Notice2026-07080
Agency Information Collection Activities; Submission for OMB Review; Comment Request; Extension: Rule 17f-5
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
April 13, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 70 (Monday, April 13, 2026)</title>
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[Federal Register Volume 91, Number 70 (Monday, April 13, 2026)]
[Notices]
[Pages 18933-18935]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07080]
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SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0269]
Agency Information Collection Activities; Submission for OMB
Review; Comment Request; Extension: Rule 17f-5
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 submitting to the Office of
Management and Budget (OMB) this request for this extension of the
proposed collection of information below.
Rule 17f-5 (17 CFR 270.17f-5) under the Investment Company Act of
1940 [15 U.S.C. 80a] (the ``Act'') governs the custody of the assets of
registered management investment companies (``funds'') with custodians
outside the United States. Under rule 17f-5, a fund or its foreign
custody manager (as delegated by the fund's board) may maintain the
fund's foreign assets in the care of an eligible fund custodian under
certain conditions. If the fund's board delegates to a foreign custody
manager authority to place foreign assets, the fund's board must find
that it is reasonable to rely on each delegate the
[[Page 18934]]
board selects to act as the fund's foreign custody manager. The
delegate must agree to provide written reports that notify the board
when the fund's assets are placed with a foreign custodian and when any
material change occurs in the fund's custody arrangements. The delegate
must agree to exercise reasonable care, prudence, and diligence, or to
adhere to a higher standard of care, in performing the delegated
services. When the foreign custody manager selects an eligible foreign
custodian, it must determine that the fund's assets will be subject to
reasonable care if maintained with that custodian, and that the written
contract that governs each custody arrangement will provide reasonable
care for fund assets. The contract must contain certain specified
provisions or others that provide at least equivalent care. The foreign
custody manager must establish a system to monitor the performance of
the contract and the appropriateness of continuing to maintain assets
with the eligible foreign custodian.
The collection of information requirements in rule 17f-5 are
intended to provide protection for fund assets maintained with a
foreign bank custodian whose use is not authorized by statutory
provisions that govern fund custody arrangements,\1\ and that is not
subject to regulation and examination by U.S. regulators. The
requirement that the fund board determine that it is reasonable to rely
on each delegate is intended to ensure that the board carefully
considers each delegate's qualifications to perform its
responsibilities. The requirement that the delegate provide written
reports to the board is intended to ensure that the delegate notifies
the board of important developments concerning custody arrangements so
that the board may exercise effective oversight. The requirement that
the delegate agree to exercise reasonable care is intended to provide
assurances to the fund that the delegate will properly perform its
duties.
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\1\ See section 17(f) of the Act. 15 U.S.C. 80a-17(f).
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The requirements that the foreign custody manager determine that
fund assets will be subject to reasonable care with the eligible
foreign custodian and under the custody contract, and that each
contract contain specified provisions or equivalent provisions, are
intended to ensure that the delegate has evaluated the level of care
provided by the custodian, that it weighs the adequacy of contractual
provisions, and that fund assets are protected by minimal contractual
safeguards. The requirement that the foreign custody manager establish
a monitoring system is intended to ensure that the manager periodically
reviews each custody arrangement and takes appropriate action if
developing custody risks may threaten fund assets.\2\
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\2\ The staff believes that subcustodian monitoring does not
involve ``collection of information'' within the meaning of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (``Paperwork
Reduction Act'').
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Commission staff estimates that each year, approximately 55
registrants \3\ could be required to make an average of one response
per registrant under rule 17f-5. A ``response'' may involve the fund's
directors making certain findings concerning foreign custody managers,
and the review and ratification of custodial contracts. Commission
staff estimates a response relating to these matters will require
approximately 2.5 hours of board of director time per response, to make
the necessary findings concerning foreign custody managers, and 1 hour
of related compliance attorney time per response, to assist the fund
board.\4\ For registrants, the total annual burden associated with
these requirements of the rule is up to approximately 192.5 hours (55
responses x 3.5 hours per response).
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\3\ This figure is an estimate of the number of new management
investment company registrants each year, based on data reported on
Form N-CEN as of December 2022, 2023, and 2024; Commission staff
anticipates that the number of existing registrants that change
their foreign custody managers is negligible and, therefore, the
compliance burden of rule 17f-5 falls primarily on new registrants;
in practice, not all registrants will use foreign custody managers;
the actual figure therefore may be smaller.
\4\ As discussed below, Commission staff estimate that a
response from a registrant will also include a related burden for
the applicable foreign custody manager chosen by the registrant's
board of directors.
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Foreign custody managers are also affected by the collection of
information requirements under rule 17f-5. Commission staff estimate
that, in connection with each registrant's board of directors making
certain findings concerning a foreign custody manager, those findings
will require approximately 20 hours of trust administrator time from
the applicable manager. This burden relates to the foreign custody
manager's initial considerations regarding custodial arrangements with
the registrant and preparing reports to the fund board.\5\ Commission
staff further estimate that annually, approximately 15 foreign custody
managers will be required to make an average of 4 responses per manager
concerning the use of foreign custodians other than depositories.\6\
This ``response'' may involve the foreign custody manager establishing
bank custody arrangements, negotiating/renegotiating custodial
contracts, preparing reports to fund boards, and establishing and/or
amending the foreign custody manager's system for monitoring custody
arrangements for its clients. The staff estimates that each response
will take approximately 250 hours of trust administrator time,
requiring approximately 1000 total hours annually per foreign custody
manager (4 responses per foreign custody manager x 250 hours per
response). Thus, the total annual burden for foreign custody managers
associated with the requirements of the rule is approximately 16,100
hours ((55 responses by foreign custody managers to registrants for
initial consideration x 20 hours per response) + (15 foreign custody
managers x 4 responses per manager) x 250 hours per response).
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\5\ This estimate does not include burden hours related to the
establishment and/or amendment of the foreign custody manager's
system for monitoring custody arrangements for its clients, which is
accounted for separately as discussed below.
\6\ This figure is based on the staff's estimate of the number
of global custodians that may act as foreign custody managers under
rule 17f-5.
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Therefore, the total annual burden of all collection of information
requirements of rule 17f-5 is estimated to be up to 16,292.5 hours
(192.5 hours + 16,100 hours). The total monetized annual cost of burden
hours is estimated to be $5,344,500 ((192.5 hours x $3,760/hour blended
wage rate) + (16,100 hours x $287/hour for a trust administrator's
time)).\7\ 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 with foreign custodians.
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\7\ The rates used to create the blended rate are as follow:
board of director time--$5,085 and compliance attorney time--$449;
staff estimates concerning wage rates for the cost of board of
director time are based on fund industry representations; based on
fund industry representations, the staff estimated in 2014 that the
average cost of board of director time, for the board as a whole,
was $4,000 per hour; adjusting for inflation, the staff estimates
that the current average cost of board of director time is
approximately $5,085 per hour; estimates concerning wage rates for
compliance attorneys and trust administrators are based on salary
information for the securities industry compiled by the Securities
Industry and Financial Markets Association and modified by
Commission staff for 2025; the compliance attorney and trust
administrator wage figures are based on published rates for each,
modified to account for a 1800-hour work-year and inflation, and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead; see Securities Industry and Financial Markets
Association, Report on Management & Professional Earnings in the
Securities Industry 2013.
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An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information
[[Page 18935]]
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.
The public may view and comment on this information collection
request at: <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202601-3235-012">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202601-3235-012</a> or email comment to
<a href="/cdn-cgi/l/email-protection#a6ebe4fe88e9ebe488e9eff4e788f5e3e5f9c2c3d5cdf9c9c0c0cfc5c3d4e6c9cbc488c3c9d688c1c9d0"><span class="__cf_email__" data-cfemail="9ed3dcc6b0d1d3dcb0d1d7ccdfb0cddbddc1fafbedf5c1f1f8f8f7fdfbecdef1f3fcb0fbf1eeb0f9f1e8">[email protected]</span></a> within 30 days of the day
after publication of this notice, by May 14, 2026.
Dated: April 9, 2026.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07080 Filed 4-10-26; 8:45 am]
BILLING CODE 8011-01-P
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