3235-0751 Supporting Statement (Rule 18a-6 WORM Proposing Release )

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for Rule 18a-6
3235-0751
Proposed Partial Revision
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44
U.S.C. Section 3501 et seq.
A.

JUSTIFICATION
1.

Necessity of Information Collection

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the “Dodd-Frank Act”) into law. 1 Section 764 of the Dodd-Frank Act
added section 15F to the Securities Exchange Act of 1934 (the “Exchange Act”), 2 which
provides that the Commission shall adopt rules governing reporting and recordkeeping for
security-based swap dealers (“SBSDs”) and major security-based swap participants
(“MSBSPs”). 3
Accordingly, on September 19, 2019, the Commission adopted amendments to its
recordkeeping and reporting rules for broker-dealers as well as new recordkeeping and reporting
rules for SBSDs and MSBSPs (the “SBS Recordkeeping Release”). 4 The SBS Recordkeeping
Release adopted Exchange Act Rule 18a-6 (in conjunction with Exchange Act Rule 18a-5) to
establish recordkeeping requirements applicable to stand-alone SBSDs, stand-alone MSBSPs,
bank SBSDs, and bank MSBSPs (collectively “SBS Entities”). 5 Rule 18a-6 is modeled on
Exchange Act Rule 17a-4, which applies to broker-dealers, but Rule 18a-6 does not include a
parallel requirement for every requirement in Rule 17a-4 because some of the requirements in
Rule 17a-4 relate to activities that are not expected or permitted of stand-alone SBSDs, standalone MSBSPs, bank SBSDs, and bank MSBSPs.
Rule 18a-6 establishes a number of new collections of information. The table below
provides a summary of the new collections of information, noting the type of record that is
required to be created, the specific provision in the rule that requires the record to be created, and
the entity to which the provision in the rule applies.
1

See Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Public Law 111-203, 124 Stat.
1376 (2010).

2

See Public Law 111-203, § 764; 15 U.S.C. 78o-10.

3

See 15 U.S.C. 78o-10(f)(2).

4

See Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based
Swap Participants, and Broker-Dealers; Final Rules, Exchange Act Release No. 87005(Sept. 19, 2019), 84
FR 68550 (Dec. 16, 2019).

5

See Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based
Swap Participants, and Broker-Dealers; Final Rules, Exchange Act Release No. 87005 (Sept. 19, 2019),
84 FR 68550 (Dec. 16, 2019).

Non-model stand-alone Model stand-alone
SBSDs
SBSDs
Records To Be Preserved for a Period of Not Less Than 6 Years
Trade blotters
Rule 18a-6(a)(1) citing Rule 18a-6(a)(1) citing
Rule 18a-5(a)(1)
Rule 18a-5(a)(1)
General ledger
Rule 18a-6(a)(1) citing Rule 18a-6(a)(1) citing
Rule 18a-5(a)(2)
Rule 18a-5(a)(2)
Ledgers for customer Rule 18a-6(a)(1) citing Rule 18a-6(a)(1) citing
and non-customer
Rule 18a-5(a)(3)
Rule 18a-5(a)(3)
accounts
Stock record
Rule 18a-6(a)(1) citing Rule 18a-6(a)(1) citing
Rule 18a-5(a)(4)
Rule 18a-5(a)(4)
Records To Be Preserved for a Period of Not Less Than 3 Years
Memoranda of
brokerage orders
Memoranda of
Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
proprietary orders
citing Rule 18a-5(a)(5) citing Rule 18a-5(a)(5)
Confirmations
Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
citing Rule 18a-5(a)(6) citing Rule 18a-5(a)(6)
Accountholder
Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
information
citing Rule 18a-5(a)(7) citing Rule 18a-5(a)(7)
Options positions
Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
citing Rule 18a-5(a)(8) citing Rule 18a-5(a)(8)
Trial balances and
Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
computation of net
citing Rule 18a-5(a)(9) citing Rule 18a-5(a)(9)
capital
Account equity and
Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
margin calculations
citing Rule
citing Rule
under Rule 18a-3
18a-5(a)(12)
18a-5(a)(12)
Possession or control Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
requirements under
citing Rule
citing Rule
Rule 18a-4
18a-5(a)(13)
18a-5(a)(13)
Customer reserve
Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
requirements under
citing Rule
citing Rule
Rule 18a-4
18a-5(a)(14)
18a-5(a)(14)
Unverified transactions Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
citing Rule
citing Rule
18a-5(a)(15)
18a-5(a)(15)
Political contributions Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
citing Rule
citing Rule
18a-5(a)(16)
18a-5(a)(16)
Compliance with
Rule 18a-6(b)(1)(i)
Rule 18a-6(b)(1)(i)
business conduct
citing Rule
citing Rule
requirements
18a-5(a)(17)
18a-5(a)(17)
Bank records
Rule 18a-6(b)(1)(ii)
Rule 18a-6(b)(1)(ii)
Bills
Rule 18a-6(b)(1)(iii) Rule 18a-6(b)(1)(iii)
Communications
Rule 18a-6(b)(1)(iv) Rule 18a-6(b)(1)(iv)
Trial balances
Rule 18a-6(b)(1)(v)
Rule 18a-6(b)(1)(v)
Account documents
Rule 18a-6(b)(1)(vi) Rule 18a-6(b)(1)(vi)
Written agreements
Rule 18a-6(b)(1)(vii) Rule 18a-6(b)(1)(vii)
Information supporting Rule 18a-6(b)(1)(viii) Rule 18a-6(b)(1)(viii)
financial reports
Rule 15c3-4 risk
Rule 18a-6(b)(1)(ix) Rule 18a-6(b)(1)(ix)
management records
Credit risk
Rule 18a-6(b)(1)(x)
determinations
Regulation SBSR
Rule 18a-6(b)(1)(xi) Rule 18a-6(b)(1)(xi)
information

2

Bank SBSDs

Stand-alone MSBSPs

Rule 18a-6(a)(2) citing Rule 18a-6(a)(1) citing
Rule 18a-5(b)(1)
Rule 18a-5(a)(1)
Rule 18a-6(a)(1) citing
Rule 18a-5(a)(2)
Rule 18a-6(a)(2) citing Rule 18a-6(a)(1) citing
Rule 18a-5(b)(2)
Rule 18a-5(a)(3)
Rule 18a-6(a)(2) citing Rule 18a-6(a)(1) citing
Rule 18a-5(b)(3)
Rule 18a-5(a)(4)
Rule 18a-6(b)(2)(i)
citing Rule 18a-5(b)(4)
Rule 18a-6(b)(2)(i)
citing Rule 18a-5(b)(5)
Rule 18a-6(b)(2)(i)
citing Rule 18a-5(b)(6)
Rule 18a-6(b)(2)(i)
citing Rule 18a-5(b)(7)

Rule 18a-6(b)(2)(i)
citing Rule 18a-5(b)(9)
Rule 18a-6(b)(2)(i)
citing Rule
18a-5(b)(10)
Rule 18a-6(b)(2)(i)
citing Rule
18a-5(b)(11)
Rule 18a-6(b)(2)(i)
citing Rule
18a-5(b)(12)
Rule 18a-6(b)(2)(i)
citing Rule
18a-5(b)(13)
Rule 18a-6(b)(2)(ii)
Rule 18a-6(b)(2)(iii)
Rule 18a-6(b)(2)(iv)
Rule 18a-6(b)(2)(v)

Rule 18a-6(b)(1)(i)
citing Rule 18a-5(a)(5)
Rule 18a-6(b)(1)(i)
citing Rule 18a-5(a)(6)
Rule 18a-6(b)(1)(i)
citing Rule 18a-5(a)(7)
Rule 18a-6(b)(1)(i)
citing Rule 18a-5(a)(8)
Rule 18a-6(b)(1)(i)
citing Rule 18a-5(a)(9)
Rule 18a-6(b)(1)(i)
citing Rule
18a-5(a)(12)

Rule 18a-6(b)(1)(i)
citing Rule
18a-5(a)(15)

Rule 18a-6(b)(1)(i)
citing Rule
18a-5(a)(17)
Rule 18a-6(b)(1)(ii)
Rule 18a-6(b)(1)(iii)
Rule 18a-6(b)(1)(iv)
Rule 18a-6(b)(1)(v)
Rule 18a-6(b)(1)(vi)
Rule 18a-6(b)(1)(vii)
Rule 18a-6(b)(1)(viii)
Rule 18a-6(b)(1)(ix)

Rule 18a-6(b)(2)(vi)

Rule 18a-6(b)(1)(xi)

Non-model stand-alone Model stand-alone
SBSDs
SBSDs
Rule 18a-6(b)(1)(xii) Rule 18a-6(b)(1)(xii)

Records relating to
business conduct
standards
Special entity
Rule 18a-6(b)(1)(xiii) Rule 18a-6(b)(1)(xiii)
documents
Associated person’s
Rule 18a-6(d)(1)
Rule 18a-6(d)(1)
employment
application
Regulatory authority Rule 18a-6(d)(2)(i)
Rule 18a-6(d)(2)(i)
reports
Compliance,
Rule 18a-6(d)(3)(i)
Rule 18a-6(d)(3)(i)
supervisory, and
procedures manuals
Life of the enterprise and of any successor enterprise
Corporate documents Rule 18a-6(c)
Rule 18a-6(c)

Bank SBSDs
Rule 18a-6(b)(2)(vii)

Stand-alone MSBSPs
Rule 18a-6(b)(1)(xii)

Rule 18a-6(b)(2)(viii) Rule 18a-6(b)(1)(xiii)
Rule 18a-6(d)(1)

Rule 18a-6(d)(1)

Rule 18a-6(d)(2)(ii)

Rule 18a-6(d)(2)(i)

Rule 18a-6(d)(3)(ii)

Rule 18a-6(d)(3)(i)

Rule 18a-6(c)

Proposed Partial Revision to Collection of Information
As discussed further below, in November 2021, the Commission proposed amendments
to the electronic recordkeeping requirements of security in Rule 18a-6. 6 This Supporting
Statement addresses only the collections of information that are proposed to be revised or added
as a result of the rule amendments proposed in November 2021 regarding the electronic
recordkeeping requirements of SBS Entities.
2.

Purpose and Use of the Information Collection

The purpose of requiring stand-alone SBSDs, stand-alone MSBSPs, bank SBSDs, and
bank MSBSPs to maintain the records specified in Rule 18a-6 is to help ensure that examiners
and other representatives of the Commission and other applicable regulatory authorities have
access to the information and documents necessary to determine whether these entities are in
compliance with the Commission’s anti-fraud and anti-manipulation rules, financial
responsibility program, and other laws, rules, and regulations. Without Rule 18a-6, it would be
extremely difficult, if not impossible, for the Commission to determine whether stand-alone
SBSDs, stand-alone MSBSPs, bank SBSDs, and bank MSBSPs that chose not to preserve
records were in compliance with these rules. Such a situation would not be in the public interest
and would be detrimental to investors and the financial community as a whole.
3.

Consideration Given to Improved Information Technology

Rule 18a-6 specifically allows stand-alone SBSDs, stand-alone MSBSPs, bank SBSDs,
and bank MSBSPs to use electronic storage media to comply with the recordkeeping
requirements under the Exchange Act. If such records are stored electronically, they must meet
certain requirements set forth in the rule. 7 Because it sets minimum standards for the electronic
6

See Electronic Recordkeeping Requirements for Broker-Dealers, Security-Based Swap Dealers, and Major
Security-Based Swap Participants, Exchange Act Release No. 34-93614 (Nov. 18, 2021), 86 FR 68300
(December 1, 2021) (“2021 Electronic Recordkeeping Proposal”).

7

See paragraph (e)(2) of Rule 18a-6, as adopted.

3

storage media employed, Rule 18a-6 does not limit stand-alone SBSDs, stand-alone MSBSPs,
bank SBSDs, and bank MSBSPs to using forms of electronic storage which may become
obsolete as new technology is developed. The Commission believes that improvements in
telecommunications and data processing technology may reduce any burdens that result from
Rule 18a-6. The proposed audit trail standard in the proposed amendments is designed to update
the requirements in Rule 18a-6 to account for technological advances in recordkeeping
technologies.
4.

Duplication

Requiring stand-alone SBSDs, stand-alone MSBSPs, bank SBSDs, and bank MSBSPs to
maintain the records specified in Rule 18a-6, as adopted, does not duplicate requirements of any
other rule. Moreover, the Commission has a substantial interest in ensuring that stand-alone
SBSDs, stand-alone MSBSPs, bank SBSDs, and bank MSBSPs preserve the information
required in Rule 18a-6, as adopted, in order to ensure compliance with applicable Commission
rules. Additionally, the Commission has provided SBSDs with an alternative method of
compliance with certain requirements of Rule 18a-6, as adopted. Specifically, the Commission
has adopted Rule 18a-10 8 which provides an alternative compliance mechanism under which an
SBSD that is also registered as a swap dealer with the CFTC may comply with relevant
recordkeeping requirements of the Commodity Exchange Act and the rules promulgated
thereunder in lieu of complying with the recordkeeping requirements of Rule 18a-6, as amended,
provided that certain requirements are met.
5.

Effects on Small Entities

Currently none of the SBS Entities registered with the Commission are “small entities”,
and based on feedback from industry participants about the security-based swap market, it is
unlikely that any other entities that will register with the Commission in the future as SBSDs or
MSBSPs will be “small entities.” 9 Thus, it is unlikely that the requirements under Rule 18a–6
will affect small entities.
6.

Consequences of Not Conducting Collection

Rule 18a-6 is a record preservation rule. Without Rule 18a-6, it would be extremely
difficult, if not impossible, for the Commission to determine whether a stand-alone SBSD, standalone MSBSP, bank SBSD, or bank MSBSP that chose not to preserve records was in
compliance with the Commission’s antifraud and anti-manipulation rules, financial responsibility
program, and other laws, rules, and regulations. Such a situation would not be in the public
interest and would be detrimental to investors and the financial community as a whole.
8

17 CFR 240.18a-10.

9

Section 601(b) of the Regulatory Flexibility Act (“RFA”) defines the term “small entity.” The statute,
however, permits agencies to formulate their own definitions. The Commission has adopted definitions for
the term “small entity” for the purposes of Commission rulemaking in accordance with the RFA. Those
definitions, as relevant to this rulemaking, are set forth in 17 CFR 240.0-10. See Statement of Management
on Internal Accounting Control, Exchange Act Release No. 18451 (Jan. 28, 1982), 47 FR 5215 (Feb. 4,
1982).

4

7.

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

As summarized in section A1 of this supporting statement, certain provisions of Rule
18a-6 require respondents to retain records for more than three years. These extended retention
periods are necessary in order to provide regulators with sufficient time to conduct
comprehensive inspections and investigations. Due to budget constraints, regulators are
expected to examine SBSDs and MSBSPs and office locations only periodically. Further,
certain documents required to be retained under Rule 18a-6 do not become obsolete (e.g.,
organizational documents).
8.

Consultations Outside the Agency

The Commission requested comment on the partial revision to the collection of information
requirements when the amendments were proposed in November 2021. 10 The Commission
received no comments regarding the Paperwork Reduction Act burden and cost estimates.
9.
Payment or Gift
No payment or gift is provided to respondents.
10.

Confidentiality

Subject to the provisions of the Freedom of Information Act, 5 U.S.C. § 552, and the
Commission’s rules thereunder (17 CFR 200.80(b)(4)(iii)), the Commission generally does not
publish or make available information contained in reports, summaries, analyses, letters, or
memoranda arising out of, in anticipation of, or in connection with an examination or inspection
of the books and records of any person or any other investigation.
11.

Sensitive Questions

The information collection does not collect personally identifiable information. The agency has
determined that a PIA and SORN are not required in connection with the collection of information.

12.

Burden of Information Collection

Rule 18a-6 described in the SBS Recordkeeping Release establishes recordkeeping
requirements applicable to stand-alone SBSDs, stand-alone MSBSPs, bank SBSDs, and bank
MSBSPs.11 The rule is expected to impose a one-time initial burden and an additional ongoing
burden on the industry, although actual recordkeeping requirements are expected to vary depending
on the size and complexity of the firm.

10

See 2021 Electronic Recordkeeping Proposal.

11

See Recordkeeping and Reporting Requirements for Security-Based Swap Dealers, Major Security-Based
Swap Participants, and Broker-Dealers; Final Rules, Exchange Act Release No. 87005 (Sept. 19, 2019),
84 FR 68550 (Dec. 16, 2019).

5

Currently Approved Burdens
Stand-Alone SBSDs and Stand-Alone MSBSPs: Rule 18a–6 requires 27 types of records
to be preserved by stand-alone SBSDs and stand-alone MSBSPs.12 Rule 18a–6 does not require the
firm to create these records or perform the underlying task, so the burdens imposed by these
requirements are to provide adequate physical space and computer hardware and software for
storage, preserve these records for the requisite time period, and produce them when requested.13
The Commission estimates that the record preservation requirements applicable to stand-alone
SBSDs and stand-alone MSBSPs impose an initial burden of 364 hours and an ongoing annual
burden of 280 hours per firm (including the first year). The Commission estimates that there are 10
respondents (six stand-alone SBSDs and four stand-alone MSBSPs), resulting in an estimated
industry-wide initial burden of 3,640 hours, 14 and an industry-wide ongoing annual burden of
2,800hours (including the first year). 15 Over a three year period, the total estimated industry
burden is 12,040 hours,16 or 4,013 hours when annualized.17
Stand-Alone SBSDs: Rule 18a–6 requires three types of records to be preserved by
stand-alone SBSDs. 18 Because the burden to create these records is accounted for in the PRA
12

See Rule 18a–6 (paragraph (a)(1), cross-referencing paragraph (a)(1) of Rule 18a–5 (trade blotters);
paragraph (a)(1), cross-referencing paragraph (a)(2) of Rule 18a– 5 (general ledgers); paragraph (a)(1),
cross-referencing paragraph (a)(3) of Rule 18a– 5 (ledgers of customer and non-customer accounts);
paragraph (a)(1), cross-referencing paragraph (a)(4) of Rule 18a–5 (stock record); paragraph (a)(1), crossreferencing paragraph (a)(5) of Rule 18a–5 (memoranda of proprietary orders); paragraph (a)(1), crossreferencing paragraph (a)(6) of Rule 18a–5 (confirmations); paragraph (a)(1), cross-referencing paragraph
(a)(7) of Rule 18a–5 (accountholder information); paragraph (a)(1), cross-referencing paragraph (a)(8) of
Rule 18a–5 (options positions); paragraph (a)(1), cross-referencing paragraph (a)(9) of Rule 18a–5 (trial
balances and computation of net capital); paragraph (a)(1), cross-referencing paragraph (a)(12) of Rule
18a–5 (Rule 18a–3 calculations); paragraph (a)(1), cross-referencing paragraph (a)(15) of Rule 18a–5
(unverified transactions); paragraph (a)(1), cross-referencing paragraph (a)(17) of Rule 18a–5 (compliance
with business conduct standards); paragraph (b)(1)(ii) (bank records); paragraph (b)(1)(iii) (bills);
paragraph (b)(1)(iv) (communications); paragraph (b)(1)(v) (trial balances); paragraph (b)(1)(vi) (account
documents); paragraph (b)(1)(vii) (written agreements); paragraph (b)(1)(viii) (information supporting
financial reports); paragraph (b)(1)(ix) (Rule 15c3–4 risk management records); paragraph (b)(1)(xi)
(Regulation SBSR information); paragraph (b)(1)(xii) (records relating to business conduct standards);
paragraph (b)(1)(xiii) (special entity documents); paragraph (c) (corporate documents); paragraph (d)(1)
(associated person’s employment application); paragraph (d)(2)(i) (regulatory authority reports); and
paragraph (d)(3)(i) (compliance, supervisory, and procedures manuals)).

13

Entities that would register as stand-alone SBSDs and stand-alone MSBSPs likely make and keep some
records today as a matter of routine business practice, but which records such entities make is not available
to the Commission. Therefore, the PRA burden estimate for these entities is based on the assumption that
they currently keep no records.

14

364 hours x 10 stand-alone SBSDs and stand-alone MSBSPs = 3,640 hours.

15

280 hours x 10 stand-alone SBSDs and stand-alone MSBSPs = 2,800 hours.

16

(3,640 hours + 2,800 hours) + 2,800 hours + 2,800 hours = 12,040 hours.

17

12,040 hours / 3 years = 4,013.33 hours per year.

18

See paragraph (b)(1)(i) of Rule 18a–6 (cross-referencing paragraph (a)(13) of Rule 18a-5 (compliance with
Rule 18a–4 possession or control requirements); paragraph (a)(14) of Rule 18a–5 (Rule 18a–4 reserve
account computations); and paragraph (a)(16) of Rule 18a–5 (political contributions)).

6

estimate for Rule 18a–5, the burdens imposed by these requirements are to ensure there is
adequate physical space and computer hardware and software for storage, ensure these records
are preserved for the requisite time period, and produce them when requested. The Commission
estimates that the relevant portions of paragraph (b)(1)(i) of Rule 18a–6 impose an initial burden
of 44 hours per firm, and an ongoing annual burden of 30 hours per firm (including the first
year). The Commission estimates that there are six stand-alone SBSDs, resulting in an industrywide initial burden of 264 hours 19 and an industry-wide ongoing annual burden of 180hours
(including the first year). 20 Over a three year period, the total estimated industry burden is 804
hours, 21 or 268 hours when annualized.22
Model Stand-Alone SBSDs: Rule 18a–6 requires records relating to credit risk
determinations to be preserved by stand-alone SBSDs authorized to use models. 23 Because the
burden of actually performing the underlying task and creating the written record is already
accounted for in the PRA estimate for Rule 18a–1, the burden is the requirement to preserve
these records for at least three years. The Commission estimates that paragraph (b)(1)(x)
imposes an initial burden of 18 hours and an ongoing annual burden of 10 hours per stand-alone
SBSD authorized to use models (including the first year). The Commission estimates that there
are four stand-alone SBSDs authorized to use models, resulting in an industry-wide initial burden
of 72 hours 24 and an industry-wide ongoing annual burden of 40 hours (including the first
year). 25 Over a three year period, the total estimated industry burden is 192 hours, 26 or 64
hours when annualized.27
Bank SBSDs and Bank MSBSPs: Rule 18a–6 requires 18 types of records to be
preserved by bank SBSDs and bank MSBSPs, all of which are limited to the firm’s business as
an SBSD or MSBSP. 28 Rule 18a–6 does not require the firm to create these records or perform
19

44 hours x 6 stand-alone SBSDs = 264 hours.

20

30 hours x 6 stand-alone SBSDs = 180 hours.

21

(264 hours + 180 hours) + 180 hours + 180 hours = 804 hours.

22

804 hours / 3 years = 268 hours per year.

23

See Rule 18a–6 (paragraph (b)(1)(x) (credit risk determinations)).

24

18 hours x 4 stand-alone SBSDs authorized to use models = 72 hours.

25

10 hours x 4 stand-alone SBSDs authorized to use models = 40 hours.

26

(72 hours + 40 hours) + 40 hours + 40 hours = 192 hours.

27

192 hours / 3 years = 64 hours per year.

28

See Rule 18a–6 (paragraph (a)(2), cross-referencing paragraph (b)(1) of Rule 18a–5 (trade blotters);
paragraph (a)(2), cross-referencing paragraph (b)(2) of Rule 18a–5 (ledgers of security-based swap
customers and non-customers); paragraph (a)(2), cross-referencing paragraph (b)(3) of Rule 18a–5 (stock
records); paragraph (b)(2)(i), cross-referencing paragraph (b)(4) of Rule 18a–5 (memoranda of brokerage
orders); paragraph (b)(2)(i), cross-referencing paragraph (b)(5) of Rule 18a–5 (memoranda of proprietary
orders); paragraph (b)(2)(i), cross-referencing paragraph (b)(6) of Rule 18a–5 (confirmations); paragraph
(b)(2)(i), cross-referencing paragraph (b)(7) of Rule 18a–5 (accountholder information); paragraph
(b)(2)(i), cross-referencing paragraph (b)(11) of Rule 18a–5 (unverified transactions); paragraph (b)(2)(i),
cross-referencing paragraph (b)(13) of Rule 18a–5 (compliance with business conduct requirements);
paragraph (b)(2)(ii) (communications); paragraph (b)(2)(iii) (account documents); paragraph (b)(2)(iv)
(written agreements); paragraph (b)(2)(vi) (Regulation SBSR information); paragraph (b)(2)(vii) (records

7

the underlying task, so the burdens imposed by these requirements are to ensure there is adequate
physical space and computer hardware and software for storage, ensure these records are
preserved for the requisite time period, and produce them when requested. Therefore, after
consideration of the similar burdens imposed by Rule 17a–4, as amended, the Commission
estimates that Rule 18a–6 imposes on bank SBSDs and bank MSBSPs an initial burden of 247
hours per firm and an ongoing burden of 190 hours per firm (including the first year). The
Commission estimates that there are 25 respondents (25 bank SBSDs and no bank MSBSPs),
resulting in an estimated industry-wide initial burden of 6,175 hours 29 and an industry-wide
ongoing annual burden of 4,750 hours (including the first year). 30 Over a three year period, the
total estimated industry burden is 20,425 hours, 31 or 6,808 hours when annualized.32
Bank SBSDs: Rule 18a–6 requires four types of records to be preserved by bank
SBSDs, all of which are limited to the firm’s business as an SBSD. 33 Because the burden to
perform the underlying task or create these records is accounted for in the PRA estimates for
Rule 18a–4 and Rule 18a–5, the burdens imposed by these new requirements are to ensure there
is adequate physical space and computer hardware and software for storage, ensure these records
are preserved for the requisite time period, and produce them when requested. The Commission
estimates that paragraphs (b)(2)(i) and (b)(2)(v) of Rule 18a–6 impose an initial burden of 57
hours per firm and an ongoing annual burden of 40 hours per firm. The Commission estimates
that there are 25 bank SBSDs, resulting in an industry-wide initial burden of 1,425 hours 34 and
an industry-wide ongoing annual burden of 1,000 hours. 35 Over a three year period, the total
estimated industry burden is 4,425 hours, 36 or 1,475 hours when annualized. 37
Third-Party Custodians: Paragraph (f) of Rule 18a–6 requires third-party custodians
for non-broker-dealer SBSDs and non-broker-dealer MSBSPs to file with the Commission a
written undertaking and surrender the SBSD or MSBSP’s records upon the Commission’s
request. 38 The obligation to provide documents upon the Commission’s request does not impose
relating to business conduct standards); paragraph (b)(2)(viii) (special entity documents); paragraph (d)(1)
(associated person’s employment application); paragraph (d)(2)(ii) (regulatory authority reports); paragraph
(d)(3)(ii) (compliance, supervisory, and procedures manuals)).
29

247 hours x 25 bank SBSDs = 6,175 hours.

30

190 hours x 25 bank SBSDs = 4,750 hours.

31

(6,175 hours + 4,750 hours) + 4,750 hours + 4,750 hours = 20,425 hours.

32

20,425 hours / 3 years = 6,808.33 hours per year.

33

See Rule 18a–6 (paragraph (b)(2)(i), cross-referencing paragraph (b)(9) (compliance with Rule 18a–4
possession or control requirements) of Rule 18a–5; paragraph (b)(2)(i), cross-referencing paragraph (b)(10)
(Rule 18a–4 reserve account computations) of Rule 18a–5; paragraph (b)(2)(i), cross-referencing paragraph
(b)(12) (political contributions) of Rule 18a–5; and paragraph (b)(2)(v) (Rule 18a–4 reserve account
computations)).

34

57 hours x 25 bank SBSDs = 1,425 hours.

35

40 hours x 25 bank SBSDs = 1,000 hours.

36

(1,425 hours + 1,000 hours) + 1,000 hours + 1,000 hours = 4,425 hours.

37

4,425 hours / 3 years = 1,475 hours per year.

38

See paragraph (f) of Rule 18a–6, as adopted.

8

a new burden, since this requirement merely changes the respondent’s identity rather than adding
to the quantity of burdens. Thus, the burden is the requirement is to prepare and file a written
undertaking. The Commission estimates that 50% of the 35 non-broker-dealer SBSDs and nonbroker-dealer MSBSPs would retain a third-party custodian, resulting in 19 written undertakings.
The Commission estimates paragraph (f) of Rule 18a–6 imposes an ongoing annual burden of
two hours per written undertaking, resulting in an industry-wide ongoing burden of 35 hours
per year. 39
Total Industry Hour Burden: Thus, the total initial industry hour burden attributable to
Rule 18a-6 is estimated to be 11,576 hours in the first year 40 and the total industry ongoing hour
burden attributable to Rule 18a-6, as adopted, is estimated to be 8,770 hours per year. 41 The total
annualized burden is estimated to be 12,629 hours. 42 These burdens are recordkeeping burdens.
Summary of Hourly Burdens

Name of Information
Collection

Type of
Burden

A.

B.

C.

D.

E.

F.

G.

Number
of Entities
Impacted

Annual
Responses
per Entity

Initial
Burden per
Entity per
Response

Initial Burden
Annualized
per Entity per
Response

Ongoing
Burden per
Entity per
Response

Annual
Burden Per
Entity per
Response

Total Annual
Burden Per
Entity

Total Industry
Burden

Small
Business
Entities
Affected

[ D + E]

[F * B]

[G * A]

[A * 0 %]

[C ÷ 3 years]
Stand-alone SBSDs and
stand-alone MSBSPs:
Paragraphs (a)(1),
(b)(1)(ii) (b)(1)(ix),
(b)(1)(xi) (b)(1)(xiii),
(c), (d)(1), (d)(2)(i), and
(d)(3)(i)

Recordkeeping

10

1

364.00

121.33

280.00

401.33

401.33

4,013.33

0.00

Stand-alone SBSDs:
Paragraphs (b)(1)(i),
(a)(14), and (a)(16)

Recordkeeping

6

1

44.00

14.67

30.00

44.67

44.67

268

0.00

Model stand-alone
SBSDs: Paragraph
(b)(1)(x)

Recordkeeping

4

1

18.00

6.00

10.00

16.00

16.00

64.00

0.00

Bank SBSDs and bank
MSBSPs: Paragraphs
(a)(2), (b)(2)(i)
(b)(2)(iv), (b(2)(vi)(viii), (d)(1),(d)(2)(ii),
(d)(3)(ii)

Recordkeeping

25

1

247.00

82.33

190.00

272.33

272.33

6,808.33

0.00

Bank SBSDs:
Paragraph (b)(2)(i) and
(b)(2)(v)

Recordkeeping

25

1

57.00

19.00

40.00

59.00

59.00

1,475.00

0.00

Third-Party Custodians

Recordkeeping

17

1

0.00

0.00

2.00

2.00

2.00

35.00 43

0.00

TOTAL HOURLY BURDEN FOR ALL RESPONDENTS

12,628.67

39

2 hours × 17.5 written undertakings = 35 hours per year.

40

3,640hours + 264 hours + 72 hours + 6,175 hours +1,425 hours + 0 hours = 11,576 hours.

41

2,800 hours + 180 hours + 40 hours + 4,750 hours + 1,000 hours + 35 hours = 8,770 hours.

42

4013.33 hours + 268 hours + 64 hours + 6,808.33 hours + 1,475 hours + 35 hours = 12,628.677 hours.

This number is 36 hours in ROCIS because the calculation for the number of estimates respondents (50
percent of non-broker-dealer SBSDs and MBSDs) resulted in a fractional number and ROCIS will only accept a
whole number of respondents.

43

9

PROPOSED PARTIAL REVISION: New Burdens Associated with the 2021 Proposed
Amendments to Rule 18a-6
The proposed amendments to Rule 18a-6(e) would add an audit-trail alternative to the
current SBS Entity recordkeeping requirement. 44 The Commission also proposed amendments
to this paragraph to require the SBS Entity to have a backup set of records when records are
preserved on an electronic recordkeeping system. 45 The proposed amendments to Rule 18a-6(e)
also would establish a requirement that a senior officer of the SBS Entity have the access and
provide the necessary undertakings. 46 The proposed amendments to Rule 18a-6(g) also would
require a SBS Entity furnish a record and its audit trail (if applicable) preserved on an electronic
recordkeeping system pursuant to Rules 18a-6(g), respectively, in a reasonably usable electronic
format, if requested by a representative of the Commission.47
The Commission estimates that the establishment of a senior officer requirement for the
44 SBS Entities subject to the rule would result in an annual burden of one hour per firm, for a
total of 44 hours under Rule 18a-6(e).

Summary of Hourly Burdens
Name of
Information
Collection

Type of Burden

Number of
Respondents

Rule 18a-6(e) –
Senior Officer
amendment

Recordkeeping

44

Annual
Responses
per
Respondent

Initial
Burden
per Entity
per
Response

Initial
Burden
Annualized
per Entity
per

Hourly
Burden
per
Response

1

0

0

1

Annual
Burden
Per
Entity
1

Annual
Burden for
all
Respondent
s
44

TOTAL

13.

44

Costs to Respondents

The following chart summarizes the costs that are currently approved for this collection.
A description of each cost follows the chart:
Summary of Dollar Costs
A.

B.

C.

D.

E.

F.

G.

44

See section II.D. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

45

See section II.E. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

46

Id.

47

See section II.G. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

.

10

Name of Information
Collection

Type of
Burden

Number
of Entities
Impacted

Annual
Responses
per Entity

Initial Cost
per Entity
per
Response

Initial Cost
Annualized
per Entity per
Response

Ongoing
Cost per
Entity per
Response

[C ÷ 3 years]

Annual Cost
Per Entity
per Response

Total Annual
Cost Per
Entity

Total Industry
Cost

Small
Business
Entities
Affected

[ D + E]

[F * B]

[G * A]

[A * 0 %]

Stand-alone SBSDs and
stand-alone MSBSPs:
Paragraphs (a)(1),
(b)(1)(ii) (b)(1)(ix),
(b)(1)(xi) (b)(1)(xiii),
(c), (d)(1), (d)(2)(i), and
(d)(3)(i)

Recordkeeping

10

1

$0.00

$0.00

$5,720.00

$5,720.00

$5,720.00

$57,200.00

0.00

Stand-alone SBSDs:
Paragraphs (b)(1)(i),
(a)(14), and (a)(16)

Recordkeeping

6

1

$0.00

$0.00

$360.00

$360.00

$360.00

$2,160.00

0.00

Model stand-alone
SBSDs: Paragraph
(b)(1)(x)

Recordkeeping

4

1

$0.00

$0.00

$120.00

$120.00

$120.00

$480.00

0.00

Bank SBSDs and bank
MSBSPs: Paragraphs
(a)(2), (b)(2)(i)
(b)(2)(iv), (b(2)(vi)(viii), (d)(1),(d)(2)(ii),
(d)(3)(ii)

Recordkeeping

25

1

$0.00

$0.00

$4,520.00

$4,520.00

$4,520.00

$113,000.00

0.00

Bank SBSDs:
Paragraph (b)(2)(i) and
(b)(2)(v)

Recordkeeping

25

1

$0.00

$0.00

$480.00

$480.00

$480.00

$12,000.00

0.00

TOTAL HOURLY COST FOR ALL RESPONDENTS

$184,84000

The Commission believes that any initial dollar cost associated with Rule 18a–6 is
already accounted for in the PRA estimate for Rule 18a–5, which includes the cost of
recordkeeping system software. The Commission does not expect that Rule 18a-6 imposes any
additional initial costs. Those requirements that are expected to impose an ongoing annual cost
to the industry are discussed below.
Stand-Alone SBSDs and Stand-Alone MSBSPs: The Commission estimates that Rule
18a-6 imposes an ongoing annual cost of approximately $5,720 per stand-alone SBSD or standalone MSBSP. The Commission estimates that there are 10 respondents (nine stand-alone
SBSDs and four stand-alone MSBSPs), resulting in an estimated industry-wide ongoing
annual cost of $57,200 per year. 48
Stand-Alone SBSDs: The Commission estimates that Rule 18a-6 imposes an ongoing
annual cost of approximately $360 per stand-alone SBSD. The Commission estimates that there
are six respondents, resulting in an estimated industry-wide ongoing annual cost of $2,160 per
year. 49
Model Stand-Alone SBSDs: The Commission estimates that Rule 18a-6 imposes an
ongoing annual cost of approximately $120 per stand-alone SBSD authorized to use models.

48

$5,720 per firm x 13 stand-alone SBSDs and stand-alone MSBSPs = $74,360 per year.

49

$360 per firm x 6 stand-alone SBSDs = $2,160 per year.

11

The Commission estimates that there are four respondents, resulting in an estimated industrywide ongoing annual cost of $480 per year. 50
Bank SBSDs and Bank MSBSPs: The Commission estimates that Rule 18a-6 imposes
an ongoing annual cost of approximately $4,520 per bank SBSD or bank MSBSP. The
Commission estimates that there are 25 respondents (25 bank SBSDs and no bank MSBSPs),
resulting in an estimated industry-wide ongoing annual cost of $113,000 per year. 51
Bank SBSDs: The Commission estimates that Rule 18a-6 imposes an ongoing annual
cost of approximately $480 per bank SBSD. The Commission estimates that there are 25
respondents, resulting in an estimated industry-wide ongoing annual cost of $12,000 per
year. 52
Total Industry Costs Burden: Therefore, the total currently-approved annual
recordkeeping cost of Rule 18a-6 is estimated to be $184,840 per year.53
PROPOSED PARTIAL REVISION: New Costs Associated with the 2021 Proposed
Amendments to Rule 18a-6. 54
As described above, the proposed amendments to Rule 18a-6(e) would add an audit-trail
alternative to the current SBS Entity recordkeeping requirement. 55 The Commission also
proposed amendments to this paragraph to require the SBS Entity to have a backup set of records
when records are preserved on an electronic recordkeeping system. 56 The proposed amendments
to Rule 18a-6(e) also would establish a requirement that a senior officer of the SBS Entity have
access to the firm’s records and provide the necessary undertakings. 57 The proposed amendments
to Rule 18a-6(e) also would require an SBS Entity furnish a record and its audit trail (if applicable)
preserved on an electronic recordkeeping system pursuant to Rules 18a-6(g), respectively, in a
reasonably usable electronic format, if requested by a representative of the Commission. 58

50

$120 per firm x 4 stand-alone SBSDs authorized to use models = $480 per year.

51

$4,520 per firm x 25 bank SBSDs and bank MSBSPs = $113,000 per year.

52

$480 per firm x 25 bank SBSDs = $12,000 per year.

53

$57,200 + $2,160 + $480 + $113,000 + $12,000 = $184,840 per year.

54

Throughout this section, to monetize the internal costs the Commission staff used data from the SIFMA
publications, Management and Professional Earnings in the Securities Industry—2013, and Office Salaries
in the Securities Industry—2013, modified by the Commission staff to account for an 1800 hour work-year
and multiplied by 5.35 (professionals) or 2.93 (office) to account for bonuses, firm size, employee benefits
and overhead. These figures have been adjusted for inflation through the end of 2020 using data published
by the Bureau of Labor Statistics.

55

See section II.D. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

56

See section II.E. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

57

Id.

58

See section II.G. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

12

Based upon information provided to the Commission by the securities industry, the
Commission estimates that the initial cost to build and implement a WORM-compliant electronic
recordkeeping system for an SBS Entity is $10 million, with an additional cost of $1.2 million
annually to maintain the system. 59 Consequently, the Commission estimates that the initial cost
to build and implement an electronic recordkeeping system that meets the audit-trail requirement
for an SBS Entity is $1,000,000 ($333,333 of annualized initial cost), with an additional cost of
$120,000 annually to maintain the system. There are 25 SBS Entities registered with the
Commission that would be subject to this audit-trail alternative requirement. The Commission
does not believe any of these firms will elect to build a WORM-compliant electronic
recordkeeping system. Moreover, the Commission estimates that most of these firms have
electronic recordkeeping systems that could meet the audit-trail requirement or that could be
configured to meet that requirement without the need to build a new system. The Commission
estimates that 4 of these firms would elect to build a new electronic recordkeeping system to
meet the audit-trail requirement for an initial one-time industry cost of $4,000,000 ($1,333,333
of annualized initial cost) and an annual cost of $480,000.
The Commission believes the initial and ongoing costs to establish backup electronic
recordkeeping systems would be substantially less than the costs of the primary electronic
recordkeeping systems because of the benefit of economies of scale for the backup system
whereby common technology and personnel could be used for both systems. The Commission
estimates that the costs for the 4 SBS Entities building a new system be $250,000 in initial costs
($83,333 of annualized initial cost) and $30,000 in annual burdens and costs. Further, the
Commission expects that the SBS Entities that have electronic recordkeeping systems that could
meet the audit-trail requirement or that could be configured to meet that requirement without the
need to build a new system also maintain backup recordkeeping systems for business continuity
purposes. Therefore, the initial and annual costs would be incurred by the 4 firms that elect to
build a new electronic recordkeeping system that meets that proposed audit-trail requirement.
Consequently, the Commission estimates that the industry-wide costs and burdens for these firms
would be $1,000,000 in initial costs ($333,333 of annualized initial cost) and $120,000 in annual
costs.
Summary of Cost Burdens
Name of
Information
Collection

Type of
Burden

Rule 18a-6(e)
– Audit trail
alternative to
WORM for
SBS Entities
Rule 18a-6(e)
– Backup
Recordkeepin

Recordkeep
ing

4

Recordkeep
ing

4

59

Number of
Respondents

Initial Cost
Burden per
Respondent

Initial Cost
for all
Respondents

Annual Cost
Burden per
Respondent

Annual Burden for
all Respondents

$1,000,000
($333,333
annualized)

$4,000,000
($1,333,333
annualized)

$120,000

$480,000

Total Burden
(Initial +
Annual) for all
Respondents
$1,813,333

$250,000
($83,333
annualized)

$1,000,000
($333,333
annualized)

$30,000

$120,000

$453,333

See Petition 4-713 (Nov. 14, 2017) filed by the Securities Industry Financial Markets Association,
Financial Services Roundtable, Futures Industry Association, International Swaps Derivatives Association,
and Financial Services Institute available at https://www.sec.gov/rules/petitions/2017/petn4-713.pdf (“Rule
17a-4(f) Rulemaking Petition”). at 4-5.

13

g Systems for
SBSDs
TOTAL

14.

$2,266,667

Cost to Federal Government

The federal government does not incur a cost for this collection of information since it
relates to a recordkeeping burden for the respondents.
15.

Changes in Burden

The proposed amendments to Rule 18a-6(e) would add an audit-trail alternative to the
current SBS Entity recordkeeping requirement. 60 The Commission also proposed amendments
to require the SBS Entities to have a backup set of records when records are preserved on an
electronic recordkeeping system. 61 The proposed amendments to Rule 18a-6(e) also would
establish a requirement that a senior officer of the SBS Entity have access to its records and
provide the necessary undertakings. 62 The proposed amendments to Rule 18a-6(g) also would
require a SBS Entity furnish a record and its audit trail (if applicable) preserved on an electronic
recordkeeping system pursuant to Rules 18a-6(e), respectively, in a reasonably usable electronic
format, if requested by a representative of the Commission.63
The Commission estimates that the establishment of a senior officer requirement would
result in a one-time initial burden of one hour per firm, for a total of 44 hours under Rule 18a6(e). The Commission also believes that the senior officer requirement would add an annual
burden of one hour per firm, for a total of 44 hours for SBS Entities collectively.
Therefore, in aggregate, the Commission estimates that the proposed amendments to Rule
18a-6 would add an initial burden and annual burden of 44 hours.
Summary of Change in Hourly Burden (Annual)
Name of
Information
Collection

Previously
Approved
Burden

New
Estimated
Burden

Change in
Burden

Reason for the Change

60

See section II.D. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

61

See section II.E. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

62

Id.

63

See section II.G. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

14

Rule 18a6(e) – Senior
Officer
amendment

0

44

44

Creation of the new senior
officer undertaking requirement.

TOTAL CHANGE IN BURDEN

44

As described above, the proposed amendments to Rule 18a-6(e) would add an audit-trail
alternative to the current SBS Entity recordkeeping requirement. 64 The Commission also
proposed amendments to both of these paragraphs to require the SBS Entity to have a backup set
of records when records are preserved on an electronic recordkeeping system. 65 The proposed
amendments to Rule 18a-6(e) also would add a requirement that a senior officer of the SBS
Entity have access the SBS Entity’s records and provide the necessary undertakings. 66 The
proposed amendments to Rule 18a-6(g) also would require a SBS Entity furnish a record and its
audit trail (if applicable) preserved on an electronic recordkeeping system pursuant to Rules 18a6(e), respectively, in a reasonably usable electronic format, if requested by a representative of the
Commission.67
Based upon information provided to the Commission by the securities industry, the
Commission estimates that the initial cost to build and implement a WORM-compliant electronic
recordkeeping system for an SBSD is $10 million, with an additional cost of $1.2 million
annually to maintain the system. 68 Based on feedback from the securities industry, the
Commission believes that the initial cost to build and implement an electronic recordkeeping
system that meets the audit-trail requirements and the ongoing cost to maintain the system would
be substantially lower than the analogous costs that would be incurred with respect to a WORMcompliant system. 69 Consequently, the Commission estimates that the initial cost to build and
implement an electronic recordkeeping system that meets the audit-trail requirement for an SBS
Entity is $1,000,000 ($333,333 of annualized one-time cost), with an additional cost of $120,000
annually to maintain the system. The Commission estimates that there are 44 SBS Entities that
are subject to Rule 18a-6(e). The Commission does not believe any of these firms will elect to
build a WORM-compliant electronic recordkeeping system. Moreover, the Commission
estimates that most of these firms have electronic recordkeeping systems that could meet the
audit-trail requirement or that could be configured to meet that requirement without the need to
64

See section II.D. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

65

See section II.E. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment).

66

Id.

67

See section II.G. of the 2021 Electronic Recordkeeping Proposal (discussing this proposed amendment)

68

See Petition 4-713 (Nov. 14, 2017) filed by the Securities Industry Financial Markets Association,
Financial Services Roundtable, Futures Industry Association, International Swaps Derivatives Association,
and Financial Services Institute available at https://www.sec.gov/rules/petitions/2017/petn4-713.pdf (“Rule
17a-4(f) Rulemaking Petition”). at 4-5.

69

See e.g. Rule 17a-4(f) Rulemaking Petition at 6-7.

15

build a new system. The Commission estimates that four of these firms would elect to build a
new electronic recordkeeping system to meet the audit-trail requirement for an initial one-time
industry cost of $4,000,000 ($1,333,333 of annualized one-time cost) and an annual cost of
$480,000.
The Commission believes the initial and ongoing costs to establish backup electronic
recordkeeping systems would be substantially less than the costs of the primary electronic
recordkeeping systems because of the benefit of economies of scale for the backup system
whereby common technology and personnel could be used for both systems. The Commission
estimates that the costs for the SBS Entities would be $250,000 in initial costs ($83,333 of
annualized initial cost) and $30,000 in annual costs. Further, the Commission expects that the
SBS Entities that have electronic recordkeeping systems that could meet the audit-trail
requirement or that could be configured to meet that requirement without the need to build a new
system also maintain backup recordkeeping systems for business continuity purposes.
Therefore, the initial and annual costs would be incurred by the 4 firms that elect to build a new
electronic recordkeeping system that meets that proposed audit-trail requirement. Consequently,
the Commission estimates that the industry-wide costs and burdens for these firms would be
$1,000,000 in initial costs ($333,333 of annualized initial cost) and $120,000 in annual costs.
Therefore, in aggregate, the Commission estimates that the proposed amendments to Rule
18a-6 would add an annualized initial cost of $5,000,000 70 for SBS Entities. 71

Summary of Change in Cost (Annual)
Name of
Previously
Information Approved
Collection
Cost

New Estimated
Cost

Change in Cost

Rule 18a-6(e) –
Audit trail
alternative to
WORM for SBS
Entities

$0

$1813,333 72

$1,813,333

Rule 18a-6(e) –
Backup
Recordkeeping
Systems for SBS
Entities

$0

$453,333 73

$453,333

Reason for the Change

New audit trail requirement for SBS
Entities preserving records
electronically
New backup recordkeeping
requirement for SBS Entities.

TOTAL CHANGE IN COST
70

$4,000,000 = $1,000,000 = $5,000,000.

71

$1,813,333 + $453,333 = $2,266,666

72

$1,333,333 + $480,000 = $1,813,333

73

$333,333 + $120,000 = $453,333

16

$2,266,666

16.

Information Collection Planned for Statistical Purposes

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

OMB Expiration Date Display Approval

The Commission is not seeking approval to not display the OMB approval expiration
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

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

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

17