Notice2025-13253
Proposed Collection; Comment Request; Extension: Rule 18a-2
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
July 15, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 133 (Tuesday, July 15, 2025)</title>
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[Federal Register Volume 90, Number 133 (Tuesday, July 15, 2025)]
[Notices]
[Pages 31733-31734]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13253]
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SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0699]
Proposed Collection; Comment Request; Extension: Rule 18a-2
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 et seq.), the Securities and Exchange
Commission (``SEC'' or ``Commission'') is soliciting comments on the
proposed collection of information in Rule 18a-2.
Rule 18a-2, 17 CFR 240.18a-2, establishes capital requirements for
nonbank major security-based swap participants that are also not
registered as broker-dealers (``nonbank MSBSPs''). In particular, a
nonbank MSBSP is required at all times to have and maintain positive
tangible net worth.
Under Rule 18a-2, nonbank MSBSPs also need to comply with Exchange
Act Rule 15c3-4 (17 CFR 240.15c3-4), which requires OTC derivatives
dealers and other firms subject to its provisions to establish,
document, and maintain a system of internal risk management controls to
assist the firm in managing the risk associated with its business
activities, including market, credit, leverage, liquidity, legal, and
operational risks.
The staff previously estimated that 5 or fewer nonbank entities
would register with the Commission as MSBSPs. The staff continues to
estimate that 5 or fewer nonbank entities will register with the
Commission as MSBSPs, although currently no such entities have
registered. These nonbank MSBSPs will be required to establish,
document, and regularly review and update risk management control
systems with respect to market, credit, leverage, liquidity, legal and
operational risks. Based on similar estimates for OTC derivatives
dealers, the Commission staff believes that each nonbank MSBSP will
spend approximately 2,000 hours to implement its risk management
control system, resulting in a one-time industry-wide hour burden of
approximately 10,000 recordkeeping hours, or approximately 3,333 hours
per year when annualized over 3 years.\1\
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\1\ 5 MSBSPs x 2,000 hours = 10,000 hours. This one-time burden
annualized over a 3-year period is approximately 3,333 hours
industry-wide (10,000 hours/3 = 3,333.33 rounded down to 3,333).
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Based on similar estimates for OTC derivatives dealers, the staff
further
[[Page 31734]]
estimates that each of these firms will spend approximately 250 hours
per year reviewing and updating its risk management control systems,
resulting in an ongoing annual industry-wide hour burden of
approximately 1,250 recordkeeping hours per year.\2\
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\2\ 5 MSBSPs x 250 hours/year = 1,250 hours/year.
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Taken together, the total industry-wide recordkeeping hour burden
is approximately 4,583 hours per year.\3\
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\3\ 2,000 hours/3 years = 3,333.33 + 1,250 hours = 4,583.33
hours rounded down to 4,583.
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Because nonbank MSBSPs may not initially have the systems or
expertise internally to meet the risk management requirements of Rule
18a-2, these firms will likely hire an outside risk management
consultant to assist them in implementing their risk management
systems. The staff estimates that each firm will hire an outside
management consultant for approximately 200 hours at a cost of
approximately $596 per hour, for a one-time external management
consulting cost of approximately $119,200 per respondent, and a total
one-time industry management consulting cost of approximately $596,000,
or approximately $198,667 per year \4\ when annualized over 3 years.
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\4\ 5 MSBSPs x 200 hours x $596/hour = $596,000. Annualized over
three years, this industry-wide burden is approximately $198,667 per
year ($596,000/3 years = $198,666.66 rounded up to $198,667).
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Nonbank MSBSPs may incur start-up costs to comply with Rule 18a-2,
including information technology costs. The information technology
systems of a nonbank MSBSP may be in varying stages of readiness to
enable these firms to meet the requirements of Rule 18a-2, so the cost
of modifying their information technology systems could vary
significantly among firms. Based on estimates for similar collections
of information,\5\ the Commission staff expects that each nonbank MSBSP
will spend an average of approximately $16,000 for one-time initial
hardware and software external expenses, for a total one-time industry-
wide external information technology cost of approximately $80,000, or
approximately $26,667 per year \6\ when annualized over 3 years. Based
on the estimates for these similar collections of information, the
average ongoing external cost to meet the information technology
requirements of Rule 18a-2 will be approximately $20,500 per nonbank
MSBSP. This will also result in an ongoing annual industry-wide
external information technology cost of approximately $102,500.\7\
Taken together, the total industry-wide information technology related
cost burden is approximately $129,167 per year.\8\
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\5\ See Risk Management Controls for Broker or Dealers with
Market Access, Exchange Act Release No. 6321 (Nov. 3, 2010), 75 FR
69792, 69814 (Nov. 15, 2010).
\6\ 5 MSBSPs x $16,000/3 years = $26,666.666, rounded up to
$26,667.
\7\ 5 MSBSP x $20,500 = $102,500.
\8\ $80,000/3 years + $102,500 = $129,166.667 rounded up to
$129,167.
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Therefore, the total industry-wide recordkeeping cost burden is
approximately $327,834 per year ($198,667 + $129,167 = $327,834).
The requirement to establish, document, and maintain a system of
internal risk management controls will be imposed on nonbank MSBSPs
because, by definition, they maintain materially large positions in
security-based swap markets and will pose substantial risk to the
stability of those markets should they default on their obligations.\9\
The collections of information in Rule 18a-2 will facilitate the
monitoring of the financial condition of nonbank MSBSPs by the
Commission and its staff. The information collection is mandatory and
is kept confidential to the extent permitted by the Freedom of
Information Act (5 U.S.C. 552 et seq.).
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\9\ The record preservation requirements for the information
collections are in Rule 18a-6, 17 CFR 240.18a-6.
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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 this proposed
collection of information is necessary for the proper performance of
the functions of the SEC, including whether the information will have
practical utility; (b) the accuracy of the SEC's estimate of the burden
imposed by the proposed collection of information, including the
validity of the methodology and the assumptions used; (c) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated,
electronic collection techniques or other forms of information
technology.
Please direct your written comments on this 60-Day Collection
Notice to Austin Gerig, Director/Chief Data Officer, Securities and
Exchange Commission, c/o Tanya Ruttenberg via email to
<a href="/cdn-cgi/l/email-protection#550534253027223a273e0730312036213c3a3b143621152630367b323a23"><span class="__cf_email__" data-cfemail="a0f0c1d0c5d2d7cfd2cbf2c5c4d5c3d4c9cfcee1c3d4e0d3c5c38ec7cfd6">[email protected]</span></a> by September 15, 2025. There will be a
second opportunity to comment on this SEC request following the Federal
Register publishing a 30-Day Submission Notice.
Dated: July 11, 2025.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-13253 Filed 7-14-25; 8:45 am]
BILLING CODE 8011-01-P
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