[Federal Register: August 24, 2006 (Volume 71, Number 164)]
[Notices]
[Page 50107-50108]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24au06-83]
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SECURITIES AND EXCHANGE COMMISSION
Proposed Collection; Comment Request
Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Filings and Information Services; Washington, DC
20549.
Extension: Rule 17i-4; SEC File No. 270-530; OMB Control No. 3235-
0594.
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 \1\ the Securities and Exchange Commission (``Commission'')
intends to submit to the Office of Management and Budget a request for
extension of the previously approved collection of information
discussed below. The Code of Federal Regulation citation to this
collection of information is the following rule: 17 CFR 240.17i-4.
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\1\ 44 U.S.C. 3501 et seq.
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Section 231 of the Gramm-Leach-Bliley Act of 1999 \2\ (the
``GLBA'') amended Section 17 of the Securities Exchange Act of 1934 to
create a regulatory framework under which a holding company of a
broker-dealer (``investment bank holding company'' or ``IBHC'') may
voluntarily be supervised by the Commission as a supervised investment
bank holding company (or ``SIBHC'').\3\ In 2004, the Commission
promulgated rules, including Rule 17i-4, to create a framework for the
Commission to supervise SIBHCs.\4\ This framework includes
qualification criteria for SIBHCs, as well as recordkeeping and
reporting requirements. Among other things, this regulatory framework
for SIBHCs is intended to provide a basis for non-U.S. financial
regulators to treat the Commission as the principal U.S. consolidated,
home-country supervisor for SIBHCs and their affiliated broker-
dealers.\5\
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\2\ Pub. L. 106-102, 113 Stat. 1338 (1999).
\3\ See 15 U.S.C. 78q(i).
\4\ See Exchange Act Release No. 49831 (Jun. 8, 2004), 69 FR
34472 (Jun. 21, 2004).
\5\ See--H.R. Conf. Rep. No. 106-434, 165 (1999). See also--
Exchange Act Release No. 49831, at 6 (Jun. 8, 2004), 69 FR 34472, at
34473 (Jun. 21, 2004).
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Rule 17i-4 requires an SIBHC to comply with present Exchange Act
Rule 15c3-4 \6\ as though it were a broker-dealer, which requires that
the firm establish, document and maintain a system of internal risk
management controls to assist it in managing the risks associated with
its business activities (including market, credit, operational,
funding, and legal risks). In addition, Rule 17i-4 requires that an
SIBHC establish, document, and maintain procedures for the detection
and prevention of money laundering and terrorist financing as part of
its internal risk management control system. Finally, Rule 17i-4
requires that an SIBHC periodically review its internal risk management
control system for integrity of the risk measurement, monitoring, and
management process, and accountability, at the appropriate
organizational level, for defining the permitted scope of activity and
level of risk. The records required to be created pursuant to Rule 17i-
4 must be preserved for a period of not less than three years.\7\
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\6\ 17 CFR 240.15c3-4.
\7\ 17 CFR 240.17i-5(b)(5).
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The collection of information required pursuant to Rule 17i-4 is
needed so that the Commission can adequately supervise the activities
of these SIBHCs, and to allow the Commission to effectively determine
whether supervision of an IBHC as an SIBHC is necessary or appropriate
in furtherance of the purposes of Sec. 17 of the Act. Without this
information, the Commission would be unable to adequately supervise the
SIBHC as provided for under the Exchange Act.
We estimate that three IBHCs will file Notices of Intention with
the Commission to be supervised by the Commission as SIBHCs. An SIBHC
will require, on average, about 3,600 hours to assess its present
structure, businesses, and controls, and establish and document its
risk management control system. In addition, an SIBHC will require, on
average, approximately 250 hours each year to maintain its risk
management control system. Consequently, the total initial burden for
all SIBHCs is approximately 10,800 hours \8\ and the continuing annual
burden is about 750 hours.\9\ Thus, the total burden relating to Rule
17i-4 for all SIBHCs is approximately 11,550 hours \10\ in the first
year, and approximately 750 hours each year thereafter.\11\
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\8\ (3,600 hours x 3 SIBHCs) = 10,800 hours.
\9\ (250 hours per year x 3 SIBHCs) = 750 hours per year.
\10\ (3,600 hours x 3 SIBHCs) + (250 hours per year x 3 SIBHCs).
\11\ (250 hours per year x 3 SIBHCs).
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We believe that an IBHC likely would upgrade its information
technology (``IT'') systems in order to more efficiently comply with
certain of the SIBHC framework rules (including Rules 17i-4, 17i-5,
17i-6 and 17i-7), and that this would be a one-time cost. Depending on
the state of development of the IBHC's IT systems, it would cost an
IBHC between $1 million and $10 million to upgrade its IT systems to
comply with the SIBHC framework of rules. Thus, on average, it would
cost each of the three SIBHCs about $5.5 million to upgrade their IT
systems, or approximately $16.5 million in total. It is impossible to
determine what percentage of the IT systems costs would be attributable
to each Rule, so we allocated the total estimated upgrade costs equally
(at 25% for each of the above-mentioned Rules), with $4,125,000
attributable to Rule 17i-5.
Written comments are invited on: (a) Whether the collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency'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)
[[Page 50108]]
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.
Comments should be directed to: R. Corey Booth, Director/Chief
Information Officer, Securities and Exchange Commission, C/O Shirley
Martinson, 6432 General Green Way, Alexandria, Virginia 22312 or send
an e-mail to: PRA_Mailbox@sec.gov. Comments must be submitted within
60 days of this notice.
Dated: August 15, 2006.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-14021 Filed 8-23-06; 8:45 am]
BILLING CODE 8010-01-P