Notice2022-19669
Proposed Collection; Comment Request; Extension: Rule 22c-1
Primary source
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Published
September 13, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 176 (Tuesday, September 13, 2022)</title>
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[Federal Register Volume 87, Number 176 (Tuesday, September 13, 2022)]
[Notices]
[Pages 56120-56121]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-19669]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-793, OMB Control No. 3235-0734]
Proposed Collection; Comment Request; Extension: Rule 22c-1
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 (44 U.S.C. 3501-3520), the Securities and Exchange
Commission (the ``Commission'') is soliciting comments on the
collections 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.
Rule 22c-1 (17 CFR 270.22c-1) under the Investment Company Act of
1940 (15 U.S.C. 80a) (the ``Investment Company Act'' or ``Act'')
enables a fund to choose to use ``swing pricing'' as a tool to mitigate
shareholder dilution. Rule 22c-1 is intended to promote investor
protection by providing funds with an additional tool to mitigate the
potentially dilutive effects of shareholder purchase or redemption
activity and a set of operational standards that allow funds to gain
comfort using swing pricing as a means of mitigating potential
dilution.
The respondents to amended rule 22c-1 are open-end management
investment companies (other than money market funds or exchange-traded
funds) that engage in swing pricing. Compliance with rule 22c-1(a)(3)
is mandatory for any fund that chooses to use swing pricing to adjust
its NAV in reliance on the rule.
While we are not aware of any funds that have engaged in swing
pricing,\1\ we are estimating for the purpose of this analysis that 5
fund complexes have funds that may adopt swing pricing policies and
procedures in the future pursuant to the rule. We estimate that the
total burden associated with the preparation and approval of swing
pricing policies and procedures by those fund complexes that would use
swing pricing will be 280 hours.\2\ We also estimate that it will cost
a fund complex $48,188 to document, review and initially approve these
policies and procedures, for a total cost of $240,940.\3\
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\1\ No funds have engaged in swing pricing as reported on Form
N-CEN as of August 15, 2022.
\2\ This estimate is based on the following calculation: (48 + 2
+ 6) hours x 5 fund complexes = 280 hours.
\3\ These estimates are based on the following calculations: 24
hours x $237 (hourly rate for a senior accountant) = $5,688; 24
hours x $545 (blended hourly rate for assistant general counsel
($510) and chief compliance officer ($580)) = $13,080; 2 hours (for
a fund attorney's time to prepare materials for the board's
determinations) x $400 (hourly rate for a compliance attorney) =
$800; 6 hours x $4,770 (hourly rate for a board of 9 directors) =
$28,620; ($5,688 + $13,080 +$800 + $28,620) = $48,188; $48,188 x 5
fund complexes = $240,940. The hourly wages used are from SIFMA's
Management & Professional Earnings in the Securities Industry 2013,
modified by Commission staff to account for an 1800-hour work-year
and inflation, and multiplied by 5.35 to account for bonuses, firm
size, employee benefits, and overhead. The staff has estimated the
average cost of board of director time as $4,770 per hour for the
board as a whole, based on information received from funds and their
counsel.
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Rule 22c-1 requires a fund that uses swing pricing to maintain the
fund's swing policies and procedures that are in effect, or at any time
within the past six years were in effect, in an easily accessible
place.\4\ The rule also requires a fund to retain a written copy of the
periodic report provided to the board prepared by the swing pricing
administrator that describes, among other things, the swing pricing
administrator's review of the adequacy of the fund's swing pricing
policies and procedures and the effectiveness of their implementation,
including the impact on mitigating dilution and any back-testing
performed.\5\ The retention of these records is necessary to allow the
staff during examinations of funds to determine whether a fund is in
[[Page 56121]]
compliance with its swing pricing policies and procedures and with rule
22c-1. We estimate a time cost per fund complex of $344.\6\ We estimate
that the total for recordkeeping related to swing pricing will be 20
hours, at an aggregate cost of $1,720, for all fund complexes that we
believe include funds that have adopted swing pricing policies and
procedures.\7\
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\4\ See rule 22c-1(a)(3)(iii).
\5\ See id.
\6\ This estimate is based on the following calculations: 2
hours x $68 (hourly rate for a general clerk) = $136; 2 hours x $104
(hourly rate for a senior computer operator) = $208. $136 + $208 =
$344.
\7\ These estimates are based on the following calculations: 4
hours x 5 fund complexes = 20 hours. 5 fund complexes x $344 =
$1,720.
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Amortized over a three-year period, we believe that the hour
burdens and time costs associated with rule 22c-1, including the burden
associated with the requirements that funds adopt policies and
procedures, obtain board approval, and periodic review of an annual
written report from the swing pricing administrator, and retain certain
records and written reports related to swing pricing, will result in an
average aggregate annual burden of 113.3 hours, and average aggregate
time costs of $82,033.\8\ We also estimate that rule 22c-1 imposes a
total external cost burden of $2,655 for outside legal services related
to compliance with the policies and procedures requirement.\9\
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\8\ These estimates are based on the following calculations:
(280 hours (year 1) + (3 x 20 hours) (years 1, 2 and 3)) / 3 = 113.3
hours; ($240,940 (year 1) + (3 x $1,720) (years 1, 2 and 3)) / 3 =
$82,033.
\9\ This estimated burden is based on the estimated wage rate of
$531 per hour for outside legal services and the following
calculation: $531 x 5 fund complexes = $2,655.
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These estimates of average costs are made solely for the purposes
of the Paperwork Reduction Act. The estimate is not derived from a
comprehensive or even a representative survey or study of the costs of
Commission rules. This collection of information is necessary to obtain
a benefit and 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 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 November 14, 2022.
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, 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: <a href="/cdn-cgi/l/email-protection#e2b2b0a3bdaf838b8e808d9aa2918781cc858d94"><span class="__cf_email__" data-cfemail="247476657b69454d48464b5c645741470a434b52">[email protected]</span></a>.
Dated: September 7, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19669 Filed 9-12-22; 8:45 am]
BILLING CODE 8011-01-P
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