Notice2021-27497
Proposed Collection; Comment Request
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 20, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 241 (Monday, December 20, 2021)</title>
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[Federal Register Volume 86, Number 241 (Monday, December 20, 2021)]
[Notices]
[Pages 71935-71936]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-27497]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-489, OMB Control No. 3235-0541]
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC
20549-2736
Extension:
Rule 606 of Regulation NMS
Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.) (``PRA''), the Securities and
Exchange Commission (``Commission'') is soliciting comments on the
existing collection of information provided for in Rule 606 of
Regulation NMS (``Rule 606'') (17 CFR 242.606), 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 (``OMB'') for extension and approval.
Rule 606 (formerly known as Rule 11Ac1-6) requires disclosure by
broker-dealers of (1) pursuant to Rule 606(a)(1), a quarterly
aggregated public report on the handling of orders in NMS stocks that
are submitted on a held basis and orders in NMS securities that are
option contracts with a market value less than $50,000; (2) pursuant to
Rule 606(b)(1), a report, upon request of a customer, on the routing of
that customer's orders in NMS stocks that are submitted on a held
basis, orders in NMS stocks that are submitted on a not held basis and
do not qualify for two de minimis exceptions, and orders in NMS
securities that are option contracts, containing certain information on
the broker-dealer's routing of such orders for that customer for the
prior six months; and (3) pursuant to Rule 606(b)(3), a report, upon
request of a customer that places with the broker-dealer, directly or
indirectly, NMS stock orders of any size that are submitted on a not
held basis (subject to two de minimis exceptions), containing certain
information on the broker-dealer's handling of such orders for that
customer for the prior six months.
The total annual time burden associated with Rule 606 is
approximately 190,240 hours per year and the total annual cost burden
associated with Rule 606 is approximately $1,300,000 per year,
calculated as described below.
The Commission estimates that out of the currently 3,585 broker-
dealers that are subject to the collection of information obligations
of Rule 606(a)(1), clearing brokers bear a substantial portion of the
burden of complying with the reporting and recordkeeping requirements
of Rule 606 on behalf of small to mid-sized introducing firms. There
currently are approximately 186 clearing brokers. In addition, there
are approximately 78 introducing brokers that receive funds or
securities from their customers. Because at least some of these firms
also may have greater involvement in determining where customer orders
are routed for execution, they have been included, along with clearing
brokers, in estimating the total burden of Rule 606(a)(1).
The Commission staff estimates that each firm significantly
involved in order routing practices incurs an average burden of 40
hours to prepare and disseminate the quarterly report required by Rule
606(a)(1), or a burden of 160 hours per year. With an estimated 264 \1\
broker-dealers significantly involved in order routing practices, the
total industry-wide time burden per year to comply with the quarterly
reporting requirement in Rule 606 is estimated to be 42,240 hours (160
x 264). Additionally, for each of the 264 broker-dealers subject to
disclosure requirements of Rule 606(a)(1), the Commission estimates the
annual burden under Rule 606(a)(1)(iv) to monitor payment for order
flow and profit-sharing relationships and potential self-regulatory
organization rule changes that could impact their order routing
decisions and incorporate any new information into their reports to be
10 hours and the annual burden for each broker-dealer to describe and
update any terms of payment for order flow arrangements and profit-
sharing relationships with a Specified Venue
[[Page 71936]]
that may influence their order routing decisions to be 15 hours, for a
total annual time burden of approximately 6,600 hours (25 x 264).
Therefore, the estimated total annual time burden to comply with Rule
606(a)(1) is 48,840 hours (42,240 + 6,600).
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\1\ 186 clearing brokers + 78 introducing brokers = 264.
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Clearing brokers generally bear the burden of responding to
individual customer requests under Rule 606(b)(1) for order handling
information. The Commission staff estimates that an average clearing
broker incurs an annual burden of 400 hours (2000 responses x 0.2
hours/response) to prepare, disseminate, and retain responses to
customers required by Rule 606(b)(1). With an estimated 186 clearing
brokers subject to Rule 606(b)(1), the total industry-wide time burden
per year to comply with the customer response requirement in Rule
606(b)(1) is estimated to be 74,400 hours (186 x 400).
The Commission estimates that approximately 200 broker-dealers are
involved in routing orders subject to the disclosure requirements of
Rule 606(b)(3). The Commission believes that some such broker-dealers
will respond to requests for customer-specific reports in house, while
others will engage a third-party service provider to do so. The
Commission estimates that approximately 135 broker-dealers will respond
in-house to individual customer requests for information on order
handling under Rule 606(b)(3), and that for each, the individual annual
time burden will be 400 hours (200 responses x 2 hours/response), with
a total annual time burden of 54,000 hours (400 x 135).
The Commission estimates that approximately 65 broker-dealers will
engage a third party to respond to individual customer requests, and
that for each, the individual annual time burden will be 200 hours (200
responses x 1 hour/response), with a total annual time burden of 13,000
hours (200 x 65). The total annual cost burden associated with engaging
such third parties is approximately $1,300,000 (65 x 200 annual
requests x $100 per request to engage a third-party service provider).
Therefore, the estimated total annual burden to comply with Rule
606(b)(3) is 67,000 hours (54,000 + 13,000) and $1,300,000.
The total annual time burden associated with Rule 606 is thus
approximately 190,240 hours per year (48,840 + 74,400 + 67,000) and the
total annual cost burden associated with Rule 606 is approximately
$1,300,000 per year.
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 will
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 in writing within 60
days of this publication.
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
Please direct your written comments to David Bottom, Director/Chief
Information Officer, Securities and Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington, DC 20549; or send an email to:
<a href="/cdn-cgi/l/email-protection#f0a0a2b1afbd91999c929f88b0839593de979f86"><span class="__cf_email__" data-cfemail="227270637d6f434b4e404d5a625147410c454d54">[email protected]</span></a>.
Dated: December 15, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-27497 Filed 12-17-21; 8:45 am]
BILLING CODE 8011-01-P
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