60 Day Notice

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Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices

purposes of the PRA, and are not
derived from a comprehensive or even
a representative survey or study of the
costs of SEC rules and forms.
Compliance with the information
collection requirements of the rules is
necessary to obtain the benefit of relying
on the rules. The information provided
on Form 1–E and in the offering circular
will not be kept confidential. 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 OMB 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:
[email protected]; and (ii)
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
[email protected]. Written comments
and recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to www.reginfo.gov/public/do/
PRAMain. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function.
Dated: January 14, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–01052 Filed 1–19–22; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–401, OMB Control No.
3235–0459]

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Proposed Collection; 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:
Rule 3a–4

Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520), the Securities
and Exchange Commission (the

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‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 3a–4 (17 CFR 270.3a–4) under
the Investment Company Act of 1940
(15 U.S.C. 80a) (‘‘Investment Company
Act’’ or ‘‘Act’’) provides a nonexclusive
safe harbor from the definition of
investment company under the Act for
certain investment advisory programs.
These programs, which include ‘‘wrap
fee’’ programs, generally are designed to
provide professional portfolio
management services on a discretionary
basis to clients who are investing less
than the minimum investments for
individual accounts usually required by
the investment adviser but more than
the minimum account size of most
mutual funds. Under wrap fee and
similar programs, a client’s account is
typically managed on a discretionary
basis according to pre-selected
investment objectives. Clients with
similar investment objectives often
receive the same investment advice and
may hold the same or substantially
similar securities in their accounts.
Because of this similarity of
management, some of these investment
advisory programs may meet the
definition of investment company under
the Act.
In 1997, the Commission adopted rule
3a–4, which clarifies that programs
organized and operated in accordance
with the rule are not required to register
under the Investment Company Act or
comply with the Act’s requirements.1
These programs differ from investment
companies because, among other things,
they provide individualized investment
advice to the client. The rule’s
provisions have the effect of ensuring
that clients in a program relying on the
rule receive advice tailored to the
client’s needs.
For a program to be eligible for the
rule’s safe harbor, each client’s account
must be managed on the basis of the
client’s financial situation and
investment objectives and in accordance
with any reasonable restrictions the
client imposes on managing the
account. When an account is opened,
the sponsor 2 (or its designee) must
1 Status of Investment Advisory Programs Under
the Investment Company Act of 1940, Investment
Company Act Rel. No. 22579 (Mar. 24, 1997) [62 FR
15098 (Mar. 31,1997)] (‘‘Adopting Release’’). In
addition, there are no registration requirements
under section 5 of the Securities Act of 1933 for
programs that meet the requirements of rule 3a–4.
See 17 CFR 270.3a–4, introductory note.
2 For purposes of rule 3a–4, the term ‘‘sponsor’’
refers to any person who receives compensation for

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obtain information from each client
regarding the client’s financial situation
and investment objectives, and must
allow the client an opportunity to
impose reasonable restrictions on
managing the account.3 In addition, the
sponsor (or its designee) must contact
the client annually to determine
whether the client’s financial situation
or investment objectives have changed
and whether the client wishes to impose
any reasonable restrictions on the
management of the account or
reasonably modify existing restrictions.
The sponsor (or its designee) must also
notify the client quarterly, in writing, to
contact the sponsor (or its designee)
regarding changes to the client’s
financial situation, investment
objectives, or restrictions on the
account’s management.
Additionally, the sponsor (or its
designee) must provide each client with
a quarterly statement describing all
activity in the client’s account during
the previous quarter. The sponsor and
personnel of the client’s account
manager who know about the client’s
account and its management must be
reasonably available to consult with the
client. Each client also must retain
certain indicia of ownership of all
securities and funds in the account.
The Commission staff estimates that
27,979,460 clients participate each year
in investment advisory programs relying
on rule 3a–4.4 Of that number, the staff
estimates that 2,127,147 are new clients
and 25,852,313 are continuing clients.5
The staff estimates that each year the
investment advisory program sponsors’
staff engage in 1.5 hours per new client
and 1 hour per continuing client to
sponsoring, organizing or administering the
program, or for selecting, or providing advice to
clients regarding the selection of, persons
responsible for managing the client’s account in the
program.
3 Clients specifically must be allowed to designate
securities that should not be purchased for the
account or that should be sold if held in the
account. The rule does not require that a client be
able to require particular securities be purchased for
the account.
4 These estimates are based on an analysis of the
number of individual clients from Form ADV Item
5D(a)(1) and (b)(1) of advisers that report they
provide portfolio management to wrap programs as
indicated in Form ADV Item 5I(2)(b) and (c), and
the number of individual clients of advisers that
identify as internet advisers in Form ADV Item
2A(11). From analysis comparing reported
individual client assets in Form ADV Item 5D(a)(3)
and 5D(b)(3) to reported wrap portfolio manager
assets in Form ADV Item 5I(2)(b) and (c), we
discount the estimated number of individual clients
of non-internet advisers providing portfolio
management to wrap programs by 10%.
5 These estimates are based on the number of new
clients expected due to average year-over-year
growth in individual clients from Form ADV Item
5D(a)(1) and (b)(1) (about 8%) and an assumed rate
of yearly client turnover of 10%.

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Federal Register / Vol. 87, No. 13 / Thursday, January 20, 2022 / Notices
prepare, conduct and/or review
interviews regarding the client’s
financial situation and investment
objectives as required by the rule.6
Furthermore, the staff estimates that
each year the investment advisory
program sponsors’ staff spends 1 hour
per client to prepare and mail quarterly
client account statements, including
notices to update information.7 Based
on the estimates above, the Commission
estimates that the total annual burden of
the rule’s paperwork requirements is
57,022,493 hours.8
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act. The estimate
is not derived from a comprehensive or
even a representative survey or study of
the costs of Commission rules and
forms. 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.
Written comments are invited on: (a)
Whether the collections of information
are necessary for the proper
performance of the functions of the
Commission, including whether the
information has practical utility; (b) the
accuracy of the Commission’s estimate
of the burdens of the collections of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burdens of the collections
of information on respondents,
including through the use of automated
collection techniques or other forms of
information technology. Consideration
will be given to comments and
suggestions submitted in writing within
60 days of this publication.
Please direct your written comments
to David Bottom, c/o John R. Pezzullo,
Director/Chief Information Officer,
Securities and Exchange Commission,
100 F Street NE, Washington, DC 20549;
or send an email to: PRA_Mailbox@
sec.gov.
Dated: January 14, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–01060 Filed 1–19–22; 8:45 am]

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BILLING CODE 8011–01–P
6 These estimates are based upon consultation
with investment advisers that operate investment
advisory programs that rely on rule 3a–4.
7 The staff bases this estimate in part on the fact
that, by business necessity, computer records
already will be available that contain the
information in the quarterly reports.
8 This estimate is based on the following
calculation: (25,852,313 continuing clients × 1
hour) + (2,127,147 new clients × 1.5 hours) +
(27,979,460 total clients × (0.25 hours × 4
statements)) = 57,022,493 hours.

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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93973; File No. SR–
NYSEAMER–2021–54]

Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Amend the NYSE American
Equities Price List and Fee Schedule
January 13, 2022.

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
30, 2021, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory 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 amend
certain Standard Rates and requirements
for transaction fees and credits that add
and remove liquidity in securities at or
above $1 and reformat the section of the
NYSE American Equities Price List and
Fee Schedule (‘‘Price List’’) setting forth
transactions fees for all transactions
other than transactions using Retail
Order Rates, transactions in securities
below $1, and transactions by an
Electronic Designated Market Makers
(‘‘eDMM’’) in assigned securities. The
Exchange proposes to implement the fee
changes effective January 3, 2022. 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,
1 15

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

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3143

set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Standard Rates for transaction fees and
credits that add and remove liquidity in
securities at or above $1 and reformat
the section of the Price List setting forth
transactions fees for all transactions
other than transactions using Retail
Order Rates, transactions in securities
below $1, and transactions by an eDMM
in assigned securities.
The proposed changes respond to the
current competitive environment where
order flow providers have a choice of
where to direct liquidity-providing and
liquidity-removing orders by offering
further incentives for ETP Holders to
send additional adding and removing
liquidity to the Exchange.
The Exchange proposes to implement
the fee changes effective January 3,
2022.
Competitive Environment
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 4
While Regulation NMS has enhanced
competition, it has also fostered a
‘‘fragmented’’ market structure where
trading in a single stock can occur
across multiple trading centers. When
multiple trading centers compete for
order flow in the same stock, the
Commission has recognized that ‘‘such
competition can lead to the
fragmentation of order flow in that
stock.’’ 5 Indeed, cash equity trading is
currently dispersed across 16
4 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(File No. S7–10–04) (Final Rule) (‘‘Regulation
NMS’’).
5 See Securities Exchange Act Release No. 61358,
75 FR 3594, 3597 (January 21, 2010) (File No. S7–
02–10) (Concept Release on Equity Market
Structure).

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