Notice2026-10822
Agency Information Collection Activities; Submission for OMB Review; Comment Request; Extension: Rule 17a-7-Exemption of Certain Purchase or Sale Transactions Between an Investment Company and Certain Affiliated Persons Thereof
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
June 1, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 104 (Monday, June 1, 2026)</title>
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[Federal Register Volume 91, Number 104 (Monday, June 1, 2026)]
[Notices]
[Page 32498]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10822]
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SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0214]
Agency Information Collection Activities; Submission for OMB
Review; Comment Request; Extension: Rule 17a-7--Exemption of Certain
Purchase or Sale Transactions Between an Investment Company and Certain
Affiliated Persons Thereof
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 extension of the proposed
collection of information under rule 17a-7 [17 CFR 270.17a-7].\1\ Rule
17a-7, as subsequently amended on several occasions, provides an
exemption from section 17(a) of the Act for purchases and sales of
securities between funds that are affiliated persons \2\ (``first-tier
affiliate'') of a registered investment company (``fund'') or an
affiliated person of that first-tier affiliate (``second-tier
affiliate''), or between a fund and a first- or second-tier affiliate
other than another fund, when the affiliation arises solely because of
a common investment adviser (or advisers that are affiliated persons of
each other), director, or officer. The exemption is subject to
conditions intended to eliminate the likelihood of overreaching. The
rule permits funds and other companies under common management to trade
securities with each other and thus to avoid brokerage commissions.\3\
The rule also limits the prices at which purchase and sale transactions
may occur, to prevent inequitable pricing practices that could harm a
participating fund.\4\
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\1\ See Exemption of Certain Purchase or Sale Transactions
Between Affiliated Registered Investment Companies; Investment
Company Act Release No. 4697 (Sept. 8, 1966) [31 FR 12092 (Sept. 16,
1966)].
\2\ Under section 2(a)(3) of the Act, ``affiliated person'' of
another person means:
\3\ See rule 17a-7(d).
\4\ See rule 17a-7(b).
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Rule 17a-7(e) requires the board of directors of a fund to make,
adopt, and approve changes to procedures reasonably designed to ensure
that the conditions of the rule have been satisfied for purchases and
sales effected in reliance on the rule. In addition, the rule requires
that the fund maintain and preserve permanently a written copy of the
procedures adopted by the board. Under the rule, the board is required
to determine, at least on a quarterly basis, that all affiliated
transactions effected during the preceding quarter in reliance on the
rule were made in compliance with these established procedures. The
rule requires the fund to maintain written records of this board
determination and each rule 17a-7 transaction for a period of not less
than six years.\5\ The Commission's examination staff uses these
records to evaluate for compliance with the rule. Compliance with rule
17a-7 is required to obtain or retain benefits.
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\5\ Rule 17a-7(g) requires the written record of the affiliated
transaction to include the following information: a description of
the security purchased or sold, the identity of the person on the
other side of the transaction, the terms of the purchase or sale
transaction, and the information or materials upon which the board
determined that the purchase or sale complied with the procedures
set by the board.
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We estimate that approximately 446 funds use rule 17a-7 to make
cross trades annually.\6\ Based on conversations with fund
representatives and the Commission's experience with the use of rule
17a-7, we estimate that the recordkeeping burden of compliance with
rule 17a-7 is approximately 5 hours per respondent. This time is spent,
for example, maintaining various records of rule 17a-7 transactions and
materials connected to the board's determination of compliance.
Accordingly, we calculate the total estimated annual internal burden of
complying with rule 17a-7 to be approximately 2,230 hours. We estimate
the annual external costs to be $1,659,120.
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\6\ This estimate is based on the average of the number of
active registrants/trusts as of December 2023, 2024, and 2025 that
indicated on Form N-CEN filings received through March 15, 2026 that
at least one of their funds/series rely on rule 17a-7.
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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.
The public may view and comment on this information collection
request at: <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202603-3235-016">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202603-3235-016</a> or email comment to
<a href="/cdn-cgi/l/email-protection#28656a700667656a0667617a69067b6d6b774c4d5b4377474e4e414b4d5a6847454a064d4758064f475e"><span class="__cf_email__" data-cfemail="5e131c067011131c7011170c1f700d1b1d013a3b2d3501313838373d3b2c1e31333c703b312e70393128">[email protected]</span></a> within 30 days of the day
after publication of this notice, by July 2, 2026.
Dated: May 27, 2026.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-10822 Filed 5-29-26; 8:45 am]
BILLING CODE 8011-01-P
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