
[Federal Register Volume 76, Number 2 (Tuesday, January 4, 2011)]
[Notices]
[Pages 396-397]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-33113]


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SECURITIES AND EXCHANGE COMMISSION

[Rule 8c-1; SEC File No. 270-455; OMB Control No. 3235-0514]


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.

Existing collection in use without an OMB Number:
    Rule 8c-1, SEC File No. 270-455, OMB Control No. 3235-0514.

    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 has submitted to the Office of Management and Budget 
requests for approval of the following rule: Rule 8c-1.
    Rule 8c-1 (17 CFR 240.8c-1) under the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.) generally prohibits a broker-dealer from 
using its customers' securities as collateral to finance its own 
trading, speculating, or underwriting transactions. More specifically, 
the rule states three main principles: First, that a broker-dealer is 
prohibited from commingling the securities of different customers as 
collateral for a loan without the consent of each customer; second, 
that a broker-dealer cannot commingle customers' securities with its 
own securities under the same pledge; and third, that a broker-dealer 
can only pledge its customers' securities to the extent that customers 
are in debt

[[Page 397]]

to the broker-dealer. See Securities Exchange Act Release No. 2690 
(November 15, 1940); Securities Exchange Act Release No. 9428 (December 
29, 1971). Pursuant to Rule 8c-1, respondents must collect information 
necessary to prevent the hypothecation of customer accounts in 
contravention of the rule, issue and retain copies of notices to the 
pledgee of hypothecation of customer accounts in accordance with the 
rule, and collect written consents from customers in accordance with 
the rule. The information is necessary to ensure compliance with the 
rule, and to advise customers of the rule's protections.
    There are approximately 111 respondents per year (i.e., broker-
dealers that conducted business with the public, filed Part II of the 
FOCUS Report, did not claim an exemption from the Reserve Formula 
computation, and reported that they had a bank loan during at least one 
quarter of the current year) that require an aggregate total of 2,498 
hours to comply with the rule. Each of these approximately 111 
registered broker-dealers makes an estimated 45 annual responses, for 
an aggregate total of 4,995 responses per year. Each response takes 
approximately 0.5 hours to complete. Thus, the total compliance burden 
per year is 2,498 burden hours. The approximate cost per hour is $59, 
resulting in a total cost of compliance for the respondents of 
approximately $147,382 (2,498 hours @ $59 per hour).
    The retention period for the recordkeeping requirement under Rule 
8c-1 is three years. The recordkeeping requirement under this rule is 
mandatory to ensure that broker-dealers do not commingle their 
securities or use them to finance the broker-dealers' proprietary 
business. This rule does not involve the collection of confidential 
information. Persons should be aware that an agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a current valid control number.
    The public may view the background documentation for this 
information collection at the following Web site: http://www.reginfo.gov. 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@omb.eop.gov; and (ii) Thomas Bayer, Chief 
Information Officer, 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: December 28, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33113 Filed 1-3-11; 8:45 am]
BILLING CODE 8011-01-P


