Rule 609 Supporting Statement (final)

SUPPORTING STATEMENT
FOR THE PAPERWORK REDUCTION ACT SUBMISSION FOR A CURRENT
INFORMATION COLLECTION

“Rule 609 and Form SIP”
A.

Justification
1.

Necessity for Information Collection

Section 11A(b)(1) of the Securities Exchange Act of 1934 (“Act”),1 as added by the
Securities Acts Amendments of 1975,2 generally makes it unlawful for any exclusive processor
directly or indirectly, to make use of the mails or any means or instrumentality of interstate
commerce to perform the functions of a Securities Information Processor (“SIP”) unless it is
registered with the Securities and Exchange Commission (“Commission”) or exempted from
registration by the Commission.3

1

15 U.S.C. 78k-l(b)(1).

2

Pub. L. No. 94-29 (June 4, 1975).

3

Section 3(a)(22)(A) of the Act, (15 U.S.C. 78c(a)(22)(A)) defines the term “securities
information processor” as follows:
The term “securities information processor” means any person engaged in the
business of (i) collecting, processing, or preparing for distribution or publication,
or assisting, participating in, or coordinating the distribution or publication of,
information with respect to transactions in or quotations for any security (other
than an exempted security) or (ii) distributing or publishing (whether by means of
a ticker tape, a communications network, a terminal display device, or otherwise)
on a current and continuing basis, information with respect to such transactions or
quotations.... [The provision goes on specifically to exclude certain categories of
persons who otherwise would meet the definition of a SIP.]
Section 3(a)(22)(B) of the Act, (15 U.S.C. 78c(a)(22)(B)) defines the term “exclusive
processor” as follows:
The term “exclusive processor” means any securities information processor or selfregulatory organization which, directly or indirectly, 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 effected or made by means of any facility of such
exchange or (ii) quotations distributed or published by means of any electronic
system operated or controlled by such association.

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Section 11A(b)(3) of the Act4 requires the Commission, upon filing of an application for
SIP registration, to publish notice of the filing and afford interested persons an opportunity to
submit written data, views and arguments concerning the application. Within 90 days of the date
of publication of the notice, the Commission must either grant the application or institute
proceedings to determine whether registration should be denied. The Commission is required to
approve the application if it finds that the SIP is so organized, and has the capacity, to be able to
assure the prompt, accurate, and reliable performance of its functions as a SIP, carry out its
functions in a manner consistent with Section 11A of the Act, and, insofar as it is acting as an
exclusive processor, operate fairly and efficiently.
2.

Purposes of, and Consequences of Not Requiring, the Information Collection

Commission Rule 6095 (formerly Rule 11Ab2-1) and Form SIP6 which were originally
adopted by the Commission in 19757 pursuant to its authority under Sections 2, 3, 11A and 23 of
the Act,8 establish the procedures by which SIPs may amend their registration statements to
correct inaccurate information. The information filed with the Commission pursuant to Rule 609
and Form SIP is designed to provide the Commission with the information necessary to make the
required findings under the 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 with respect to the SIP.
This information is also made available to members of the public who may wish to comment on
the information provided. Without the information, the Commission is not able to determine
whether the SIP has the capacity to be able to assure the prompt, accurate, and reliable
performance of its functions as a SIP, and to carry out its functions in a manner consistent with
Section 11A of the Act.
3.

Role of Improved Information Technology

Rule 609 is officially submitted to the Commission as a paper (hardcopy) document. In
the future, the Commission may consider the feasibility of permitting applicants to file
through the Commission’s EDGAR system . Nonetheless, applicant’s utilize various computer
information systems to compile information such as financial statements and account statements.

4

15 U.S.C. 78k-l(b)(3).

5

17 CFR 242.609. Regulation NMS redesignated the Commission’s National Market
System rules. See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR
37496 (June 29, 2005).

6

17 CFR 249.1001.

7

See Securities Exchange Act Release No. 11673 (September 23, 1975), 40 FR 45422
(October 2, 1975).

8

15 U.S.C. 78b, 78c, 78k, and 78w.

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4.

Efforts to Identify Duplication

Not applicable; SIPs need to register with the Commission only once.
5.

Effects on Small Entities

Not applicable.
6.

Consequences of Less Frequent Collection

The Commission’s receipt of information is dependent upon the SIP applicant and
therefore could not be collected less frequently.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

Not applicable. The Rule is not inconsistent with 5 CFR 1320.5(d)(2).
8.

Consultations Outside the Agency

The Federal Register notice with a 60-day comment period soliciting comments on this
collection of information was published on March 23, 2011 (76 FR 16461). No comments were
received.
9.

Payment or Gifts to Respondents

Not applicable.
10.

Assurances of Confidentiality

The information collected is generally not confidential. A respondent may request that
some of the information provided be confidential, in such case it will be treated as such if
appropriate under the Freedom of Information Act.
11.

Sensitive Questions

Not applicable. There are no questions of a sensitive nature asked.

12.

Estimate of Respondent Reporting Burden

Under Rule 609 and the instructions to Form SIP, applicants for registration as a SIP
must file four copies of Form SIP with the Commission. If any information reported in items 113 or item 21 of Form SIP, or in any amendment, is or becomes inaccurate, whether before or
after registration has been granted, the SIP must promptly file an amendment on Form SIP

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correcting the information. The amendment need contain only the facing page, the signature
page, and any pages on which an answer is being amended, together with any exhibits that are
being amended.
There are currently only two SIPs registered with the Commission. We do not anticipate
other SIPs registering in the foreseeable future. Nonetheless, we have assumed the burden of
information collection is estimated to involve approximately 1 respondent application for
registration making 1 response per year and that it takes an estimated 400 hours to comply with
the registration requirements.9 We estimate that respondents will incur a reporting burden of 400
hours per response. 10
13.

Estimate of Total Annualized Cost Burden

Based on our communications with previous applicants for registration, it appears that the
cost of registration would equal approximately $1,000 for printing and supplies.
14.

Estimate of Cost to Federal Government

Not applicable. There are no material costs associated with Rule 609.
15.

Explanation of Changes in Burden

No changes have been made in the burden associated with this information collection.
16.

Information Collections Planned for Statistical Purposes

Not applicable. There is no intention to publish the information for any purpose.
17.

Explanation as to Why Expiration Date will not be displayed

Not applicable.
18.

Exceptions to Certification

Not applicable.

9

10

We have not included in these estimates the burden hours or cost of amending a Form SIP
because we have already overstated the compliance burdens by assuming that we receive
one initial registration pursuant to Rule 609 on Form SIP a year. We estimate the cost of
amending Form SIP to be minimal at less than $1,000 per year.
150 hours of professional work (@ $50 per hour = $7,500.00) + 250 hours of clerical work
(@ $15 per hour = 3,750.00).