Supporting Statement_Rule 12d1-1 (2024)

OMB CONTROL NUMBER: 3235-0584

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 12d1-1
A.

JUSTIFICATION
1.

Necessity for the Information Collection

An investment company (“fund”) is generally limited in the amount of securities the fund
(“acquiring fund”) can acquire from another fund (“acquired fund”). Section 12(d) of the
Investment Company Act of 1940 (the “Investment Company Act” or “Act”) 1 provides that a
registered fund (and companies it controls) cannot:
•

acquire more than three percent of another fund’s securities;

•

invest more than five percent of its own assets in another fund; or

•

invest more than ten percent of its own assets in other funds in the aggregate. 2

In addition, a registered open-end fund, its principal underwriter, and any registered
broker or dealer cannot sell that fund’s shares to another fund if, as a result:
•

the acquiring fund (and any companies it controls) owns more than three percent
of the acquired fund’s stock; or

•

all acquiring funds (and companies they control) in the aggregate own more than
ten percent of the acquired fund’s stock. 3

Rule 12d1-1 under the Act provides an exemption from these limitations for “cash
sweep” arrangements in which a fund invests all or a portion of its available cash in a money
market fund rather than directly in short-term instruments. 4 An acquiring fund relying on the

1

See 15 U.S.C. 80a.

2

See 15 U.S.C. 80a-12(d)(1)(A). If an acquiring fund is not registered, these limitations
apply only with respect to the acquiring fund’s acquisition of registered funds.

3

See 15 U.S.C. 80a-12(d)(1)(B).

4

See 17 CFR 270.12d1-1.

exemption may not pay a sales load, distribution fee, or service fee on acquired fund shares, or if
it does, the acquiring fund’s investment adviser must waive a sufficient amount of its advisory
fee to offset the cost of the loads or distribution fees. 5 The acquired fund may be a fund in the
same fund complex or in a different fund complex. In addition to providing an exemption from
section 12(d)(1) of the Act, the rule provides exemptions from section 17(a) of the Act and rule
17d-1 thereunder, which restrict a fund’s ability to enter into transactions and joint arrangements
with affiliated persons. 6 These provisions would otherwise prohibit an acquiring fund from
investing in a money market fund in the same fund complex, 7 and prohibit a fund that acquires
five percent or more of the securities of a money market fund in another fund complex from
making any additional investments in the money market fund. 8
The rule also permits a registered fund to rely on the exemption to invest in an
unregistered money market fund that limits its investments to those in which a registered money
5

See rule 12d1-1(b)(1).

6

See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d); 17 CFR 270.17d-1.

7

An affiliated person of a fund includes any person directly or indirectly controlling,
controlled by, or under common control with such other person. See 15 U.S.C.
80a-2(a)(3) (definition of “affiliated person”). Most funds today are organized by an
investment adviser that advises or provides administrative services to other funds in the
same complex. Funds in a fund complex are generally under common control of an
investment adviser or other person exercising a controlling influence over the
management or policies of the funds. See 15 U.S.C. 80a-2(a)(9) (definition of “control”).
Not all advisers control funds they advise. The determination of whether a fund is under
the control of its adviser, officers, or directors depends on all the relevant facts and
circumstances. See Investment Company Mergers, Investment Company Act Release
No. 25259 (Nov. 8, 2001) [66 FR 57602 (Nov. 15, 2001)], at n.11. To the extent that an
acquiring fund in a fund complex is under common control with a money market fund in
the same complex, the funds would rely on the rule’s exemptions from section 17(a) and
rule 17d-1.

8

See 15 U.S.C. 80a-2(a)(3)(A), (B).
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market fund may invest under rule 2a-7 under the Act, and undertakes to comply with all the
other provisions of rule 2a-7. 9 In addition, the acquiring fund must reasonably believe that the
unregistered money market fund (i) operates in compliance with rule 2a-7, (ii) complies with
sections 17(a), (d), (e), 18, and 22(e) of the Act 10 as if it were a registered open-end fund, (iii) has
adopted procedures designed to ensure that it complies with these statutory provisions,
(iv) maintains the records required by rules 31a-1(b)(1), 31a-1(b)(2)(ii), 31a-1(b)(2)(iv), and
31a-1(b)(9); 11 and (v) preserves permanently, the first two years in an easily accessible place, all
books and records required to be made under these rules.
2.

Purpose and Use of the Information Collection

Rule 2a-7 contains certain collection of information requirements. An unregistered
money market fund that complies with rule 2a-7 would be subject to these collection of
information requirements. In addition, the recordkeeping requirements under rule 31a-1 with
which the acquiring fund reasonably believes the unregistered money market fund complies are
collections of information for the unregistered money market fund. The adoption of procedures
by unregistered money market funds to ensure that they comply with sections 17(a), (d), (e), 18,
and 22(e) of the Act also constitute collections of information. By allowing funds to invest in
registered and unregistered money market funds, rule 12d1-1 is intended to provide funds greater
options for cash management. In order for a registered fund to rely on the exemption to invest in
an unregistered money market fund, the unregistered money market fund must comply with
9

See 17 CFR 270.2a-7.

10

See 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d), 15 U.S.C. 80a-17(e), 15 U.S.C. 80a-18, 15
U.S.C. 80a-22(e).

11

See 17 CFR 270.31a-1(b)(1), 17 CFR 270.31a-1(b)(2)(ii), 17 CFR 270.31a-1(b)(2)(iv),
17 CFR 270.31a-1(b)(9).
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certain collection of information requirements for registered money market funds. These
requirements are intended to ensure that the unregistered money market fund has established
procedures for collecting the information necessary to make adequate credit reviews of securities
in its portfolio, as well as other recordkeeping requirements that will assist the acquiring fund in
overseeing the unregistered money market fund (and Commission staff in its examination of the
unregistered money market fund’s adviser).
3.

Consideration Given to Information Technology

Rule 31a-2(f) under the Act permits funds to maintain many types of records on
micrographic and electronic storage media.
4.

Duplication

The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it proposes a rule or a change in a
rule. The conditions in rule 12d1-1 are not duplicated elsewhere.
5.

Effect on Small Entities

Rule 12d1-1 does not distinguish between small entities and other unregistered funds.
The rule does not apply directly to unregistered money market funds, which are not regulated by
the Commission. The Commission does not believe that to the extent an unregistered money
market fund complies with the rule’s requirements in order to sell its shares to a registered fund
relying on the rule, the collection of information is unduly burdensome.
We review all Commission rules periodically, as required by the Regulatory Flexibility
Act, to identify methods to minimize recordkeeping or reporting requirements affecting small
entities.

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6.

Consequences of Not Conducting Collection

Rule 2a-7 requires for retail and government money market funds, that a fund’s board
adopt written procedures designed to stabilize the fund’s net asset value and also adopt
guidelines regarding the delegation of certain responsibilities. None of these is a recurring
obligation. The rule also requires money market funds to perform periodic analyses of portfolio
securities and reviews of the credit risks associated with those securities. The frequency of these
reviews is within the fund’s discretion. The reviews are necessary to ensure that securities that
remain in a fund’s portfolio continue to present minimal credit risks.
7.

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

Unregistered money market funds that sell their shares to registered funds that rely on
rule 12d1-1 are required to keep certain records for more than three years. The Commission
believes that the long-term retention of records is necessary to carry out its examination and
enforcement responsibilities, and its mandate to ensure that the Act's provisions are legally
enforceable. Under the rule, registered funds may invest in unregistered funds that meet certain
conditions, including having an adviser that is registered with the Commission. Commission
staff periodically inspects the operations of registered funds and registered investment advisers to
ensure compliance with the rules and regulations under the Act and the Investment Advisers Act
of 1940, as amended. 12 For those advisers who also advise an unregistered money market fund
that sells shares to registered funds in reliance on rule 12d1-1, Commission staff also inspects for
compliance with the conditions in the rule. Nevertheless, each fund or adviser may be inspected
only at intervals of several years due to limits on the Commission’s resources. For this reason,
12

15 U.S.C. §80b-1.

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the Commission often needs information relating to events or transactions that occurred years
ago. Computerized record storage has made long-term retention of records less burdensome.
8.

Consultation Outside the Agency

Before adopting rule 12d1-1, the Commission received and evaluated public comments
on the proposed rule and its collection of information requirements. In, addition, the
Commission and staff of the Division of Investment Management participate in an ongoing
dialogue with representatives of the fund industry through public conferences, meetings, and
informal exchanges. The Commission requested public comment on the collection of
information requirements in rule 12d1-1 before it submitted this request for extension and
approval to the Office of Management and Budget. The Commission received no comments in
response to its request.
9.

Payment or Gift

Not applicable.
10.

Confidentiality

Not applicable.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be required
under this collection of information. The information collection does not collect personally
identifiable information (PII). The agency has determined that a system of records notice
(SORN) and privacy impact assessment (PIA) are not required in connection with the collection
of information.

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12.

Burden of Information Collection

The following estimates of average burden hours and costs are made solely for purposes
of the Paperwork Reduction Act of 1995 (“PRA”) 13 and are not derived from a comprehensive or
even representative survey or study of the cost of Commission rules and forms.
The number of unregistered money market funds that are affected by rule 12d1-1 is an
estimate based on the number of liquidity funds reported on Form PF as of the third calendar
quarter 2023. 14 The hour burden estimates for the condition that an unregistered money market
fund comply with rule 2a-7 are based on the burden hours included in the Commission’s 2022
PRA extension regarding rule 2a-7. 15 However, we have updated the estimated costs associated
using the following methodology:
• For professional personnel: SIFMA’s Management & Professional Earnings in
the Securities Industry 2013, modified for 2024 by Commission staff to account
for an 1800-hour work-year and inflation, and multiplied by 5.35 to account for
bonuses, firm size, employee benefits, and overhead;
13

44 U.S.C. 3501 et seq.

14

See the U.S. Securities and Exchange Commission’s Division of Investment Management
– Analytics Office Private Funds Statistics, Third Calendar Quarter 2023 (March 31,
2024), available at https://www.sec.gov/files/investment/2023q3-private-funds-statistics20240331-accessible.pdf.

15

See Securities and Exchange Commission, Request for OMB Approval of Extension for
Approved Collection for Rule 2a-7 under the Investment Company Act of 1940 (OMB
Control No. 3235-0268) (approved August 3, 2022) (“2022 rule 2a-7 PRA extension”),
available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202109-3235024. The 2022 rule 2a-7 PRA extension is the most recent rule 2a-7 submission that
includes certain estimates with respect to aggregate annual hour and cost burdens for
collections of information for registered money market funds.

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• For a fund board of directors: SIFMA data does not include a board of directors.
For board time, Commission staff currently uses a cost of $5,672 per hour, which
was last adjusted for inflation in December 2023. This estimate assumes an
average of nine board members per year; and
•

For clerical personnel: SIFMA’s Office Salaries in the Securities Industry 2013,
modified for 2024 by Commission staff to account for an 1800-hour work-year
and inflation, and multiplied by 2.93 to account for bonuses, firm size, employee
benefits, and overhead.

The estimated burden of information collection for rule 2a-7 is set forth in Table 1 below.
We use these estimated burdens for registered money market funds to extrapolate the
information collection burdens for unregistered money market funds under rule 12d1-1 in Table
2 below.

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Table 1: Rule 2a-7 burden of information collection for registered money market funds 16
Estimated Responses

Estimated Burden
Hours

Estimated Internal Cost
Burden

680 burden hours of
professional (business
analyst or portfolio
manager) time per fund

[($276 per hour
(intermediate business
analyst) + $396 per hour
(senior portfolio manager)
= $672)] 2 =

Record of credit risk
analyses, and
determination regarding
adjustable rate
securities, asset backed
securities, securities
subject to a demand
feature or guarantee,
and counterparties to
repurchase agreements
85 responses annually for
each of 320 funds 17 =

x 320 funds

$336 median weighted
average per hour
$336 x 217,600 (hours) =

16

The estimated responses and hour burdens shown in this chart were included in the Securities
and Exchange Commission, Request for OMB Approval of Extension for Approved Collection
for Rule 2a-7 under the Investment Company Act of 1940 (OMB Control No. 3235-0268)
(approved August 3, 2022) (the “2022 rule 2a-7 PRA extension”). The 2022 rule 2a-7 PRA
extension was the most recent rule 2a-7 submission that includes certain estimates with respect to
aggregate annual hour and cost burdens for collections of information for registered money
market funds.
However, the cost burdens shown in this chart have been updated. The cost burdens for
professional personnel are based on SIFMA’s Management & Professional Earnings in the
Securities Industry 2013, modified for 2024 by the Commission staff to account for an 1800hour work –year and inflation, and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead, while the cost burdens for clerical personnel are based on
SIFMA's Office Salaries in the Securities Industry 2013, modified for 2024 by Commission staff
to account for an 1800-hour work-year and inflation, and multiplied by 2.93 to account for
bonuses, firm size, employee benefits and overhead. However, SIFMA data does not include a
board of directors. For board time, Commission staff currently uses a cost of $5,672 per hour,
which was last adjusted for inflation in 2023. This estimate assumes an average of nine board
members per year.

The number of funds based on Form N-MFP filings for the month ended May 2021 and used in the
2022 rule 2a-7 PRA extension.
17

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Estimated Responses
Total

Estimated Burden
Hours
217,600 estimated
burden hours

27,200 estimated
responses annually

Estimated Internal Cost
Burden
$73,113,600 estimated
cost burden

Fund’s website
disclosures including
portfolio holding
information, daily and
weekly liquid assets, net
flow, daily current NAV,
financial support
received by the fund, the
imposition and removal
of liquidity fees, and the
suspension and
resumption of fund
redemptions
Disclosure of Portfolio
Information

Disclosure of Portfolio
Information

Disclosure of Portfolio
Information

12 months x 320 funds =
3,840 responses per year

[12 hours (webmaster)
annually x 320 funds =
3,840 hours per year]
+
[24 hours (webmaster)
initial burden for each
new fund x 10 new funds
= 240 one-time hours]
=
4,080 annual aggregate
one-time and recurring
burdens for the disclosure
of portfolio holdings
information

[3,840 hours (for 320
funds) x $299 (per hour
for a webmaster)] =
$1,148,160 (for recurring
internal burden labor
costs)]
+
[240 hours (for 10 new
funds) x $299 (per hour
for a webmaster) =
$71,760]
=
$1,219,920 aggregate
annual one-time and
recurring labor burdens
for disclosure of portfolio
information

Disclosure of Daily and
Weekly Liquid Assets and
Net Shareholder Flow

Disclosure of Daily and
Weekly Liquid Assets and
Net Shareholder Flow

Disclosure of Daily and
Weekly Liquid Assets and
Net Shareholder Flow

252 business days x 320
funds = 80,640 responses
per year

[31.5 hours (senior
systems analyst/senior
programmer) + 4.5 hours
(compliance manager /
compliance attorney) = 36
hours x 320 funds] =
11,520 hours per year
+

[31.5 hours x $371
(blended rate for a senior
systems analyst ($342)
and senior programmer
($399)] = $11,687 (per
fund) + [4.5 hours x $406
(blended rate for a

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Estimated Responses

Estimated Burden
Hours
[70 hours (blended time
for a compliance manager
and a compliance
attorney) x 10 new funds]
= 700 one-time hours per
year
=
12,220 aggregate annual
one-time and recurring
burden hours for
disclosure of daily and
weekly liquid assets and
shareholder flow

Estimated Internal Cost
Burden
compliance manager
($372) and a compliance
attorney ($440)] = $1,827
= $13,514 (per fund to
update the depiction of
daily and weekly liquid
assets and the fund’s net
inflow or outflow on the
fund’s website each
business day during that
year) x 320 funds =
$4,324,480 (aggregate
annual recurring burden)
+
[(20 hours x $406
((blended rate for a
compliance manager
($372) and a compliance
attorney ($440) = $8,120)
+
(50 hours x $371
((blended rate for a senior
systems analyst ($342)
and senior programmer
($399) = $18,550)] =
$26,670 (internal labor
cost burden for each new
fund)] x 10 new funds =
$266,700 (total one-time
cost burden)
=
$4,591,180 aggregate
annual one-time and
recurring burdens for
disclosure of daily and
weekly liquid assets and
shareholder flow

Disclosure of Daily
Current NAV

Disclosure of Daily
Current NAV

Disclosure of Daily
Current NAV

252 business days x 320
funds = 80,640 responses
per year

32 hours (senior systems
analyst /senior
programmer) x 320 funds
= 10,240 hours per year
+
70 hours x 10 new funds
= 700 one-time hours

32 hours x $371 (blended
rate for a senior systems
analyst ($342) and senior
programmer ($399) =
$11,872 (annual ongoing
internal labor cost burden
per fund) x 320 funds =
$3,799,040 (ongoing
annual burden)

=

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Estimated Responses

Estimated Burden
Hours
10,940 aggregate annual
one-time and recurring
burden hours for the
disclosure of daily current
NAV

Estimated Internal Cost
Burden
+
[(20 hours x $406
(blended rate for
compliance manager
($372) and a compliance
attorney ($440)) = $8,120
+ (50 hours x $371
(blended rate for a senior
systems analyst ($342)
and senior programmer
($399) = $18,550)] =
$26,670 (internal labor
cost burden for each new
fund) x 10 new funds =
$266,700 (total one-time
cost burden)]
=
$4,065,740 aggregate
annual one-time and
recurring labor burdens
for disclosure of daily and
current NAV

Disclosure of Financial
Support Received by the
Fund, the Imposition and
Removal of Liquidity
Fees, and the Suspension
and Resumption of Fund
Redemptions

Disclosure of Financial
Support Received by the
Fund, the Imposition and
Removal of Liquidity
Fees, and the Suspension
and Resumption of Fund
Redemptions

Disclosure of Financial
Support Received by the
Fund, the Imposition and
Removal of Liquidity
Fees, and the Suspension
and Resumption of Fund
Redemptions

11 responses per year

1 additional burden hour
each time a fund updates
its website to include new
disclosure about the
provision of financial
support to fund x 10
reports per year =
10 hours per year
+
1 burden hour for website
updates x 1 estimated
instance of a fund
updating its website
regarding the imposition
and removal of liquidity
fees, and suspension and
resumption of fund
redemptions = 1 hour per
year
=

10 reports per fund
x
[(1 hour per website
update x $299 per hour
for a webmaster (internal
cost burden per fund to
include new disclosure) =
$2,990 (aggregate internal
labor cost burden for
disclosure of financial
support provided to
funds) + (1 hour (annual
aggregate burden) x $299
per hour for a webmaster
= $299 (aggregate internal
labor cost burden)] =
$3,289

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=

TOTAL
Board review of
procedures and
guidelines of any
investment adviser or
officers to whom the
fund’s board has
delegated responsibility
under rule 2a-7 and
amendment of such
procedures and
guidelines

Estimated Responses

Estimated Burden
Hours
11 aggregate annual onetime and recurring burden
for the disclosure of
financial support received
by the fund, imposition
and removal of liquidity
fees, and suspension and
resumption of fund
redemptions

Estimated Internal Cost
Burden
$32,890 aggregate annual
one-time and recurring
burden for the disclosure
of financial support
received by the fund,
imposition and removal of
liquidity fees, and
suspension and
resumption of fund
redemptions

Total Estimated
Responses Relating to
Website Disclosure

Total Estimated Burden
Hours Relating to Website
Disclosure

Total Estimated Cost
Burden Relating to
Website Disclosure

3,840 +80,640 + 80,640
+11 = 165,131

4,080 + 12,220 + 10,940
+ 11 = 27,251

$1,219,920 + $4,591,180
+ $4,065,740 + $32,890 =
$9,909,730

165,131 estimated
responses annually

27,251 estimated burden
hours

$9,909,730 estimated
cost burden

1 response annually for
each of 80 funds 18

1 hour (board time)
+
4 hours (compliance and
professional legal time)

(1 hour x $5,672 (board
time) = $5,672) + (4
hours x $406 (blended
rate for compliance
manager ($372) and a
compliance attorney
($440) = $1,624) =

= 5 hours per fund

18

For purposes of the 2022 rule 2a-7 PRA extension, we assumed that on average 25% (320
funds x .25 = 80 funds) of money market funds would review and update their procedures on
annual basis).
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Estimated Responses

Total
Review, revise, and
approve written
procedures to stress test
a fund’s portfolio

Total
Reports to fund boards
on the results of stress
testing

Estimated Burden
Hours

Estimated Internal Cost
Burden
$7,296 (cost per fund)

1 response x 80 =
80 estimated responses
annually

5 hours x 80 responses=
400 estimated burden
hours

$7,296 x 80 responses =
$583,680 estimated cost
burden

1 response annually 19 for
each of 80 fund
complexes 20

1 hour of board time + 5
hours of senior portfolio
manager time + 3 hours of
risk management
specialist time +
3 hours of professional
legal time=12 burden
hours per fund complex

(1 hour x $5,672 (board
time) = $5,672) + (5
hours x $396 (Sr.
portfolio mgr.) = $1,980)
+ (3 hours x $240 (risk
management specialist) =
$720) + (3 hours x $500
(attorney) = $1,500) =
$9,872 per fund complex

12 hours x 80 responses =
960 estimated burden
hours

$9,872 x 80 responses =
$789,760 estimated cost
burden

5 hours senior portfolio
manager time
+ 2 hours compliance
manager time
+ 2 hours professional
legal time
+ 1 hour paralegal time
10 hours per response

5 x $396 (sr. portfolio
manager) = $1,980 +
2 x $372 (compliance
manager) = $744 +
2 x $500 (attorney) =
$1,000 +
1 x $262 (paralegal) =
$262

1 response x 80 fund
complexes =
80 estimated responses
annually

5 responses annually for
each of 80 fund
complexes

$1,980 + $744 + $1,000 +
$262 = $3,986 per
response
19

We have not amortized the one-time hour and cost burdens figures associated with new funds,
because we estimated there would be 10 new funds each year. Therefore, the burden would
occur each year instead of occurring over a three-year period. We have done this throughout this
PRA.
20

Commission staff estimates that there are 80 fund complexes subject to rule 2a-7. This
estimate is based on Form N-MEP filings with the Commission for the month ended May 2021.
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Estimated Responses

Total
Retail Funds Policies
and Procedures

Total
Establishment of written
procedures to test
periodically the ability
of the fund to maintain a
stable NAV per share
based on certain
hypothetical events
(“stress testing”)

Estimated Burden
Hours

Estimated Internal Cost
Burden

5 responses x 80 =
400 estimated responses
annually

10 hours x 400 =
4,000 estimated burden
hours

$3,986 x 400 responses =
$1,594,400 estimated
cost burden

2 21

12 hours (attorney time)
+ 1 hour (board time)
13 hours per fund

(12 hours x $500
(attorney) = $6,000) + (1
hour x $5,672 (board
time) = $5,672) = $11,672
(per fund)

13 hours x 2 responses =
26 estimated burden
hours

$11,672 x 2 responses =
$23,344 estimated cost
burden

3 hours board time + 8
hours professional legal
time + 7 hours risk
management specialist
time + 4 hours senior risk
management time = 22
hours

3 hours x $5,672 ( board
time) = $17,016

2 estimated responses
annually

1 response annually for
10 new money market
funds

8 hours x $500 (attorney)
= $4,000
7 hours x $240 (risk
management specialist) =
$1,680

21

We estimated that approximately two new money market funds would seek to qualify as retail
money market funds under rule 2a-7 and therefore be required to adopt written policies and
procedures reasonably designed to limit beneficial owners to natural persons.
For purposes of the 2022 rule 2a-7 PRA extension, Form N-MFP data reflects that none of the 10
new money market funds created per year between May 2018 through May 2021 elected to be
retail funds. Despite this, we continue to estimate that 2 new money market funds per year would
elect to be retail funds to avoid potentially underestimating the burden associated with these
requirements.

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Estimated Responses

Estimated Burden
Hours

Estimated Internal Cost
Burden
4 hours x $430 (sr. risk
management specialist) =
$1,720
$17,016 + $4,000 +
$1,680 + $1,720 =
$24,416 (per response)

Total
Establishment of written
procedures designed to
stabilize NAV and
guidelines and
procedures for board
delegation of authority

10 estimated responses
annually

1 response annually for
10 new funds

22 hours x 10 responses =
220 estimated burden
hours

$24,416 x 10 responses =
$244,160 estimated cost
burden

0.5 hours of board time
+7.2 hours professional
legal time + 7.8 hours
paralegal time = 15.5 hour
per response

0.5 x hours x $5,672
(board time) = $2,836
7.2 hours x $500
(attorney) = $3,600
7.7 hours x $262
(paralegal) = $2,017
$2,836 + $3,600 + $2,017
= $8,453 per response

Total
Board determination –
Fees and Gates

10 estimated responses
annually

2 funds per year

15.5 hrs x 10 responses =
155 estimated burden
hours

$8,453 x 10 responses =
$84,530 estimated cost
burden

4 hours attorney + 2 hours
of board time + 1 hour of
fund’s compliance
attorney = 7 hours per
fund

4 hours x $500 (attorney)
= $2,000
2 hours x $5,672 (board
time) = $11,344
1 x $440 (compliance
attorney) = $440
$2,000 + $11,344 + $440
= $13,784 per fund

Total

2 estimated responses

7 hours x 2 responses =
14 estimated burden

- 16 -

$13,784 x 2 funds
$27,568 estimated cost

Estimated Responses
annually

Estimated Burden
Hours
hours

Estimated Internal Cost
Burden
burden

2 responses annually for
20 funds

.5 hours (professional
legal time)

.5 hours x $500 (attorney)
= $250 per response

Total

40 estimated responses
annually

.5 hours x 40 responses =
20 estimated burden
hours

$250 x 40 responses =
$10,000 estimated cost
burden

TOTAL ESTIMATED
ANNUAL BURDEN OF
INFORMATION
COLLECTION FOR
RULE 2a-7

192,955 estimated
responses annually

250,646 estimated
burden hours annually

$86,380,772 estimated
cost burden annually

Written record of board
determinations and
actions related to failure
of a security to meet
certain eligibility
standards or an event of
default or insolvency

- 17 -

Based on the estimated burden of information collection for rule 2a-7 and Form PF filings, the
estimated burden of information collection for rule 12d1-1 is set forth in Table 2 below.
Table 2: Rule 12d1-1 burden of information collection burden estimates for unregistered
money market funds

Record of credit risk
analyses, and
determination
regarding adjustable
rate securities, asset
backed securities,
securities subject to a
demand feature or
guarantee, and
counterparties to
repurchase agreements

Estimated Responses

Estimated Burden Hours

Estimated Internal Cost
Burden 22

85 responses annually per
33 liquidity funds 23

680 burden hours of
professional (business

[$276 per hour
(intermediate business

22

The cost burdens shown in this chart for professional personnel are based on SIFMA’s
Management & Professional Earnings in the Securities Industry 2013, modified for 2024 by the
Commission staff to account for an 1800-hour work –year and inflation, and multiplied by 5.35
to account for bonuses, firm size, employee benefits and overhead and the cost burdens for
clerical personnel are based on SIFMA's Office Salaries in the Securities Industry 2013,
modified for 2024 by Commission staff to account for an 1800-hour work-year and inflation, and
multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead. However,
SIFMA data does not include a board of directors. For board time, Commission staff currently
uses a cost of $5672 per hour, which was last adjusted for inflation in December 2024. This
estimate assumes an average of nine board members per year.
We use these estimated burdens for registered money market funds to extrapolate the
information collection burdens for unregistered money market funds under rule 12d1-1 in this
Table 2.
23

The number of liquidity funds is based on the following: 68 x the percentage of liquidity
funds that are at least partially in compliance with the risk–limiting provisions of rule 2a-7, or
100 – 52) = 48%. The result (rounded up to a whole number) is 33 liquidity funds (68 * 0.48 =
33). The number of liquidity funds and percentage of funds that are at least partially compliant
with the risk-limiting provisions of rule 2a-7 is based on the U.S. Securities and Exchange
Commission’s Division of Investment Management – Analytics Office Private Funds Statistics,
- 18 -

Estimated Responses

Estimated Burden Hours
analyst or portfolio
manager) time per liquidity
fund x 33 liquidity funds

Estimated Internal Cost
Burden 22
analyst)
+ $396 per hour (senior
portfolio manager) =
$672] 2 =
$336 median weighted
average per hour

Total

Fund’s website
disclosures including
portfolio holding
information, daily and
weekly liquid assets, net
shareholder flow, daily
current NAV, financial
support received by the
fund, the imposition and
removal of liquidity
fees, and the suspension
and resumption of fund
redemptions

680 x 33 =
22,440 estimated burden
hours

$336 x 22,440 hours =
$7,539,840 estimated
cost burden

Disclosure of Portfolio
Holdings Information

Disclosure of Portfolio
Holdings Information

Disclosure of Portfolio
Holdings Information

12 months x 33 liquidity
funds = 396 responses
per year

[12 hours (one hour per
monthly filing) to update
the website to include the
disclosure of portfolio
holdings information x 33
liquidity funds = 396 hours
per year]
+
[24 hours of webmaster
time for an estimated 1
new liquidity fund 24 each

396 hours (for 33
liquidity funds) x $299
(per hour for a
webmaster) = $118,404
(for recurring internal
burden labor costs) +

2,805 estimated
responses per liquidity
fund annually

24 hours for 1 new
liquidity fund x $299 (per
hour for a webmaster) =
$7,176

Third Calendar Quarter 2023 (March 31, 2024) available at
https://www.sec.gov/files/investment/2023q3-private-funds-statistics-20240331-accessible.pdf.
24

The number of new unregistered money market funds is estimated from 2021-2023 historical
Form PF filings by liquidity fund advisers. See Securities and Exchange Commission’s Division
of Investment Management – Analytics Office Private Funds Statistics, Third Calendar Quarter
2023 (March 31, 2024) available at https://www.sec.gov/files/investment/2023q3-private-fundsstatistics-20240331-accessible.pdf.
- 19 -

Estimated Responses

Estimated Burden Hours
year to initially develop a
webpage and provide
monthly disclosure for the
initial year = 24 one-time
burden hours]
= 420 aggregate annual
one-time and recurring
burden hours for the
disclosure of portfolio
holdings

Estimated Internal Cost
Burden 22
=
$125,580 total aggregate
annual one-time and
recurring labor burdens
for disclosure of portfolio
holdings

Disclosure of Daily and
Weekly Liquid Assets and
Net Shareholder Flow

Disclosure of Daily and
Weekly Liquid Assets and
Net Shareholder Flow

Disclosure of Daily and
Weekly Liquid Assets and
Net Shareholder Flow

252 business days x 33
liquidity funds = 8,316
responses per year

[36 hours ongoing annual
burden x 33 liquidity funds
= 1,188 hours per year]
+
[70 hours for each new
liquidity fund x 1 new fund
= 70 one-time hours]

[31.5 hours x $371
(blended rate for a senior
systems analyst ($342)
and senior programmer
($399) = $11,687 (per
liquidity fund)]
+
[4.5 hours x $406
(blended rate for
compliance manager
($372) and a compliance
attorney ($440)) =
$1,827]

= 1,258 aggregate annual
recurring and one-time
burden hours for disclosure
of daily and weekly liquid
assets and shareholder flow

=
$13,514 (per fund to
update the depiction of
daily and weekly liquid
assets and the liquidity
fund’s net inflow or
outflow on the liquidity
fund’s website each
business day during that
year)

- 20 -

Estimated Responses

Estimated Burden Hours

Estimated Internal Cost
Burden 22
x 33 liquidity funds
=
$445,962 recurring
aggregate annual cost
burdens for the disclosure
of daily and weekly liquid
assets and weekly liquid
assets and the fund’s net
inflow or outflow on the
liquidity fund’s website
each business day during
the year
+
[(20 hours x $406
(blended rate for
compliance manager
($372) and a compliance
attorney ($440)) = $8,120
+ (50 hours x $371
(blended rate for a senior
systems analyst ($342)
and senior programmer
($399)) = $18,550] =
$26,670 (internal labor
cost burden for each new
fund)]
=
$472,632 aggregate
annual recurring and onetime cost burdens for
disclosure of daily and
weekly liquid assets and
shareholder flow

Disclosure of Daily
Current NAV

Disclosure of Daily
Current NAV

Disclosure of Daily
Current NAV

252 business days x 33
liquidity funds = 8,316
responses per year

[32 hours (sr. systems
analyst/sr. programmer) x
33 liquidity funds = 1,056
hours per year]
+
[70 one-time burden hours
for each new liquidity fund
x 1 new liquidity fund = 70
one-time burden hours]
=
1,126 aggregate annual
recurring and one-time
burden hours for disclosure

32 hours x $371 (blended
rate for a senior systems
analyst ($342) and senior
programmer ($399) =
$11,872 (annual ongoing
internal labor cost burden
per fund) x 33 funds =
$391,776 ongoing annual
cost burdens
+
[(20 hours x $406
(blended rate for
compliance manager

- 21 -

Estimated Responses

Estimated Burden Hours
of daily current NAV

TOTAL

Estimated Internal Cost
Burden 22
($372) and a compliance
attorney ($440)) = $8,120
+ (50 hours x $371
(blended rate for a senior
systems analyst ($342)
and senior programmer
($399) = $18,550)] =
$26,670 (internal labor
cost burden for each new
fund)]
x 1 new fund = $26,670
(total one-time cost
burden)
=
$418,446 aggregate
annual recurring and onetime cost burdens

Disclosure of Financial
Support Received by the
Fund, and Imposition and
Removal of Liquidity
Fees, and the Suspension
and Resumption of Fund
Redemptions

Disclosure of Financial
Support Received by the
Fund, and Imposition and
Removal of Liquidity Fees,
and the Suspension and
Resumption of Fund
Redemptions

Disclosure of Financial
Support Received by the
Fund, and Imposition and
Removal of Liquidity
Fees, and the Suspension
and Resumption of Fund
Redemptions

Not applicable

Not applicable

Not applicable

Total Estimated Burden
Hours Relating to
Website Disclosure

Total Estimated Burden
Hours Relating to Website
Disclosure

Total Estimated Burden
Hours Relating to
Website Disclosure

396 + 8,316 + 8,316 =
16,928 estimated
responses

420 + 1,258 + 1,126 =
2,804 estimated burden
hours

$125,580 + $472,632 +
$418,446 =
$1,016,658 estimated
cost burden

Board review of
procedures and
guidelines of any
investment adviser or
officers to whom the
fund’s board has
delegated responsibility
under rule 2a-7 and
amendment of such

- 22 -

procedures and
guidelines 25

TOTAL
Review, revise, and
approve written
procedures to stress test
a fund’s portfolio

Estimated Responses

Estimated Burden Hours

Estimated Internal Cost
Burden 22

1 response annually for
each of 8 funds 26

1 hour (board time) + 4
hours (compliance and
professional legal time) = 5
hours

[1 hour x $5,672 ( board
time) = $5,672] + [4 x
$406 (blended rate for
compliance manager
($372) and a compliance
attorney ($440)) =
$1,624] = $7,296 (cost
per fund)

5 hours x 8 responses =
40 estimated burden
hours

$7,296 x 8 responses =
$58,368 estimated cost
burden

1 hour of board time + 5
hours of senior portfolio
manager time
+ 3 hours of risk
management specialist
time + 3 hours of
professional legal time =
12 hours

1 hour x $5,672 (board
time) = $5,672

8 estimated responses

1 response annually for
each of 33 fund
complexes 27

5 x $396 (Sr. portfolio
manager) = $1,980
3 x $240 (risk
management specialist) =
$720
3 x $500 (attorney) =
$1,500
$5,672 + $1,980 + $720 +
$1,500 = $9,872 per

25

We recognize that in many cases the adviser to an unregistered money market fund typically
performs the function of the fund’s board. Money Market Fund Reform; Amendments to Form
PF Investment Company Act Rel. No. 31166 (Jul. 23, 2014), 79 FR 47735, 47809 (Aug. 14,
2014).
26

For purposes of this PRA extension, we assumed that on average 25% (33 funds x .25 =
approximately 8 funds) of liquidity funds would review and update their procedures on annual
basis.
27

This number has been derived from the number of advisers to liquidity funds. See U.S
Securities and Exchange Commission, Division of Investment Management, Analytics Office,
Private Fund Statistics, Third Quarter 2023 (March 31, 2024), Table 2.
- 23 -

TOTAL
Reports to fund boards
on the results of stress
testing 28

Estimated Responses

Estimated Burden Hours

Estimated Internal Cost
Burden 22
liquidity fund complex

33 estimated responses

12 hours x 33 responses =
396 estimated burden
hours

$9,872 x 33 responses =
$325,776 estimated cost
burden

5 hours senior portfolio
manager time
+ 2 hours compliance
manager time
+ 2 hours professional
legal time
+ 1 hour paralegal time
10 hours per response

5 x $396 (sr. portfolio
manager) = $1,980

5 responses annually for
each of 33 fund
complexes

2 x $372 (compliance
manager) = $744
2 x $500 (attorney) =
$1,000
1 x $262 (paralegal) =
$262

TOTAL

5 responses x 33 fund
complexes =
165 estimated responses

$1,980 + $744 + $1,000 +
$262 = $3,986 per
response
10 hours x 165 response =
1,650 estimated burden
hours

$3,986 x 165 responses =
$657,690 estimated cost
burden

Not applicable

Not applicable

Not applicable

1 response annually for 1
new liquidity fund

3 hours board time + 8
hours professional legal
time + 7 hours risk

3 hours x $5,672 (board
time) = $17,016

Retail Funds Policies
and Procedures 29
TOTAL
Establishment of
written procedures to
test periodically the
ability of the fund to
maintain a stable NAV
per share based on
certain hypothetical
events (“stress testing”)

28

See supra note 25.

29

There are no liquidity funds of this type; liquidity funds only are offered to qualified investors.
- 24 -

Estimated Responses

Estimated Burden Hours
management specialist
time + 4 hours senior risk
management time = 22
hours

Estimated Internal Cost
Burden 22
8 hours x $500 (attorney)
= $4,000
7 hours x $240 (risk
management specialist) =
$1,680
4 hours x $430 (sr. risk
management specialist) =
$1,720
$17,016 + $4,000 +
$1,680 + $1,720 =
$24,416 (per response)

TOTAL
Establishment of
written procedures
designed to stabilize
NAV and guidelines and
procedures for board
delegation of authority 30

1 estimated response

1 response annually for 1
new liquidity fund

22 hours x 1 response =
22 estimated burden
hours

$24,416 x 1 response =
$24,416 estimated cost
burden

0.5 hours board time + 7.2
hours professional legal
time + 7.8 hours paralegal
time = 15.5 hours

0.5 hours x $5,672 (board
time) = $2,836
7.2 hours x $500
(attorney) = $3,600
7.8 hours x $262
(paralegal) = $2,044
$2,836 + $3,600 +
$2,044 = $8,480 (per
response)

TOTAL

1 estimated response

15.5 hours x 1 response
15.5 estimated burden
hours

Board determination –
Fees and Gates 31
30

See supra note 25.

31

Id.
- 25 -

$8,480 x 1 estimated
response =
$8,480 estimated cost
burden

Estimated Responses

Estimated Burden Hours

2 liquidity funds per year

4 hours attorney + 2 hours
of board time + 1 hours of
fund’s compliance attorney
= 7 hours per liquidity
fund

Estimated Internal Cost
Burden 22
4 hours x $500 (attorney)
= $2,000
2 hours x $5,672 ( board
time) = $11,344
1 x $440 (compliance
attorney) = $440
$2,000 + $11,344 + $440
= $13,784 per liquidity
fund

2 estimated responses

7 hours x 2 funds =
14 estimated hours
burden

$13,784 x 2 liquidity
funds =
$27,568 estimated costs
burden

2 responses annually for
2 liquidity funds 33

.5 hours (professional legal
time)

.5 hours x $500 (attorney)
= $250

Total

4 estimated responses

.5 hours x 4 responses
2 estimated burden hours

$250 x 4 responses =
$1,000 estimated cost
burden

TOTAL ESTIMATED
BURDEN OF
INFORMATION
COLLECTION FOR
RULE 12d1-1

19,947 estimated
responses annually

27,384 estimated burden
hours annually

$9,659,796 estimated
internal cost burden
annually

TOTAL
Written record of board
determinations and
actions related to failure
of a security to meet
certain eligibility
standards or an event of
default or insolvency 32

32

Id.

33

In the context of registered money market funds, we have previously estimated an average of
approximately 2 occurrences for 20 funds each year; however, this number may vary
significantly in any particular year. For purposes of this PRA extension, we assumed there would
be same proportion of unregistered money market funds experiencing events of default or
solvency each year. (20/320 registered money market funds = approximately 5%. 5% x 33
liquidity funds = approximately 2 liquidity funds)
- 26 -

13.

Cost to Respondents

Commission staff estimates that in addition to the internal costs described in section 12,
unregistered money market funds will incur external costs to preserve records, as required under
rule 2a-7. These costs will vary significantly for individual funds, depending on the amount of
assets under fund management and whether the fund preserves its records in a storage facility in
hard copy or has developed and maintains a computer system to create and preserve compliance
records. In the 2022 rule 2a-7 PRA extension, Commission staff estimated that the amount an
individual money market fund may spend ranges from $100 per year to $300,000. We have no
reason to believe the range is different for unregistered money market funds. Based on Form PF
data as of the third calendar quarter 2023, liquidity funds have $361 billion in gross asset value. 34
The Commission does not have specific information about the proportion of assets held in small,
medium-sized, or large unregistered money market funds. Because liquidity funds are often used
as cash management vehicles, the staff estimates that each private liquidity fund is a “large” fund
(i.e., more than $1 billion in assets under management). Based on a cost of $0.0000009 per
dollar of assets under management (for large funds), 35 the staff estimates compliance with the
record storage requirements of rule 2a-7 for these unregistered money market funds costs
approximately $324,900 annually. 36

See U.S Securities and Exchange Commission, Division of Investment Management,
Analytics Office, Private Fund Statistics, Third Quarter 2023 (March 31, 2024), Table 3.
34

35

The cost estimate is the same as that used in the most recently approved rule 2a-7 submission.

36

This estimate is based on the following calculation: ($361 billion x 0.0000009) = $324,900
for large funds.
- 27 -

Consistent with estimates made in the rule 2a-7 submission, Commission staff estimates
that unregistered money market funds also incur capital costs to create computer programs for
maintaining and preserving compliance records for rule 2a-7 of $0.0000132 per dollar of assets
under management. Based on the assets under management figures described above, staff
estimates annual capital costs for all unregistered money market funds of $4.76 million. 37
Commission staff further estimates that, even absent the requirements of rule 2a-7,
money market funds would spend at least half of the amounts described above for record
preservation ($162,450) and for capital costs ($2.38 million). Commission staff concludes that
the aggregate annual external costs of compliance with the rule are $162,450 for record
preservation and $2.38 million for capital costs, or a total of $2.54 million.
14.

Cost to the Federal Government

There are no costs to the Federal Government associated with rule 12d1-1.
15.

Change in Burden

The estimated total annual burden decreased from 33,660 hours to 27,384 hours. The
decrease in hours is attributable to a decrease in our estimate of the number of fund complexes
with liquidity funds invested in by mutual funds in excess of the statutory limits under rule
12d1-1.

This estimate is based on the following calculation: ($361 billion x 0.0000132) = $4.76
million.
37

- 28 -

The estimated total annual cost decreased from $10.93 million annually to $2.54 million
annually. 38 The decrease in cost is attributable to a decrease in our estimate of liquidity funds as
reported on Form PF data, and the correction of a previous calculation error.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

Not applicable.
18.

Exceptions to Certification Statement for Paperwork Reduction Act
Submission

Not applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
Not applicable.

38

This estimate is based on the total estimated external cost burden ($162,450 for record
preservation + $2.38 million for capital costs = $2.54 million).
- 29 -