[Federal Register Volume 87, Number 209 (Monday, October 31, 2022)]
[Notices]
[Pages 65635-65636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23571]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-027, OMB Control No. 3235-0035]


Submission for OMB Review; Comment Request; Extension: Rule 17a-
13

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, pursuant to the Paperwork Reduction 
Act of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and 
Exchange Commission (``Commission'') has submitted to the Office of 
Management and Budget (``OMB'') a request for approval of extension of 
the previously approved collection of information provided for in Rule 
17a-13 (17 CFR 240.17a-13) under the Securities Exchange Act of 1934 
(15 U.S. C. 78a et seq.) (``Exchange Act'').
    Rule 17a-13(b) (17 CFR 240.17a-13(b)) generally requires that at 
least once each calendar quarter, all registered brokers-dealers 
physically examine and count all securities held, and that they account 
for all other

[[Page 65636]]

securities not in their possession, but subject to the broker-dealer's 
control or direction. Any discrepancies between the broker-dealer's 
securities count and the firm's records must be noted and, within seven 
days, the unaccounted for difference must be recorded in the firm's 
records. Rule 17a-13(c) (17 CFR 240.17a-13(c)) provides that under 
specified conditions, the count, examination, and verification of the 
broker-dealer's entire list of securities may be conducted on a 
cyclical basis rather than on a certain date. Although Rule 17a-13 does 
not require broker-dealers to file a report with the Commission, 
discrepancies between a broker-dealer's records and the securities 
counts may be required to be reported, for example, as a loss on Form 
X-17a-5 (17 CFR 248.617), which must be filed with the Commission under 
Exchange Act Rule 17a-5 (17 CFR 240.17a-5). Rule 17a-13 exempts broker-
dealers that limit their business to the sale and redemption of 
securities of registered investment companies and interests or 
participation in an insurance company separate account and those who 
solicit accounts for federally insured savings and loan associations, 
provided that such persons promptly transmit all funds and securities 
and hold no customer funds and securities. Rule 17a-13 also does not 
apply to certain broker-dealers required to register only because they 
effect transactions in securities futures products.
    Rule 17a-13 requires the recording of only those differences in the 
broker-dealer's records that remain unresolved seven business days 
after the date of the examination, count, and verification. The 
Commission or the self-regulatory organization (``SRO'') designated as 
the broker-dealer's examining authority may examine these recorded 
discrepancies in a broker-dealer's records to determine whether they 
are the result of the firm's inability to maintain control of its 
business.
    The information obtained from Rule 17a-13 is used as an inventory 
control device to monitor a broker-dealer's ability to account for all 
securities held in transfer, in transit, pledged, loaned, borrowed, 
deposited, or otherwise subject to the firm's control or direction. 
Discrepancies between the securities counts and the broker-dealer's 
records alert the Commission and the self-regulatory organizations 
(``SROs'') to those firms experiencing back-office operational issues.
    As of August 2022, there were approximately 3,532 active broker-
dealers registered with the Commission. However, given the variability 
in their businesses, it is difficult to quantify how many hours per 
year each broker-dealer spends complying with Rule 17a-13. As noted, 
Rule 17a-13 requires a broker-dealer to account for all securities in 
its possession or subject to its control or direction. Many broker-
dealers hold few, if any, securities, while others hold large 
quantities. Therefore, the time burden of complying with Rule 17a-13 
will depend on respondent-specific factors, including size, number of 
customers, and proprietary trading activity. The staff estimates that 
the average time spent per respondent is 100 hours per year on an 
ongoing basis to maintain the records required under Rule 17a-13. This 
estimate takes into account the fact that more than half of the 3,532 
respondents--according to financial reports filed with the Commission--
may spend little or no time complying with Rule 17a-13, given that they 
do not do a public securities business or do not hold inventories of 
securities. For these reasons, the staff estimates that the total 
recordkeeping burden per year is approximately 353,200 hours (3,532 
respondents x 100 hours/respondent)
    The records required to be made by Rule 17a-13 are available only 
to Commission examination staff, state securities authorities, and 
applicable SROs. Subject to the provisions of the Freedom of 
Information Act, 5 U.S.C. 522, and the Commission's rules thereunder 
(17 CFR 200.80(b)(4)(iii)), the Commission does not generally publish 
or make available information contained in any reports, summaries, 
analyses, letters, or memoranda arising out of, in anticipation of, or 
in connection with an examination or inspection of the books and 
records of any person or any other investigation.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    The public may view background documentation for this information 
collection at the following website: www.reginfo.gov. Find this 
particular information collection by selecting ``Currently under 30-day 
Review--Open for Public Comments'' or by using the search function. 
Written comments and recommendations for the proposed information 
collection should be sent by November 30, 2022 to (i) www.reginfo.gov/public/do/PRAMain and (ii) David Bottom, Director/Chief Information 
Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F 
Street NE, Washington, DC 20549, or by sending an email to: 
[email protected].

    Dated: October 25, 2022.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-23571 Filed 10-28-22; 8:45 am]
BILLING CODE 8011-01-P


