DGL REVISED 2021 Rule 17f-1(b) Supporting Statement

DGL REVISED 2021 Rule 17f-1(b) Supporting Statement.pdf

Exchange Act Rule 17f-1(b) – Requirements for reporting and inquiry with respect to missing, lost, stolen, or counterfeit securities (17 CFR 240.17f-1(b))

OMB: 3235-0032

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SUPPORTING STATEMENT
for the Paperwork Reduction Act Collection Submission
for Rule 17f-1(b)
OMB Control No. 3235-0032
A.

JUSTIFICATION
1.

Necessity of Information Collection

The Commission, pursuant to Sections 2, 17(f), 19(a) and 23 of the Securities
Exchange Act of 1934 (“Act”), adopted Rule 17f-1 (17 CFR 240.17f-1(b)) in 1979. This
rule implemented Section 17(f)(1) of the Act by establishing a program for reporting and
making inquiries requirements regarding missing, lost, stolen, or counterfeit securities
(“Program”). Section 17(f)(1) of the Act was a response by Congress to large numbers of
securities thefts. Testimony at the hearings conducted before the Senate Permanent
Subcommittee on Investigation between 1971 and 1974 indicated that the trafficking in
stolen securities was a profitable area for organized crime and that the failure to have
available to the financial community a means of easily identifying missing, lost, stolen, or
counterfeit certificates was a contributing factor to the increase in, and the ease of,
negotiating such securities. The purpose of Section 17(f)(1) and Rule 17f-1 thereunder is
to create a central database of information related to missing, lost, stolen, or counterfeit
securities and to make available to covered institutions information that promptly
identifies those securities, removing them from the stream of commerce and facilitating
the capture of those who engage in such traffic.
The Commission has adopted a number of amendments to Rule 17f-1, including
the addition of paragraph (b). Paragraph (b) requires that every “reporting institution”
register with the Commission or its designee according to instructions issued by the
Commission. The term “reporting institution” includes every national securities
exchange, member thereof, registered securities association, broker, dealer, municipal
securities dealer, government securities broker, government securities dealer, registered
transfer agent, registered clearing agency, participant therein, member of the Federal
Reserve System and bank whose deposits are insured by the Federal Deposit Insurance
Corporation.
Upon accepting the registration form by the Securities Information Center
(“SIC”), the Commission’s designee to maintain and operate the database, a reporting
institution is given access to the data base for both reporting and inquiry purposes.
Without the identifying information provided by the registration form, access to the
confidential database could not be limited to those institutions specified in the Act and
Rule 17f-1. In addition, the registration procedure provides the Commission with a
means of identifying those reporting institutions that have not registered in the Program
and those institutions that have registered but are not complying with the requirements
for reporting and inquiry.

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2.

Purpose and Use of the Information Collection

The Commission uses the information received in response to Rule 17f-1(b) to
correlate the occurrence of securities losses and thefts to the size and type of reporting
institution involved. The information is also used during the inquiry procedure to notify
immediately the Federal Bureau of Investigation with regard to attempted negotiations of
such securities. Without Rule 17f-1(b), the Commission would not have a means of
identifying those reporting institutions that have not registered in the Program and those
institutions that have registered but are not complying with the requirements for reporting
and inquiry.
3.

Consideration Given to Information Technology

Not applicable.
4.

Duplication

Not applicable because reporting institutions are required to register with SIC
only once.
5.

Effect on Small Entities

Although the information requested in the registration form affects small entities,
the effect is minimal. The specific information requested is easily accessible to all
reporting institutions and creates no significant burden.
6.

Consequences of Not Conducting Collection

Since the information is requested only once upon registration for participation in
the Program, the collection of this information could not be conducted less frequently.
7.

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

There are no special circumstances. The 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.

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10.

Confidentiality

Reporting institutions required to register under rule 17f-1(b) will not be kept
confidential. However, the Program database will be kept confidential.
11.

Sensitive Questions

The information collection does not collect personally identifiable information.

12.

Burden of Information Collection

Approximately 10,000 entities in the securities industry are registered with SIC.
Registration is a one-time event; it is ongoing until the registrant withdraws from the
Program. We estimate that, each year, 10 new reporting institutions register with SIC.
The staff estimates that the average number of hours necessary to comply with Rule 17f1(b), that is, to register with SIC, is one-half hour. Accordingly, the staff estimates that
the total annual reporting burden for all participants is 5 hours (10 x one-half hour).
While not a cost burden under Item 13, with respect to the estimated 5 hours per
year to comply with the rule, the Commission staff estimates that compliance staff work
at subject entities results in an internal cost of compliance, at an estimated hourly wage of
$283, of $141.50 per year per entity (.5 hours x $283 per hour = $141.50 per year). 1
Therefore, the aggregate annual internal cost of compliance is approximately $1,415
($141.50 x 10= $1,415).
New Reporting Institutions Each
Year

Time to Register with
SIC Per Entity

Total Time to
Register Per Year

10

0.5 hours

5 hours

Time to
Register with
SIC Per
Entity
0.5 hours
13.

Estimated
Hourly Wage
$283

Cost of
Compliance
Per Year Per
Entity
$141.50

New
Reporting
Institutions
Each Year
10

Aggregate
Annual
Internal Cost
of Compliance
$1,415

Costs to Respondents

Not applicable; (a) it is not anticipated that respondents will have to incur any
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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capital and start-up cost to comply with the rule; (b) it is not anticipated that respondents
will have to incur any additional operational or maintenance cost (other than provided for
in item number 12) to comply with the rule.
14.

Costs to Federal Government

Not applicable. The time involved in administering Rule 17f-1(b) is minimal.
The staff occasionally receives an inquiry from a reporting institution with regard to
registration. Those inquiries can be responded to within one-half hour and this is done by
existing staff as part of their regular duties. The staff is also involved with reviewing the
multi-year delegation arrangement with the Securities Information Center (“SIC”). This
is also done by existing staff as part of their regular duties.
15.

Changes in Burden

Not applicable.
16.

Information Collection Planned for Statistical Purposes

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

Display of OMB Approval 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.


File Typeapplication/pdf
AuthorDe boyrie, Elizabeth
File Modified2021-10-05
File Created2021-10-05

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