

[Federal Register: September 19, 2007 (Volume 72, Number 181)]
[Notices]               
[Page 53609-53610]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19se07-127]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Request for Public Comment

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 
20549-0213.

Extension: Rule 15c3-3; SEC File No. 270-087; OMB Control No. 3235-
0078.

    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'') intends to submit to the Office of Management and 
Budget a request for extension of the previously approved collections 
of information discussed below. The Code of Federal Regulations 
citation to this collection of information is: 17 CFR 240.15c3-3 
Customer Protection--Reserves and Custody of Securities.
    Rule 15c3-3 under the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.) requires that a broker-dealer that holds customer 
securities obtain and maintain possession and control of fully-paid and 
excess margin securities they hold for customers. In addition, the Rule 
requires that a broker-dealer that holds customer funds make either a 
weekly or monthly computation to determine whether certain customer 
funds need to be segregated in a special reserve bank account for the 
exclusive benefit of the firm's customers. It also requires that a 
broker-dealer maintain a written notification from each bank where a 
Special Reserve Bank Account is held acknowledging that all assets in 
the account are for the exclusive benefit of the broker-dealer's 
customers, and to provide written notification to the Commission (and 
its designated examining authority) under certain, specified 
circumstances. Finally, Rule 15c3-3 was amended in 2001 to add 
paragraph (o), which only applies to broker-dealers that sell 
securities futures products to customers. Paragraph (o) requires that 
such broker-dealers provide certain notifications to customers, and to 
make a record of any changes of account type.
    There are approximately 344 broker-dealers fully subject to the 
Rule (i.e., broker-dealers that can not claim any of the exemptions 
enumerated at paragraph (k)), of which approximately 9 make daily, 245 
make weekly, and 90 make monthly, reserve computations. On average, 
each of these respondents require approximately 2.5 hours to complete a 
computation. Accordingly, Commission staff estimates that the resulting 
burden totals 45,960 hours annually ((2.5 hours x 240 computations x 9 
respondents that calculate daily) + (2.5 hours x 52 computations x 245 
respondents that calculate weekly) + (2.5 hours x 12 computations x 90 
respondents that calculate monthly)).
    A broker-dealer required to maintain the Special Reserve Bank 
Account prescribed by Rule 15c3-3 must obtain and retain a written 
notification from each bank in which it has a Special Reserve Bank 
Account to evidence bank's acknowledgement that assets deposited in the 
Account are being held by the bank for the exclusive benefit of the 
broker-dealer's customers. As stated previously, 344 broker-dealers are 
presently fully-subject to Rule 15c3-3. In addition, 140 broker-dealers 
operate in accordance with the exemption provided in paragraph 
(k)(2)(i) which also requires that a broker-dealer maintain a Special 
Reserve Bank Account. The staff estimates that of the total broker-
dealers that must comply with this rule, only 25%, or 121 ((344 + 140) 
x .25) must obtain 1 new letter each year (either because the broker-
dealer changed the type of business it does and became subject to 
either paragraph (e)(3) or (k)(2)(i) or simply because the broker-
dealer established a new Special Reserve Bank Account). The staff 
estimates that it would take a broker-dealer approximately 1 hour to 
obtain this written notification from a bank regarding a Special 
Reserve Bank Account because the language in these letters is largely 
standardized. Therefore, Commission staff estimates that broker-dealers 
will spend approximately 121 hours each year to obtain these written 
notifications.
    In addition, a broker-dealer must immediately notify the Commission 
and its designated examining authority if it

[[Page 53610]]

fails to make a required deposit to its Special Reserve Bank Account. 
Commission staff estimates that broker-dealers file approximately 65 
such notices per year. Broker-dealers would require approximately 30 
minutes, on average, to file such a notice. Therefore, Commission staff 
estimates that broker-dealers would spend a total of approximately 33 
hours each year to comply with the notice requirement of Rule 15c3-3.
    Finally, a broker-dealer that effects transactions in SFPs for 
customers \1\ also will have paperwork burdens associated with the 
requirement in paragraph (o) of Rule 15c3-3 to make a record of each 
change in account type.\2\ More specifically, a broker-dealer that 
changes the type of account in which a customer's SFPs are held must 
create a record of each change in account type that includes the name 
of the customer, the account number, the date the broker-dealer 
received the customer's request to change the account type, and the 
date the change in account type took place. As of December 31, 2006, 
broker-dealers that were also registered as FCMs reported that they 
maintained 38,815,092 customer accounts. The staff estimates that 8% of 
these customers may engage in SFP transactions (38,815,092 accounts x 
8% = 3,105,207). Further, the staff estimates that 20% per year may 
change account type. Thus, broker-dealers may be required to create 
this record for up to 621,041 accounts (3,105,207 accounts x 20%). The 
staff believes that it will take approximately 3 minutes to create each 
record.\3\ Thus, the total annual burden associated with creating a 
record of change of account type will be 31,052 hours (621,041 accounts 
x (3min/60min)).
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    \1\ Broker-dealers that do not engage in an SFP business with or 
for customers are not affected by this section of Rule 15c3-3. 
Broker-dealers that engage in an SFP business must also register 
with the CFTC as a futures commission merchant (``FCM''). As of 
January 31, 2007 there were 64 broker-dealers that were also 
registered as FCMs.
    \2\ 17 CFR 240.15c3-3(o)(3)(i).
    \3\ In fact, the staff believes that most firms will have this 
process automated. To the extent that no person need be involved in 
the generation of this record, the burden will be very minimal.
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    Consequently, the staff estimates that the total annual burden 
hours associated with Rule 15c3-3 would be approximately 77,166 hours 
(45,960 hours + 121 hours + 33 hours + 31,052 hours).
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; (b) the accuracy of the agency's estimate 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.
    Comments should be directed to: R. Corey Booth, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Shirley 
Martinson, 6432 General Green Way, Alexandria, Virginia 22312 or send 
an e-mail to: PRA_Mailbox@sec.gov. Comments must be submitted within 
60 days of this notice.

     Dated: September 14, 2007.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-18451 Filed 9-18-07; 8:45 am]

BILLING CODE 8010-01-P
