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Federal Register / Vol. 87, No. 170 / Friday, September 2, 2022 / Notices

the proposal, which are set forth in the
Notice,18 in addition to any other
comments they may wish to submit
about the proposed rule change. In
particular, the Commission seeks
comment on the following questions
and asks commenters to submit data
where appropriate to support their
views:
1. What are commenters’ views on
whether the proposed Trust and Shares
would be susceptible to manipulation?
What are commenters’ views generally
on whether the Exchange’s proposal is
designed to prevent fraudulent and
manipulative acts and practices? What
are commenters’ views generally with
respect to the liquidity and transparency
of the bitcoin markets, the bitcoin
markets’ susceptibility to manipulation,
and thus the suitability of bitcoin as an
underlying asset for an exchange-traded
product?
2. Based on data and analysis
provided and the academic research
cited by the Exchange,19 do commenters
agree with the Exchange that the
Chicago Mercantile Exchange (‘‘CME’’)
on which bitcoin futures contracts trade
(‘‘CME Bitcoin Futures’’) represents a
regulated market of significant size
related to spot bitcoin? 20 What are
commenters’ views on whether there is
a reasonable likelihood that a person
attempting to manipulate the Shares
would also have to trade on the CME to
manipulate the Shares? Do commenters
agree with the Exchange’s assertion that
the combination of (a) CME Bitcoin
Futures leading price discovery; (b) the
overall size of the bitcoin market; and
(c) the ability for market participants to
buy or sell large amounts of bitcoin
without significant market impact, helps
to prevent the Shares from becoming the
predominant force on pricing in either
the spot bitcoin or CME Bitcoin Futures
markets? 21
3. The Exchange states that bitcoin is
resistant to price manipulation and that
other means to prevent fraudulent and
manipulative acts and practices exist to
justify dispensing with the requirement
to enter into a comprehensive
surveillance-sharing agreement with a
regulated market of significant size
related to spot bitcoin.22 In support of
its assertion, the Exchange provides data
and analysis 23 to indicate that the spot
bitcoin market is ‘‘increasingly
efficient,’’ with ‘‘higher liquidity’’ and a
‘‘higher degree of consensus among
18 See

Notice, supra note 3.
id. at 33256–61, 33261 n.59.
20 See id. at 33262.
21 See id.
22 See id. at 33261 n.62.
23 See id. at 33262–68.
19 See

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investors regarding the price of
[b]itcoin,’’ making it ‘‘less susceptible to
manipulation.’’ 24 Do commenters
believe the Exchange has shown that the
bitcoin market is resistant to price
manipulation?
III. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) or any other provision of the Act,
and the rules and regulations
thereunder. Although there do not
appear to be any issues relevant to
approval or disapproval that would be
facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4, any request for an
opportunity to make an oral
presentation.25
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by September 23, 2022.
Any person who wishes to file a rebuttal
to any other person’s submission must
file that rebuttal by October 7, 2022.
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (http://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2022–031 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2022–031. This
file number should be included on the
subject line if email is used. To help the
24 See

id. at 33264–66.
19(b)(2) of the Act, as amended by the
Securities Act Amendments of 1975, Public Law
94–29 (June 4, 1975), grants the Commission
flexibility to determine what type of proceeding—
either oral or notice and opportunity for written
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
(1975).
25 Section

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Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (http://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2022–031 and
should be submitted by September 23,
2022. Rebuttal comments should be
submitted by October 7, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–18966 Filed 9–1–22; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–652, OMB Control No.
3235–0699]

Submission for OMB Review;
Comment Request; Extension: Rule
18a–2
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
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
26 17

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CFR 200.30–3(a)(57).

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lotter on DSK11XQN23PROD with NOTICES1

Federal Register / Vol. 87, No. 170 / Friday, September 2, 2022 / Notices
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rule 18a–2 (17 CFR 240.18a–2), under
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) (‘‘Exchange Act’’).
Rule 18a–2 establishes capital
requirements for nonbank major
security-based swap participants that
are also not registered as broker-dealers
(‘‘nonbank MSBSPs’’). In particular, a
nonbank MSBSP is required at all times
to have and maintain positive tangible
net worth.
Under Rule 18a–2, nonbank MSBSPs
also need to comply with Exchange Act
Rule 15c3–4 (17 CFR 240.15c3–4),
which requires OTC derivatives dealers
and other firms subject to its provisions
to establish, document, and maintain a
system of internal risk management
controls to assist the firm in managing
the risk associated with its business
activities, including market, credit,
leverage, liquidity, legal, and
operational risks.
The staff previously estimated that 5
or fewer nonbank entities would register
with the Commission as MSBSPs. The
staff continues to estimate that 5 or
fewer nonbank entities will register with
the Commission as MSBSPs, although
currently no such entities have
registered. These nonbank MSBSPs will
be required to establish, document, and
regularly review and update risk
management control systems with
respect to market, credit, leverage,
liquidity, legal and operational risks.
Based on similar estimates for OTC
derivatives dealers, the Commission
staff believes that each nonbank MSBSP
will spend approximately 2,000 hours to
implement its risk management control
system, resulting in a one-time industrywide hour burden of approximately
10,000 recordkeeping hours, or
approximately 3,333 hours per year
when annualized over 3 years.1
Based on similar estimates for OTC
derivatives dealers, the staff further
estimates that each of these firms will
spend approximately 250 hours per year
reviewing and updating its risk
management control systems, resulting
in an ongoing annual industry-wide
hour burden of approximately 1,250
recordkeeping hours per year.2
Taken together, the total industrywide recordkeeping hour burden is
approximately 4,583 hours per year.3
1 5 MSBSPs × 2,000 hours = 10,000 hours. This
one-time burden annualized over a 3-year period is
approximately 3,333 hours industry-wide (10,000
hours/3 = 3,333.33 rounded down to 3,333).
2 5 MSBSPs × 250 hours/year = 1,250 hours/year.
3 2,000 hours/3 years = 3,333.33 + 1,250 hours =
4,583.33 hours rounded down to 4,583.

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Because nonbank MSBSPs may not
initially have the systems or expertise
internally to meet the risk management
requirements of Rule 18a–2, these firms
will likely hire an outside risk
management consultant to assist them
in implementing their risk management
systems. The staff estimates that each
firm will hire an outside management
consultant for approximately 200 hours
at a cost of approximately $400 per
hour, for a one-time external
management consulting cost of
approximately $80,000 per respondent,
and a total one-time industry
management consulting cost of
approximately $400,000, or
approximately $133,333 per year 4 when
annualized over 3 years.
Nonbank MSBSPs may incur start-up
costs to comply with Rule 18a–2,
including information technology costs.
The information technology systems of
a nonbank MSBSP may be in varying
stages of readiness to enable these firms
to meet the requirements of Rule 18a–
2, so the cost of modifying their
information technology systems could
vary significantly among firms. Based
on estimates for similar collections of
information,5 the Commission staff
expects that each nonbank MSBSP will
spend an average of approximately
$16,000 for one-time initial hardware
and software external expenses, for a
total one-time industry-wide external
information technology cost of
approximately $80,000, or
approximately $26,667 per year 6 when
annualized over 3 years. Based on the
estimates for these similar collections of
information, the average ongoing
external cost to meet the information
technology requirements of Rule 18a–2
will be approximately $20,500 per
nonbank MSBSP. This will result in an
ongoing annual industry-wide external
information technology cost of
approximately $102,500.7 Taken
together, the total industry-wide
information technology related cost
burden is approximately $129,167 per
year.8
Therefore, the total industry-wide
recordkeeping cost burden is
4 5 MSBSPs × 200 hours × $400/hour = $400,000.
Annualized over three years, this industry-wide
burden is approximately $133,333 per year
($400,000/3 years = $133,333.33 rounded down to
$133,333).
5 See Risk Management Controls for Broker or
Dealers with Market Access, Exchange Act Release
No. 6321 (Nov. 3, 2010), 75 FR 69792, 69814 (Nov.
15, 2010).
6 5 MSBSPs × $16,000/3 years = $26,666.666,
rounded up to $26,667.
7 5 MSBSP × $20,500 = $102,500.
8 $80,000/3 years + $102,500 = $129,166.667
rounded up to $129,167.

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approximately $262,500 per year
($133,333 + $129,167 = $262,500).
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. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent by
October 3, 2022 to (i) www.reginfo.gov/
public/do/PRAMain and (ii) David
Bottom, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o John Pezzullo, 100 F
Street NE, Washington, DC 20549, or by
sending an email to: PRA_Mailbox@
sec.gov.
Dated: August 29, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–18982 Filed 9–1–22; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–42, OMB Control No.
3235–0047]

Submission for OMB Review;
Comment Request; Extension: Rule
204–3
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
The title for the collection of
information is ‘‘Rule 204–3 (17 CFR
275.204–3) under the Investment
Advisers Act of 1940.’’ (15 U.S.C. 80b).
Rule 204–3, the ‘‘brochure rule,’’
requires advisers to deliver their
brochures and brochure supplements at
the start of an advisory relationship and
to deliver annually thereafter the full
updated brochures or a summary of
material changes to their brochures. The
rule also requires that advisers deliver
amended brochures or brochure

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