Federal Register / Vol. 89, No. 235 / Friday, December 6, 2024 / Notices 97141 

1The Securities Act requires the delivery of 

prospectuses to investors who buy securities from 

an issuer or from underwriters or dealers who 

participate in a registered distribution of securities; 

see Securities Act sections 2(a)(10), 4(1), 4(3), 5(b) 

(15 U.S.C. 77b(a)(10), 77d(1), 77d(3), 77e(b)); see 

also rule 174 under the Securities Act (17 CFR 

230.174) (regarding the prospectus delivery 

obligation of dealers); rule 15c2–8 under the 

Securities Exchange Act of 1934 (17 CFR 240.15c2– 

8) (prospectus delivery obligations of brokers and 

dealers). 

2Rule 154 permits the householding of 

prospectuses that are delivered electronically to 

investors only if delivery is made to a shared 

electronic address and the investors give written 

consent to householding; implied consent is not 

permitted in such a situation. See rule 154(b)(4). 

3See rule 154(c). 

4The Commission estimates that 530 mutual 

funds prepare both the implied consent notice and 

the annual explanation of the right to revoke 

consent + 265 mutual funds that prepare only the 

annual explanation of the right to revoke. 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–438, OMB Control No. 

3235–0495] 

Submission for OMB Review; 

Comment Request; Extension: Rule 

154 

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, under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520), 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. 

The federal securities laws generally 

prohibit an issuer, underwriter, or 

dealer from delivering a security for sale 

unless a prospectus meeting certain 

requirements accompanies or precedes 

the security. Rule 154 (17 CFR 230.154) 

under the Securities Act of 1933 (15 

U.S.C. 77a) (the ‘‘Securities Act’’) 

permits, under certain circumstances, 

delivery of a single prospectus to 

investors who purchase securities from 

the same issuer and share the same 

address (‘‘householding’’) to satisfy the 

applicable prospectus delivery 

requirements.1 The purpose of rule 154 

is to reduce the amount of duplicative 

prospectuses delivered to investors 

sharing the same address. 

Under rule 154, a prospectus is 

considered delivered to all investors at 

a shared address, for purposes of the 

federal securities laws, if the person 

relying on the rule delivers the 

prospectus to the shared address, 

addresses the prospectus to the 

investors as a group or to each of the 

investors individually, and the investors 

consent to the delivery of a single 

prospectus. The rule applies to 

prospectuses and prospectus 

supplements. Currently, the rule 

permits householding of all 

prospectuses by an issuer, underwriter, 

or dealer relying on the rule if, in 

addition to the other conditions set forth 

in the rule, the issuer, underwriter, or 

dealer has obtained from each investor 

written or implied consent to 

householding.2 The rule requires 

issuers, underwriters, or dealers that 

wish to household prospectuses with 

implied consent to send a notice to each 

investor stating that the investors in the 

household will receive one prospectus 

in the future unless the investors 

provide contrary instructions. In 

addition, at least once a year, issuers, 

underwriters, or dealers, relying on rule 

154 for the householding of 

prospectuses relating to open-end 

management investment companies that 

are registered under the Investment 

Company Act of 1940 (‘‘mutual funds’’) 

and each series thereof must explain to 

investors who have provided written or 

implied consent how they can revoke 

their consent.3 Preparing and sending 

the notice and the annual explanation of 

the right to revoke are collections of 

information. 

The rule allows issuers, underwriters, 

or dealers to household prospectuses if 

certain conditions are met. Among the 

conditions with which a person relying 

on the rule must comply are providing 

notice to each investor that only one 

prospectus will be sent to the household 

and, in the case of issuers that are 

mutual funds and any series thereof, 

providing to each investor who consents 

to householding an annual explanation 

of the right to revoke consent to the 

delivery of a single prospectus to 

multiple investors sharing an address. 

The purpose of the notice and annual 

explanation requirements of the rule is 

to ensure that investors who wish to 

receive individual copies of 

prospectuses are able to do so. 

Although rule 154 is not limited to 

mutual funds, the Commission believes 

that it is used mainly by mutual funds 

and by broker-dealers that deliver 

mutual fund prospectuses. The 

Commission is unable to estimate the 

number of issuers other than mutual 

funds that rely on the rule. 

The Commission estimates that, as of 

March 2024, there are approximately 

12,118 mutual fund series registered on 

Form N–1A, approximately 1,060 of 

which are directly sold and therefore 

deliver their own prospectuses. Of 

these, the Commission estimates that 

approximately half (530 mutual fund 

series): (i) do not send the implied 

consent notice requirement because 

they obtain affirmative written consent 

to household prospectuses in the fund’s 

account opening documentation; or (ii) 

do not take advantage of the 

householding provision because of 

electronic delivery options which lessen 

the economic and operational benefits 

of rule 154 when compared with the 

costs of compliance. Therefore, the 

Commission estimates that each of the 

530 directly sold mutual fund series 

will spend an average of 20 hours per 

year complying with the notice 

requirement of the rule, for a total of 

10,600 burden hours. In addition, of the 

approximately 1,060 mutual fund series 

that are directly sold, the Commission 

estimates that approximately 75% (or 

795) will each spend 1 hour complying 

with the annual explanation of the right 

to revoke requirement of the rule, for a 

total of 795 hours. 

The Commission estimates that as of 

March 2024, there were approximately 

70 broker-dealers that have customer 

accounts with mutual funds, and 

therefore may be required to deliver 

mutual fund prospectuses. The 

Commission estimates that each affected 

broker-dealer will spend, on average, 20 

hours complying with the notice 

requirement of the rule, for a total of 

1,400 hours. In addition, each brokerdealer will also spend one hour 

complying with the annual explanation 

of the right to revoke requirement, for a 

total of 70 hours. Therefore, the total 

number of respondents for rule 154 is 

865 (795 4 mutual fund series plus 70 

broker-dealers), and the estimated total 

hour burden is approximately 12,865 

hours (11,395 hours for mutual fund 

series, plus 1,470 hours for brokerdealers). 

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 of the 

costs of Commission rules and forms. 

The 30-day public comment period 

for this information collection request 

opens on December 9, 2024 and closes 

on January 6, 2025. The public may 

view the full information request and 

submit comments at https://

www.reginfo.gov/public/do/

PRAViewICR?ref_nbr=202409-3235-007 

or email comments to 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov. 


lotter on DSK11XQN23PROD with NOTICES1
97142 Federal Register / Vol. 89, No. 235 / Friday, December 6, 2024 / Notices 

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

2 17 CFR 240.19b–4. 

3The version of the Rule Book and Sections 1 and 

5 of the Procedures which includes the Proposed 

Rule Change reflects a separate proposed rule 

change previously submitted to the Securities and 

Exchange Commission (SEC) under the Filing No. 

SR–LCH SA–2024–002 recently approved by the 

SEC. 

4All capitalized terms not defined herein have 

the same meaning as in the Rule Book or 

Procedures, as applicable, in their version as 

available on LCH SA’s website: https://

www.lch.com/resources/rulebooks/lch-sa. 

5Pursuant to Section 1.1.1 of the Rule Book, a 

CCM means any legal entity admitted as a clearing 

member in accordance with the CDS Clearing Rules 

and party to the CDS Admission Agreement, 

provided that if such entity is an FCM/BD, it has 

satisfied LCH SA that it is able to provide the CDS 

Client Clearing Services in accordance with Title V 

prior to offering such services. 

6 In accordance with amended Section 1.2 of the 

Procedures. Thus, a CDS Dealer will not be 

permitted to submit any Original Transaction under 

which it is acting on behalf of anyone other than 

itself or its affiliated CCM to LCH SA for clearing. 

7Pursuant to Section 1.1.1 of the Rule Book, the 

list of the Approved Trade Source Systems that can 

be used for the purposes of submitting Original 

Transactions to LCH SA for clearing is published 

in a Clearing Notice, which is available here: 

https://www.lch.com/system/files/media_root/

Clearing%20Notice_ATSS_no_2021-001_

04.01.2021.pdf. 

Dated: December 3, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–28732 Filed 12–5–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101790; File No. SR–LCH 

SA–2024–005] 

Self-Regulatory Organizations; LCH 

SA; Notice of Filing of Proposed Rule 

Change Relating to Dealer Status 

December 2, 2024. 

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

Securities Exchange Act of 1934 

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

hereby given that on November 21, 

2024, Banque Centrale de 

Compensation, which conducts 

business under the name LCH SA (‘‘LCH 

SA’’), filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change (‘‘Proposed 

Rule Change’’), as described in Items I, 

II and III below, which Items have been 

prepared by the clearing agency. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

LCH SA is proposing to amend its: (i) 

CDS Clearing Rule Book (‘‘Rule Book’’), 

and (ii) CDS Clearing Procedures 

(‘‘Procedures’’) (collectively the ‘‘CDS 

Clearing Rules’’) 3 to incorporate new 

terms and to make conforming, 

clarifying, and clean-up changes in 

order to enable affiliates of a Clearing 

Member, which would be referred to as 

‘‘CDS Dealers’’, to present Original 

Transactions to LCH SA for clearing, 

novation and registration in the name of 

a Clearing Member without having to be 

admitted as either a Clearing Member or 

being a Client of a Clearing Member.4

The text of the Proposed Rule Change 

has been annexed as Exhibit 5 to File 

No. SR–LCH SA–2024–005. The 

implementation of the Proposed Rule 

Change will be contingent on LCH SA’s 

receipt of all necessary regulatory 

approvals. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

LCH SA 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. LCH 

SA 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 

LCH SA is proposing to amend its 

CDS Clearing Rules to enable affiliates 

of Clearing Members that are registered 

as CCMs with LCH SA to present 

Original Transactions to LCH SA for 

clearing, novation and registration in 

the name of a Clearing Member that is 

a CCM 5 without having to be admitted 

as either a Clearing Member or being a 

Client of a Clearing Member. A CCM’s 

affiliate will need to be admitted as a 

CDS Dealer by LCH SA to a register of 

CDS Dealers before submitting any 

Original Transaction, under which such 

affiliate is acting as agent for and on 

behalf of its CCM or as principal,6 to 

LCH SA through an Approved Trade 

Source System.7 Under the current Rule 

Book, an affiliate of a Clearing Member 

may submit Original Transactions for 

clearing with LCH SA only if such 

affiliate is itself admitted as a Clearing 

Member of LCH SA or if it is a Client 

of a Clearing Member. 

The new status of CDS Dealer will 

allow affiliates of a CCM, that is either 

a General Member or a Select Member, 

registered as such CDS Dealers to 

present Original Transactions to LCH 

SA for clearing, novation and 

registration in the name of a Clearing 

Member. This new status will provide 

flexibility to Clearing Members in how 

they operate their execution and 

booking arrangements within their 

respective group, without the need to 

have multiple Clearing Members within 

such group or to onboard their affiliates 

as Clients. Specifically, it will enable 

Clearing Members to operate more 

efficiently by servicing their clients via 

the existing execution entities and, 

where applicable, documentation 

required but allows consolidation of 

clearing positions and margin within a 

single membership. 

A CDS Dealer will be required to enter 

into a tripartite agreement with LCH SA 

and a Clearing Member within its 

corporate group (the ‘‘CDS Dealer 

Clearing Agreement’’). Under this 

agreement, the CDS Dealer will agree to 

be bound by the CDS Clearing Rules. 

An Original Transaction presented by 

a CDS Dealer to LCH SA for clearing 

will give rise to the novation of such 

Original Transaction into a Cleared 

Transaction between LCH SA and the 

Clearing Member with which such CDS 

Dealer is party to a CDS Dealer Clearing 

Agreement, that will be registered in the 

House Trade Account of such Clearing 

Member; hence these Cleared 

Transactions under which the Clearing 

Member is acting as principal will be 

registered in the House Trade Account 

in which the Cleared Transactions 

resulting from the novation of Original 

Transactions presented by the Clearing 

Member on its own behalf are also 

registered. 

For illustrative purposes, Exhibit 3 

provides an example of a simplified 

operational framework under the 

current model as compared to the 

proposed model for house and client 

transactions. Under the current 

operational framework reflected in 

‘‘Example 1A: House v. House Standard 

Trade’’, a CCM may present Original 

Transactions to LCH SA for clearing, 

novation and registration in the House 

Trade Account of such CCM. In 

addition, an affiliate of a CCM may also 

present Original Transactions to LCH 

SA for clearing only if such affiliate is 

itself admitted as a Clearing Member of 

LCH SA or if it is a Client of a Clearing 

Member. Under the proposed 

framework reflected in ‘‘Example 1B: 

House v. Dealer Trade’’, a CDS Dealer 

(as an affiliate of the CCM) will be able 

to present Original Transactions to LCH 

SA for clearing and novation, with the 

resulting trade registered in the House 


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