30 day notice

Federal Register / Vol. 84, No. 26 / Thursday, February 7, 2019 / Notices
subject to the requirements in rule 17f–
4. The rule is elective, but most, if not
all, funds use depository custody
arrangements.4
Rule 17f–4 contains two general
conditions. First, a fund’s custodian
must be obligated, at a minimum, to
exercise due care in accordance with
reasonable commercial standards in
discharging its duty as a securities
intermediary to obtain and thereafter
maintain financial assets. If the fund
deals directly with a depository, the
depository’s contract or written rules for
its participants must provide that the
depository will meet similar obligations.
All funds that deal directly with
securities depositories in reliance on
rule 17f–4 should have either modified
their contracts with the relevant
securities depository, or negotiated a
modification in the securities
depository’s written rules when the rule
was amended. Therefore, we estimate
there is no ongoing burden associated
with this collection of information.5
Second, the custodian must provide,
promptly upon request by the fund,
such reports as are available about the
internal accounting controls and
financial strength of the custodian. If a
fund deals directly with a depository,
the depository’s contract with or written
rules for its participants must provide
that the depository will provide similar
financial reports. Custodians and
depositories usually transmit financial
reports to funds twice each year.6 The
Commission staff estimates that 49
custodians spend approximately 914
hours (by support staff) annually in
transmitting such reports to funds.7 In
Banks and one active registered clearing agency.
The Commission staff recognizes that not all of
these entities may currently be acting as a securities
depository for fund securities.
4 Based on responses to Item 18 of Form N–SAR
(17 CFR 274.101), approximately 97 percent of
funds’ custodians maintain some or all fund
securities in a securities depository pursuant to rule
17f–4.
5 The Commission staff assumes that new funds
relying on 17f–4 would choose to use a custodian
instead of directly dealing with a securities
depository because of the high costs associated with
maintaining an account with a securities
depository. Thus, new funds would not be subject
to this condition.
6 The estimated 49 custodians would handle
requests for reports from 3,917 fund clients
(approximately 80 fund clients per custodian) and
the depositories from the remaining 80 funds that
choose to deal directly with a depository. It is our
understanding based on staff conversations with
industry representatives that custodians and
depositories transmit these reports to clients in the
normal course of their activities as a good business
practice regardless of whether they are requested.
Therefore, for purposes of this PRA estimate, the
Commission staff assumes that custodians transmit
the reports to all fund clients.
7 (3,917 fund clients × 2 reports) = 7,834
transmissions. The staff estimates that each

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addition, approximately 80 funds (i.e.,
two percent of all funds) deal directly
with a securities depository and may
request periodic reports from their
depository. Commission staff estimates
that depositories spend approximately
19 hours (by support staff) annually
transmitting reports to the 80 funds.8
The total annual burden estimate for
compliance with rule 17f–4’s reporting
requirement is therefore 933 hours.9
If a fund deals directly with a
securities depository, rule 17f–4
requires that the fund implement
internal control systems reasonably
designed to prevent an unauthorized
officer’s instructions (by providing at
least for the form, content, and means of
giving, recording, and reviewing all
officers’ instructions). All funds that
seek to rely on rule 17f–4 should have
already implemented these internal
control systems when the rule was
amended. Therefore, there is no ongoing
burden associated with this collection of
information requirement.10
Based on the foregoing, the
Commission staff estimates that the total
annual hour burden of the rule’s
collection of information requirements
is 933 hours.
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act. This estimate
is not derived from a comprehensive or
even representative survey or study of
the costs of Commission rules.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to:
transmission would take approximately 7 minutes
for a total of approximately 914 hours (7 minutes
× 7,834 transmissions).
8 (80 fund clients who may deal directly with a
securities depository × 2 reports) = 160
transmissions. The staff estimates that each
transmission would take approximately 7 minutes
for a total of approximately 19 hours (7 minutes ×
160 transmissions).
9 914 hours for custodians and 19 hours for
securities depositories.
10 The Commission staff assumes that new funds
relying on 17f–4 would choose to use a custodian
instead of directly dealing with a securities
depository because of the high costs associated with
maintaining an account with a securities
depository. Thus new funds would not be subject
to this condition.

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[email protected]; and (ii)
Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
[email protected]. Comments must be
submitted to OMB within 30 days of
this notice.
Dated: February 1, 2019.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–01372 Filed 2–6–19; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rules 300–304 of Regulation
Crowdfunding (Intermediaries), SEC File
No. 270–774, OMB Control No. 3235–
0726.

Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rules 300–304 of Regulation
Crowdfunding.1
Rules 300–304 of Regulation
Crowdfunding enumerate the
requirements with which intermediaries
must comply to participate in the offer
and sale of securities in reliance on
Section 4(a)(6) of the Securities Act of
1933 (‘‘Section 4(a)(6)’’). Rule 300
requires an intermediary to be registered
with the Commission as a broker or as
a funding portal and be a member of a
registered national securities
association.2
Rule 301 requires intermediaries to
have a reasonable basis for believing
that an issuer seeking to offer and sell
securities in reliance on Section 4(a)(6)
through the intermediary’s platform
complies with the requirements in
Section 4A(b) of the Securities Act and
1 See Regulation Crowdfunding, Exchange Act
Release No. 76324 (Oct. 30, 2015), 80 FR 71387
(Nov. 16, 2015) (Final Rule) (‘‘Regulation
Crowdfunding’’).
2 Currently, FINRA is the only registered national
securities association.

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Federal Register / Vol. 84, No. 26 / Thursday, February 7, 2019 / Notices

the related requirements in Regulation
Crowdfunding. Rule 302 provides that
no intermediary or associated person of
an intermediary may accept an
investment commitment in a transaction
involving the offer or sale of securities
made in reliance on Section 4(a)(6) until
the investor has opened an account with
the intermediary and the intermediary
has obtained from the investor consent
to electronic delivery of materials. Rule
303 requires an intermediary to make
publicly available on its platform the
information that an issuer of
crowdfunding securities is required to
provide to potential investors, in a
manner that reasonably permits a
person accessing the platform to save,
download or otherwise store the
information, for a minimum of 21 days
before any securities are sold in the
offering, during which time the
intermediary may accept investment
commitments. Rule 303 also requires
intermediaries to comply with the
requirements related to the maintenance
and transmission of funds. An
intermediary that is a registered broker
is required to comply with the
requirements of Rule 15c2–4 of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) (Transmission or
Maintenance of Payments Received in
Connection with Underwritings).3 An
intermediary that is a registered funding
portal must direct investors to transmit
the money or other consideration
directly to a qualified third party that
has agreed in writing to hold the funds
for the benefit of, and to promptly
transmit or return the funds to, the
persons entitled thereto in accordance
with Regulation Crowdfunding.
The rules also require intermediaries
to implement and maintain systems to
comply with the information disclosure,
communication channels, and investor
notification requirements. These
requirements include providing
disclosure about compensation at
account opening (Rule 302), obtaining
investor acknowledgements to confirm
investor qualifications and review of
educational materials (Rule 303),
providing investor questionnaires (Rule
303), providing communication
channels with third parties and among
investors (Rule 303), notifying investors
of investment commitments (Rule 303),
confirming completed transactions
(Rule 303) and confirming or
reconfirming offering cancellations
(Rule 304).
The Commission staff estimates that
there would be 62 intermediaries
engaged in crowdfunding activity and
therefore subject to Rules 300–304. The

Commission staff estimates that
annualized industry burden would be
15,621 hours to comply with Rules 300–
304. This estimate is composed of a onetime burden for new intermediaries to
comply with the rules and develop the
platform and ongoing burdens
associated with maintaining the
platform. The Commission staff
estimates that the costs associated with
complying with Rules 300–304 are
estimated to be approximately a total
amount of $5,772,327. These costs are
composed of a one-time burden for new
intermediaries to comply with the rules
and develop the platform and ongoing
burdens associated with maintaining the
platform.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to:
[email protected] and (ii)
Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549, or by sending an email to:
[email protected]. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: February 1, 2019.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–01367 Filed 2–6–19; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85033; File No. SR–
NYSEArca–2018–98]

Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to Listing and
Trading Shares of the iShares
Commodity Multi-Strategy ETF Under
NYSE Arca Rule 8.600–E; and Notice of
Designation of a Longer Period for
Commission Action on Proposed Rule
Change Relating to Listing and Trading
Shares of the iShares Commodity
Multi-Strategy ETF Under NYSE Arca
Rule 8.600–E
February 1, 2019.

Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
21, 2018, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the iShares Commodity
Multi-Strategy ETF under NYSE Arca
Rule 8.600–E (‘‘Managed Fund Shares’’).
The proposed change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
1 15

U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15

3 17

CFR 240.15c2–4.

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