
[Federal Register: January 12, 2010 (Volume 75, Number 7)]
[Notices]               
[Page 1663-1664]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12ja10-90]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Submission for OMB Review; Comment Request

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

Extension:
    Rule 17i-5; SEC File No. 270-531; OMB Control No. 3235-0590.

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 \1\ the Securities and Exchange Commission (``Commission'') has 
submitted 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 the following rule: 17 CFR 240.17i-5.
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    \1\ 44 U.S.C. 3501 et seq.
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    Section 231 of the Gramm-Leach-Bliley Act of 1999 \2\ (the 
``GLBA'') amended Section 17 of the Securities Exchange Act of 1934 (15 
U.S.C. 78q) (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'').\3\ In 2004, the Commission promulgated rules, including 
Rule 17i-5, to create a framework for the Commission to supervise 
SIBHCs.\4\ 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.\5\
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    \2\ Pub. L. 106-102, 113 Stat. 1338 (1999).
    \3\ See 15 U.S.C. 78q(i).
    \4\ See Exchange Act Release No. 49831 (Jun. 8, 2004), 69 FR 
34472 (Jun. 21, 2004).
    \5\ 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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    Pursuant to Section 17(i)(3)(A) of the Exchange Act, an SIBHC would 
be required to make and keep records,

[[Page 1664]]

furnish copies thereof, and make such reports as the Commission may 
require by rule.\6\ Rule 17i-5 requires that an SIBHC make and keep 
current certain records relating to its business. In addition, it 
requires that an SIBHC preserve those and other records for at least 
three years.
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    \6\ 15 U.S.C. 78q(i)(3)(A).
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    The collections of information required pursuant to Rule 17i-5 are 
necessary so that the Commission can adequately supervise the 
activities of these SIBHCs. In addition, these collections of 
information are needed 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 the Act. Rule 17i-5 also 
enhances the Commission's supervision of the SIBHCs' subsidiary broker-
dealers through collection of additional information and inspections of 
affiliates of those broker-dealers. Without this information and 
documentation, the Commission would be unable to adequately supervise 
an SIBHC, nor would it be able to determine whether continued 
supervision of an IBHC as an SIBHC were necessary and appropriate in 
furtherance of the purposes of Section 17 of the Act.
    In addition to the one firm currently supervised by the Commission 
as a SIBHC, we estimate that 2 IBHCs will file Notices of Intention 
with the Commission to be supervised by the Commission as SIBHCs; for a 
total of three firms. An SIBHC will generally require about 40 hours to 
create and document a contingency plan regarding funding and liquidity 
of the affiliate group at a cost of $9,200 per SIBHC.\7\ An SIBHC will 
require, on average, approximately 64 hours each quarter to create a 
record regarding stress tests, or approximately 256 hours each year and 
a cost of $49,920.\8\ Further, an SIBHC will establish approximately 20 
new counterparty arrangements each year, and will take, on average, 
about 30 minutes to create a record regarding the basis for credit risk 
weights for each such counterparty for a cost of $1,410.\9\ Finally, an 
SIBHC will generally require about 24 hours per year to maintain the 
specified records for a cost of $4,632.\10\
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    \7\ We believe that an SIBHC would have a Senior Treasury 
Manager create this record. According to the Securities Industry and 
Financial Markets Association (``SIFMA''), the hourly cost of a 
Senior Treasury Manager is $230, as reflected in the SIFMA's Report 
on Management and Professional Earnings for 2008 (``SIFMA's Report 
on Professional Earnings), and modified to account for an 1,800-hour 
work-year and multiplied by 5.35 to account for bonuses, firm size, 
employee benefits and overhead. ($230 x 40 hours) = $9,200.
    \8\ We believe that an SIBHC would have a Floor Supervisor, or 
equivalent, create this record with an hourly cost of $195, as 
reflected in SIFMA's Report on Professional Earnings''). ($195 x 
256) = $49,920.
    \9\ On average, each firm presently maintains relationships with 
approximately 1,000 counterparties. Further, firms generally already 
maintain documentation regarding their credit decisions, including 
their determination of credit risk weights, for those 
counterparties. We believe that an SIBHC would have an Intermediate 
Accountant create this record, which according to SIFMA's Report on 
Professional Earnings receives an hourly rate of $141. ($141 x ((30 
minutes x 20 counterparties)/60 minutes) = $1,410.
    \10\ We believe that an SIBHC would have a Programmer Analyst 
perform this task and according to SIFMA's Report on Professional 
Earnings, a Programmer Analyst receives an hourly rate of $193. 
($193 x 24) = $4,632.
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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-5.
    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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    \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) 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: Shagufta_
Ahmed@comb.eop.gov; and (ii) Charles Boucher, 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 to OMB 
within 30 days of this notice.

    Dated: January 6, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-303 Filed 1-11-10; 8:45 am]
BILLING CODE 8011-01-P

