
[Federal Register Volume 76, Number 216 (Tuesday, November 8, 2011)]
[Notices]
[Page 69301]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28901]



[[Page 69301]]

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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

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

Extension:
    Rule 17f-1; SEC File No. 270-236; OMB Control No. 3235-0222.

    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 (the ``Commission'') has submitted to the Office of 
Management and Budget a request for extension of the previously 
approved collection of information discussed below.
    Rule 17f-1 (17 CFR 270.17f-1) under the Investment Company Act of 
1940 (the ``Act'') (15 U.S.C. 80a) is entitled: ``Custody of Securities 
with Members of National Securities Exchanges.'' Rule 17f-1 provides 
that any registered management investment company (``fund'') that 
wishes to place its assets in the custody of a national securities 
exchange member may do so only under a written contract that must be 
ratified initially and approved annually by a majority of the fund's 
board of directors. The written contract also must contain certain 
specified provisions. In addition, the rule requires an independent 
public accountant to examine the fund's assets in the custody of the 
exchange member at least three times during the fund's fiscal year. The 
rule requires the written contract and the certificate of each 
examination to be transmitted to the Commission. The purpose of the 
rule is to ensure the safekeeping of fund assets.
    Commission staff estimates that each fund makes 1 response and 
spends an average of 3.5 hours annually in complying with the rule's 
requirements. Commission staff estimates that on an annual basis it 
takes: (i) 0.5 hours for the board of directors\1\ to review and ratify 
the custodial contracts; and (ii) 3 hours for the fund's controller to 
assist the fund's independent public auditors in verifying the fund's 
assets. Approximately 5 funds rely on the rule annually, with a total 
of 5 responses.\2\ Thus, the total annual hour burden for rule 17f-1 is 
approximately 17.5 hours.\3\
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    \1\ Estimates of the number of hours are based on conversations 
with representatives of mutual funds that comply with the rule. The 
actual number of hours may vary significantly depending on 
individual fund assets. The hour burden for rule 17f-1 does not 
include preparing the custody contract because that would be part of 
customary and usual business practice.
    \2\ Based on a review of Form N-17f-1 filings over the last 
three years the Commission staff estimates that an average of 5 
funds rely on rule 17f-1 each year.
    \3\ This estimate is based on the following calculation: (5 
respondents x 3.5 hours = 17.5 hours). The annual burden for rule 
17f-1 does not include time spent preparing Form N-17f-1. The burden 
for Form N-17f-1 is included in a separate collection of 
information.
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    Funds that rely on rule 17f-1 generally use outside counsel to 
prepare the custodial contract for the board's review and to transmit 
the contract to the Commission. Commission staff estimates the cost of 
outside counsel to perform these tasks for a fund each year is 
$800.00.\4\ Funds also must have an independent public accountant 
verify the fund's assets three times each year and prepare the 
certificate of examination. Commission staff estimates the annual cost 
for an independent public accountant to perform this service is 
$8,000.00.\5\ Therefore, the total annual cost burden for a fund that 
relies on rule 17f-1 would be approximately $8,800.00.\6\ As noted 
above, the staff estimates that 5 funds rely on rule 17f-1 each year, 
for an estimated total annualized cost burden of $44,000.00.\7\
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    \4\ This estimate is based on the following calculation: (2 
hours of outside counsel time x $400 = $800). The staff has 
estimated the average cost of outside counsel at $400 per hour, 
based on information received from funds, fund intermediaries, and 
their counsel.
    \5\ This estimate is based on information received from fund 
representatives estimating the aggregate annual cost of an 
independent public accountant's periodic verification of assets and 
preparation of the certificate of examination.
    \6\ This estimate is based on the following calculation: ($800 + 
$8,000 = $8,800).
    \7\ This estimate is based on the following calculation: (5 
funds x $8.800.00 = $44,000.00).
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules. Compliance with the collections of information 
required by rule 17f-1 is mandatory for funds that place their assets 
in the custody of a national securities exchange member. Responses will 
not be kept confidential. 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.
    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 email 
to: Shagufta_Ahmed@omb.eop.gov; and (ii) Thomas Bayer, Director/Chief 
Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 6432 General Green Way, Alexandria, VA 22312 or send an 
email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB 
within 30 days of this notice.

    Dated: November 3, 2011.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-28901 Filed 11-7-11; 8:45 am]
BILLING CODE 8011-01-P


