Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 23311 

Commission uses the information 

provided in the application filed 

pursuant to Rule 19d–3 to review final 

actions taken by SROs including: (1) 

Disciplinary sanctions; (2) denials of 

membership, participation or 

association; and (3) prohibitions on or 

limitations of access to SRO services. 

It is estimated that approximately 15 

respondents will utilize this application 

procedure annually, with a total burden 

of 270 hours, for all respondents to 

complete all submissions. This figure is 

based upon past submissions. The staff 

estimates that the average number of 

hours necessary to comply with the 

requirements of Rule 19d–3 is 18 hours. 

The average cost per hour, to complete 

each submission, is approximately $101. 

Therefore, the total cost of compliance 

for all respondents is $27,270. (15 

submissions × 18 hours × $101 per 

hour). 

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 to be 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. 

Please direct your written comments 

to Charles Boucher, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Shirley 

Martinson, 6432 General Green Way, 

Alexandria, VA 22312 or send an e-mail 

to: PRA_Mailbox@sec.gov. 

Dated: April 26, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–10213 Filed 4–30–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Rule 19d–1; SEC File No. 270–242; OMB 

Control No. 3235–0206] 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

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 

(‘‘Commission’’) is soliciting comments 

on the existing collection of information 

provided for in Rule 19d–1 (17 CFR 

240.19d–1)—Notices by Self-Regulatory 

Organizations of Final Disciplinary 

Actions, Denials Bars, or Limitations 

Respecting Membership, Association, or 

Access to Services, and Summary 

Suspensions. The Commission plans to 

submit this existing collection of 

information to the Office of 

Management and Budget for extension 

and approval. 

Rule 19d–1 (‘‘Rule’’) under the 

Securities Exchange Act of 1934 (17 

U.S.C. 78a et seq.) prescribes the form 

and content of notices to be filed with 

the Commission by self-regulatory 

organizations (‘‘SROs’’) for which the 

Commission is the appropriate 

regulatory agency concerning the 

following final SRO actions: (1) 

Disciplinary sanctions (including 

summary suspensions); (2) denials of 

membership, participation or 

association with a member; and (3) 

prohibitions or limitations on access to 

SRO services. 

The Rule enables the Commission to 

obtain reports from the SROs containing 

information regarding SRO 

determinations to discipline members or 

associated persons of members, deny 

membership or participation or 

association with a member, and similar 

adjudicated findings. The Rule requires 

that such actions be promptly reported 

to the Commission. The Rule also 

requires that the reports and notices 

supply sufficient information regarding 

the background, factual basis and issues 

involved in the proceeding to enable the 

Commission: (1) To determine whether 

the matter should be called up for 

review on the Commission’s own 

motion; and (2) to ascertain generally 

whether the SRO has adequately carried 

out its responsibilities under the 

Exchange Act. 

It is estimated that 10 respondents 

will utilize this application procedure 

annually, with a total burden of 1,175 

hours, based upon past submissions. 

This figure is based on 10 respondents, 

spending approximately 117.5 hours 

each per year. Each respondent 

submitted approximately 235 responses. 

The staff estimates that the average 

number of hours necessary to comply 

with the requirements of Rule 19d–1 for 

each submission is 0.5 hours. The 

average cost per hour, per each 

submission is approximately $101. 

Therefore, the total cost of compliance 

for all the respondents is $118,675. (10 

respondents × 235 responses per 

respondent × .5 hrs per response × $101 

per hour). 

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 to be 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. 

Direct your written comments to 

Charles Boucher, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Shirley 

Martinson, 6432 General Green Way, 

Alexandria, VA 22312 or send an e-mail 

to: PRA_Mailbox@sec.gov. 

Dated: April 26, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–10215 Filed 4–30–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Rule 17f–4; SEC File No. 270–232; OMB 

Control No. 3235–0225] 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

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’’) 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. 

Section 17(f) (15 U.S.C. 80a–17(f)) 

under the Investment Company Act of 


erowe on DSK5CLS3C1PROD with NOTICES
23312 Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 

1 15 U.S.C. 80a. 

2As amended in 2003, rule 17f–4 permits any 

registered investment company, including a unit 

investment trust or a face-amount certificate 

company, to use a security depository. See Custody 

of Investment Company Assets With a Securities 

Depository, Investment Company Act Release No. 

25934 (Feb. 13, 2003) (68 FR 8438 (Feb. 20, 2003)). 

The term ‘‘fund’’ is used in this Notice to mean a 

registered investment company. 

3The Commission staff estimates that, as 

permitted by the rule, 2% of all active funds deal 

directly with a securities depository instead of 

using an intermediary. The number of custodians is 

from Lipper Inc.’s Lana Database. Securities 

depositories include the 12 Federal Reserve Banks 

and 4 registered depositories. 

4Based on responses to Item 18 of Form N–SAR 

(17 CFR 274.101), approximately 98 percent of all 

funds now use depository custody arrangements. As 

of November 30, 2009, approximately 3770 funds 

out of the 3844 active funds relied on rule 17f–4. 

5Rule 17f–4(a)(1). This provision incorporates 

into the rule the standard of care provided by 

section 504(c) of Article 8 of the Uniform 

Commercial Code when the parties have not agreed 

to a standard. Rule 17f–4 does not impose any 

substantive obligations beyond those contained in 

Article 8. Uniform Commercial Code, Revised 

Article 8—Investment Securities (1994 Official Text 

with Comments) (‘‘Revised Article 8’’). 

6Moreover, the rule does not impose any 

requirement regarding evidence of the obligation. 

7The Commission staff assumes that new funds 

relying on 17f–4 would choose to use a custodian 

instead of directly dealing with a securities 

depository because of the high costs associated with 

maintaining an account with a securities 

depository. Thus new funds would not be subject 

to this condition. 

8Rule 17f–4(a)(2). 

9Rule 17f–4(b)(1)(ii). 

10The 48 custodians would handle requests for 

reports from 3770 fund clients (approximately 79 

fund clients per custodian) and the depositories 

from the remaining 74 funds that choose to deal 

directly with a depository. It is our understanding 

based on staff conversations with representatives of 

custodians that custodians and depositories 

transmit these reports to clients in the normal 

course of their activities as a good business practice 

regardless of whether they are requested. Therefore, 

for purposes of this PRA estimate, the Commission 

staff assumes that custodians transmit the reports to 

all fund clients. If all custodians and depositories 

transmit these reports to funds in the normal course 

of their activities, there would be no burden 

associated with this collection of information. See 

5 CFR 1320.3(b)(2) (‘‘The time, effort, and financial 

resources necessary to comply with a collection of 

information that would be incurred by persons in 

the normal course of their activities * * * will be 

excluded if the agency demonstrates that the 

reporting, recordkeeping, or disclosure activities 

needed to comply are usual and customary.’’). 

11 (48 custodians × 2 reports) = 96 reports × 79 

fund clients per custodian = 7584 transmissions. 

The staff estimates that each transmission would 

take approximately 7 minutes for a total of 885 

hours (7 minutes × 7584 transmissions). The 

estimate of time to transmit reports is based on staff 

conversations with representatives of custodians. 

12 (16 depositories x 2 reports) = 32 reports x 4.6 

fund clients per depository = 147 transmissions. 

The staff estimates that each transmission would 

take approximately 7 minutes for a total of 

approximately 17 hours (7 minutes x 147 

transmissions). 

13 885 hours for custodians and 17 hours for 

securities depositories. 

14Rule 17f–4(b)(2). 

15The Commission staff assumes that new funds 

relying on 17f–4 would choose to use a custodian 

instead of directly dealing with a securities 

depository because of the high costs associated with 

maintaining an account with a securities 

depository. Thus new funds would not be subject 

to this condition. 

1940 (the ‘‘Act’’) 1 permits registered 

management investment companies and 

their custodians to deposit the securities 

they own in a system for the central 

handling of securities (‘‘securities 

depositories’’), subject to rules adopted 

by the Commission. 

Rule 17f–4 (17 CFR 270.17f–4) under 

the Act specifies the conditions for the 

use of securities depositories by funds2

and custodians. The Commission staff 

estimates that 138 respondents 

(including 74 active funds, 48 

custodians, and 16 possible securities 

depositories)3 are subject to the 

requirements in rule 17f–4. The rule is 

elective, but most, if not all, funds use 

depository custody arrangements.4

Rule 17f–4 contains two general 

conditions. First, a fund’s custodian 

must be obligated, at a minimum, to 

exercise due care in accordance with 

reasonable commercial standards in 

discharging its duty as a securities 

intermediary to obtain and thereafter 

maintain financial assets.5 This 

obligation does not contain a collection 

of information because it does not 

impose identical reporting, 

recordkeeping or disclosure 

requirements. Funds and custodians 

may determine the specific measures 

the custodian will take to comply with 

this obligation.6 If the fund deals 

directly with a depository, the 

depository’s contract or written rules for 

its participants must provide that the 

depository will meet similar obligations, 

which is a collection of information for 

purposes of the Paperwork Reduction 

Act of 1995. All funds that deal directly 

with securities depositories in reliance 

on rule 17f–4 should have either 

modified their contracts with the 

relevant securities depository, or 

negotiated a modification in the 

securities depository’s written rules 

when the rule was amended. Therefore, 

we estimate there is no ongoing burden 

associated with this collection of 

information.7

Second, the custodian must provide, 

promptly upon request by the fund, 

such reports as are available about the 

internal accounting controls and 

financial strength of the custodian.8 If a 

fund deals directly with a depository, 

the depository’s contract with or written 

rules for its participants must provide 

that the depository will provide similar 

financial reports,9 which is a collection 

of information for purposes of the 

Paperwork Reduction Act of 1995. 

Custodians and depositories usually 

transmit financial reports to funds twice 

each year.10 The Commission staff 

estimates that 48 custodians spend 

approximately 885 hours (by support 

staff) annually in transmitting such 

reports to funds.11 In addition, 

approximately 74 funds (i.e., two 

percent of all funds) deal directly with 

a securities depository and may request 

periodic reports from their depository. 

Commission staff estimates that, for 

each of the 74 funds, depositories spend 

approximately 17 hours (by support 

staff) annually transmitting reports to 

the funds.12 The total annual burden 

estimate for compliance with rule 17f– 

4’s reporting requirement is therefore 

902 hours.13

If a fund deals directly with a 

securities depository, rule 17f–4 

requires that the fund implement 

internal control systems reasonably 

designed to prevent an unauthorized 

officer’s instructions (by providing at 

least for the form, content, and means of 

giving, recording, and reviewing all 

officers’ instructions).14 All funds that 

seek to rely on rule 17f–4 should have 

already implemented these internal 

control systems when the rule was 

amended. Therefore, there is no ongoing 

burden associated with this collection of 

information requirement.15

Based on the foregoing, the 

Commission staff estimates that the total 

annual hour burden of the rule’s 

collection of information requirement is 

902 hours. 

The estimates of average burden hours 

are made solely for the purposes of the 

Paperwork Reduction Act. These 

estimates are not derived from a 

comprehensive or even a representative 

survey or study of the costs of 

Commission rules. 

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 collection of information is 

necessary for the proper performance of 

the functions of the Commission, 

including whether the information will 

have practical utility; (b) the accuracy of 

the Commission’s estimate of the 

burden of the collections of information; 

(c) ways to enhance the quality, utility, 

and clarity of the information collected; 

and (d) ways to minimize the burdens 

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 


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Federal Register / Vol. 75, No. 84 / Monday, May 3, 2010 / Notices 23313 

1 5 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5The Exchange defines a ‘‘professional’’ as 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). 

6See Securities Exchange Act Release No. 59545 

(March 9, 2009), 74 FR 11158 (March 16, 2009) (SR– 

Phlx–2009–20). 

7See Securities Exchange Act Release Nos. [sic] 

59243 (January 13, 2009), 74 FR 4272 (January 23, 

2009) (SR–Phlx–2008–86). 

8See Securities Exchange Act Release No. 61337 

(January 12, 2010), 75 FR 2905 (January 19, 2010) 

(SR–Phlx–2009–104). 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(4). 

writing within 60 days of this 

publication. 

Please direct your written comments 

to Charles Boucher, Director/CIO, 

Securities and Exchange Commission, 

C/O Shirley Martinson, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. 

Dated: April 26, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–10214 Filed 4–30–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–61984; File No. SR–Phlx– 

2010–60] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NASDAQ 

OMX PHLX, Inc. Relating to QNET 

Sector Index Option Fees 

April 26, 2010. 

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 April 16, 

2010, NASDAQ OMX PHLX, Inc. 

(‘‘Phlx’’ or ‘‘Exchange’’) 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. Phlx has 

designated this proposal as one 

establishing or changing a due, fee, or 

other charge applicable only to a 

member under Section 19(b)(3)(A)(ii) of 

the Act,3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the proposal 

effective upon filing with the 

Commission. 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 

The Exchange proposes to amend the 

Exchange’s Fee Schedule for Sector 

Index Options by assessing a $.20 per 

contract transaction fee for options 

overlying the NASDAQ Internet Index 

(‘‘QNET’’). The Exchange also proposes 

making other technical clarifications. 

While changes to the Exchange’s Fee 

Schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated this proposal to be operative 

for trades settling on or after May 3, 

2010. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqtrader.com/ 

micro.aspx?id=PHLXfilings, on the 

Commission’s Web site at http:// 

www.sec.gov, 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 

The Exchange proposes to add 

additional transaction fees to Category 

III of its Fee Schedule, titled Sector 

Index Options. The Exchange proposes 

to assess a $.20 per contract transaction 

fee for options overlying QNET for the 

following market participants: 

Customers, registered options traders 

(on-floor), specialists, professionals,5

firms and broker-dealers. The Exchange 

is proposing to assess the $.20 per 

contract fee from trade date April 30, 

2010 through trade date December 30, 

2010. Thereafter, the Exchange proposes 

to assess the options transaction charges 

for sector index options as designated 

by category of market participant on the 

Fee Schedule, beginning on trade date 

December 31, 2010. In other words, the 

Exchange is proposing to eliminate the 

$.20 per contract transaction 

promotional pricing after December 30, 

2010 and instead assess members the 

applicable sector index options 

transaction charges, by market 

participant, on December 31, 2010. For 

example, for transactions in QNET 

sector index options, a customer would 

no longer be assessed the $.20 per 

contract on trade date December 31, 

2010, but instead would be assessed the 

option transaction charge, which is 

currently $.44 per contract. 

The Exchange proposes to assess a 

fixed rate across all market participants 

for a specified period of time to 

incentivize members to trade QNET. 

The Exchange also proposes removing 

certain text from the Fee Schedule that 

was the result of an inadvertent error. 

The Exchange is proposing to delete the 

text, ‘‘Subject to certain thresholds and 

per trade caps’’ from Categories III and 

IV of the Fee Schedule as related to 

Registered Options Traders (on-floor) 

and Specialists in sector index options 

fees and U.S. dollar-settled foreign 

currency option fees. The Exchange 

indicated in a prior proposed rule 

change that the Firm Related Equity 

Option and Index Option Cap would no 

longer be applicable to sector index 

options 6 and U.S. dollar-settled foreign 

currency options 7 and the volume 

threshold.8

While changes to the Exchange’s Fee 

Schedule pursuant to this proposal are 

effective upon filing, the Exchange has 

designated this proposal to be operative 

for trades settling on or after May 3, 

2010. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its schedule of fees 

is consistent with Section 6(b) of the 

Act 9 in general, and furthers the 

objectives of Section 6(b)(4) of the Act 10

in particular, in that it is an equitable 

allocation of reasonable fees and other 

charges among Exchange members. The 

Exchange believes that the proposed 

$.20 per contract sector index option 

fees for QNET is equitable because all 

market participants would be assessed 

the same fee. The Exchange further 

believes that offering the $.20 per 

contract fee for a specified promotional 

period and thereafter assessing the 

standard sector index option transaction 

fees is also equitable because it is 

intended to encourage trading in QNET. 

In addition, the removal of extraneous 

language in the Fee Schedule should 

provide clarity to members concerning 

fees. 


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