[Federal Register Volume 88, Number 44 (Tuesday, March 7, 2023)]
[Notices]
[Pages 14219-14220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04627]



[[Page 14219]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-794, OMB Control No. 3235-0737]


Proposed Collection; Comment Request; Extension: Rule 22e-4

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

    Notice is hereby given that, under the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501-3520), the Securities and Exchange Commission 
(``Commission'') is soliciting comments on the collection of 
information summarized below. The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget for extension and approval.
    Section 22(e) of the Investment Company Act of 1940 (``Investment 
Company Act'') provides that no registered investment company shall 
suspend the right of redemption or postpone the date of payment of 
redemption proceeds for more than seven days after tender of the 
security absent specified unusual circumstances. The provision was 
designed to prevent funds and their investment advisers from 
interfering with the redemption rights of shareholders for improper 
purposes, such as the preservation of management fees. Although section 
22(e) permits funds to postpone the date of payment or satisfaction 
upon redemption for up to seven days, it does not permit funds to 
suspend the right of redemption for any amount of time, absent certain 
specified circumstances or a Commission order.
    Rule 22e-4 under the Act [17 CFR 270.22e-4] requires an open-end 
fund and an exchange-traded fund that redeems in kind (``In-Kind ETF'') 
to establish a written liquidity risk management program that is 
reasonably designed to assess and manage the fund's or In-Kind ETF's 
liquidity risk. This program includes policies and procedures that 
incorporate certain program elements, including: (i) for funds and In-
Kind ETFs, the assessment, management, and periodic review of liquidity 
risk (with such review occurring no less frequently than annually); 
(ii) for funds, the classification of the liquidity of a fund's 
portfolio investments, as well as at-least-monthly reviews of the 
fund's liquidity classifications; (iii) for funds that do not primarily 
hold assets that are highly liquid investments, the determination of 
and periodic review of the fund's highly liquid investment minimum and 
establishment of policies and procedures for responding to a shortfall 
of the fund's highly liquid investment minimum, which includes 
reporting to the fund's board of directors; (iv) for funds and In-Kind 
ETFs, the limitation of the fund's or In-Kind ETF's investment in 
illiquid investments that are assets to no more than 15% of the fund's 
or In-Kind ETF's net assets; and (iv) for funds and In-Kind ETFs, the 
establishment of policies and procedures regarding redemptions in kind, 
to the extent that the fund engages in or reserves the right to engage 
in redemptions in kind. The rule also requires board approval and 
oversight of a fund's or In-Kind ETF's liquidity risk management 
program and recordkeeping.
    Rule 22e-4 also requires a limited liquidity review, under which an 
unit investment trust's (``UIT'') principal underwriter or depositor 
determines, on or before the date of the initial deposit of portfolio 
securities into the UIT, that the portion of the illiquid investments 
that the UIT holds or will hold at the date of deposit that are assets 
is consistent with the redeemable nature of the securities it issues 
and retains a record of such determination for the life of the UIT and 
for five years thereafter.
    The requirements under rule 22e-4 that a fund and In-Kind ETF, as 
applicable, adopt a written liquidity risk management program, report 
to the board, maintain a written record of how the highly liquid 
investment minimum was determined and written policies and procedures 
for responding to a shortfall of the fund's highly liquid investment 
minimum, which includes reporting to the fund's board of directors (for 
funds that do not primarily hold highly liquid investments), establish 
written policies and procedures regarding how the fund will engage in 
redemptions in kind, and retain certain other records are all 
collections of information. In addition, the requirement under rule 
22e-4 that the principal underwriter or depositor of a UIT assess the 
liquidity of the UIT on or before the date of the initial deposit of 
portfolio securities into the UIT and retain a record of such 
determination for the life of the UIT, and for five years thereafter, 
is also a collection of information.
    The Commission staff estimates that 11,659 funds, 603 newly-
registered funds, and 8 UITs are subject to rule 22e-4. The internal 
annual burden estimate is 16 hours for a fund, 11 for a newly-
registered fund, and 8 hours for an UIT. Based on these estimates, the 
total annual burden hours associated with the rule is estimated to be 
193,241 hours. The estimated burden hours associated with rule 22e-4 
have increased by 165,091 hours from the current allocation of 28,150 
hours. This increase is due to an increase in the estimated number of 
affected entities, as well as revisions in the manner of calculation. 
The external cost associated with this collection of information is 
approximately $3,124 per fund and $2,000 per newly-registered fund, and 
the total annual external cost burden is $37,628,716. The estimated 
external cost has increased by $37,628,716 from the current estimate of 
$0. This increase is due to the staff's determination to revise the 
manner in which it calculates these estimates.
    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. The collection of information required by rule 22e-4 
is necessary to obtain the benefits of the rule. Information regarding 
a fund's monthly position-level liquidity classification and its highly 
liquid investment minimum reported on Form N-PORT will be kept 
confidential. Other information provided to the Commission in 
connection with staff examinations or investigations is kept 
confidential subject to the provisions of applicable law. If 
information collected pursuant to rule 22e-4 is reviewed by the 
Commission's examination staff, it is accorded the same level of 
confidentiality accorded to other responses provided to the Commission 
in the context of its examination and oversight program. 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 OMB 
control number.
    Written comments are invited on: (a) whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
estimate of the burden of the collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information 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 by May 8, 2023.
    An agency may not conduct or sponsor, and a person is not required 
to

[[Page 14220]]

respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    Please direct your written comments to: David Bottom, Acting 
Director/Chief Information Officer, Securities and Exchange Commission, 
c/o John Pezzullo, 100 F Street NE, Washington, DC 20549 or send an 
email to: [email protected].

    Dated: March 2, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04627 Filed 3-6-23; 8:45 am]
BILLING CODE 8011-01-P


