62898 Federal Register / Vol. 75, No. 197 / Wednesday, October 13, 2010 / Notices 

1 15 U.S.C. 80a. In addition, the offering and 

selling of securities that are not registered pursuant 

to the Securities Act of 1933 (‘‘Securities Act’’) is 

generally prohibited by U.S. securities laws. 15 

U.S.C. 77. 

2See Offer and Sale of Securities to Canadian 

Tax-Deferred Retirement Savings Accounts, Release 

Nos. 33–7860, 34–42905, IC–24491 (June 7, 2000) 

[65 FR 37672 (June 15, 2000)]. This rulemaking also 

included new rule 237 under the Securities Act, 

permitting securities of foreign issuers to be offered 

to Canadian-U.S. Participants and sold to Canadian 

retirement accounts without being registered under 

the Securities Act. 17 CFR 230.237. 

3 17 CFR 270.7d–2. 

4 44 U.S.C. 3501–3502. 

5 Investment Company Institute, 2010 Investment 

Company Fact Book (2010) at 183, tbl. 60. 

6The Commission’s estimate concerning the wage 

rate for attorney time is based on salary information 

for the securities industry compiled by the 

Securities Industry and Financial Markets 

Association (‘‘SIFMA’’). The $316 per hour figure for 

an attorney is from SIFMA’s Management & 

Professional Earnings in the Securities Industry 

2009, modified by Commission staff to account for 

an 1800-hour work-year and multiplied by 5.35 to 

account for bonuses, firm size, employee benefits, 

and overhead. 

establish Canadian retirement accounts 

while living and working in Canada and 

who later move to the United States 

(‘‘Canadian-U.S. Participants’’ or 

‘‘participants’’) often continue to hold 

their retirement assets in their Canadian 

retirement accounts rather than 

prematurely withdrawing (or ‘‘cashing 

out’’) those assets, which would result in 

immediate taxation in Canada. 

Once in the United States, however, 

these participants historically have been 

unable to manage their Canadian 

retirement account investments. Most 

investment companies (‘‘funds’’) that are 

‘‘qualified companies’’ for Canadian 

retirement accounts are not registered 

under the U.S. securities laws. 

Securities of those unregistered funds, 

therefore, generally cannot be publicly 

offered and sold in the United States 

without violating the registration 

requirement of the Investment Company 

Act of 1940 (‘‘Investment Company 

Act’’).1 As a result of this registration 

requirement, Canadian-U.S. Participants 

previously were not able to purchase or 

exchange securities for their Canadian 

retirement accounts as needed to meet 

their changing investment goals or 

income needs. 

The Commission issued a rulemaking 

in 2000 that enabled Canadian-U.S. 

Participants to manage the assets in 

their Canadian retirement accounts by 

providing relief from the U.S. 

registration requirements for offers of 

securities of foreign issuers to CanadianU.S. Participants and sales to Canadian 

retirement accounts.2 Rule 7d–2 under 

the Investment Company Act 3 permits 

foreign funds to offer securities to 

Canadian-U.S. Participants and sell 

securities to Canadian retirement 

accounts without registering as 

investment companies under the 

Investment Company Act. 

Rule 7d–2 contains a ‘‘collection of 

information’’ requirement within the 

meaning of the Paperwork Reduction 

Act of 1995.4 Rule 7d–2 requires written 

offering materials for securities offered 

or sold in reliance on that rule to 

disclose prominently that those 

securities and the fund issuing those 

securities are not registered with the 

Commission, and that those securities 

and the fund issuing those securities are 

exempt from registration under U.S. 

securities laws. Rule 7d–2 does not 

require any documents to be filed with 

the Commission. 

Rule 7d–2 requires written offering 

documents for securities offered or sold 

in reliance on the rule to disclose 

prominently that the securities are not 

registered with the Commission and 

may not be offered or sold in the United 

States unless registered or exempt from 

registration under the U.S. securities 

laws, and also to disclose prominently 

that the fund that issued the securities 

is not registered with the Commission. 

The burden under the rule associated 

with adding this disclosure to written 

offering documents is minimal and is 

non-recurring. The foreign issuer, 

underwriter, or broker-dealer can redraft 

an existing prospectus or other written 

offering material to add this disclosure 

statement, or may draft a sticker or 

supplement containing this disclosure 

to be added to existing offering 

materials. In either case, based on 

discussions with representatives of the 

Canadian fund industry, the staff 

estimates that it would take an average 

of 10 minutes per document to draft the 

requisite disclosure statement. 

The staff estimates that there are 2075 

publicly offered Canadian funds that 

potentially would rely on the rule to 

offer securities to participants and sell 

securities to their Canadian retirement 

accounts without registering under the 

Investment Company Act.5 Most of 

these funds have already relied upon 

the rule and have made the one-time 

change to their offering documents 

required to rely on the rule. The staff 

estimates that 104 (5 percent) additional 

Canadian funds may newly rely on the 

rule each year to offer securities to 

Canadian-U.S. Participants and sell 

securities to their Canadian retirement 

accounts, thus incurring the paperwork 

burden required under the rule. The 

staff estimates that each of those funds, 

on average, distributes 3 different 

written offering documents concerning 

those securities, for a total of 312 

offering documents. The staff therefore 

estimates that 104 respondents would 

make 312 responses by adding the new 

disclosure statement to approximately 

312 written offering documents. The 

staff therefore estimates that the annual 

burden associated with the rule 7d–2 

disclosure requirement would be 52 

hours (312 offering documents × 10 

minutes per document). The total 

annual cost of these burden hours is 

estimated to be $16,432 (52 hours × 

$316 per hour of attorney time).6

These burden hour estimates are 

based upon the Commission staff’s 

experience and discussions with the 

fund industry. 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. 

Compliance with the collection of 

information requirements of the rule is 

mandatory and is necessary to comply 

with the requirements of the rule in 

general. Responses 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. 

Please direct general comments 

regarding the above information to the 

following persons: (i) Desk Officer for 

the Securities and Exchange 

Commission, Office of Management and 

Budget, Room 10102, New Executive 

Office Building, Washington, DC 20503 

or send an e-mail to Shagufta Ahmed at 

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

Jeffrey Heslop, Acting, Director/CIO, 

Securities and Exchange Commission, 

C/O Remi Pavlik-Simon, 6432 General 

Green Way, Alexandria, VA 22312; or 

send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Dated: October 6, 2010. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25737 Filed 10–12–10; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

Submission for OMB Review; 

Comment Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of Investor 

Education and Advocacy, 

Washington, DC 20549–0213. 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 197 / Wednesday, October 13, 2010 / Notices 62899 

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

2Securities Exchange Act Release No. 62767 

(August 26, 2010), 75 FR 53368. 

3The specific language of the proposed provision 

is available at http://www.dtcc.com/downloads/ 

legal/rule_filings/2010/ficc/2010–04.pdf. 

4 15 U.S.C. 78q–1. 

5 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

6 15 U.S.C. 78q–1(b)(3)(F). 

7 15 U.S.C. 78q–1. 

8 15 U.S.C. 78s(b)(2). 

9 17 CFR 200.30–3(a)(12). 

Extension: 

Rule 425; OMB Control No. 3235–0521; 

SEC File No. 270–462. 

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’’) has submitted to the 

Office of Management and Budget the 

request for extension of the previously 

approved collection of information 

discussed below. 

Rule 425 (17 CFR 230.425) under the 

Securities Act of 1933 (15 U.S.C. 77a et 

seq.) requires the filing of certain 

prospectuses and communications 

under Rule 135 (17 CFR 230.135) and 

Rule 165 (17 CFR 230.165) in 

connection with business combination 

transactions. The purpose of the rule is 

to permit more oral and written 

communications with shareholders 

about tender offers, mergers and other 

business combination transactions on a 

more timely basis, so long as the written 

communications are filed on the date of 

first use. The information provided 

under Rule 425 is made available to the 

public upon request. Also, the 

information provided under Rule 425 is 

mandatory. Approximately 1,680 issuers 

file communications under Rule 425 at 

an estimated 0.25 hours per response for 

a total of 420 annual burden hours. 

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 regarding the 

above information should be directed to 

the following persons: (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 send an email to: Shagufta_Ahmed@omb.eop.gov; 

and (ii) Jeffrey Heslop, Acting Director/ 

CIO, Office of Information Technology, 

Securities and Exchange Commission, 

C/O Remi Pavlik-Simon, 6432 General 

Green Way, Alexandria, Virginia 22312; 

or send e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 30 days of 

this notice. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25738 Filed 10–12–10; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63038; File No. SR–FICC– 

2010–04] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Order 

Approving Proposed Rule Change to 

Provide Clarity With Respect to the 

Close Out Netting of the Government 

Securities Division in the Event of the 

Fixed Income Clearing Corporation’s 

Default or Insolvency 

October 5, 2010. 

I. Introduction 

On August 12, 2010, the Fixed Income 

Clearing Corporation (‘‘FICC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change SR–FICC–2010– 

04 pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’).1 The proposed rule change was 

published for comment in the Federal 

Register on August 31, 2010.2 No 

comment letters were received on the 

proposal. This order approves the 

proposal. 

II. Description 

FICC is proposing to add a provision 

to the rules of the Government 

Securities Division (‘‘GSD’’) to make 

explicit the close out netting that would 

be applied to obligations between FICC 

and its members in the event that FICC 

becomes insolvent or defaults in its 

obligations to its members.3

FICC has been asked by some of its 

dealer members to add a provision to 

the rules of GSD to make explicit the 

close out netting of obligations between 

FICC and its members in the event that 

FICC becomes insolvent or defaults in 

its obligations to its members. Such 

members have stated that such a 

provision would provide clarity in their 

application of balance sheet netting to 

their transactions at FICC under U.S. 

GAAP in accordance with the criteria 

specified in the Financial Accounting 

Standards Board’s Interpretation No. 39, 

Offsetting of Amounts Related to 

Certain Contracts (FIN 39). The 

members have stated further that a close 

out provision would allow them to 

comply with Basel Accord Standards 

relating to netting. Specifically, firms 

are able to calculate their capital 

requirements on the basis of their net 

credit exposure where they have legally 

enforceable netting arrangements with 

their counterparties, which includes a 

close out netting provision in the event 

of the default of a counterparty (in this 

case, the division of FICC acting as a 

CCP). 

III. Discussion 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act 4 and the 

rules and regulations thereunder 

applicable to FICC.5 In particular, the 

Commission believes that by adding a 

close out provision to its rules, FICC is 

providing its members with clarity with 

respect to close out netting that would 

be applied to obligations of FICC and its 

members in the event of an FICC 

insolvency or default and in the 

calculation of their capital requirements 

with respect to their net credit exposure 

where members have legally enforceable 

netting arrangements with their 

counterparties. The proposal is therefore 

consistent with the requirements of 

Section 17A(b)(3)(F),6 which requires, 

among other things, that the rules of a 

clearing agency are designed to remove 

impediments to and perfect the 

mechanism of a national system for the 

prompt and accurate clearance and 

settlement of securities transactions. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

requirements of Section 17A of the Act 7

and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,8 that the 

proposed rule change (File No. SR– 

FICC–2010–04) be, and hereby is, 

approved. 

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25620 Filed 10–12–10; 8:45 am] 

BILLING CODE 8011–01–P 

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