[Federal Register: February 8, 1999 (Volume 64, Number 25)]
[Notices]               
[Page 6119-6120]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08fe99-144]

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SECURITIES AND EXCHANGE COMMISSION

 
Proposed Extension of Existing Collection; Comment Request

Upon Written Request, Copies Available From. Securities and Exchange 
Commission Office of Filings and Information Services Washington, DC 
20549

Extension:
    Rule 17a-13, SEC File No. 270-27, OMB Control No. 3235-0035
    Rule 11Ab2-1 and Form SIP, SEC File No. 270-23, OMB Control No. 
3235-0043

    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 (Commission) is soliciting comments on the collections of 
information summarized below. The Commission plans to submit these 
existing collections of information to the Office of Management and 
Budget for extension and approval.
    Rule 17a-13(b) generally requires that at least once each calendar 
quarter, all registered brokers and dealers physically examine and 
count all securities held and account for all other securities not in 
their possession, but subject to the broker-dealer's control or 
direction. Any discrepancies between the broker-dealer's securities 
count and the firm's records must be noted and, within seven days, the 
unaccounted for difference must be recorded in the firm's records. Rule 
17a-13(c) provides that under specified conditions, the securities 
count, examination and verification of the broker-dealer's entire list 
of securities may be conducted on a cyclical basis rather than on a 
certain date. Although Rule 17a-13 does not require filing a report 
with the Commission, security count discrepancies must be reported on 
Form X-17a-5 as required by Rule 17a-5. Rule 17a-13 exempts broker-
dealers that limit their business to the sale and redemption of 
securities of registered investment companies and interests or 
participation in an insurance company separate account and those who 
solicit accounts for federally insured savings and loan associations, 
provided that such persons, promptly transmit all funds and securities 
and hold no customer funds and securities.
    The information obtained from Rule 17a-13 is used as an inventory 
control device to monitor a broker-dealers' ability to account for all 
securities held, in transfer, in transit, pledged, loaned, borrowed, 
deposited or otherwise subject to the firm's control or direction. 
Discrepancies between the securities counts and the broker-dealer's 
records alert the Commission and the Self Regulatory Organizations 
(SROs) to those firms having problems in the their back offices.
    Because of the many variations in the amount of securities that 
broker-dealers are accountable for, it is difficult to develop a 
meaningful figure for the cost of compliance with Rule 17a-13. 
Approximately 92% of all registered broker-dealers are subject to Rule 
17a-13. Accordingly, approximately 7,156 broker-dealer to comply with 
the Rule is 100 hours per year, for a total estimated annualized burden 
of 715,600 hours. It should be noted that a significant number of firms 
subject to Rule 17a-13 have minimal obligations under the Rule because 
they do not hold securities. It should further be noted that most 
broker-dealers would engage in the activities required by Rule 17a-13 
even if they were not required to do so.
    Rule 11Ab2-1 and Form SIP establish the procedures by which a 
Securities

[[Page 6120]]

Information Processor (SIP) files and amends its SIP registration form. 
The information filed with the Commission pursuant to Rule 11Ab2-1 and 
Form SIP is designed to provide the Commission with the information 
necessary to make the required findings under the Securities Exchange 
Act of 1934 (Act) before granting the SIP's application for 
registration. In addition, the requirement that a SIP file an amendment 
to correct any inaccurate information is designed to assure that the 
Commission has current, accurate information will respect to the SIP. 
This information is also made available to members of the public.
    Only exclusive SIPs are required to register with the Commission. 
An exclusive SIP is an SIP that engages on an exclusive basis on behalf 
of any national securities exchange or registered securities 
association, or any national securities exchange or registered 
securities association which engages on an exclusive basis on its own 
behalf, in collecting, processing, or preparing for distribution or 
publication, any information with respect to (i) transactions or 
quotations on or effective or made by means of any facility of such 
exchange or (ii) quotations distributed or published by means of any 
electronic quotation system operated by such association. The Federal 
securities laws require that before the Commission may approve the 
registration of an exclusive SIP, it must make certain mandatory 
findings. It takes a SIP applicant approximately 400 hours to prepare 
documents which include sufficient information to enable the Commission 
to make those findings. Currently, there are only two exclusive SIPs 
registered with the Commission. The Securities Information Automation 
Corporation (SIAC) and the Nasdaq Stock Market, Inc. (Nasdaq). SIAC and 
Nasdaq are required to keep the information on file with the Commission 
current, which entails filing a form SIP annually to update 
information. Accordingly, the annual reporting and recordkeeping burden 
for Rule 11Ab2-1 and Form SIP is 400 hours. This annual reporting and 
recordkeeping burden does not include the burden hours or cost of 
amending a Form SIP because the Commission has already overstated the 
compliance burdens by assuming that the Commission will receive one 
initial registration pursuant to Rule 11Ab2-1 on Form SIP a year.
    Written comments are invited on: (a) whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the proposed 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 in writing within 60 
days of this publication.
    Please direct your written comments to Michael E. Bartell, 
Associate Executive Director, Office of Information Technology, 
Securities and Exchange Commission, 450 5th Street, N.W. Washington, DC 
20549.

    Dated: January 28, 1999.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-2892 Filed 2-5-99; 8:45 am]
BILLING CODE 8010-01-M