Supporting Statement A

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PAPERWORK REDUCTION ACT SUPPORTING STATEMENT
for the extension of
Rule 17f-5
OMB Control Number 3235-0269

The U.S. Securities and Exchange Commission (“Commission” or SEC) submits this
information collection request (ICR) pursuant to the Paperwork Reduction Act of 1995 (PRA), 44
U.S.C. Section 3501 et seq., with the following justification.

1.

Necessity of Information Collection
Rule 17f 5 (17 CFR 270.17f 5) under the Investment Company Act of 1940 [15 U.S.C. 80a] (the

“Act”) governs the custody of the assets of registered management investment companies (“funds”) with
custodians outside the United States. Under rule 17f 5, a fund or its foreign custody manager (as
delegated by the fund’s board) may maintain the fund’s foreign assets in the care of an eligible fund
custodian under certain conditions. If the fund’s board delegates to a foreign custody manager authority
to place foreign assets, the fund’s board must find that it is reasonable to rely on each delegate the board
selects to act as the fund’s foreign custody manager. The delegate must agree to provide written reports
that notify the board when the fund’s assets are placed with a foreign custodian and when any material
change occurs in the fund’s custody arrangements. The delegate must agree to exercise reasonable care,
prudence, and diligence, or to adhere to a higher standard of care, in performing the delegated services.
When the foreign custody manager selects an eligible foreign custodian, it must determine that the
fund’s assets will be subject to reasonable care if maintained with that custodian, and that the written
contract that governs each custody arrangement will provide reasonable care for fund assets. The
contract must contain certain specified provisions or others that provide at least equivalent care. The
foreign custody manager must establish a system to monitor the performance of the contract and the
appropriateness of continuing to maintain assets with the eligible foreign custodian.

U.S. Securities and Exchange Commission (SEC)
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On October 1, 2026, the Commission proposed, among other things, to amend rule 17f-2 to add a
reference to business development companies (“BDCs”) to clarify that BDCs, like registered
investments companies, may rely on rule 17f-5 to custody their securities and similar investments. 1

2.

Purpose and Use of Information Collection
The collection of information requirements in rule 17f-5 are intended to provide protection for

fund assets maintained with a foreign bank custodian whose use is not authorized by statutory provisions
that govern fund custody arrangements, 2 and that is not subject to regulation and examination by U.S.
regulators. The requirement that the fund board determine that it is reasonable to rely on each delegate
is intended to ensure that the board carefully considers each delegate’s qualifications to perform its
responsibilities. The requirement that the delegate provide written reports to the board is intended to
ensure that the delegate notifies the board of important developments concerning custody arrangements
so that the board may exercise effective oversight. The requirement that the delegate agree to exercise
reasonable care is intended to provide assurances to the fund that the delegate will properly perform its
duties.
The requirements that the foreign custody manager determine that fund assets will be subject to
reasonable care with the eligible foreign custodian and under the custody contract, and that each contract
contain specified provisions or equivalent provisions, are intended to ensure that the delegate has
evaluated the level of care provided by the custodian, that it weighs the adequacy of contractual
provisions, and that fund assets are protected by minimal contractual safeguards. The requirement that
the foreign custody manager establish a monitoring system is intended to ensure that the manager
periodically reviews each custody arrangement and takes appropriate action if developing custody risks

1

See Adviser and Regulated Fund Custody Rules; Crypto Custody Rules, Investment Company Act
Release No. 36353 (Oct. 1, 2026) [91 FR 63870 (Oct. 6, 2026)] (“Proposing Release”).

2

See section 17(f) of the Act. 15 U.S.C. 80a-17(f).

U.S. Securities and Exchange Commission (SEC)
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may threaten fund assets. 3

3.

Use and Consideration of Information Technology
Rule 31a-2(f) under the Act permits investment companies to maintain many types of records on

micrographic and electronic storage media.

4.

Identifying and Minimizing 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. Rule 17f-5 does not
require duplicative reporting or recordkeeping. Other law generally does not require the board findings
concerning delegation, foreign custody manager findings and monitoring systems, delegate reports, and
risk analysis, monitoring, and notification systems required by these rules.

5.

Effect on Small Entities
The effect of rule 17f-5 on small entities is not unduly burdensome. Rule 17f-5 affects, among

other persons, the relatively small number of firms that act as foreign custody managers for funds under
rule 17f-5. None of these foreign custody managers would likely qualify as a small entity, because each
manager is assumed to be a major bank with a global branch network or global ties to other banks. Rule
17f-5 also affects the funds that invest in foreign markets, and the investment advisers to those funds.
Few if any of the affected funds and advisers are small entities. 4

3

The staff believes that subcustodian monitoring does not involve “collection of information” within the
meaning of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 - 3520) (“Paperwork Reduction Act”).

4

A fund is considered a small entity for purposes of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., if
it, together with other investment companies in the same group of related investment companies, has net
assets of $50 million or less. 17 CFR 270.0-10. An adviser is considered a small entity if it has assets
under management of less than $25 million, has total assets of less than $5 million, and is not in a control
relationship with other advisers or persons that are not small entities. 17 CFR 275.0-7. Most funds that
invest in foreign securities are part of a fund complex that has net assets of more than $50 million, and are
advised by advisers with assets under management of $25 million or more.

U.S. Securities and Exchange Commission (SEC)
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6.

Consequences of Not Conducting Collection and Obstacles to Reducing
Burden
The internal board reporting requirements of rule 17f-5 do not recur periodically, but apply only

upon the occurrence of certain events, such as when the fund board selects a delegate or the foreign
custody manager selects a foreign custodian. These event-triggered requirements include the rule’s
provisions for board findings and custody contracts. Some custody arrangements, such as arrangements
with less established foreign banks, or with reliable subcustodians in countries subject to economic or
political turmoil, may require more frequent internal board reporting than other arrangements.

7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
Not applicable.

8.

Public Comment and Consultations Outside the Agency
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. These forums provide the Commission and the staff means of ascertaining and acting upon
paperwork burdens confronting the industry. Before adopting the proposed amendments to rule 17f-5,
the Commission will receive and evaluate public comments on the proposal and its collection of
information requirements.

9.

Payment or Gift to Respondents
Not applicable.

10.

Assurance of Confidentiality and Privacy
Not applicable.

11.

Collection Questions of a Sensitive Nature
Not applicable.

12.

Estimated Time Burden and its Cost Equivalent
The estimate of average burden hours is made solely for the purposes of the Paperwork

Reduction Act and is not derived from a comprehensive or even a representative survey or study of the
costs of Commission rules and forms.
U.S. Securities and Exchange Commission (SEC)
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Commission staff have previously estimated that the annual burden of compliance with rule 17f5 to be 3.5 hours at a cost of $13,160 per respondent that engages a new foreign custody manager.
Commission staff has estimated that of all management investment companies, approximately 0.5% will
engage a new foreign custody manager. Therefore, of 176 BDCs, 5 we estimate that 1 will engage a new
foreign custody manager under rule 17f-5. The total annual burden of the proposed amendment to rule
17f-5 is estimated to be 3.5 hours and $13,160.
Table 1:
Estimated Paperwork Burden Effects of the Proposed Amendments to rule 17f-5
Annual No. of Responses
1

13.

Annual Hours
4 hours

Total Annual Cost Burden
N/A

Estimated Additional Cost Burden
Rule 17f-5 does not impose any paperwork related cost burden not discussed in item 12 above.

14.

Annual Cost to the Federal Government
Not applicable. There is no requirement to report the information collection(s) to the SEC.

15.

Reasons for Changes in Burden Estimates
The estimated total annual hour burden for rule 17f-5 has increased an increase of 4 hours due to

the addition of BDCs to the rule.

16.

Plans for Publishing Results
Not applicable.

17.

Approval to Omit Display of OMB Expiration Date
Not applicable.

18.

Exceptions to the Certification for Paperwork Reduction Act Submissions
Not applicable.

5

Based on Refinitiv data as of December 31, 2025.

U.S. Securities and Exchange Commission (SEC)
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