2023 Rule 17a-5 Supporting Statement DL 060723

2023 Rule 17a-5 Supporting Statement DL 060723.pdf

Rule 17a-5, Form X-17A-5 (FOCUS REPORT)

OMB: 3235-0123

Document [pdf]

Download: pdf | pdf

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for Rule 17a-5
OMB Control No. 3235-0123
A.

JUSTIFICATION
1.

Necessity of Information Collection

Section 17(a)(1) 1 of the Securities Exchange Act of 1934 (“Exchange Act”) provides that
broker-dealers must make and keep records, furnish copies of the records, and make and
disseminate reports as the Securities and Exchange Commission (“Commission”), by rule,
prescribes. Section 17(e)(1)(A) 2 of the Exchange Act requires every broker-dealer registered
with the Commission to file annually with the Commission: (1) a balance sheet and income
statement “certified by a[n] independent public accounting firm, or by a registered public
accounting firm if the firm is required to be registered under the Sarbanes-Oxley Act of 2002”;
and (2) such other financial statements (which shall, as the Commission specifies, be certified)
and information concerning its financial condition as the Commission, by rule, may prescribe. A
“registered public accounting firm” is a public accounting firm registered with the Public
Company Accounting Oversight Board (“PCAOB”). 3 Section 17(e)(2) 4 of the Exchange Act
provides that the Commission, by rule, may prescribe the form and content of the financial
statements and the accounting principles and standards used in their preparation.
Rule 17a-5 under the Exchange Act 5 is a reporting rule for broker-dealers. Rule 17a-5
applies to broker-dealers, including some broker-dealers that are OTC derivatives dealers;
broker-dealers, other than OTC derivatives dealers, that are also registered security-based swap
dealers; and broker-dealers, including OTC derivatives dealers, that are also registered as major
security-based swap participants. Paragraph (a)(1) of Rule 17a-5 requires broker-dealers to file
periodic reports on Form X-17A-5, the Financial and Operational Combined Uniform Single
Report (“FOCUS Report”). The FOCUS Report was designed to eliminate the overlapping
regulatory reports required by various self-regulatory organizations and the Commission and to
reduce reporting burdens.
Under paragraph (a)(2) of Rule 17a-5, the reports provided for in paragraph (a) that must
be filed with the Commission must be filed with the Commission at its principal office and the
regional office of the Commission where the broker-dealer has its principal place of business.
However, under paragraph (a)(3) of Rule 17a-5, the provisions of paragraph (a)(1) do not apply
to members of national securities exchanges or registered national securities associations that
maintain records containing the information required by Form X-17A-5 and which transmit to
the Commission copies of the records pursuant to a plan which has been declared effective by the
1

See 15 U.S.C. § 78q(a)(1).

See 15 U.S.C. § 78q(e)(1)(A).

See Pub. L. No. 107-204 § 2(a)(12).

See 15 U.S.C. § 78q(e)(2).

See 17 CFR 240.17a-5.

Commission. As a result, FOCUS Reports required to be filed under paragraph (a)(1) of Rule
17a-5 are generally filed electronically with FINRA 6 via FINRA’s eFOCUS system.
Paragraph (a)(1)(i) of Rule 17a-5 provides that broker-dealers that clear transactions or
carry customer accounts must file Part I of the FOCUS Report monthly. However, in 1996, the
NASD’s plan was amended to eliminate the requirement for member firms to file Part I. 7
Paragraphs (a)(1)(ii) and (iii) of Rule 17a-5 generally require broker-dealers that clear
transactions or carry customer accounts and broker-dealers registered as security-based swap
dealers or major security-based swap participants to file Part II of the FOCUS Report and
broker-dealers that do not clear transactions nor carry customer accounts and that are not
registered as security-based swap dealers or major security-based swap participants to file Part
IIA of the FOCUS Report quarterly. However, paragraph (a)(1)(iv) of Rule 17a-5 requires
broker-dealers to file Part II or Part IIA monthly upon receiving written notice from the
Commission or the designated examining authority (“DEA”) of the broker-dealer. Paragraph
(a)(5) of Rule 17a-5 requires broker-dealers that compute certain capital charges in accordance
with Appendix E to Exchange Act Rule 15c3-1 8 (“ANC broker-dealers”) to file certain
additional monthly and quarterly reports.
Paragraph (c) of Rule 17a-5 requires a broker-dealer to furnish certain financial
information to its customers. 9
Paragraph (d) of Rule 17a-5 requires broker-dealers, subject to limited exceptions, to file
annual reports, which must include a financial report and a compliance report or exemption
report, and generally must include reports prepared by an independent public accountant
covering the financial report and the compliance report or exemption report. Generally, brokerdealers that did not claim they were exempt from Exchange Act Rule 15c3-3, 10 the broker-dealer
customer protection rule, throughout the fiscal year must file compliance reports and brokers that
claim they were exempt from Rule 15c3-3 throughout the fiscal year must file exemption reports.
The annual reports must be filed with the Commission at its principal office and at the regional
office of the Commission where the broker-dealer has its principal place of business or the
annual reports may be filed electronically in accordance with directions provided on the
Commission’s website. Currently, those directions provide for electronic filing of the annual
reports via the Commission’s EDGAR system. The annual reports must also be filed with the
Securities Investor Protection Corporation (“SIPC”) if the firm is a member of SIPC, and must
6

In 2007, FINRA was created through the consolidation of NASD and the member regulation, enforcement,
and arbitration operations of the New York Stock Exchange.

See Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of
Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to the Association’s
FOCUS Filing Plan, Release No. 34-36780, File No. SR-NASD-96-03 (Jan. 26, 1996), 61 FR 3743, 3745
(Feb. 1, 1996) available at: www.govinfo.gov/content/pkg/FR-1996-02-01/pdf/96-2056.pdf.

See 17 CFR 240.15c3-1e.

Paragraph (c) of Rule 17a-5 is subject to a separate Paperwork Reduction Act filing (OMB Control Number
3235-0199).

See 17 CFR 240.15c3-3.

generally be provided to all self-regulatory organizations of which the broker-dealer is a
member.
Under Paragraph (e)(3) of Rule 17a-5, annual reports filed by broker-dealers under
paragraph (d) of Rule 17a-5 are not confidential, except that if the Statement of Financial
Condition is bound separately from the balance of the annual reports, and each page of the
balance of the annual reports is stamped “confidential,” then the balance of the annual reports
shall be deemed confidential to the extent permitted by law. Paragraph (e)(4) of Rule 17a-5
requires broker-dealers to file with SIPC a report on the SIPC annual general assessment
reconciliation or exclusion from membership forms.
Paragraph (f)(1) of Rule 17a-5 provides that the independent public accountant must be
qualified and independent in accordance with Rule 2-01 of Regulation S-X 11 and must be
registered with the PCAOB if required by the Sarbanes-Oxley Act of 2002. Paragraph (f)(2) of
Rule 17a-5 requires broker-dealers that are required to file annual reports under paragraph (d) of
Rule 17a-5 to file statements regarding their independent public accountant. If the engagement
of the accountant is of a continuing nature, no further filing is required. Otherwise, a new
statement must be filed with the Commission. Paragraph (f)(3) of Rule 17a-5 requires a brokerdealer to file a notice with the Commission if it replaces its accountant.
Paragraph (g) of Rule 17a-5 requires the independent public accountant to undertake to
prepare its reports based on an examination of the financial report and either an examination of
the compliance report or a review of certain statements in the exemption report. The reports
must be prepared in accordance with PCAOB standards.
Paragraph (h) of Rule 17a-5 contains notification requirements related to certain
findings made during the course of preparing the reports of the independent accountant.
Paragraph (k) of Rule 17a-5 requires an ANC broker-dealer to file a supplemental report
on management controls concurrently with its annual reports.
Paragraph (n) of Rule 17a-5 provides that a broker-dealer must notify the Commission if
it changes its fiscal year.
Paragraph (p) of Rule 17a-5 provides that OTC derivatives dealers may comply with
Rule 17a-5 by complying with Exchange Act Rule 17a-12. 12
2.

Purpose and Use of Information Collection

Reports required to be filed under Rule 17a-5 are used, among other things, to monitor
the financial and operational condition of a broker-dealer by Commission staff and by the
broker-dealer’s DEA. The reports required under Rule 17a-5 are one of the primary means of
ensuring compliance with the broker-dealer financial responsibility rules. A firm’s failure to
11

17 CFR 210.2-01.

See 17 CFR 240.17a-12.

comply with these rules would severely impair the ability of the Commission and the firm’s
DEA to protect customers.
FOCUS Report data are used in preparation for broker-dealer examinations and
inspections. The completed forms also are used to determine which firms are engaged in various
securities-related activities, the extent to which they are engaged in those activities, and how
economic events and government policies might affect various segments of the securities
industry.
3.

Consideration Given to Information Technology

The data required in the FOCUS Report are tailored to the complexity of the brokerdealer’s business. The burden is therefore commensurate with the type of business in which the
firm engages. Approximately 90% of FOCUS Reports are filed electronically. Annual reports
under paragraph (d) of Rule 17a-5 are generally filed with the Commission in paper form or
electronically through the Commission’s EDGAR system.
4.

Duplication

The Commission designed Rule 17a-5 to eliminate duplicative reporting requirements
among the various securities regulatory agencies. Therefore, any duplication of the information
requested is minimal.
5.

Effect on Small Entities

As discussed above, a broker-dealer typically must file one of two alternative quarterly or
monthly reports: (1) a comprehensive FOCUS Report Part II which must be filed by every
broker-dealer that clears transactions or carries customer accounts and OTC derivatives dealers;
or (2) a less detailed FOCUS Report Part IIA which must be filed by broker-dealers that do not
clear transactions or carry customer accounts. Many small broker-dealers file FOCUS Report
Part IIA because they do not clear transactions or carry customer accounts. Part IIA is shorter
than Part II. The Commission does not believe any of the firms that file Part II are small firms
since they are clearing firms or firms that carry customer accounts. Even if small firms filed
FOCUS Report Part II, it would be inappropriate to provide these small firms with an exemption
from Rule 17a-5 because the FOCUS Report provides Commission and DEA staff with critical
financial information from the firms responsible for the safekeeping and disposition of customer
funds and securities.
6.

Consequences of Not Conducting Collection

The required reports are used by securities regulators to monitor the financial and
operational condition of broker-dealers. If the required reports were not made, the ability of the
Commission and the DEAs to monitor the financial and operational condition of broker-dealers
would be impaired, potentially affecting regulators’ capability to protect customers. Further, if
the required collections were conducted less frequently, the information in the reports would
become outdated.

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

There are no special circumstances. This 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

No payment or gift is provided to respondents.
10.

Confidentiality

Reports filed pursuant to paragraph (a) of Rule 17a-5 are deemed to be confidential
pursuant to paragraph (a)(2) of Rule 17a-5. As stated above, annual reports filed by brokerdealers under paragraph (d) of Rule 17a-5 are not confidential, except that if the Statement of
Financial Condition is bound separately from the balance of the annual reports, and each page of
the balance of the annual reports is stamped “confidential,” then the balance of the annual reports
shall be deemed confidential to the extent permitted by law. With respect to the other
information collected under Rule 17a-5, a broker-dealer can request the confidential treatment of
the information. 13 If such a confidential treatment request is made, the information will be
treated as confidential to the extent permitted by law. 14
Subject to the provisions of the Freedom of Information Act, 5 U.S.C. § 552, and the
Commission’s rules under that Act (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 collects basic elements of Personally Identifiable Information
(“PII”) including name, job title, and work address that is covered by the EDGAR PIA. No
information of a sensitive nature, including social security numbers, will be required under this
collection of information. Additionally, the agency has determined that the information
collection does not constitute a system of records for purposes of the Privacy Act. Information is
not retrieved by a personal identifier.

See 17 CFR 200.83. Information regarding requests for confidential treatment of information submitted to
the Commission is available at http://www.sec.gov/foia/howfo2.htm#privacy.

See, e.g., 15 U.S.C. 78x (governing the public availability of information obtained by the Commission);
5 U.S.C. 552 et seq.

12.

Information Collection Burden

FOCUS Report Part II.: Broker-dealers that clear transactions or carry customer
accounts and broker-dealers registered as security-based swap dealers, other than OTC
derivatives dealers, and broker-dealers registered as major security-based swap participants are
generally required to file FOCUS Report Part II on a monthly or quarterly basis. 15 Commission
staff estimates that a FOCUS Report Part II takes approximately 12 hours to prepare and file.
(However, as discussed below, for certain broker-dealers, Part II elicits additional information
and requires additional time to prepare). For the year ended December 31, 2022, Part II filers
generally filed the Report monthly, and approximately 461 firms filed FOCUS Report Part II,
resulting in an annual industry-wide burden of approximately 66,384 hours per year. 16 This
estimate is based on Commission staff’s experience reviewing these filings and communicating
with broker-dealers regarding the reports.
For broker-dealers registered as security-based swap dealers or major security-based
swap participants, for certain ANC broker-dealers, and for stand-alone non-ANC broker-dealers
that engage in security-based swap activities, the FOCUS Report Part II elicits additional
information. For non-ANC broker-dealers registered as security-based swap dealers, the
Commission estimates that there is an additional burden of 240 hours per firm per year, and for
non-ANC firms registered as major security-based swap participants, the Commission estimates
that there is an additional burden of 204 hours per firm per year. For ANC broker-dealers
registered as security-based swap dealers, the Commission estimates that there is an additional
burden of 228 per firm per year. For stand-alone non-ANC broker-dealers that engage in
security-based swap activities, the Commission estimates that there is an additional burden of
120 hours per firm per year.
As of March 2023, there was one non-ANC broker-dealer that was registered as a
security-based swap dealer. There were no non-ANC broker-dealers registered as a major
security-based swap participant. However, the Commission will use one entity as its estimate,
since it is possible, over the course of three years, that a non-ANC broker-dealer may register as
a major security-based swap participant. As of March 2023, there were two ANC broker-dealers
registered as security-based swap dealers. As of March 2023, the Commission estimates that 25
stand-alone non-ANC broker-dealers engaged in security-based swap activities.
As a result, the additional annual reporting burden for the one non-ANC broker-dealer
registered as a security-based swap dealer is approximately 240 hours; 17 The additional burden
for one non-ANC broker-dealer registered as a major security-based swap participant is 204
hours; 18 the additional burden for the two ANC broker-dealers registered as security-based swap

See 17 CFR 240.17a-5(a)(2)(ii), (iv).

12 hours per response x 12 responses per year x 461 respondents = 66,384 hours.

240 x 1 = 240.

204 x 1 = 204.

dealers is approximately 456 hours; 19 and the additional burden for the 25 stand-alone non-ANC
broker-dealers engaged in security-based swap activities is approximately 3,000 hours. 20
Therefore, the total annual industry-wide burden attributable to Part II of the FOCUS
Report (paragraph (a)(1)(ii) of Rule 17a-5) is approximately 70,284 hours. 21
FOCUS Report Part IIA: Broker-dealers that do not clear transactions or carry
customer accounts and are not registered as security-based swap dealers or major security-based
swap participants are required to file FOCUS Report Part IIA on a quarterly or monthly basis. 22
Commission staff estimates that each FOCUS Report Part IIA takes approximately 12 hours to
prepare and file. For the 12 months ended December 31, 2022, approximately 2,089 firms filed
FOCUS Report Part IIA quarterly, resulting in an annual reporting burden of 100,272 hours, 23
and 958 firms filed Part IIA monthly, resulting in an annual reporting burden of 137,952
hours. 24
Therefore, the total annual industry-wide reporting burden associated with Part IIA of the
FOCUS Report is approximately 238,224 hours. 25
ANC Broker-Dealer Additional Reports: As explained above, paragraph (a)(5) of
Rule 17a-5 requires ANC broker-dealers to file additional monthly and quarterly reports with the
Commission, and paragraph (k) of Rule 17a-5 requires an ANC broker-dealers to file an annual
supplemental report with the Commission regarding its internal risk management controls. As of
March 2023, there are 5 ANC broker-dealers. The burden estimates are based on Commission
staff’s history and experience reviewing these filings and communicating with ANC brokerdealers regarding the reports.
ANC Additional Monthly Reports: The average amount of time necessary to prepare and
file the required supplemental monthly reports by each firm is estimated to be 4 hours per month.
As a result, each firm is estimated to have an annual reporting burden of 48 hours, 26 resulting in
an annual industry-wide burden of 240 hours. 27

228 x 2 = 456.

120 x 25 = 3,000.

66,384 + 240 hours x 1 respondent + 204 hours x 1 respondents + 228 hours x 2 respondents + 120 hours x
25 respondents = 70,284 hours per year. The Commission also estimated initial burdens of 50 hours, 35
hours, 25 hours, and 20 hours, respectively, for these additional requirements, but as there are no new firms
subject to the requirements since the last submission, there are no initial burdens.

See 17 CFR 240.17a-5(a)(1)(iii) and (iv) .

2,089 respondents x 4 responses per year x 12 hours per response = 100,272 hours.

958 respondents x 12 responses per year x 12 hours per response = 137,952 hours.

100,272 hours + 137,952 hours = 238,224 hours per year.

4 hours x 12 responses per year = 48 hours per respondent.

48 hours per respondent x 5 respondents = 240 hours per year.

ANC Additional Quarterly Reports: The average amount of time necessary to prepare
and file the required supplemental quarterly reports is estimated to be 8 hours per quarter. As a
result, each firm is estimated to have an annual reporting burden of 32 hours, 28 resulting in an
annual industry-wide burden of 160 hours. 29
ANC Supplemental Annual Reports: The Commission estimates that the average amount
of time necessary to prepare and file the required supplemental annual reports is approximately
40 hours per year. As a result, the annual industry-wide burden associated with this requirement
is approximately 200 hours. 30
Broker-Dealer Annual Reports: As stated above, paragraph (d) of Rule 17a-5 requires
most broker-dealers to file annual reports, including a financial report and either a compliance
report or an exemption report, as well as reports prepared by an independent public accountant
covering the financial report and the compliance report or exemption report. Part III of Form X17A-5 is the cover page for the annual reports. Approximately 3,218 broker-dealers filed annual
reports under paragraph (d) for the 12 months ended December 31, 2022. 31 The Commission
received approximately 1,559 filings of those reports in paper and approximately 1,659
electronically via EDGAR. The reporting burden associated with Part III of Form X-17A-5 is
estimated to be approximately 12 hours per year, 32 resulting in an annual industry-wide burden
of approximately 38,616 hours. 33
A broker-dealer that does not claim it was exempt from Rule 15c3-3 throughout the fiscal
year must file a compliance report with the Commission. As of December 31, 2022, there were
approximately 147 carrying broker-dealers that must comply with Rule 15c3-3 and therefore
must file a compliance report. The Commission estimates that it takes such a firm approximately
60 hours to prepare the financial report and the compliance report, resulting in an annual
industry-wide burden of approximately 8,820 hours. 34
A broker-dealer that claimed it was exempt from Rule 15c3-3 throughout the fiscal year
must file an exemption report with the Commission. As of December 31, 2022, approximately
3,071 broker-dealers filed exemption reports. The Commission estimates that it takes a brokerdealer claiming an exemption from Rule 15c3-3 approximately 7 hours to prepare its financial
report and exemption report, resulting in an annual industry-wide burden of approximately
21,497 hours. 35

8 hours x 4 responses per year = 32 hours per respondent.

32 hours per respondent x 5 respondents = 160 hours per year.

40 hours per respondent x 5 respondents = 200 hours per year.

This filing includes Form X-17A-5 Schedule I and Form X-17A-5 Part III.

12 hours x 1 response per year = 12 hours per respondent.

12 hours per respondent x 3,218 respondents = 38,616 hours per year.

60 hours per respondent x 147 respondents = 8,820 hours per year.

7 hours per respondent x 3,071respondents = 21,497 hours per year.

Paragraph (d)(6) of Rule 17a-5 requires SIPC member broker-dealers to file a copy of the
annual reports with SIPC. According to SIPC’s 2021 annual report, there were approximately
3,404 SIPC members. The Commission estimates that it takes a broker-dealer approximately 30
minutes (or 0.5 hours) to file the annual reports with SIPC, resulting in an annual industry-wide
third-party reporting burden of approximately 1,702 hours. 36
SIPC Annual General Assessment Reconciliation Report or Exclusion from
Membership Forms: As stated above, paragraph (e)(4) of Rule 17a-5 requires broker-dealers to
file with SIPC a report on the SIPC annual general assessment reconciliation or exclusion from
membership forms. 37 Commission staff estimates that it takes a broker-dealer approximately 5
hours to file these forms with SIPC. As stated above, according to SIPC’s 2021 annual report,
there were approximately 3,404 SIPC members, resulting in an estimated annual industry-wide
burden of approximately 17,020 hours. 38
Statement Regarding Independent Public Accountant: Paragraph (f)(2) of Rule 17a-5
requires broker-dealers to prepare a statement providing information regarding the brokerdealer’s independent public accountant and to file it each year with the Commission and its
DEA, except that if the engagement is of a continuing nature, no further filing is required. 39
The Commission estimates that it received approximately 168 statements regarding the
independent public accountant during 2022. It further estimates that 8 of these statements were
from carrying or clearing broker-dealers, and 160 of these statements were from broker-dealers
that neither carry customer accounts nor clear transactions. The Commission estimates that it
takes a carrying or clearing broker-dealer approximately 10 hours, and a broker-dealer that
neither carries customer accounts nor clears transactions approximately 2 hours, to file the
statement regarding the independent public accountant with the Commission, resulting in an
annual burden of approximately 80 hours 40 for non-carrying, non-clearing broker-dealers and for
carrying and clearing firms approximately 320 hours. 41
Notice of Replacement of Accountant: Paragraph (f)(3) of Rule 17a-5 requires a
broker-dealer to file a notice with the Commission if it replaces the independent public
accountant engaged to prepare reports covering the annual reports. 42 The estimated ongoing
burden that may occur once over a three year period associated with this requirement is
approximately 2 hours, or approximately 0.67 hours on an annualized basis. 43 The Commission
36

.5 hours per respondent x 3,404 respondents = 1,702 hours per year.

See 17 CFR 240.17a-5(e)(4).

5 hours x 3,404 broker-dealers = 17,020 hours.

See 17 CFR 240.17a-5(f)(2). For most broker-dealers, the engagement with their independent public
accountant is of a continuing nature, and in that case, an annual filing is not required.

10 hours per respondent x 8 respondents = 80 hours per year.

2 hours per response x 160 respondents = 320 hours.

See 17 CFR 240.17a-5(f)(3).

2 hours / 3 years = 0.67 hours per respondent per year.

estimates that it received approximately 435 of these notices for calendar year 2022, resulting in
a burden of approximately 291 hours on an annualized basis. 44
Change of Fiscal Year: As stated above, under paragraph (n) of Rule 17a-5, a brokerdealer must notify the Commission if it changes its fiscal year. Based on staff experience, the
Commission estimates that 75 broker-dealers will change their fiscal year each year. The
Commission estimates that it takes a broker-dealer approximately 10 minutes to provide this
notice to the Commission. As a result, each firm is estimated to have an annual reporting burden
of approximately 0.167 hours, 45 resulting in an annual industry-wide burden of approximately
13 hours. 46
Total Industry-Wide Burden: The Commission therefore estimates that the total
industry-wide burden associated with Rule 17a-5 is approximately 397,467 hours per year. The
burden is summarized in the table below.
Summary of Hourly Burdens
A.
Name of Information Collection

Type of
Burden

Number of
Entities
Impacted

Annual
Responses
per Entity

Initial
Burden per
Entity per
Response

D.
E.
Initial
Ongoing
Burden
Burden per
Annualized
Entity per
per Entity
Response
per Response
[C ÷ 3 years]

Annual
Burden Per
Entity per
Response

Total Annual
Burden Per
Entity

Total Industry
Burden

[ D + E]

[F * B]

[G * A]

Small
Business
Entities
Affected

FOCUS Report Part II: NonModel Clearing Broker-Dealers

Reporting

461

0.00

12.00

144.00

66,384

FOCUS Report Part II: NonModel Broker-Dealer SBSDs

Reporting

0.00

20.00

240

Reporting

0.00

17.00

204

Reporting

0.00

19.00

228

456

Reporting

0.00

10.00

120

3,000

Reporting

2,089

0.00

12.00

48.00

100,272

895

Reporting

958

0.00

12.00

144.00

137,952

895

ANC Supplemental Monthly
Reports

Reporting

0.00

4.00

48.00

240

ANC Supplemental Quarterly
Reports

Reporting

0.00

8.00

32.00

160

ANC Supplemental Annual
Reports

Reporting

0.00

40.00

200

Annual Audited Reports

Reporting

3,218

0.00

12.00

38,616

895

Compliance Report

Reporting

147

0.00

60.00

8,820

FOCUS Report Part II: NonModel Broker-Dealer MSBSPs
FOCUS Report Part II: ANC
Broker-Dealer SBSDs
FOCUS Report Part II: NonModel Stand-alone BrokerDealers with SBS Activities
FOCUS Report Part IIA: NonModel Non-Clearing BrokerDealers-Quarterly
FOCUS Report Part IIA: NonModel Non-Clearing BrokerDealers-Monthly

0.67 hours per year x 435 respondents = 291 hours per year.

10 minutes / 60 minutes = 0.1667 hours.

0.167 hours per respondent x 75 respondents = 13 hours (rounded up from 12.75).

Summary of Hourly Burdens
A.

C.
Initial
Burden per
Entity per
Response

D.
E.
Initial
Ongoing
Burden
Burden per
Annualized
Entity per
per Entity
Response
per Response

Annual
Burden Per
Entity per
Response

Total Annual
Burden Per
Entity

Total Industry
Burden

[ D + E]

[F * B]

[G * A]

Small
Business
Entities
Affected

Name of Information Collection

Type of
Burden

Number of
Entities
Impacted

Annual
Responses
per Entity

Exemption Report

Reporting

3,071

0.00

7.00

21,497

895

SIPC Annual Reports

Third-Party
Disclosure

3,404

0.00

0.50

1,702

895

Annual General Assessment
Reconciliation or Exclusion
from Membership Forms

Third-Party
Disclosure

3,404

0.00

5.00

17,020

895

Statement Regarding
Independent Public Accountant
- Carrying or Clearing BrokerDealer

Reporting

0.00

10.00

Statement Regarding
Independent Public Accountant
- Non-Carrying, Non-Clearing
Broker-Dealer

Reporting

160

0.00

2.00

320

112

Notice of Replacement of
Accountant

Reporting

435

0.00

0.007

2.00

0.67

291

Notice of Change of Fiscal Year
End

Reporting

0.00

0.17

[C ÷ 3 years]

TOTAL HOUR BURDEN

13.

397,467

Costs to Respondents

Those requirements that are expected to impose a cost burden to respondents are
discussed below.
ANC Supplemental Reports: Paragraph (a)(5) and paragraph (k) of Rule 17a-5 impose
monthly, quarterly, and annual reporting requirements on ANC broker-dealers. The Commission
receives these reports via email, EDGAR (annual reports) or firm-specific systems, and therefore
there are no postage costs associated with the requirements.
Annual Reports: Annual reports under paragraph (d) of Rule 17a-5 must be filed with
the Commission at the Commission’s principal office and to the regional office of the
Commission for the region in which the broker-dealer has its principal place of business or the
annual reports may be filed electronically with the Commission. Reports that are filed
electronically on EDGAR will be received by both the Commission’s principal and regional
offices. The annual reports must also be filed with the broker-dealer’s DEA and with SIPC if the
broker-dealer is a member of SIPC. Broker-dealers currently generally file the annual reports
with their DEA and with SIPC electronically. The Commission estimates that postage costs to
comply with paragraph (d) of Rule 17a-5 for firms that file with the Commission in paper impose
an annual cost of approximately $9.95 per mailing per respondent, resulting in an annual cost to
mail the reports to the Commission’s principal office and to the regional office of the
11

Commission for the region in which the broker-dealer has its principal place of business of
$19.90 per response. 47 For calendar year 2022, approximately 1,559 broker-dealers filed their
annual reports in paper with the Commission 48, resulting in an estimated annual industry-wide
cost of approximately $31,022 per year. 49
A broker-dealer that does not claim it was exempt from Rule 15c3-3 throughout the most
recent fiscal year must file a compliance report with the Commission with its annual reports as
well as an accountant’s reports based on examinations of its financial report and compliance
report. For the year ended December 31, 2022, the Commission estimates that approximately
147 broker-dealers filed compliance reports. The Commission estimates that the cost associated
with the independent public accountant’s examinations of the firm’s financial report and
compliance report will be, on average, approximately $150,000 per broker-dealer per year,
resulting in an industry-wide annual reporting cost of approximately $22,050,000. 50
A broker-dealer that claims it was exempt from Rule 15c3-3 throughout the most recent
fiscal year must file an exemption report with the Commission with its annual reports as well as
an accountant’s reports based on an examination of its financial report and a review of its
exemption report. For the year ended December 31, 2022, the Commission estimates that
approximately 3,071 broker-dealers filed exemption reports. The Commission estimates that the
cost associated with the independent public accountant’s examination of the firm’s financial
report and review of the exemption report will be, on average, approximately $3,000 per brokerdealer per year, resulting in an industry-wide annual reporting cost of approximately
$9,213,000. 51
SIPC Annual General Assessment Reconciliation Report or Exclusion from
Membership Form: Under paragraph (e)(4) of Rule 17a-5, broker-dealers must file with SIPC
a report on the SIPC annual general assessment reconciliation or exclusion from membership
forms. These items may be filed with SIPC either by mail or via email. The Commission
estimates that postage costs to send these items by mail would impose an annual cost of 53 cents
per firm. The Commission estimates that each year, 3,404 firms will file with SIPC a report on
the SIPC annual general assessment reconciliation or exclusion from membership form and that

Currently, a priority mail flat rate legal sized envelope costs $9.95, based on costs obtained on the U.S.
Postal Service website, available at www.usps.gov. $9.95 x 2 = $19.90. These mailing cost estimates also
account for the requirement that paper filers have to file with Commission headquarters and also with the
Commission’s appropriate regional office.

The costs of paper filing incurred by 1,559 respondents, totaling $31,022 was averaged over the entire
group of 3,218 respondents, which resulted in an annual cost of $9.64 per respondent.

$19.90 per firm x 1,559 broker-dealers = $31,022 per year (based on average cost of $9.64 per respondent
per year).

$150,000 per year x 147 carrying broker-dealers = $22,050,000.

$3,000 per year x 3,071 non-carrying broker-dealers = $9,213,000.

approximately half of these will be filed in paper, for a total annual industry-wide cost of
approximately $902. 52
SIPC Annual Reports: The Commission estimates $0 cost burden for the 3,404 brokerdealers that are members of SIPC to comply with paragraph (d)(6) of Rule 17a-5, because these
firms file the annual reports with SIPC electronically. 53
Statement Regarding Independent Public Accountant and Notice of Replacement of
Accountant: These statements and notices must be filed with the Commission at its principal
office in Washington, DC; the Commission’s office for the region in which the broker-dealer’s
principal place of business is located; and the principal office of the broker-dealer’s
DEA. Broker-dealers file these items with their DEA electronically, and they may send them to
the Commission either in paper or electronically. The Commission estimates that postage costs
to comply with paragraphs (f)(2) and (f)(3) of Rule 17a-5 impose an annual dollar cost of 53
cents per response for those that are filed in paper. The Commission estimates that there are
603 54 responses, and that approximately 160 of them are filed in paper. Further, the Commission
estimates that approximately half of the paper filings (or a total of 80) are statements regarding
the independent public accountant (of which 8 are submitted by clearing or carrying brokerdealers and 72 are submitted by non-clearing and non-carrying broker-dealers). The
Commission also estimates that the remaining paper filings, approximately 80, are notices of the
replacement of the accountant. This results in $4 for 8 paper statements, $38 for 72 paper
statements, and $42 for 80 paper notices, for an annual industry-wide cost of approximately
$84. 55
Notice of Change of Fiscal Year End: The Commission estimates that postage costs to
comply with the requirement to notify the Commission when a firm changes its fiscal year
impose a cost of 53 cents per firm that sends the notice in paper. The Commission estimates that
75 firms send the notice in paper each year, resulting in an annual estimated industry-wide cost
of $40. 56
52

3,404 respondents / 2 = 1,702 paper filers. $0.53 per year x 1,702 paper filers = $902 per year (rounded
down from $902.06). The costs of paper filing incurred by 1,702 respondents, totaling $902 was averaged
over the entire group of 3,404 respondents, which resulted in an annual cost of $0.265 per respondent.

3,404 respondents x $0.53 per year = $1,804 (rounded down from $1,804.12).

The total number of respondents filing statements regarding independent public accountant and filing
notices of replacement of public accountant totals: 8 +160 + 435 = 603 respondents.

$0.53 per response x 8 paper filings (Statement regarding Independent Public Accountant,
Carrying/Clearing firm) = $4 (rounded down from $4.24); $0.53 per response x 72 paper filings (Statement
regarding Independent Public Accountant, Non-Carrying/Non-Clearing firm) = $38 (rounded down from
$38.16); $0.53 x 80 paper filings (Notice of Replacement of Public Accountant) = $42 (rounded down
from $42.4) . Total annual industry cost for all paper filings of statements and notices: $4 + $38+ $42 =
$84. The cost of paper filings for Statement regarding Independent Public Accountant, Non-Carrying/NonClearing firm) of $38 was averaged over all 160 respondents (for annual cost per respondent of $0.24) and
the cost of paper filings for the Notice of Replacement of Public Accountant of $42 was averaged over 435
respondents (for annual cost per respondent of $0.097).

$0.53 per year x 75 broker-dealers = $40 (rounded up from $39.75).

Total Industry Cost Burden: Therefore, the total industry-wide dollar cost burden
associated with Rule 17a-5 is estimated to be $31,295,048. The burden is summarized in the
table below.
Summary of Dollar Costs
A.
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

Annual
Cost Per
Entity per
Response

Total
Annual
Cost Per
Entity

Total Industry Cost

[ D + E]

[F * B]

[G * A]

[C ÷ 3
years]

Small
Business
Entities
Affected

ANC Supplemental
Monthly Reports

Reporting

ANC Supplemental
Quarterly Reports

Reporting

ANC Supplemental
Annual Reports

Reporting

Annual Reports

Reporting

1,559

$19.90

$31,022.10

895

Rule 17a-5(d)(3):
Compliance Report

Reporting

147

$150,000.00

$22,050,000

Rule 17a-5(d)(4):
Exemption Report

Reporting

3,071

$3,000.00

$9,213,000

895

SIPC Annual Reports

Third-Party
Disclosure

3,404

$0.

$$0

895

Third-Party
Disclosure

1,702

$0.53

$902

895

Reporting

$0.53

Reporting

$0.53

$38

Notice of Replacement
of Accountant

Reporting

$0.53

$42

Notice of Change in
Fiscal Year

Reporting

$0.53

$40

SIPC Annual General
Assessment
Reconciliation Report
or Exclusion from
Membership Forms
Statement Regarding
Independent Public
Accountant Carrying or
Clearing Broker-Dealer
Statement Regarding
Independent Public
Accountant – NonCarrying, NonClearing Broker-Dealer

TOTAL COST

14.

$31,295,048

Costs to Federal Government

Rule 17a-5, is not expected to result in costs to the federal government due to contracting,
information technology, development, hiring one or more new employees, or reallocating
existing employees.
15.

Changes in Burden

The prior hour burden was 336,032 hours. The current burden of 397,467 hours
represents an increase of approximately 61,435 hours. The hour burden estimate for the filing of
Part IIA of Form X-17A increased by 83,904 hours due to an increase in the Commission’s
estimate of the number of broker-dealers that filed Part IIA of Form X-17A-5 monthly (instead

of quarterly) 57 and a decrease in the Commission’s estimate of the number of firms that filed Part
IIA of Form X-17A-5 quarterly 58 for the year ended December 31, 2022. 59 The estimate for the
statement regarding the independent public accountant decreased from 11,030 hours to 400
hours, a decrease of 10,630 hours, due to the fact that the Commission’s estimate of the number
of firms that filed the statement decreased from 3,675 firms to 168 firms. Other significant
decreases in burden are attributable to a decrease in the estimate of the number of broker-dealers
filing annual reports from 3,679 firms to 3,218 firms, a decrease in the estimate of the number of
ANC broker-dealers from 10 to 5, and a decrease in the estimate of the number of broker-dealers
that are SIPC members from 3,689 to 3,404.
The prior cost burden was $35,287,127 (rounded down). The current burden of
$31,295,048 represents a decrease of $3,992,081. The cost burden has changed largely due to
the fact that many submissions that were formerly made in paper are now made electronically.
ANC firms now file their reports electronically, so that the number of firms that file their reports
in paper has decreased from 10 to 0; the number of annual reports filed in paper has decreased
from 3,689 to 1,559; the number of compliance reports filed has decreased from 175 to 147; the
annual reports are now filed with SIPC electronically, so that the number filed in paper has
decreased from 3,624 to 0; the number of SIPC Annual General Assessment Forms filed in paper
has decreased from 3,689 to 1,702; and the number of Statements Regarding the Independent
Public Accountant filed in paper has decreased from 3,675 to 150. The change in burden is also
attributable to the fact that postage costs have increased. The cost of a first-class stamp has
increased from 50 cents to 53 cents and the cost of a priority mail flat rate legal sized envelope
has increased from $7.75 to $9.95.
The changes in hour and cost burdens are summarized in the table below.

Name of Information
Collection

Current
Annual
Industry
Burden/Cost

Revised Annual
Industry
Burden/Cost

Change in
Burden/Cost

FOCUS Report Part II: NonModel Clearing Broker-Dealers

66,240

66,384

144

FOCUS Report Part II: NonModel Broker-Dealer SBSDs

1,540

240

(1,300)

FOCUS Report Part II: NonModel Broker-Dealer MSBSPs

216

204

(12)

FOCUS Report Part II: ANC
Broker-Dealer SBSDs

2,363

456

(1,907)

3,167

3,000

(167)

154,320

100,272

(54,048)

FOCUS Report Part II: NonModel Stand-alone BrokerDealers with SBS Activities
FOCUS Report Part IIA: NonModel Non-Clearing BrokerDealers-quarterly

Resulting in an increase of 137,952 hours (see table below).

Resulting in a decrease of 54,048 hours (see table below).

137,952 – 54,048 = 83,904.

Reason for Change
Change in staff estimate of entities
impacted
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.

FOCUS Report Part IIA: NonModel Non-Clearing BrokerDealers-monthly

137,952

ANC Supplemental Monthly
Reports

480

240

(240)

ANC Supplemental Quarterly
Reports

320

160

(160)

ANC Supplemental Annual
Reports

400

200

(200)

Annual Audited Reports

44,148

38,616

(5,532)

Rule 17a-5(d)(3):

10,500

8,820

(1,680)

Rule 17a-5(d)(4):
Exemption Report

21,007

21,497

490

SIPC Annual Reports

1811

1,702

(109

Annual General Assessment
Reconciliation or Exclusion from
Membership Forms

18,445

17,020

(1,425)

Statement Regarding Independent
Public Accountant - Carrying or
Clearing Broker-Dealer

4600

(4,520)

Change in staff estimate of entities
impacted.

Statement Regarding Independent
Public Accountant - NonCarrying, Non-Clearing BrokerDealer

6,430

320

(6,110)

Change in staff estimate of entities
impacted.

Notice of Replacement of
Accountant

291

257

Change in staff estimate of entities
impacted.

Change of Fiscal Year End

n/a

ANC Supplemental Monthly
Reports

$60

($60)

ANC Supplemental Quarterly
Reports

$20

($20)

ANC Supplemental Annual
Reports

($5)

Annual Audited Reports

$28,512

$31,022

$2,510

Rule 17a-5(d)(3):
Compliance Report

$26,250,000

$22,050,000

($4,200,000)

Rule 17a-5(d)(4):
Exemption Report

$9,003,000

$9,213,000

$210,000

SIPC Annual Reports

$1,811

$1804

$1,845

$902

($943)

Change in staff estimate of entities
impacted.

$230

($226)

Change in staff estimate of entities
impacted; change in postal rates.

$1608

$38

($1570)

Change in staff estimate of entities
impacted; change in postal rates.

Compliance Report

SIPC Annual General
Assessment Reconciliation
Report or Exclusion from
Membership Forms
Statement Regarding
Independent Public
Accountant (Carrying or
Clearing Broker-Dealer)
Statement Regarding
Independent Public
Accountant (Non Carrying,
Non Clearing BrokerDealers)

Change in number of annual
responses.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.

Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted; change in postal rates.
Change in staff estimate of entities
impacted.
Change in staff estimate of entities
impacted.
SIPC now receives these
electronically.

Notice Replacement of Public
Accountant

$42

Change in staff estimate of entities
impacted; change in postal rates.

Notice of Change in Fiscal
Year

$38

$40

Change in postal rates

16.

Information Collection Planned for Statistical Purposes

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

Approval to Omit OMB Expiration Date

We request authorization to omit the expiration date on the electronic versions of Form
X-17A-5. Including the expiration date on the electronic version of the form will result in
increased costs, because the need to make changes to the Form may not follow the application’s
scheduled version release dates. The OMB control number will be displayed.
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.

File Type	application/pdf
File Modified	2023-06-07
File Created	2023-06-07