Notice2023-03337
Submission for OMB Review; Comment Request; Extension: Rule 17f-7
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
February 17, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 33 (Friday, February 17, 2023)</title>
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[Federal Register Volume 88, Number 33 (Friday, February 17, 2023)]
[Notices]
[Page 10418]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-03337]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-470, OMB Control No. 3235-0529]
Submission for OMB Review; Comment Request; Extension: Rule 17f-7
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. 350l-3521) (``Paperwork Reduction Act''), the
Securities and Exchange Commission (the ``Commission'') has submitted
to the Office of Management and Budget (``OMB'') a request for
extension of the previously approved collections of information
discussed below.
Rule 17f-7 (17 CFR 270.17f-7) permits a fund under certain
conditions to maintain its foreign assets with an eligible securities
depository, which has to meet minimum standards for a depository. The
fund or its investment adviser generally determines whether the
depository complies with those requirements based on information
provided by the fund's primary custodian (a bank that acts as global
custodian). The depository custody arrangement also must meet certain
conditions. The fund or its adviser must receive from the primary
custodian (or its agent) an initial risk analysis of the depository
arrangements, and the fund's contract with its primary custodian must
state that the custodian will monitor risks and promptly notify the
fund or its adviser of material changes in risks. The primary custodian
and other custodians also are required to agree to exercise at least
reasonable care, prudence, and diligence.
The collection of information requirements in rule 17f-7 are
intended to provide workable standards that protect funds from the
risks of using foreign securities depositories while assigning
appropriate responsibilities to the fund's primary custodian and
investment adviser based on their capabilities. The requirement that
the foreign securities depository meet specified minimum standards is
intended to ensure that the depository is subject to basic safeguards
deemed appropriate for all depositories. The requirement that the fund
or its adviser must receive from the primary custodian (or its agent)
an initial risk analysis of the depository arrangements, and that the
fund's contract with its primary custodian must state that the
custodian will monitor risks and promptly notify the fund or its
adviser of material changes in risks, is intended to provide essential
information about custody risks to the fund's investment adviser as
necessary for it to approve the continued use of the depository. The
requirement that the primary custodian agree to exercise reasonable
care is intended to provide assurances that its services and the
information it provides will meet an appropriate standard of care.
The staff estimates that each of approximately 1,445 investment
advisers \1\ will make an average of 8 responses annually under the
rule to address depository compliance with minimum requirements, any
indemnification or insurance arrangements, and reviews of risk analyses
or notifications.\2\ The staff estimates each response will take 6
hours, requiring a total of approximately 48 hours for each adviser.\3\
Thus, the total annual burden associated with these requirements of the
rule is approximately 69,360 hours.\4\
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\1\ From a review of the Form ADV filings and Form N-CEN
filings, respectively, as of December 31, 2021 and for filings
received through August 31, 2022, Commission staff estimated that
1,445 registered investment advisers managed or sponsored open-end
registered funds (including exchange-traded funds) and closed-end
registered funds.
\2\ 1,445 advisers x 8 responses = 11,560 responses.
\3\ 8 responses per adviser x 6 hours per response = 48 hours
per adviser.
\4\ 1,445 advisers x 48 hours per adviser = 69,360 hours.
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In addition, based on public filings made with the Commission, we
calculate that there are approximately 38 global custodians that are
engaged to perform global custodial services to funds and thus subject
to the provisions of rule 17f-7.\5\ This estimate is based on
information that is publicly available on Form N-CEN filings.\6\ The
staff further estimates that during each year, each of approximately 38
global custodians will make an average of 4 responses to analyze
custody risks and provide notice of any material changes to custody
risk under the rule.\7\ The staff estimates that each response will
take 260 hours, requiring approximately 1,040 hours annually per global
custodian.\8\ Thus the total annual burden associated with this aspect
of the rule is approximately 39,520 hours.\9\ The staff estimates that
the total annual hour burden associated with all collection of
information requirements of the rule is therefore 108,880 hours.\10\
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\5\ We analyzed Form N-CEN filings for registrants as of
December 31, 2021 and based on these filings, we estimated the
number of global custodians that have been retained by funds and are
subject to the provisions of rule 17f-7 to be approximately 38.
\6\ See Item C.12.a.vii.7 of Form N-CEN.
\7\ 38 custodians x 4 responses = 152 responses.
\8\ 260 hours per response x 4 responses per global custodian =
1,040 hours per global custodian.
\9\ 38 global custodians x 1,040 hours per global custodian =
39,520 hours.
\10\ 69,360 hours + 39,520 hours = 108,880 hours.
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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 and forms. Compliance with the collection of
information requirements of the rule is necessary to obtain the benefit
of relying on the rule's permission for funds to maintain their assets
in foreign custodians. The information provided under rule 17f-7 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.
The public may view background documentation for this information
collection at the following website: <a href="http://www.reginfo.gov">www.reginfo.gov</a>. 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 within 30 days of publication of this notice
by March 20, 2023 to (i) <a href="/cdn-cgi/l/email-protection#a5e8e7fd8beae8e78beaecf7e48bf6e0e6fac1c0d6cefacac3c3ccc6c0d7e5cac8c78bc0cad58bc2cad3"><span class="__cf_email__" data-cfemail="f8b5baa0d6b7b5bad6b7b1aab9d6abbdbba79c9d8b93a7979e9e919b9d8ab897959ad69d9788d69f978e">[email protected]</span></a> 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: <a href="/cdn-cgi/l/email-protection#e1b1b3a0beac80888d838e99a1928482cf868e97"><span class="__cf_email__" data-cfemail="633331223c2e020a0f010c1b231006004d040c15">[email protected]</span></a>.
Dated: February 13, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03337 Filed 2-16-23; 8:45 am]
BILLING CODE 8011-01-P
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