Notice2023-04627
Proposed Collection; Comment Request; Extension: Rule 22e-4
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
March 7, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 44 (Tuesday, March 7, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 44 (Tuesday, March 7, 2023)]
[Notices]
[Pages 14219-14220]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[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: <a href="/cdn-cgi/l/email-protection#f9a9abb8a6b49890959b9681b98a9c9ad79e968f"><span class="__cf_email__" data-cfemail="46161407190b272f2a24293e0635232568212930">[email protected]</span></a>.
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
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on March 7, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.