Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Notices 4311 

27The Exchange states that the Information 

Bulletin will discuss the following: (1) The risks 

involved in trading the Shares during the Opening 

and Late Trading Sessions when an updated IFV 

will not be calculated or publicly disseminated; (2) 

the procedures for purchases and redemptions of 

Shares in Creation Units and Redemption Units 

(and that Shares are not individually redeemable); 

(3) NYSE Arca Rule 9.2–E(a), which imposes a duty 

of due diligence on its ETP Holders to learn the 

essential facts relating to every customer prior to 

trading the Shares; (4) how information regarding 

the IFV is disseminated; (5) how information 

regarding portfolio holdings is disseminated; (6) the 

requirement that ETP Holders deliver a prospectus 

to investors purchasing newly issued Shares prior 

to or concurrently with the confirmation of a 

transaction; and (7) trading information. 

28 17 CFR 240.10A–3. 

29 15 U.S.C. 78f(b)(5). 

30 Id. 

31 17 CFR 200.30–3(a)(12). 

1Status of Investment Advisory Programs Under 

the Investment Company Act of 1940, Investment 

Company Act Rel. No. 22579 (Mar. 24, 1997) [62 FR 

15098 (Mar. 31, 1997)] (‘‘Adopting Release’’). In 

addition, there are no registration requirements 

under section 5 of the Securities Act of 1933 for 

programs that meet the requirements of rule 3a–4. 

See 17 CFR 270.3a–4, introductory note. 

2For purposes of rule 3a–4, the term ‘‘sponsor’’ 

refers to any person who receives compensation for 

sponsoring, organizing or administering the 

program, or for selecting, or providing advice to 

clients regarding the selection of, persons 

responsible for managing the client’s account in the 

program. 

3Clients specifically must be allowed to designate 

securities that should not be purchased for the 

account or that should be sold if held in the 

account. The rule does not require that a client be 

able to require particular securities be purchased for 

the account. 

4These estimates are based on an analysis of the 

number of individual clients from Form ADV Item 

5D(a)(1) and (b)(1) of advisers that report they 

provide portfolio management to wrap programs as 

Continued 

(4) The Exchange has the appropriate 

rules to facilitate transactions in the 

Shares during all trading sessions; 

(5) Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an Information Bulletin 

of the special characteristics and risks 

associated with trading the Shares; 27

(6) FINRA has implemented increased 

sales practice and customer margin 

requirements for FINRA members 

applicable to inverse, leveraged and 

inverse leveraged securities (which 

include the Shares) and options on such 

securities, as described in FINRA 

Regulatory Notices 09–31 (June 2009), 

09–53 (August 2009), and 09–65 

(November 2009). ETP Holders that 

carry customer accounts will be 

required to follow the FINRA guidance 

set forth in these notices; 

(7) For initial and continued listing, 

the Fund will be in compliance with 

Rule 10A–3 under the Act; 28 and 

(8) A minimum of 100,000 Shares of 

the Fund will be outstanding at the 

commencement of trading on the 

Exchange. 

Accordingly, the Commission finds 

that the proposed rule change, as 

modified by Amendment No. 1, is 

consistent with Section 6(b)(5) of the 

Act 29 and the rules and regulations 

thereunder applicable to a national 

securities exchange. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,30 that the 

proposed rule change (SR–NYSEArca– 

2021–28), as modified by Amendment 

No. 1, be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–01564 Filed 1–26–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–401, OMB Control No. 

3235–0459] 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Rule 3a–4 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 350l-3520), the Securities and 

Exchange Commission (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget a 

request for extension of the previously 

approved collection of information 

discussed below. 

Rule 3a–4 (17 CFR 270.3a–4) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a) (‘‘Investment Company 

Act’’ or ‘‘Act’’) provides a nonexclusive 

safe harbor from the definition of 

investment company under the Act for 

certain investment advisory programs. 

These programs, which include ‘‘wrap 

fee’’ programs, generally are designed to 

provide professional portfolio 

management services on a discretionary 

basis to clients who are investing less 

than the minimum investments for 

individual accounts usually required by 

the investment adviser but more than 

the minimum account size of most 

mutual funds. Under wrap fee and 

similar programs, a client’s account is 

typically managed on a discretionary 

basis according to pre-selected 

investment objectives. Clients with 

similar investment objectives often 

receive the same investment advice and 

may hold the same or substantially 

similar securities in their accounts. 

Because of this similarity of 

management, some of these investment 

advisory programs may meet the 

definition of investment company under 

the Act. 

In 1997, the Commission adopted rule 

3a–4, which clarifies that programs 

organized and operated in accordance 

with the rule are not required to register 

under the Investment Company Act or 

comply with the Act’s requirements.1

These programs differ from investment 

companies because, among other things, 

they provide individualized investment 

advice to the client. The rule’s 

provisions have the effect of ensuring 

that clients in a program relying on the 

rule receive advice tailored to the 

client’s needs. 

For a program to be eligible for the 

rule’s safe harbor, each client’s account 

must be managed on the basis of the 

client’s financial situation and 

investment objectives and in accordance 

with any reasonable restrictions the 

client imposes on managing the 

account. When an account is opened, 

the sponsor 2 (or its designee) must 

obtain information from each client 

regarding the client’s financial situation 

and investment objectives, and must 

allow the client an opportunity to 

impose reasonable restrictions on 

managing the account.3 In addition, the 

sponsor (or its designee) must contact 

the client annually to determine 

whether the client’s financial situation 

or investment objectives have changed 

and whether the client wishes to impose 

any reasonable restrictions on the 

management of the account or 

reasonably modify existing restrictions. 

The sponsor (or its designee) must also 

notify the client quarterly, in writing, to 

contact the sponsor (or its designee) 

regarding changes to the client’s 

financial situation, investment 

objectives, or restrictions on the 

account’s management. 

Additionally, the sponsor (or its 

designee) must provide each client with 

a quarterly statement describing all 

activity in the client’s account during 

the previous quarter. The sponsor and 

personnel of the client’s account 

manager who know about the client’s 

account and its management must be 

reasonably available to consult with the 

client. Each client also must retain 

certain indicia of ownership of all 

securities and funds in the account. 

The Commission staff estimates that 

27,979,460 clients participate each year 

in investment advisory programs relying 

on rule 3a–4.4 Of that number, the staff 


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4312 Federal Register / Vol. 87, No. 18 / Thursday, January 27, 2022 / Notices 

indicated in Form ADV Item 5I(2)(b) and (c), and 

the number of individual clients of advisers that 

identify as internet advisers in Form ADV Item 

2A(11). From analysis comparing reported 

individual client assets in Form ADV Item 5D(a)(3) 

and 5D(b)(3) to reported wrap portfolio manager 

assets in Form ADV Item 5I(2)(b) and (c), we 

discount the estimated number of individual clients 

of non-internet advisers providing portfolio 

management to wrap programs by 10%. 

5These estimates are based on the number of new 

clients expected due to average year-over-year 

growth in individual clients from Form ADV Item 

5D(a)(1) and (b)(1) (about 8%) and an assumed rate 

of yearly client turnover of 10%. 

6These estimates are based upon consultation 

with investment advisers that operate investment 

advisory programs that rely on rule 3a–4. 

7The staff bases this estimate in part on the fact 

that, by business necessity, computer records 

already will be available that contain the 

information in the quarterly reports. 

8This estimate is based on the following 

calculation: (25,852,313 continuing clients × 1 

hour) + (2,127,147 new clients × 1.5 hours) + 

(27,979,460 total clients × (0.25 hours × 4 

statements)) = 57,022,493 hours. 1 15 U.S.C. 78o–7. 

2See 17 CFR 240.17g–4; Release No. 34–55231 

(Feb. 2, 2007), 72 FR 6378 (Feb. 9, 2007); Release 

No. 34–55857 (June 5, 2007), 72 FR 33564 (June 18, 

2007). 

3 9 currently registered NRSROs × 10 hours = 90 

hours. 

estimates that 2,127,147 are new clients 

and 25,852,313 are continuing clients.5

The staff estimates that each year the 

investment advisory program sponsors’ 

staff engage in 1.5 hours per new client 

and 1 hour per continuing client to 

prepare, conduct and/or review 

interviews regarding the client’s 

financial situation and investment 

objectives as required by the rule.6

Furthermore, the staff estimates that 

each year the investment advisory 

program sponsors’ staff spends 1 hour 

per client each year to prepare and mail 

quarterly client account statements, 

including notices to update 

information.7 Based on the estimates 

above, the Commission estimates that 

the total annual burden of the rule’s 

paperwork requirements is 57,022,493 

hours.8

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. 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. 

The public may view the background 

documentation for this information 

collection at the following website, 

www.reginfo.gov. 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 email to: 

Lindsay.M.Abate@omb.eop.gov; and (ii) 

David Bottom, c/o John R. Pezzullo, 

Director/Chief Information Officer, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 20549 

or send an email to: PRA_Mailbox@

sec.gov. 

Comments must be submitted to OMB 

within 30 days of this notice to 

www.reginfo.gov/public/do/PRAMain. 

Find this particular information 

collection by selecting ‘‘Currently under 

30-day Review—Open for Public 

Comments’’ or by using the search 

function. 

Dated: January 21, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–01555 Filed 1–26–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[OMB Control No. 3235–0627] 

Rule 17g–4 30 Day Notice 2021— 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Extension: 

Rule 17g–4 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.) (‘‘PRA’’), the 

Securities and Exchange Commission 

(‘‘Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for approval of 

extension of the previously approved 

collection of information provided for in 

Rule 17g–4 (17 CFR 240.17g–4) under 

the Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.) (‘‘Exchange Act’’). 

The Credit Rating Agency Reform Act 

of 2006 added a new section 15E, 

‘‘Registration of Nationally Recognized 

Statistical Rating Organizations,’’ 1 to 

the Exchange Act. Pursuant to the 

authority granted under section 15E of 

the Exchange Act, the Commission 

adopted Rule 17g–4, which requires that 

a nationally recognized statistical rating 

organization (‘‘NRSRO’’) establish, 

maintain, and enforce written policies 

and procedures to prevent the misuse of 

material nonpublic information, 

including policies and procedures 

reasonably designed to prevent: (a) The 

inappropriate dissemination of material 

nonpublic information obtained in 

connection with the performance of 

credit rating services; (b) a person 

within the NRSRO from trading on 

material nonpublic information; and (c) 

the inappropriate dissemination of a 

pending credit rating action.2

There are 9 credit rating agencies 

registered with the Commission as 

NRSROs under section 15E of the 

Exchange Act, which have already 

established the policies and procedures 

required by Rule 17g–4. Based on staff 

experience, an NRSRO is estimated to 

spend an average of approximately 10 

hours per year reviewing its policies 

and procedures regarding material 

nonpublic information and updating 

them (if necessary), resulting in an 

average industry-wide annual hour 

burden of approximately 90 hours.3

An agency may not conduct or 

sponsor a collection of information 

unless it displays a currently valid OMB 

control number. No person shall be 

subject to any penalty for failing to 

comply with a collection of information 

subject to the PRA that does not display 

a valid OMB control number. 

The public may view background 

documentation for this information 

collection at the following website: 

>www.reginfo.gov<. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice to (i) >www.reginfo.gov/public/ 

do/PRAMain< and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, c/ 

o John R. Pezzullo, 100 F Street NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: January 21, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–01547 Filed 1–26–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–489, OMB Control No. 

3235–0541] 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 


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