3235-0410 Supporting Statement (2025) Final

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
Rules 17h-1T and 17h-2T
OMB Control No. 3235-0410
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C.
Section 3501 et seq.

A.

JUSTIFICATION
1.

Information Collection Necessity

On July 16, 1992, the Commission adopted Rules 17h-1T and 17h-2T (17 CFR 240.17h1T and 17 CFR 240.17h-2T) (the “risk assessment rules”), under the Securities Exchange Act of
1934 (“Exchange Act”) pursuant to its authority under the risk assessment provisions of the
Market Reform Act of 1990 (Pub. L. No. 101-432, 104 Stat. 963 (1990)). 1 These rules are
intended to give the Commission access to information concerning the financial and securities
activities of certain broker-dealer affiliates. A broker-dealer may be affected by the financial
difficulties of an affiliate both directly, such as by the affiliate’s withdrawal of capital to meet the
affiliate’s obligations, and indirectly, such as by the effect that the affiliate’s difficulties may
have on the broker-dealer’s ability to obtain financing. This impact on a broker-dealer may be
exacerbated in times of market stress. Accordingly, Rules 17h-1T and 17h-2T enable the
Commission to monitor the activities of broker-dealer affiliates through its access to affiliate
information and receipt of reports on a quarterly basis.
Rule 17h-1T requires a covered broker-dealer to maintain and preserve records and other
information concerning certain entities that are associated with the broker-dealer. This
requirement extends to the financial and securities activities of the holding company, affiliates
and subsidiaries of the broker-dealer that are reasonably likely to have a material impact on the
financial or operational condition of the broker-dealer. Rule 17h-2T requires a covered brokerdealer to file with the Commission reports concerning the information required to be maintained
and preserved under Rule 17h-1T within 60 calendar days of the end of each fiscal quarter.
However, Rule 17h-2T also allows a firm to file its year-end financial statements separately from
the rest of its fiscal fourth quarter report, within 105 calendar days of the end of that quarter. 2
The Commission is statutorily authorized by Section 17(h) of the Exchange Act of 1934
(15 U.S.C. 78q(h)) to adopt rules that require a broker-dealer to maintain and preserve risk
assessment information with respect to those entities that are associated with the broker-dealer
1
2

See Final Temporary Risk Assessment Rules, Exchange Act Release 30929 (July 16, 1992), 57 FR 32159
(July 21, 1992).
Thus, the same information is filed with the Commission whether the broker-dealer files all the information
within 60 calendar days of the end of the fiscal fourth quarter or some of the information within 60 calendar
days and the rest within 105 calendar days of the end of the fiscal fourth quarter.

2
whose “business activities are reasonably likely to have a material impact on the financial and
operational condition” of the broker-dealer. In addition, Section 17(h) authorizes the
Commission to adopt rules that require a broker-dealer to file, no more frequently than quarterly,
summary reports of the information and records maintained pursuant to the risk assessment rules.
Further statutory authority is found in Section 23(a) of the Exchange Act (15 U.S.C. 78w).
2025 Rule Amendments (Rule 17h-2T: Form 17-H)
On December 16, 2024, the Commission voted to adopt amendments to Rule 17h-2T to
require Form 17-H to be filed in the Commission’s Electronic Data Gathering and Retrieval
(“EDGAR”) system. 3 Previously, Rule 17h-2T permits Form 17-H to be filed with the
Commission in paper-based format. The Commission is not substantively changing the
information that must be filed in connection with Form 17-H under Rule 17h-2T but is only
changing the manner and format in which that information is filed. The EDGAR-filing
requirement for Form 17-H is new, although filers had the option to file in EDGAR voluntarily
prior to the amendments and almost all of them elected to do so. The Commission also is
requiring Item 4 (financial statements) of Form 17-H to be filed in EDGAR and provided in the
Inline eXtensible Business Reporting Language (“Inline XBRL”) structured data language. The
Inline XBRL requirement is a new requirement.
More specifically, prior to the rule amendments, broker-dealers subject to the filing
requirement may choose to file the form in paper to the Commission’s headquarters in
Washington, DC, or may choose to file the form in EDGAR. As of December 31, 2023,
approximately 99% of the 241 broker-dealers subject to Rule 17h-2T utilized EDGAR to make
their required Form 17-H filings. The remaining broker-dealers submitted the Form 17-H in
paper form. For electronic filing on EDGAR, the facing page and Part II of Form 17-H are
fillable forms that EDGAR subsequently converts into a structured, eXtensible Markup
Language (“XML”)-based data language specific to Form 17-H.
With the 2025 rule amendments, the Commission is retaining the custom XML
functionality for the facing page disclosures and Part II (associated persons disclosures) that is
already built into the voluntary EDGAR-filing process for Form 17-H. In conclusion, the rule
amendments do not change the materials filed under the rule or the custom XML requirements
but alter existing requirements by mandating that Form 17-H be filed on EDGAR and that the
financial statements required by Item 4 of Form 17-H be structured in Inline XBRL.
2.

Information Collection Purpose and Use

The information required by Rules 17h-1T and 17h-2T is necessary to enable the
Commission to monitor the activities of a covered broker-dealer’s affiliate whose business
activities are reasonably likely to have a material impact on the financial and operational

3

See Electronic Submission of Certain Materials Under the Securities Exchange Act of 1934; Amendments
Regarding the FOCUS Report; SEC Release Nos. 33–11342; 34–101925; IC– 35420; (Dec. 16, 2024); 90
FR 7250 (Jan. 21, 2025) (File No. S7-08-23).

3
condition of the broker-dealer. Without this information, the Commission would be unable to
assess the potentially damaging impact of the affiliate’s activities on the broker-dealer.
3.

Consideration Given to Information Technology

As stated above, the Commission is requiring Form 17-H to be filed in EDGAR and
provided in Inline XBRL. Previously, broker-dealers subject to Rule 17h-2T may—but were not
required to—file Form 17-H in EDGAR, but almost all of them voluntarily filed the form in
EDGAR. As mentioned, the Inline XBRL requirement is a new requirement.
4.

Duplication

We are not aware of duplication of this information.
5.

Effect on Small Entities

The risk assessment rules generally do not apply to small entities because a broker-dealer
that maintains less than $20 million in capital and does not carry customer accounts is exempted
under the rules. Further, a broker-dealer that either restricts its business to certain mutual fund
activities, certain direct participation programs or introduces accounts on a fully disclosed basis
is also exempt under the rules. In addition, a broker-dealer that is owned by a natural person is
exempt from the risk assessment rules under Section 17(h) of the Exchange Act.
6.

Consequences of Not Conducting Collection

The risk assessment rules enable the Commission to monitor the activities of a covered
broker-dealer’s affiliate whose business activities are reasonably likely to have a material impact
on the financial and operational condition of the broker-dealer. This information is collected
quarterly. If the information were to be collected less frequently, the Commission would have to
rely on stale and outdated information when assessing risks to the broker-dealer. As a result, the
Commission would be unable to adequately assess the potentially damaging impact of more
recent activities of the broker-dealer affiliates on the broker-dealer.
7.

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 Commission requested comment on the collection of information requirements in the
proposing release in March 2023. 4 Multiple commenters generally agreed that the Inline XBRL
requirements under the rule amendments will impose additional costs on affected entities, but
4

See Electronic Submission of Certain Materials Under the Securities Exchange Act of 1934; Amendments
Regarding the FOCUS Report; SEC Release Nos. 33-11176, 34-97182, IC-34864 (Mar. 22, 2023); 88 FR
23920 (Apr. 18, 2023) (File No. S7-08-23).

4
disagreed with the Commission’s estimates on the specific nature and magnitude of such costs.5
The Commission considered these comments. The Commission estimated at proposal, and
continues to estimate for the rule amendments, that certain affected filers or submitters (specifically,
clearing agencies and exchanges not affiliated with public companies) will incur costs of $20,000 to
$30,000 to structure the documents, but that other affected filers or submitters will incur lower
costs. The Commission has, however, increased the burden and cost estimates for Inline XBRL
tagging of the relevant documents.
9.

Payment or Gift

No payment or gift is provided to respondents.
10.

Confidentiality

All information obtained by the Commission pursuant to the provisions of Rules 17h-1T
and 17h-2T from a broker or dealer concerning a material associated person is deemed confidential
information for the purposes of section 24(b) of the Exchange Act.
11.

Sensitive Questions

This information collection does not collect personally identifiable information. The
agency has determined that neither a Privacy Impact Assessment (“PIA”) nor a System of
Records Notice (“SORN”) are required in connection with the collection of information.
12.

Information Collection Burden

Annual Recordkeeping Burden:
As of December 31, 2023, there are 241 respondents that must comply with Rules 17h-1T
and 17h-2T, which is an increase of 6 from the prior extension for Rules 17h-1T and 17h-2T. 6
Each of these 241 respondents are estimated to require 10 hours per year to maintain the records
required under Rule 17h-1T, for an aggregate estimated annual industry recordkeeping
burden of 2,410 hours (241 respondents X 10 hours). In addition, there are 241 broker-dealer
respondents that must file quarterly and annual risk assessment reports with the Commission
under Rule 17h-2T. Therefore, each of these 241 respondents must make five annual responses
under Rule 17h-2T (for a total of 1,205 responses per year). These five responses are estimated
to require 14 hours per respondent per year, for an aggregate estimated annual industry
reporting burden of 3,374 hours (241 respondents X 14 hours).
In addition, new respondents must draft an organizational chart required under Rule 17h-1T
and establish a system for complying with the risk assessment rules. The staff estimates that
5

The comments on the proposing release are available at https://www.sec.gov/comments/s7-0823/s70823.htm.

6

See Submission for OMB Review: Comment Request: Extension; Rules 17h-T and 17h-2T, [SEC File No.
270-359, OMB Control No. 3235-0410]. 87 FR 56109 (Sept. 13, 2022).

5
drafting the required organizational chart requires one hour and establishing a system for complying
with the rules requires three hours. Based on the modest increase in the number of new filers in
recent years, the staff estimates there will be three new respondents, and thus, a corresponding
estimated initial (one-time) burden of twelve hours for new respondents (4 hours X 3 news
respondents = 12 hours), for an annualized total industry reporting burden of 4 hours (that is, a
one-time burden of 12 hours amortized over three years).
The three burden hour totals listed above for reporting, recordkeeping, and new respondents
are not a result of any new information collections or any substantive changes to existing
information collections adopted by the Commission, but only result from changes in the number of
actual respondents (for recordkeeping and reporting) and prospective respondents (for estimated
new respondents).
2025 Rule Amendments (Rule 17h-2T: Form 17-H Inline XBRL Requirement)
As mentioned, the Commission is requiring broker-dealers subject to Rule 17h-2T to file
Item 4 of Form 17-H in EDGAR in Inline XBRL. To be clear, the Commission is not changing
the substantive information required in Item 4 of Form 17-H but is only changing the format in
which the Item 4 of Form 17-H is filed by requiring EDGAR-filing in Inline XBRL. While the
EDGAR-filing and Inline XBRL requirements are new, broker-dealers subject to Rule 17h-2T
have had the option to file Form 17-H in EDGAR and almost all of them have been doing so.
Under the rule amendments, broker-dealers that are required to file reports under Rule 17h-2T
are required to tag the financial statements included with the report in Inline XBRL.
As broker-dealers that are required to file reports under Rule 17h-2T are also required to
file annual reports in EDGAR under Rule 17a-5, the Commission is not estimating an additional
burden for becoming familiar with the EDGAR system and for monitoring changes in EDGAR
filing requirements attributable to the amendments to Rule 17h-2T. Likewise, because these
broker-dealers also are required to tag annual reports under Rule 17a-5 in Inline XBRL, the
Inline XBRL requirement for reports under Rule 17h-12T represents additional (quarterly)
iterations of that compliance process, as abbreviated to reflect that Form 17-H requires only
financial statements (and not any supplemental reports or other related filings) to be tagged in
Inline XBRL, and that Form 17-H filers may omit the statement of cash flows and the footnotes
to the financial statements. Thus, the Commission estimates an average additional burden of 2
hour per response four times a year (quarterly) for 241 respondents, resulting in a total
industrywide burden of 1,928 hours 7 per year for Form 17-H filers to structure their financial
statements (Item 4 of Form 17-H) in Inline XBRL.
The hour burdens are summarized in the following chart:

7

(241 respondents X 8 hours = 1,928 hours.)

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Summary of Hourly Burdens
A.
Name of
Information
Collection

Type of
Burden

Number
of
Entities
Impacted

B.

C.

D.

E.

F.

G.

Annual
Responses
per Entity

Initial
Burden
per
Entity
per
Response

Initial
Burden
Annualized
per Entity
per
Response

Ongoing
Burden
per
Entity
per
Response

Annual
Burden
Per
Entity per
Response

Total
Annual
Burden
Per Entity

Total
Industry
Burden

Small
Business
Entities
Affected

[ D + E]

[F * B]

[G * A]

[A * %]

[C ÷ 3
years]
Rule 17h-1T &
Rule 17h-2T
Rule 17h-2T
(quarterly risk
assessment
reports & annual
financial
statements)
Rule 17h-1T –
Initial Burden for
new respondents
(org chart &
compliance
program)
Requirement to
file Form 17-H in
Inline XBRL –
Ongoing Burden

Recordkeeping

241

1

0

0

10

10

10

2,410

0

Reporting

241

5

0

0

2.8 8

2.8

14

3,374

0

Reporting

39

1

4

1.33

0

1.33

1.33

4

0

Reporting

241

4

0

0

2

2

8

1,928

0

TOTAL HOURLY BURDEN FOR ALL RESPONDENTS

13.

7,716

Costs to Respondents

The total annual cost burden for Rules 17h-1T and 17h-2T is $0.
14.

Costs to Federal Government

There is no estimated cost to the federal government.
15.

Changes in Burden

The change in burden is a result of an increase in the number of respondents from 235 to
241 and because the Commission is requiring broker-dealers subject to Rule 17h-2T to file Item
4 (financial statements) of Form 17-H in inline XBRL. The increase in the number of
respondents is unrelated to the rule amendments. As a result, the estimated total annual industry
hourly burden increased from 5,640 to 7,716, an increase of 2,076.
The estimated total annual hour burden has changed as follows:
8
9

The 5 responses are estimated to take a combined total of 14 hours per year, therefore, to determine the
burden per response, we divided 14 by 5. (14 / 5 = 2.8.)
We are estimating a modest future increase in the number of broker-dealers—namely, 3 new respondents—
that would be subject to Rule 17h-1T (which is not being amended in the 2025 rulemaking).

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Summary of Changes in Burden Hours
Name of Information
Collection
Rule 17h-1T & 17h-2T
(Recordkeeping)
Rule 17h-2T (quarterly
risk assessment reports &
annual financial
statements)
Rule 17h-1T initial
burden for projected new
respondents
Requirement to file Form
17-H in Inline XBRL –
Ongoing Burden
Total Hourly Burden
Change for All
Respondents

TOTAL CHANGE

16.

Annual Industry
Burden

Annual Industry
Burden Previously
Approved

Change in
Burden

Reason for Change

2,410

2,350

60

Increase in number of respondents

3,374

3,290

84

Increase in number of respondents

4

0

4

Projected increase in number of respondents

1,928

0

1,928

New requirement that Form 17-H be filed in Inline XBRL

2,076

Respondents increased from 235 to 241 with an estimated
future increase of 3 participants. The new Inline XBRL
filing requirement for quarterly risk assessments would
result in an hour burden increase for each of the four
responses required by respondents annually.

7,716

5,640

2,076 hours

Information Collection Planned for Statistical Purposes

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

Approval to Omit OMB Expiration

The Commission is not seeking approval to omit the expiration date.
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
The collection of information does not involve statistical methods.