Document ID: SEC-2006-1430-0001
Agency: sec
Document Type: Notice
Title: Agency information collection activities; proposals, submissions, and approvals
Posted Date: 2006-11-08T05:00Z

[Federal Register: November 8, 2006 (Volume 71, Number 216)]
[Notices]               
[Page 65547-65548]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08no06-118]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Submission for OMB Review; Comment Request

Upon written request, copies available from: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, DC 
20549.

Extension:
    Rule 17i-4; SEC File No. 270-530; OMB Control No. 3235-0594.

    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 a 
request for extension of the previously approved collection of 
information discussed below.
    Section 231 of the Gramm-Leach-Bliley Act of 1999 \1\ (the 
``GLBA'') amended Section 17 of the Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.) (the ``Act'' or the ``Exchange Act'') to create a 
regulatory framework under which a holding company of a broker-dealer 
(``investment bank holding company'' or ``IBHC'') may voluntarily be 
supervised by the Commission as a supervised investment bank holding 
company (or ``SIBHC'').\2\ In 2004, the Commission promulgated rules, 
including Rule 17i-4, (17 CFR 240.17i-4.) to create a framework for the 
Commission to supervise SIBHCs.\3\ This framework includes 
qualification criteria for SIBHCs, as well as recordkeeping and 
reporting requirements. Among other things, this regulatory framework 
for SIBHCs is intended to provide a basis for non-U.S. financial 
regulators to treat the Commission as the principal U.S. consolidated 
home-country supervisor for SIBHCs and their affiliated broker-
dealers.\4\
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    \1\ Pub. L. 106-102, 113 Stat. 1338 (1999).
    \2\ See 15 U.S.C. 78q(i).
    \3\ See Exchange Act Release No. 49831 (Jun. 8, 2004), 69 FR 
34472 (Jun. 21, 2004).
    \4\ See H.R. Conf. Rep. No. 106-434, 165 (1999). See also 
Exchange Act Release No. 49831, at 6 (Jun. 8, 2004), 69 FR 34472, at 
34473 (Jun. 21, 2004).
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    Rule 17i-4 requires an SIBHC to comply with present Exchange Act 
Rule 15c3-4 \5\ as though it were a broker-dealer, which requires that 
the firm establish, document and maintain a system of internal risk 
management controls to assist it in managing the risks associated with 
its business activities (including market, credit, operational, 
funding, and legal risks). In addition, Rule 17i-4 requires that an 
SIBHC establish, document, and maintain procedures for the detection 
and prevention of money laundering and terrorist financing as part of 
its internal risk management control system. Finally, Rule 17i-4 
requires that an SIBHC periodically review its internal risk management 
control system for integrity of the risk measurement, monitoring, and 
management process, and accountability, at the appropriate 
organizational level, for defining the permitted scope of activity and 
level of risk.
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    \5\ 17 CFR 240.15c3-4.
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    The collection of information required pursuant to Rule 17i-4 is 
needed so that the Commission can adequately supervise the activities 
of these SIBHCs, and to allow the Commission to effectively determine 
whether supervision of an IBHC as an SIBHC is necessary or appropriate 
in furtherance of the purposes of Section 17 of the Act. Without this 
information, the Commission would be unable to adequately supervise the 
SIBHC as provided for under the Exchange Act.
    We estimate that three IBHCs will file Notices of Intention with 
the Commission to be supervised by the Commission as SIBHCs. An SIBHC 
will require, on average, about 3,600 hours to assess its present 
structure, businesses, and controls, and establish and document its 
risk management control system. In addition, an SIBHC will require, on 
average, approximately 250

[[Page 65548]]

hours each year to maintain its risk management control system. 
Consequently, the total initial burden for all SIBHCs is approximately 
10,800 hours \6\ and the continuing annual burden is about 750 
hours.\7\ Thus, the total burden relating to Rule 17i-4 for all SIBHCs 
is approximately 11,550 hours \8\ in the first year, and approximately 
750 hours each year thereafter.\9\
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    \6\ (3,600 hours x 3 SIBHCs) = 10,800 hours.
    \7\ (250 hours per year x 3 SIBHCs) = 750 hours per year.
    \8\ (3,600 hours x 3 SIBHCs) + (250 hours per year x 3 SIBHCs).
    \9\ (250 hours per year x 3 SIBHCs).
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    We believe that an IBHC likely will upgrade its information 
technology (``IT'') systems in order to more efficiently comply with 
certain of the SIBHC framework rules (including Rules 17i-4, 17i-5, 
17i-6 and 17i-7), and that this would be a one-time cost. Depending on 
the state of development of the IBHC's IT systems, it would cost an 
IBHC between $1 million and $10 million to upgrade its IT systems to 
comply with the SIBHC framework of rules. Thus, on average, it would 
cost each of the three IBHCs about $5.5 million to upgrade their IT 
systems, or approximately $16.5 million in total. It is impossible to 
determine what percentage of the IT systems costs would be attributable 
to each Rule, so we allocated the total estimated upgrade costs equally 
(at 25% for each of the above-mentioned Rules), with $4,125,000 
attributable to Rule 17i-4.
    The records required to be created pursuant to Rule 17i-4 must be 
preserved for a period of not less than three years.\10\ The collection 
of information is mandatory and the information required to be provided 
to the Commission pursuant to this Rule is deemed confidential pursuant 
to Section 17(j) of the Exchange Act and Section 552(b)(3)(B) of the 
Freedom of Information Act,\11\ notwithstanding any other provision of 
law.
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    \10\ 17 CFR 240.17i-5(b)(5).
    \11\ 5 U.S.C. 552(b)(3)(B).
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    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.
    Comments should be directed to: (i) the 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 e-mail 
to: David_Rostker@omb.eop.gov; and (ii) R. Corey Booth, 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. Comments must be submitted to OMB within 
30 days of this notice.

    Dated: October 23, 2006.
Nancy M. Morris,
Secretary.
[FR Doc. E6-18790 Filed 11-7-06; 8:45 am]

BILLING CODE 8011-01-P