PRA 2015 17Ad-4(b) (c) Justification DGL REDLINE

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 17Ad-4(b) &(c)

A. Justification
(1) Necessity of Information Collection
To facilitate the establishment of a national clearance and settlement system for securities
transactions, Congress authorized the Securities and Exhange Commission (“Commission”) to
establish a regulatory scheme for transfer agents under the Securities Exchange Act of 1934 (the
“Act”). Pursuant to this authority, the Commission promulgated rules that require registered
transfer agents to meet minimum performance and recordkeeping standards designed to protect
investors and facilitate securities transfers. Because a significant number of registered transfer
agents perform transfer functions for a relatively small number of securities issues or because of
the limited trading volume in those issues, the Commission concluded that these transfer agents
should be able to claim relief from many of the Commission’s transfer agent rules.
If the Commission or the Office of the Comptroller of the Currency (“OCC”) is the
appropriate regulatory authority (“ARA”) for an exempt transfer agent, that transfer agent is
required to prepare and maintain in its possession a notice certifying that it is exempt from
certain performance standards and recordkeeping and record retention provisions of the
Commission’s transfer agent rules. This notice need not be filed with the Commission or OCC.
If the Board of Governors of the Federal Reserve System (“Fed”) or the Federal Deposit
Insurance Corporation (“FDIC”) is the transfer agent’s ARA, that transfer agent must prepare a
notice and file it with the Fed or FDIC.
Rule 17Ad-4(c) sets forth the conditions under which a registered transfer agent loses its
exempt status. Once the conditions for exemption no longer exist and if the ARA for the transfer
agent is the Fed or the FDIC, the transfer agent must prepare and file a notice of loss of exempt
status under paragraph (c). The transfer agent cannot claim exempt status under Rule 17Ad-4(b)
again until it remains subject to the minimum performance standards for non-exempt transfer
agents for six consecutive months.
The ARAs use the information contained in the notice to determine whether a registered
transfer agent qualifies for the exemption, to determine when a registered transfer agent no
longer qualifies for the exemption, and to determine the extent to which that transfer agent is
subject to regulation.
(2) Purpose and Use of the Information Collection
The ARAs would be unable to effectively monitor transfer agent compliance with the
Commission’s transfer agent rules if agents claiming exemptions from certain performance
standards and recordkeeping and record retention provisions did not prepare and file these
notices.

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(3) Consideration Given to Information Technology
Not applicable.
(4) Duplication
There are no duplicative requirements.
(5) Effect on Small Entities
Rule 17Ad-4(b) exempts small entity transfer agents from compliance with the
performance standards and recordkeeping and record retention requirements that other transfer
agents are subject to. The collection of information concerning the number of items received for
transfer and processing for the preceding six months creates a minimal burden that is outweighed
by the exemption from the detailed turnaround, processing, recordkeeping and record retention
provisions that other transfer agents must comply with.
(6) Consequences of Not Conducting Collection
Since the notice of exempt status or loss of exempt status must be prepared and filed in
some cases only at the time exempt status is attained or lost, the information collected could not
be conducted less frequently.
(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. No public comments were received.
(9) Payment or Gift
Not applicable.
(10) Confidentiality
No assurance of confidentiality is provided.
(11) Sensitive Questions
No questions of a sensitive nature are asked. The information collection does not collect
any Personally Identifiable Information (PII).

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(12) Burden of Information Collection
The Commission estimates that approximately 10 registered transfer agents each
year prepare or file notices in compliance with Rules 17Ad-4(b) and 17Ad-4(c). Respondents
spend a minimal amount of time preparing notices of exempt status or loss of exempt status. In
view of the readily available nature of the information required to be stated in the notice (because
the information must be compiled and retained pursuant to other Commission rules), the
summary fashion in which such information must be presented in the notice (most notices are
one page or less in length), and the experience of the transfer agent staff regarding these notices,
the Commission estimates that each such registered transfer agent spends approximately 1.5
hours to prepare or file such notices for an aggregate total annual burden of 15 hours (1.5 hours
times 10 transfer agents).
While not a cost burden under Item 13, with respect to the estimated 1.5 hours per year per
transfer agent to comply with Rules 17Ad-4(b) and 17Ad-4(c), the Commission staff estimates
that compliance staff work at registered transfer agents results in an internal cost of compliance,
at an estimated hourly wage of $283, of $424.5 per year per transfer agent (1.5 hours x $283 per
hour = $ 424.5 per year). 1 Therefore, the aggregate annual internal cost of compliance is
approximately $4,245 ($424.5 x 10 = $4,245).
(13) Costs to Respondents
Not applicable.
a. It is not anticipated that respondents will incur any capital and start-up costs to
comply with the rule and form requirements.
b. It is not anticipated that respondents will incur any additional operational or
maintenance costs to comply with the rule requirements.
(14) Estimate of Cost to the Federal Government
The rule requires that transfer agents maintain notices of exempt status and, if the transfer
agent’s ARA is the Fed or FDIC, file that notice of exempt status or loss of exempt status with
the Fed or FDIC. The Commission and other ARAs review these records during the course of
examining and monitoring the operation of transfer agents. The time necessary to review these
notices, whether they have been filed with the FDIC or the Fed or during an inspection is
approximately 1.5 hours. As a result, annual total cost to the Federal Government associated
with Rules 17Ad-4(b) & (c) is estimated to be approximately $750 based on an average hourly
cost of $50 (1.5 hours x 10 transfer agent notices x $50 hourly cost). This figure is based on

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The estimated hourly wages used in this analysis were derived from reports prepared by the Securities
Industry and Financial Markets Association. See Securities Industry and Financial Markets Association, Office
Salaries in the Securities Industry – 2013 (2013), modified to account for an 1800-hour work year and multiplied by
5.35 to account for bonuses, firm size, employee benefits and overhead.

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computation of the value of government staff time devoted to this activity and the related
overhead valued at 35% of the value of staff time.
(15) Changes in Burden
The total annual hourly burden has been reduced from 19 hours to 15 hours due to
updates by the Commission’s staff’s to: (i) bring current the time burden estimate for completion
of the notices required under Rules 17Ad-4(b) and 17Ad-4(c), and (ii) a decrease in the estimate
of number of notices filed or retained pursuant to Rules 17Ad-4(b) and 17Ad-4(c).
The previous submission overestimated the annual burden and the number of respondents
by including the burden from the other agencies. Three ICs were removed.
(16) Information Collection Planned for Statistical Purposes
Not applicable.
(17) Approval to Omit OMB Expiration Date
The Commission is not seeking approval to omit the expiration date.
(18) Exceptions to Certification
Not applicable. This collection complies with the requirements in 5 CFR 1320.9.
B. Collection of Information Employing Statistical Methods
No statistical methods are employed in connection with the collections of information.