
[Federal Register Volume 76, Number 8 (Wednesday, January 12, 2011)]
[Notices]
[Pages 2153-2154]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-475]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

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'') is soliciting comments on the existing collection of 
information provided for in Rule 15c3-3 (17 CFR 240.15c3-3), 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 for extension and approval.
    Rule 15c3-3 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, paragraph (o) of Rule 15c3-3, which applies 
only to broker-dealers that sell securities futures products (``SFP'') 
to customers, requires that such broker-dealers provide certain 
notifications to customers, and to make a record of any changes of 
account type.
    There are approximately 279 broker-dealers fully subject to the 
Rule (i.e., broker-dealers that cannot claim any of the exemptions 
enumerated at paragraph (k)), of which approximately 13 make daily, 210 
make weekly, and 56 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 36,780 hours annually ((2.5 hours x 240 computations x 13 
respondents that calculate daily) + (2.5 hours x 52 computations x 210 
respondents that calculate weekly) + (2.5 hours x 12 computations x 56 
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, 279 broker-dealers are 
presently fully-subject to Rule 15c3-3. In addition, 120 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 100 ((279 + 120) 
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 100 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 fails to make a required 
deposit to its Special Reserve Bank Account. Commission staff estimates 
that broker-dealers file approximately 33 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

[[Page 2154]]

approximately 17 hours each year to comply with the notice requirement 
of Rule 15c3-3.
    Finally, a broker-dealer that effects transactions in SFPs for 
customers 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.\1\ 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, 2009, 
broker-dealers that were also registered as futures commission 
merchants reported that they maintained 35,242,468 customer accounts. 
The staff estimates that 8% of these customers may engage in SFP 
transactions (35,242,468 accounts x 8% = 2,819,397). 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 563,879 
accounts (2,819,397 accounts x 20%). The staff believes that it will 
take approximately 3 minutes to create each record.\2\ Thus, the total 
annual burden associated with creating a record of change of account 
type will be 28,194 hours (563,879 accounts x (3min/60min)).
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    \1\ 17 CFR 240.15c3-3(o)(3)(i).
    \2\ 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 65,091 hours 
(36,780 hours + 100 hours + 17 hours + 28,194 hours).
    The staff estimates that a broker-dealer would have (1) A financial 
reporting manager make a record of its reserve computations and send 
the required notices to the Commission, (2) an attorney obtain the 
written notifications from banks where 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 
customers, and (3) a compliance clerk create a record of each change in 
account type. The staff estimates that the hourly rate of a financial 
reporting manager and an attorney are $290 and $354, respectively,\3\ 
and the hourly rate of a compliance clerk is $67.\4\ Consequently, the 
total cost of the above-described hour burden would be $12,595,528.\5\
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    \3\ The $290/hour figure for a financial reporting manager and 
the $354/hour figure for an attorney are derived from SIFMA's 
Management & Professional Salaries in the Securities Industry 2010, 
as modified by Commission staff to account for an 1,800 hour work-
year and multiplied by 5.35 to account for bonuses, firm size, 
employee benefits and overhead.
    \4\ The $67/hour figure for a compliance clerk is derived from 
SIFMA's Office Salaries in the Securities Industry 2010, modified by 
Commission staff to account for an 1,800 hour work-year and 
multiplied by 2.93 to account for bonuses, firm size, employee 
benefits and overhead.
    \5\ (((36,780 hours + 17 hours) x $290/hour) + (100 hours x 
$354/hour) + (28,194 hours x $67/hour)).
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    In addition, a broker-dealer that effects transactions in SFPs for 
customers also will have an annualized cost burden associated with the 
requirements in paragraph (o) of Rule 15c3-3 to (1) provide each 
customer that plans to effect SFP transactions with a disclosure 
document containing certain information,\6\ and (2) send each SFP 
customer notification of any change of account type.\7\ Approximately 
8% of the accounts held by broker-dealers that are also registered as 
FCMs, or 2,819,397 accounts, may engage in SFP transactions. The staff 
estimates that the cost of printing and sending each disclosure 
document will be approximately $.15 per document sent.\8\ Thus, the 
staff estimates that the cost of printing and sending disclosure 
documents would be approximately $422,910 (2,819,397 accounts x $.15). 
In addition, approximately 563,879 accounts (2,819,397 accounts x 20%) 
may change account type per year requiring that broker-dealers provide 
notification to those customers. The staff estimates that the cost of 
sending this notification to customers will be about $84,582 (563,879 
accounts x $.15). Consequently, the staff estimates that the total 
annual cost associated with Rule 15c3-3 would be $507,492 ($422,910 + 
$84,583).
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    \6\ 17 CFR 240.15c3-3(o)(2).
    \7\ 17 CFR 240.15c3-3(o)(3)(ii).
    \8\ Based on past conversations with industry representatives 
regarding other rule changes as adjusted to account for inflation 
and increased postage costs.
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    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.
    Please direct your written comments to: Thomas Bayer, Chief 
Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 6432 General Green Way, Alexandria, Virginia 22312 or 
send an e-mail to: PRA_Mailbox@sec.gov.

    Dated: January 6, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-475 Filed 1-11-11; 8:45 am]
BILLING CODE 8011-01-P


