants through 

increased liquidity. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASDAQ does not believe that the 

proposed rule changes will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

In the Exchange’s fee schedule for 

Removing Liquidity in Penny Pilot 

Options, Customers have had to pay the 

lowest fee, and this continues to be 

reflected in the pricing schedule. The 

Exchange does not believe the proposed 

differential would result in any burden 

on competition as between Participants. 

The Exchange believes that continuing 

to assess Customers the current fee 

while increasing the fee for other 

Participants creates competition among 

options exchanges because the 

Exchange believes that this may cause 

market participants to select NOM as a 

venue to send Customer and other order 

flow. The Exchange believes that 

incentivizing Participants to post 

liquidity on NOM benefits NOM 

Participants through increased order 

interaction. 

The Exchange’s proposal to increase 

the Professional, Firm, Non-NOM 

Market Maker, NOM Market Maker, and 

Broker-Dealer Fees for Removing 

Liquidity in Penny Pilot Options does 

not misalign the current fees on NOM. 

As noted, Customers were assessed less 

than other participants before the 

proposal, and will continue to be 

assessed less under the new fee. The 

Exchange believes that other market 

participants benefit from incentivizing 

order flow as explained herein. As 

noted, Customers continue to pay a 

lower Fee for Removing Liquidity in 

Penny Pilot Options, which is currently 

the case for most fees on NOM that are 

either not assessed to a Customer or 

where a Customer is assessed the lowest 

fee because of the liquidity such order 

flow brings to the Exchange. Also, NOM 

Market Makers have obligations 20 to the 

market which are not borne by other 

market participants and therefore the 

Exchange believes that NOM Market 

Makers are entitled to a lower fee. 

For the reasons specified herein, the 

Exchange does not believe this proposal 

will result in any burden on 

competition. The Exchange operates in 

a highly competitive market comprised 

of twelve U.S. options exchanges in 

which sophisticated and knowledgeable 

market participants can readily send 

order flow to competing exchanges if 

they deem fee levels or rebate incentives 

at a particular exchange to be excessive 

or inadequate. The Exchange believes 

that this competitive marketplace 

impacts the fees and rebates present on 

the Exchange today and substantially 

influences the proposals set forth above. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Pursuant to Section 19(b)(3)(A)(ii) of 

the Act,21 the Exchange has designated 

this proposal as establishing or changing 

a due, fee, or other charge imposed on 

any person, whether or not the person 

is a member of the self-regulatory 

organization, which renders the 

proposed rule change effective upon 

filing. 

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: (i) necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

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 (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2015–019 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2015–019. 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 Web site (http://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 

mstockstill on DSK4VPTVN1PROD with NOTICES

13946 Federal Register / Vol. 80, No. 51 / Tuesday, March 17, 2015 / Notices 

22 17 CFR 200.30–3(a)(12). 

1This figure is based on the estimated 8,145 

operating companies that filed annual reports on 

Form 10–K, Form 20–F, or Form 40–F during the 

2013 fiscal year (the most recent data currently 

available), and the estimated 3,251 investment 

companies that filed periodic reports on Form N– 

SAR between June 1, 2013 and May 31, 2014 (the 

most recent data currently available). 

2This estimate is based on the issuer-filings made 

with the Commission during the past three years 

that include a reference to the issuer’s QLCC. 

those that may be withheld from the 

public in accordance with the 

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

available for Web site 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NASDAQ–2015–019 and should be 

submitted on or before April 7, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–06018 Filed 3–16–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: U.S. Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE., Washington, DC 

20549–2736. 

Extension: 

Reports of Evidence of Material Violations. 

SEC File No. 270–514, OMB Control No. 

3235–0572. 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act (PRA) 

of 1995, 44 U.S.C. Sections 3501–3520, 

the Securities and Exchange 

Commission (‘‘Commission’’) is 

soliciting comments on the collection of 

information summarized below. The 

Commission plans to submit the 

existing collection of information to the 

Office of Management and Budget for 

extension of the previously approved 

collection of information discussed 

below. 

On February 6, 2003, the Commission 

published final rules, effective August 5, 

2003, entitled ‘‘Standards of 

Professional Conduct for Attorneys 

Appearing and Practicing Before the 

Commission in the Representation of an 

Issuer’’ (17 CFR 205.1–205.7). The 

information collection embedded in the 

rules is necessary to implement the 

Standards of Professional Conduct for 

Attorneys prescribed by the rule and 

required by Section 307 of the SarbanesOxley Act of 2002 (15 U.S.C. 7245). The 

rules impose an ‘‘up-the-ladder’’ 

reporting requirement when attorneys 

appearing and practicing before the 

Commission become aware of evidence 

of a material violation by the issuer or 

any officer, director, employee, or agent 

of the issuer. An issuer may choose to 

establish a qualified legal compliance 

committee (‘‘QLCC’’) as an alternative 

procedure for reporting evidence of a 

material violation. In the rare cases in 

which a majority of a QLCC has 

concluded that an issuer did not act 

appropriately, the QLCC may 

communicate that information to the 

Commission. The collection of 

information is, therefore, an important 

component of the Commission’s 

program to discourage violations of the 

federal securities laws and promote 

ethical behavior of attorneys appearing 

and practicing before the Commission. 

The respondents to this collection of 

information are attorneys who appear 

and practice before the Commission 

and, in certain cases, the issuer, and/or 

officers, directors and committees of the 

issuer. In providing quality 

representation to issuers, attorneys may 

report evidence of violations to others 

within the issuer, including the Chief 

Legal Officer, the Chief Executive 

Officer, and, where necessary, the 

directors. In addition, officers and 

directors investigate evidence of 

violations and report within the issuer 

the results of the investigation and the 

remedial steps they have taken or 

sanctions they have imposed. Except as 

discussed below, we believe that the 

reporting requirements imposed by the 

rule are ‘‘usual and customary’’ 

activities that do not add to the burden 

that would be imposed by the collection 

of information. 

Certain aspects of the collection of 

information, however, may impose a 

burden. For an issuer to establish a 

QLCC, the QLCC must adopt written 

procedures for the confidential receipt, 

retention, and consideration of any 

report of evidence of a material 

violation. We estimate for purposes of 

the PRA that there are approximately 

11,396 issuers that are subject to the 

rules.1 Of these, we estimate that 

approximately 3.3 percent, or 373, have 

established or will establish a QLCC.2

Establishing the written procedures 

required by the rule should not impose 

a significant burden. We assume that an 

issuer would incur a greater burden in 

the year that it first establishes the 

procedures than in subsequent years, in 

which the burden would be incurred in 

updating, reviewing, or modifying the 

procedures. For purposes of the PRA, 

we assume that an issuer would spend 

6 hours every three-year period on the 

procedures. This would result in an 

average burden of 2 hours per year. 

Thus, we estimate for purposes of the 

PRA that the total annual burden 

imposed by the collection of 

information would be 746 hours. 

Assuming half of the burden hours will 

be incurred by outside counsel at a rate 

of $500 per hour would result in a cost 

of $186,500. 

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. 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 requested 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[s] 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. 

The public may view the background 

documentation for this information 

collection at the following Web site, 

www.reginfo.gov . Comments should be 

directed: (i) to 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 email to: 

Shagufta_Ahmed@omb.eop.gov; and (ii) 

to Pamela Dyson, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Remi PavlikSimon, 100 F St. NE., Washington, DC 

20549 or by sending an email to 

mstockstill on DSK4VPTVN1PROD with NOTICES