Rule 17g-5 Supporting Statement

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rule 17g-5
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44
U.S.C. Section 3501 et seq. (“PRA”).
A.

JUSTIFICATION
1.

Necessity of Information Collection

The Credit Rating Agency Reform Act of 2006 1 (“Rating Agency Act”), enacted on
September 29, 2006, defined the term “nationally recognized statistical rating organization,” or
“NRSRO” and provided authority for the Securities and Exchange Commission (“Commission”)
to implement registration, recordkeeping, financial reporting, and oversight rules with respect to
credit rating agencies registered with the Commission as NRSROs. The Rating Agency Act
added a new Section 15E 2 to the Securities Exchange Act of 1934 (“Exchange Act”).
Section 15E(h)(1) of the Exchange Act requires an NRSRO to establish, maintain, and
enforce written policies and procedures reasonably designed, taking into consideration the nature
of the business of the NRSRO and affiliated persons and affiliated companies, to address and
manage any conflicts of interest that can arise from such business. 3 Section 15E(h)(2) of the
Exchange Act provides the Commission with authority to prohibit, or require the management
and disclosure of, any potential conflict of interest relating to the issuance of credit ratings by an
NRSRO. 4 The Commission adopted, and subsequently amended, Rule 17g-5 5 pursuant, in part,
to section 15E(h)(2) of the Exchange Act. 6
Rule 17g-5 requires the disclosure of and establishment of procedures to manage certain
NRSRO conflicts of interest, prohibits certain other NRSRO conflicts of interest, and contains
requirements regarding the disclosure of information in the case of the conflict of interest of an
NRSRO issuing or maintaining a credit rating on an asset-backed security that was paid for by
the issuer, sponsor, or underwriter of the security.
1
2
3
4
5
6

Pub. L. No. 109-291.
15 U.S.C. 78o-7.
15 U.S.C. 78o-7(h)(1).
15 U.S.C. 78o-7(h)(2).
17 CFR 240.17g-5. The OMB Control Number for Rule 17g-5 is 3235-0649.
See Oversight of Credit Rating Agencies Registered as Nationally Recognized Statistical
Rating Organizations, Exchange Act Release No. 55857 (June 5, 2007), 72 FR 33564,
33595-33599 (June 18, 2007); Amendments to Rules for Nationally Recognized
Statistical Rating Organizations, Exchange Act Release No. 59342 (Feb. 2, 2009) 74 FR
6456, 6465-6469 (Feb. 9, 2009); Amendments to Rules for Nationally Recognized
Statistical Rating Organizations, Exchange Act Release No. 61050 (Nov. 23, 2009), 74
FR 63832, 63842-63850 (Dec. 4, 2009).

-2Title IX, Subtitle C of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(“Dodd-Frank Act”), 7 “Improvements to the Regulation of Credit Rating Agencies,” among
other things, establishes new self-executing requirements applicable to NRSROs, requires certain
studies, 8 and requires that the Commission adopt rules applicable to NRSROs in a number of
areas. 9
Section 932(a)(4) of the Dodd-Frank Act added paragraph (3) to section 15E(h) of the
Exchange Act. 10 Section 15E(h)(3)(A) of the Exchange Act provides that the Commission shall
issue rules to prevent the sales and marketing considerations of an NRSRO from influencing the
production of credit ratings by the NRSRO. 11 Section 15E(h)(3)(B)(i) of the Exchange Act
requires that the Commission’s rules shall provide for exceptions for small NRSROs with respect
to which the Commission determines that the separation of the production of credit ratings and
sales and marketing activities is not appropriate. 12 Section 15E(h)(3)(B)(ii) of the Exchange Act
requires that the Commission’s rules shall provide for the suspension or revocation of the
registration of an NRSRO if the Commission finds, on the record, after notice and opportunity
for a hearing, that: (1) the NRSRO has committed a violation of a rule issued under section
15E(h) of the Exchange Act; and (2) the violation affected a rating. 13 On May 18, 2011, the
Commission proposed for comment amendments to existing rules, including Rule 17g-5, and
new rules in accordance with Title IX, Subtitle C of the Dodd-Frank Act and to enhance
oversight of NRSROs. 14 On August 27, 2014, the Commission adopted amendments to Rule
17g-5, in part to implement sections 15E(h)(3)(A), 15E(h)(3)(B)(i), and 15E(h)(3)(B)(ii) of the
Exchange Act. 15 The Adopting Release, unlike the Proposing Release, does contain estimates of
the PRA burdens associated with Rule 17g-5. 16
The final rules amend the collection of information included in Rule 17g-5 in three ways.
First, the Commission added paragraph (a)(3)(iii)(E) to Rule 17g-5 to require an NRSRO to
7
8
9
10
11
12
13
14

15

16

Pub. L. No. 111-203, 124 Stat. 1376, H.R. 4173 (July 21, 2010).
See Pub. L. No. 111-203, 939, 939D - 939F.
See Pub. L. No. 111-203, 931-939H; see also Pub. L. No. 111-203 § 943.
See Pub. L. No. 111-203, 932(a)(4); 15 U.S.C. 78o-7(h)(3).
15 U.S.C. 78o-7(h)(3)(A).
15 U.S.C. 78o-7(h)(3)(B)(i).
15 U.S.C. 78o-7(h)(3)(B)(ii).
See Nationally Recognized Statistical Rating Organizations, Exchange Act Release No.
64514 (May 18, 2011), 76 FR 33420 (June 8, 2011) (“Proposing Release”).
See Nationally Recognized Statistical Rating Organizations, Exchange Act Release No.
72936 (Aug. 27, 2014), 79 FR 55077 (Sep. 15, 2014) (“Adopting Release”).
In the Proposing Release, the Commission indicated that the proposed amendments to
Rule 17g-5 “do not contain a collection of information requirement within the meaning of
the PRA.” See Proposing Release, 76 FR at 33490. Since that time, the Commission has
carefully re-considered the operation of these rules and has determined that these
amendments would in fact supplement and modify the existing collection of information
contained in Rule 17g-5. Accordingly, the Commission included PRA estimates in the
Adopting Release. The Commission is now requesting approval of the revised collection
of information for a three year period under the standard review process.

-3obtain a representation from the issuer, sponsor, or underwriter of an asset-backed security that
the issuer, sponsor, or underwriter will post on the website referred to in paragraph (a)(3)(iii) of
Rule 17g-5 (“Rule 17g-5 website”), promptly after receipt, any executed Form ABS Due
Diligence-15E delivered by a person employed to provide third-party due diligence services with
respect to the security or money market instrument. This disclosure requirement involves a
collection of information within the meaning of the PRA. This requirement was not included in
the Commission’s May 18, 2011 proposal, but was included in the final rule in response to
comment received from the public on the proposal. The requirement is designed to provide for
the prompt posting of Form ABS Due Diligence-15E to the Rule 17g-5 website so that other
NRSROs can have access to it contemporaneously with an NRSRO that knew the third party was
performing due diligence and requested that the form be delivered upon completion of the
services.
Second, the Commission added paragraph (c)(8) to Rule 17g-5 to prohibit an NRSRO
from issuing or maintaining a credit rating where a person within the NRSRO who participates in
determining or monitoring the credit rating, or developing or approving procedures or
methodologies used for determining the credit rating, including qualitative and quantitative
models, also: (1) participates in sales or marketing of a product or service of the NRSRO or a
product or service of an affiliate of the NRSRO; or (2) is influenced by sales or marketing
considerations. For the reasons noted above, a burden estimate of the collection of information
associated with new paragraph (c)(8) of Rule 17g-5 was not included in the Proposing Release. 17
However, the Commission included an estimated PRA burden for paragraph (c)(8) in the
Adopting Release, and such estimate has been incorporated into Section 12 below.
Third, the Commission added paragraph (f) to Rule 17g-5, which provides that upon
written application by an NRSRO the Commission may exempt, either unconditionally or on
specified terms and conditions, the NRSRO from paragraph (c)(8) of Rule 17g-5 if the
Commission finds that due to the small size of the NRSRO it is not appropriate to require the
separation of the production of credit ratings from sales and marketing activities and the
exemption is in the public interest. For the reasons noted above, a burden estimate of the
collection of information associated with new paragraph (f) of Rule 17g-5 was not included in
the Proposing Release. 18 However, the Commission included an estimated PRA burden for
paragraph (f) in the Adopting Release, and such estimate has been incorporated into Section 12
below.
The collection of information obligation imposed by Rule 17g-5 is mandatory for credit
rating agencies that are applying to register or are registered with the Commission as NRSROs.
Registration with the Commission as an NRSRO is voluntary.
2.

Purpose and Use of the Information Collection

The collection of information included in Rule 17g-5 is necessary for Commission
oversight of registered NRSROs. Specifically, this collection of information aids the
17
18

See note 16, supra.
See note 16, supra.

-4Commission by addressing potential practices that could impair the objectivity and the quality of
a credit rating.
The collection required under the amendment adding paragraph (a)(3)(iii)(E) to Rule
17g-5 will be used by the providers of third-party due diligence services to meet their statutory
obligation to deliver Form ABS Due Diligence-15E to any NRSRO that produces a credit rating
to which the services relate. Furthermore, disclosing these certifications on the Rule 17g-5
websites will make them available to NRSROs that may not otherwise be aware that third-party
due diligence services are being employed with respect to an Exchange Act-ABS because, for
example, they are not hired to rate the Exchange Act-ABS.
The amendment adding paragraph (c)(8) to Rule 17g-5 will require an NRSRO to update
its policies and procedures for addressing and managing conflicts of interest to account for this
new absolutely prohibited conflict of interest. The updated policies and procedures will be used
by the NRSRO to address this conflict and comply with Rule 17g-5. Furthermore, Exhibit 7 to
Form NRSRO requires an applicant for registration as an NRSRO or an NRSRO to provide a
copy in the exhibit of the written policies and procedures an applicant or NRSRO must establish,
maintain, and enforce to address and manage conflicts of interest pursuant to section 15E(h) of
the Exchange Act. This disclosure by an NRSRO can be reviewed by investors and other users
of credit ratings to evaluate the NRSRO’s policies and procedures (including those addressing
the new absolutely prohibited conflict) and to compare them with the policies and procedures of
other NRSROs.
The amendment adding paragraph (f) to Rule 17g-5 to provide a means for an NRSRO to
seek an exemption from the Commission because of its small size from the provision
establishing the new absolutely prohibited conflict will be used by NRSROs to seek conditional
or unconditional exemptions from the new requirement.
3.

Consideration Given to Information Technology

Rule 17g-5 allows NRSROs to disclose certain information in an electronic format. The
Commission believes that improvements in telecommunications and data processing technology
may reduce any burdens associated with Rule 17g-5.
4.

Duplication

No duplication is apparent.
5.

Effect on Small Entities

Small entities may be affected by the Rule because all NRSROs, regardless of size, are
subject to the additional requirements in the amendments to Rule 17g-5. However, paragraph (f)
of Rule 17g-5 provides that upon written application by an NRSRO the Commission may
exempt, either conditionally or unconditionally, the NRSRO from paragraph (c)(8) of Rule 17g-5
if the Commission finds that due to the small size of the NRSRO it is not appropriate to require
the separation within the NRSRO of the production of credit ratings from sales and marketing
activities and such exemption is in the public interest.

-5-

6.

Consequences of Not Conducting Collection

If this information were not collected as frequently, the Commission would be unable to
ascertain, on an ongoing basis, whether a credit rating agency registered as an NRSRO “fails to
maintain adequate financial and managerial resources to consistently produce credit ratings with
integrity.” 19
7.

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

There are no special circumstances. This collection is consistent with the guidelines in 5
CFR 1320.5(d)(2).
8.

Consultations Outside the Agency

The required Federal Register notice with a 60-day comment period soliciting comments
on this collection of information was published on March 20, 2015, SEC File. No. 270-581,
OMB Control No. 3235-0649. No public comments were received. 20

9.

Payment or Gift

No payment or gift is provided to respondents.
10.

Confidentiality

No assurance of confidentiality is provided.
11.

Sensitive Questions

Not applicable; no information of a sensitive nature is required. The information
collection does not collect any Personally Identifiable Information (PII).
12.

Burden of Information Collection

Analysis of Burden of the Rule Before Current Amendments
When the Commission adopted Rule 17g-5 in June 2007, the rule consisted of paragraphs
(a)(1) and (a)(2), providing that an NRSRO cannot have a conflict of interest unless it is
disclosed and the NRSRO has written policies and procedures to address and manage the conflict
in accordance with section 15E(h) of the Exchange Act; paragraphs (b)(1) through (b)(9), listing
conflicts of interest that must be disclosed and managed; paragraphs (c)(1) through (c)(4), listing
19
20

15 U.S.C. 15E(d).
See Proposed Collection; Comment Request, 80 FR 15039 (Mar. 20, 2015).

-6conflicts of interest that are absolutely prohibited; and paragraph (d), defining “person within” an
NRSRO. 21 The Commission did not estimate a PRA burden for the rule. 22
The Commission amended Rule 17g-5 in February 2009 to add new prohibited conflicts
of interest in paragraphs (c)(5) through (c)(7) of Rule 17g-5. 23 The Commission did not estimate
a PRA burden for the amendments. 24
The Commission amended Rule 17g-5 in November 2009 to add new paragraphs (a)(3),
(b)(9) and (e). 25 The amendment adding paragraph (b)(9) added a conflict of interest for
NRSROs to disclose and manage: issuing or maintaining a credit rating for a security or money
market instrument issued by an asset pool or as part of an asset-backed securities transaction that
was paid for by the issuer, sponsor, or underwriter (“arranger”) of the security or money market
instrument. Under paragraph (a)(3) of Rule 17g-5, an NRSRO is prohibited from issuing a credit
rating for a structured finance product unless certain information about the transaction and the
assets underlying the structured finance product are disclosed or arranged to be disclosed by the
NRSRO. Specifically, the amendments require an NRSRO that is hired by arrangers to perform
credit ratings for structured finance products to disclose to other NRSROs the deals for which it
is in the process of determining such credit ratings and to obtain written representations from
arrangers that the arrangers will provide the same information given to the hired NRSRO to other
NRSROs. An NRSRO rating such products will need to disclose to other NRSROs the following
information on a password protected Internet website: a list of each such security or money
market instrument for which it is currently in the process of determining an initial credit rating in
chronological order and identifying the type of security or money market instrument, the name of
the issuer, the date the rating process was initiated, and the Internet website address where the
issuer, sponsor, or underwriter of the security or money market instrument represents that the
information described in paragraphs (a)(3)(iii)(C) and (D) of Rule 17g-5 as amended can be
accessed. Under paragraph (e) of Rule 17g-5, an NRSRO that wishes to access information on
another NRSRO’s Internet website or on an arranger’s Internet website pursuant to Rule 17g5(a)(3) is required to provide the Commission with an annual certification.
Regarding paragraph (a)(3) of Rule 17g-5, the Commission estimated that the total
number of structured finance ratings issued by all NRSROs in a given year would be 14,880 and
that it would take 1 hour per transaction to make the required information publicly available, for
a total annual burden of 14,880 hours. The Commission arrived at the 14,880 estimate as
follows: the Commission estimated that there were approximately 4,000 new structured finance
21

22

23

24

25

See Oversight of Credit Rating Agencies Registered as Nationally Recognized Statistical
Rating Organizations, 72 FR at 33622-23.
See Oversight of Credit Rating Agencies Registered as Nationally Recognized Statistical
Rating Organizations, 72 FR at 33605.
See Amendments to Rules for Nationally Recognized Statistical Rating Organizations, 74
FR at 6483.
See Amendments to Rules for Nationally Recognized Statistical Rating Organizations, 74
FR at 6469.
See Amendments to Rules for Nationally Recognized Statistical Rating Organizations, 74
FR at 63864-65.

-7deals per year, and that, based on the number of outstanding structured finance ratings of all
NRSROs, that the three largest NRSROs account for 97% of the market for structured finance
ratings. Therefore, the Commission estimated that each of the three largest NRSROs would rate
approximately 3,880 structured finance products per year, 26 that there would be approximately
30 NRSROs, and that the remaining 27 NRSROs would each rate approximately 120 structured
finance products per year. 27
Burden Analysis of Current Amendments
In the Adopting Release, the Commission estimated that the three largest NRSROs
account for 90% of the structured finance market and that there were approximately 715
offerings of asset-backed securities in calendar year 2013. 28 Therefore, the Commission
estimates that the total number of structured finance ratings issued by all 10 NRSROs in a given
year is approximately 2,436. 29 The Commission therefore estimates that the corresponding
annual disclosure burden for NRSROs is approximately 2,436 hours industry-wide. 30
Paragraph (a)(3) of Rule 17g-5 also requires arrangers to disclose certain information.
The Commission previously estimated that there are approximately 200 arrangers subject to the
rule. The Commission estimates that it would take approximately 300 hours to develop a
system, as well as the policies and procedures, for the disclosures required by Rule 17g-5. This
would result in a total one-time disclosure hour burden of 60,000 hours for 200 respondents. 31 In
the Adopting Release, the Commission estimated that there are approximately 336 issuers,
sponsors, or underwriters of asset-backed securities. Therefore, the one-time burden for the
additional 136 respondents is approximately 40,800 hours. 32 The Commission therefore estimates
that, over a three-year period, the total industry-wide one-time burden would be approximately
13,600 hours per year when annualized over three years.33 Thus, the total annual disclosure burden
for each arranger would be approximately 100 hours. 34
Disclosures are also required for arrangers on a transaction by transaction basis. The
Commission previously estimated that each respondent would arrange approximately 20 new
transactions per year and that it would take 1 hour per transaction to make the information
publicly available. Therefore, the Commission estimated that it would take a respondent
approximately 20 hours 35 to disclose this information under Rule 17g-5 for a total aggregate
26
27
28
29

30
31
32
33
34
35

4,000 x .97 = 3,880.
.03 x 4,000 = 120. 3,880 x 3 = 11,640. 120 x 27 = 3,240. 11,640 + 3,240 = 14,880
See Adopting Release, 79 FR at 55234.
715 x .9 = 643.5, rounded to 644. 644 x 3 = 1,932. 715 x .1 = 71.5, rounded to 72. 72 x
7 = 504. 1,932 + 504 = 2,436.
2,436 transactions x 1 hour = 2,436 hours.
300 hours x 200 arrangers = 60,000 hours.
136 x 300 = 40,800.
40,800 / 3 = 13,600.
13,600 hours / 136 arrangers = 100 hours.
20 transactions x 1 hour = 20 hours.

-8annual hour burden of 4,000 hours. 36 In the Adopting Release, the Commission estimated that
there are approximately 336 issuers, sponsors, or underwriters of asset-backed securities, for a
total annual disclosure burden of approximately 6,720 hours. 37
Paragraph (a)(3) of Rule 17g-5 also requires disclosure of information by arrangers on an
ongoing basis that is used by an NRSRO to undertake credit rating surveillance on the structured
finance product. The Commission previously estimated that this disclosure would be required
with respect to approximately 125 transactions per month, and that it would take each respondent
approximately 0.5 hours per transaction to disclose the information. Therefore, the Commission
estimated that it would take each respondent approximately 750 hours 38 on an annual basis to
disclose such information, for a total aggregate annual disclosure burden of 150,000 hours. 39 In
the Adopting Release, the Commission estimated that there are approximately 336 issuers,
sponsors, or underwriters of asset-backed securities, for a total annual disclosure burden of
approximately 252,000 hours. 40
Regarding paragraph (e) of Rule 17g-5, the Commission estimated that it would take each
NRSRO approximately 2 hours to complete the certification, resulting in a total industry-wide
annual reporting burden for 10 NRSROs of 20 hours. 41
The Commission did not estimate a burden for paragraph (b)(9) of Rule 17g-5.
New paragraph (a)(3)(iii)(E) of Rule 17g-5 may require NRSROs to redraft the
agreement templates they use with respect to obtaining representations from issuers, sponsors, or
underwriters as required under Rule 17g-5. 42 Based on staff experience, the Commission
estimates that an NRSRO will spend approximately two hours on a one-time basis to redraft
these templates with respect to each issuer, sponsor, or underwriter, for a total industry-wide
one-time disclosure burden of approximately 6,720 hours. 43 The Commission therefore estimates
that the total one-time disclosure burden to redraft the templates would be approximately 2,240
hours per year when annualized over three years. 44 Thus, the total annual disclosure burden for
each NRSRO would be approximately 224 hours.45
In addition, based on the Commission’s estimate that there will be 715 offerings of
Exchange Act-ABS per year, 46 the Commission estimates that issuers, sponsors, and
36
37
38
39
40
41
42
43

44
45
46

200 respondents x 20 hours = 4,000 hours.
336 respondents x 20 hours = 6,720 hours.
125 transactions x 30 minutes x 12 months = 45,000 minutes/60 minutes = 750 hours.
750 hours x 200 respondents = 150,000 hours.
750 hours x 336 respondents = 252,000 hours.
10 NRSROs x 2 hours = 20 hours.
See Adopting Release 79 FR at 55239.
336 issuers, sponsors, and underwriters x 2 hours = 672 hours; 672 hours x 10 NRSROs
= 6,720 hours.
6,720 / 3 = 2,240.
2,240 hours / 10 NRSROs = 224 hours.
See Adopting Release 79 FR at 55239.

-9underwriters will need to post approximately 715 Forms ABS Due Diligence-15E on Rule 17g-5
websites per year (in addition to the information that is already posted to the websites). Based on
staff experience, the Commission estimates that it will take the issuer, sponsor, or underwriter
approximately ten minutes to upload each form and post it to the website, for a total industrywide annual disclosure burden of approximately 119 hours. 47 Thus, the total annual disclosure
burden for each NRSRO would be approximately 11.9 hours.
As a consequence of the new absolute prohibition in paragraph (c)(8) of Rule 17g-5, the
Commission believes that an NRSRO will need to update the written policies and procedures to
address and manage conflicts of interest the NRSRO must establish, maintain, and enforce under
section 15E(h) of the Exchange Act and Rule 17g-5. Based on Commission staff experience, the
Commission estimates that updating the conflicts of interest policies and procedures would take
an NRSRO an average of approximately 100 hours, for an industry-wide one-time reporting
burden of approximately 1,000 hours. 48 In addition, Exhibit 7 to Form NRSRO requires an
NRSRO to provide a copy of the written policies and procedures in the exhibit. Paragraph (e) of
Rule 17g-1 requires an NRSRO to promptly file with the Commission an update of its
registration on Form NRSRO when information on the form is materially inaccurate. The update
of registration must be filed electronically on the Commission’s EDGAR system. The
Commission estimates, based on staff experience, that it would take an NRSRO an average of
approximately twenty-five hours on a one-time basis to prepare and file the update of registration
to account for the update of the NRSRO’s written policies and procedures to address and manage
conflicts of interest, for an industry-wide one-time reporting burden of approximately 250 hours
and a total industry-wide one-time reporting burden of approximately 1,250 hours to update the
NRSRO’s conflicts of interest policies and procedures and to prepare and file an update of
registration to account for the update of the NRSRO’s written policies and procedures. 49 The
Commission therefore estimates that the total one-time reporting burden to update the conflicts of
interest policies and procedures and to prepare and file an update of registration to account for the
update of the NRSRO’s written policies and procedures would be 1,250 hours, or approximately
417 hours per year when annualized over three years. 50 Thus, the total annualized reporting burden
for each NRSRO would be approximately 42 hours.51
Based on staff experience, the Commission believes that an NRSRO utilizing new
paragraph (f) of Rule 17g-5 to apply for an exemption from the prohibited conflict under
paragraph (c)(8) would likely spend an average of approximately 150 hours to draft and submit
the application to the Commission, or 50 hours per year when annualized over three years. 52 If
47

48
49

50
51
52

715 Forms ABS Due Diligence-15E per year x 10 minutes = 119.17 hours, rounded to
119 hours.
100 hours x 10 NRSROs = 1,000 hours.
10 NRSROs x 25 hours = 250 hours; 1,000 hours + 250 hours = 1,250 hours. See also
Oversight of Credit Rating Agencies Registered as Nationally Recognized Statistical
Rating Organizations, 72 FR at 33614 (providing a PRA estimate of twenty-five hours for
an NRSRO to prepare and furnish an update of its registration).
1,250 / 3 = 416.67, rounded to 417.
417 hours / 10 NRSROs = 41.7 hours, rounded to 42 hours.
150 /3 = 50.

- 10 all 10 NRSROs apply for an exemption, the one-time industry reporting burden would be 1,500
hours, or 500 hours per year when annualized over three years. 53
13.

Costs to Respondents

Based on staff experience, the Commission believes that an NRSRO utilizing new
paragraph (f) of Rule 17g-5 to apply for an exemption from the prohibited conflict under
paragraph (c)(8) would also likely engage outside counsel to assist in drafting an exemption
request, that counsel would spend an average of approximately fifty hours for a cost of
approximately $20,000 to assist in drafting the request, or approximately $6,700 when
annualized over three years. 54 If all 10 NRSROs apply for an exemption, the one-time industrywide reporting burden for NRSROs would be approximately $200,000, or approximately
$67,000 per year when annualized over 3 years. 55
14.

Federal Government Cost

There would be no additional costs to the Federal Government.
15.

Changes in Burden

The changes in burden are due to updated estimates and the burdens associated with the
new rules and amendments to existing rules.
The industry-wide change in burden resulting from updated estimates is approximately: a
decrease of 12,444 hours in the annual disclosure burden for NRSROs; 56 an increase in the
annualized one-time disclosure burden for arrangers of structured finance products of 13,600
hours; an increase in the annual disclosure burden for arrangers of structured finance products of
2,720 hours; 57 and an increase in the annual disclosure burden for arrangers of structured finance
products of 102,000 hours. 58
The industry-wide increase in burden resulting from the new rules and amendments to
existing rules is approximately: an annualized one-time disclosure burden for NRSROs of 2,240
hours; an annual disclosure burden for arrangers of structured finance products of 119 hours; an
annualized one-time reporting burden for NRSROs of 417 hours; and an annualized one-time
reporting burden for NRSROs of $67,000 and 500 hours.

53
54

55
56
57
58

150 x 10 = 1,500; 1,500 /3 = 500.
50 hours x $400 per hour for outside counsel = $20,000; $20,000 / 3 = $6,666, rounded to
$6,700.
$20,000 x 10 = $200,000; $200,000 / 3 = $66,667, rounded to $67,000.
14,880 – 2,436 = 12,444.
6,720 – 4,000 = 2,720.
252,000 – 150,000 = 102,000.

- 11 16.

Information Collection Planned for Statistical Purposes

Not applicable. The information collection is not used for statistical purposes.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the expiration date.
18.

Exceptions to Certification

This collection complies with the requirements in 5 CFR 1320.9.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
This collection does not employ statistical methods.