Document ID: SEC-2013-0313-0002
Agency: sec
Document Type: Notice
Title: Agency Information Collection Activities; Proposals, Submissions, and Approvals
Posted Date: 2021-12-20T05:00Z

[Federal Register Volume 86, Number 241 (Monday, December 20, 2021)]
[Notices]
[Pages 71935-71936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-27497]

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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-489, OMB Control No. 3235-0541]

Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

Extension:
    Rule 606 of Regulation NMS

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.) (``PRA''), the Securities and 
Exchange Commission (``Commission'') is soliciting comments on the 
existing collection of information provided for in Rule 606 of 
Regulation NMS (``Rule 606'') (17 CFR 242.606), under the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.). The Commission plans to 
submit this existing collection of information to the Office of 
Management and Budget (``OMB'') for extension and approval.
    Rule 606 (formerly known as Rule 11Ac1-6) requires disclosure by 
broker-dealers of (1) pursuant to Rule 606(a)(1), a quarterly 
aggregated public report on the handling of orders in NMS stocks that 
are submitted on a held basis and orders in NMS securities that are 
option contracts with a market value less than $50,000; (2) pursuant to 
Rule 606(b)(1), a report, upon request of a customer, on the routing of 
that customer's orders in NMS stocks that are submitted on a held 
basis, orders in NMS stocks that are submitted on a not held basis and 
do not qualify for two de minimis exceptions, and orders in NMS 
securities that are option contracts, containing certain information on 
the broker-dealer's routing of such orders for that customer for the 
prior six months; and (3) pursuant to Rule 606(b)(3), a report, upon 
request of a customer that places with the broker-dealer, directly or 
indirectly, NMS stock orders of any size that are submitted on a not 
held basis (subject to two de minimis exceptions), containing certain 
information on the broker-dealer's handling of such orders for that 
customer for the prior six months.
    The total annual time burden associated with Rule 606 is 
approximately 190,240 hours per year and the total annual cost burden 
associated with Rule 606 is approximately $1,300,000 per year, 
calculated as described below.
    The Commission estimates that out of the currently 3,585 broker-
dealers that are subject to the collection of information obligations 
of Rule 606(a)(1), clearing brokers bear a substantial portion of the 
burden of complying with the reporting and recordkeeping requirements 
of Rule 606 on behalf of small to mid-sized introducing firms. There 
currently are approximately 186 clearing brokers. In addition, there 
are approximately 78 introducing brokers that receive funds or 
securities from their customers. Because at least some of these firms 
also may have greater involvement in determining where customer orders 
are routed for execution, they have been included, along with clearing 
brokers, in estimating the total burden of Rule 606(a)(1).
    The Commission staff estimates that each firm significantly 
involved in order routing practices incurs an average burden of 40 
hours to prepare and disseminate the quarterly report required by Rule 
606(a)(1), or a burden of 160 hours per year. With an estimated 264 \1\ 
broker-dealers significantly involved in order routing practices, the 
total industry-wide time burden per year to comply with the quarterly 
reporting requirement in Rule 606 is estimated to be 42,240 hours (160 
x 264). Additionally, for each of the 264 broker-dealers subject to 
disclosure requirements of Rule 606(a)(1), the Commission estimates the 
annual burden under Rule 606(a)(1)(iv) to monitor payment for order 
flow and profit-sharing relationships and potential self-regulatory 
organization rule changes that could impact their order routing 
decisions and incorporate any new information into their reports to be 
10 hours and the annual burden for each broker-dealer to describe and 
update any terms of payment for order flow arrangements and profit-
sharing relationships with a Specified Venue

[[Page 71936]]

that may influence their order routing decisions to be 15 hours, for a 
total annual time burden of approximately 6,600 hours (25 x 264). 
Therefore, the estimated total annual time burden to comply with Rule 
606(a)(1) is 48,840 hours (42,240 + 6,600).
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    \1\ 186 clearing brokers + 78 introducing brokers = 264.
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    Clearing brokers generally bear the burden of responding to 
individual customer requests under Rule 606(b)(1) for order handling 
information. The Commission staff estimates that an average clearing 
broker incurs an annual burden of 400 hours (2000 responses x 0.2 
hours/response) to prepare, disseminate, and retain responses to 
customers required by Rule 606(b)(1). With an estimated 186 clearing 
brokers subject to Rule 606(b)(1), the total industry-wide time burden 
per year to comply with the customer response requirement in Rule 
606(b)(1) is estimated to be 74,400 hours (186 x 400).
    The Commission estimates that approximately 200 broker-dealers are 
involved in routing orders subject to the disclosure requirements of 
Rule 606(b)(3). The Commission believes that some such broker-dealers 
will respond to requests for customer-specific reports in house, while 
others will engage a third-party service provider to do so. The 
Commission estimates that approximately 135 broker-dealers will respond 
in-house to individual customer requests for information on order 
handling under Rule 606(b)(3), and that for each, the individual annual 
time burden will be 400 hours (200 responses x 2 hours/response), with 
a total annual time burden of 54,000 hours (400 x 135).
    The Commission estimates that approximately 65 broker-dealers will 
engage a third party to respond to individual customer requests, and 
that for each, the individual annual time burden will be 200 hours (200 
responses x 1 hour/response), with a total annual time burden of 13,000 
hours (200 x 65). The total annual cost burden associated with engaging 
such third parties is approximately $1,300,000 (65 x 200 annual 
requests x $100 per request to engage a third-party service provider). 
Therefore, the estimated total annual burden to comply with Rule 
606(b)(3) is 67,000 hours (54,000 + 13,000) and $1,300,000.
    The total annual time burden associated with Rule 606 is thus 
approximately 190,240 hours per year (48,840 + 74,400 + 67,000) and the 
total annual cost burden associated with Rule 606 is approximately 
$1,300,000 per year.
    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 will 
have practical utility; (b) the accuracy of the Commission's estimate 
of the burden of the 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.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number
    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: 
[email protected].

    Dated: December 15, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-27497 Filed 12-17-21; 8:45 am]
BILLING CODE 8011-01-P