13032 Federal Register / Vol. 87, No. 45 / Tuesday, March 8, 2022 / Notices 

Please direct your written comment to 

David Bottom, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o John 

Pezzullo, 100 F Street NE, Washington, 

DC 20549 or send an email to: PRA_

Mailbox@sec.gov. 

Dated: March 2, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–04802 Filed 3–7–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–258, OMB Control No. 

3235–0268] 

Proposed Collection; Comment 

Request; Extension: Rule 2a–7 

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.), 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 for extension 

and approval. 

Rule 2a–7 (17 CFR 270.2a–7) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a) (the ‘‘Act’’) governs 

money market funds. Money market 

funds are open-end management 

investment companies that differ from 

other open-end management investment 

companies in that they seek to maintain 

a stable price per share, usually $1.00. 

The rule exempts money market funds 

from the valuation requirements of the 

Act, and, subject to certain risk-limiting 

conditions, permits money market funds 

to use the ‘‘amortized cost method’’ of 

asset valuation or the ‘‘penny-rounding 

method’’ of share pricing. 

Rule 2a–7 also imposes certain 

recordkeeping and reporting obligations 

on money market funds. The board of 

directors of a money market fund, in 

supervising the fund’s operations, must 

establish written procedures designed to 

stabilize the fund’s net asset value 

(‘‘NAV’’); establish written procedures 

to test periodically the ability of the 

fund to maintain a stable NAV based on 

certain hypothetical events (‘‘stress 

testing’’); review, revise, and approve 

written procedures to stress test a fund’s 

portfolio; and create a report to the fund 

board documenting the results of stress 

testing. The board must also adopt 

guidelines and procedures relating to 

certain responsibilities it delegates to 

the fund’s investment adviser. These 

procedures and guidelines typically 

address various aspects of the fund’s 

operations. The fund must maintain and 

preserve for six years a written copy of 

both these procedures and guidelines. 

The fund also must maintain and 

preserve for six years a written record of 

the board’s considerations and actions 

taken in connection with the discharge 

of its responsibilities, to be included in 

the board’s minutes, including 

determinations to impose any liquidity 

fees or temporary suspension of 

redemptions. In addition, the fund must 

maintain and preserve for three years 

written records of certain credit risk 

analyses, evaluations with respect to 

securities subject to demand features or 

guarantees, evaluations with respect to 

asset-backed securities not subject to 

guarantees, and determinations with 

respect to adjustable rate securities and 

asset-backed securities. If the board 

takes action with respect to defaulted 

securities, events of insolvency, or 

deviations in share price, the fund must 

file with the Commission an exhibit to 

Form N–CR describing the nature and 

circumstances of the action. If any 

portfolio security fails to meet certain 

eligibility standards under the rule, the 

fund also must identify those securities 

in an exhibit to Form N–CR. After 

certain events of default or insolvency 

relating to a portfolio security, the fund 

must notify the Commission of the event 

and the actions the fund intends to take 

in response to the situation. 

A fund must also post certain periodic 

information on the its website including 

disclosure of portfolio holdings, 

disclosure of daily and weekly liquid 

assets and net shareholder flow, 

disclosure of daily current NAV, and 

disclosures of financial support received 

by the fund, the imposition and removal 

of liquidity fees, and the suspension and 

resumption of fund redemptions. Lastly, 

for funds that elect to be retail funds, 

they must create written policies and 

procedures reasonably designed to limit 

all beneficial owners of the fund to 

natural persons. 

The recordkeeping requirements in 

rule 2a–7 are designed to enable 

Commission staff in its examinations of 

money market funds to determine 

compliance with the rule, as well as to 

ensure that money market funds have 

established procedures for collecting the 

information necessary to make adequate 

credit reviews of securities in their 

portfolios. The reporting requirements 

of rule 2a–7 are intended to assist 

Commission staff in overseeing money 

market funds and reduce the likelihood 

that a fund is unable to maintain a 

stable NAV. 

Commission staff estimates that there 

are 320 money market funds (80 fund 

complexes), all of which are subject to 

rule 2a–7. Commission staff further 

estimates that there will be 

approximately 10 new money market 

funds established each year. 

Commission staff estimates that rule 2a– 

7 contains the following collection of 

information requirements: 

• Record of credit risk analyses, and 

determinations regarding adjustable rate 

securities, asset-backed securities, assetbacked securities not subject to 

guarantees, securities subject to a 

demand feature or guarantee, and 

counterparties to repurchase 

agreements. Commission staff estimates 

a total annual hour burden for 320 funds 

to be 260,440 hours. 

• Establishment of written procedures 

designed to stabilize NAV and 

guidelines and procedures for board 

delegation of authority. Commission 

staff estimates a total annual hour 

burden for 10 new money market funds 

to be 155 hours. 

• Board review of procedures and 

guidelines of any investment adviser or 

officers to whom the fund’s board has 

delegated responsibility under rule 2a– 

7 and amendment of such procedures 

and guidelines. Commission staff 

estimates a total annual hour burden for 

80 funds to be 400 hours. 

• Records of the board’s 

determination for imposing any 

liquidity fees or temporary suspension 

of redemptions. Commission staff 

estimates a total annual hour burden for 

2 funds to be 14 hours. 

• Records of the board’s 

determinations and actions related to 

failure of a security to meet certain 

eligibility standards or an event of 

default or insolvency. Commission staff 

estimates a total annual hour burden for 

20 funds to be 50 hours. 

• Establishment of written procedures 

to test periodically the ability of the 

fund to maintain a stable NAV per share 

based on certain hypothetical events 

(‘‘stress testing’’). Commission staff 

estimates a total annual hour burden for 

10 new money market funds to be 220 

hours. 

• Review, revise, and approve written 

procedures to stress test a fund’s 

portfolio. Commission staff estimates a 

total annual hour burden for 80 fund 

complexes to be 960 hours. 

• Reports to fund boards on the 

results of stress testing. Commission 

staff estimates a total annual hour 


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Federal Register / Vol. 87, No. 45 / Tuesday, March 8, 2022 / Notices 13033 

1A significant portion of the recordkeeping 

burden involves organizing information that the 

funds already collect when initially purchasing 

securities. In addition, when a money market fund 

analyzes a security, the analysis need not be 

presented in any particular format. Money market 

funds therefore have a choice of methods for 

maintaining these records that vary in technical 

sophistication and formality. Accordingly, the cost 

of preparing these documents may vary 

significantly among individual funds. The burden 

hours associated with filing reports to the 

Commission as an exhibit to Form N–CR are 

included in the PRA burden estimate for that form. 

2The amount assets under management in 

individual money market funds ranges widely, 

varying from below $50 million to well over $150 

billion. We further note that the assets under 

management figures were calculated based on net 

assets at the fund level and not the sum of the 

market values of the underlying funds. 

3The staff estimated the annual cost of preserving 

the required books and records by identifying the 

annual costs incurred by several funds and then 

relating this total cost to the average net assets of 

these funds during the year. With a total of $328.5 

million under management in small funds, $52.4 

billion under management in medium funds and 

$5.4 trillion under management in large funds, the 

costs of preservation were estimated as follows: 

((0.0051295 × $328.5 million) + (0.0005041 × $52.4 

billion) + (0.0000009 × $5.4 trillion) = $33.0 

million. For purposes of this PRA submission, 

Commission staff used the following categories for 

fund sizes: (i) Small—money market funds with $50 

million or less in assets under management; (ii) 

medium—money market funds with more than $50 

million up to and including $1 billion in assets 

under management; and (iii) large—money market 

funds with more than $1 billion in assets under 

management. 

4This estimate is based on the following 

calculation: $0.0000132 × $5.4 trillion in assets 

under management for large funds = $71.6 million. 

5This estimate is based on the following 

calculation: $71.6 million in capital costs/2 = $35.8 

million. 

6This estimate is based on the following 

calculation: $33.0 million in record preservation 

costs/2 = $16.5 million. 

burden for 80 fund complexes to be 

4,000 hours. 

• Website disclosures of portfolio 

holdings, of daily and weekly liquid 

assets and net shareholder flow, of daily 

current NAV, and disclosures of 

financial support received by the fund, 

the imposition and removal of liquidity 

fees and the suspension and resumption 

of fund redemptions. Commission staff 

estimates a total annual hour burden for 

320 funds to be 27,251 hours. 

• For funds electing retail fund status, 

written policies and procedures limiting 

all beneficial owners of the fund to 

natural persons. Commission staff 

estimates a total annual hour burden for 

2 funds to be 26 hours. 

Thus, the Commission estimates the 

total annual burden of the rule’s 

information collection requirements is 

293,516 hours. 

The estimated total annual burden is 

being decreased from 337,328 hours to 

293,516 hours. This net decrease of 

43,812 hours is attributable to a 

combination of factors, including a 

decrease in the number of money 

market funds and fund complexes, and 

updated information from money 

market funds regarding hourly burdens, 

including revised staff estimates of the 

burden hours required to comply with 

rule 2a–7. 

Commission staff estimates that in 

addition to the costs described in 

section 12, money market funds will 

incur costs to preserve records, as 

required under rule 2a–7.1 These costs 

will vary significantly for individual 

funds, depending on the amount of 

assets under fund management and 

whether the fund preserves its records 

in a storage facility in hard copy or has 

developed and maintains a computer 

system to create and preserve 

compliance records.2 Commission staff 

estimates that the amount an individual 

fund may spend ranges from $100 per 

year to $300,000. Based on a cost of 

$0.0051295 per dollar of assets under 

management for small funds, 

$0.0005041 per dollar assets under 

management for medium funds, and 

$0.0000009 per dollar of assets under 

management for large funds, the staff 

estimates compliance with the record 

storage requirements of rule 2a–7 costs 

the fund industry approximately $33.0 

million per year.3

Based on responses from individuals 

in the money market fund industry, the 

staff estimates that some of the largest 

fund complexes have created computer 

programs for maintaining and 

preserving compliance records for rule 

2a–7. Based on a cost of $0.0000132 per 

dollar of assets under management for 

large funds, the staff estimates that total 

annualized capital/startup costs range 

from $0 for small funds to $71.6 million 

for all large funds.4 Commission staff 

further estimates that, even absent the 

requirements of rule 2a–7, money 

market funds would spend at least half 

of the amount for capital costs ($35.8 

million) 5 and for record preservation 

($16.5 million) 6 to establish and 

maintain these records and the systems 

for preserving them as a part of sound 

business practices to ensure 

diversification and minimal credit risk 

in a portfolio for a fund that seeks to 

maintain a stable price per share. 

These estimates of burden hours and 

costs are made solely for the purposes 

of the Paperwork Reduction Act. The 

estimates are not derived from a 

comprehensive or even a representative 

survey or study of Commission rules. 

The collections of information 

required by rule 2a–7 are necessary to 

obtain the benefits described above. 

Notices to the Commission will not be 

kept confidential. 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. 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

estimates of the burden of the proposed 

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 by May 9, 2022. 

Please direct your written comments 

to David Bottom, Director/Chief 

Information Officer, Securities and 

Exchange Commission, C/O John 

Pezzullo, 100 F Street NE, Washington, 

DC 20549; or send an email to: PRA_

Mailbox@sec.gov. 

Dated: March 3, 2022. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–04884 Filed 3–7–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–437, OMB Control No. 

3235–0494] 

Submission for OMB Review; 

Comment Request; Extension: Rule 

30e–2 

Notice is hereby given that, under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501 et seq.), (‘‘Paperwork 

Reduction Act’’) the Securities and 

Exchange Commission (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for extension of the 

previously approved collection of 

information discussed below. 

Rule 30e–2 (17 CFR 270.30e–2) under 

the Investment Company Act of 1940 

(15 U.S.C. 80a–1 et seq.) (‘‘Investment 

Company Act’’) requires registered unit 

investment trusts (‘‘UITs’’) that invest 

substantially all of their assets in shares 

of a management investment company 

(‘‘fund’’) to send their unitholders 

annual and semiannual reports 

containing financial information on the 

underlying company. Specifically, rule 


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