approximate number of NRSRO credit ratings outstanding or the number of
credit analysts employed by NRSROs, based on the most recent annual
certifications submitted to the Commission by the NRSROs.\2123\ An
NRSRO objected to this method of estimating the burden attributable to
the proposal, stating that ``to properly evaluate the actual burden of
the rules, particularly as they relate to the seven NRSROs that must
compete with the largest three NRSROs, the burden analysis must take
into account not only the number of ratings or analysts in isolation,
but also must include the amount of legal and compliance resources
necessary to implement systemic and simultaneous changes'' and that
``the investments will not be diminished relative to financial
resources because an NRSRO may have fewer analysts or credit ratings
issued.'' \2124\ Similarly, another NRSRO stated that ``the burden on
smaller rating agencies may be even more severe than the Commission's
numbers suggest'' and that ``[w]hile some aspects of the proposals
(such as disclosures and updates) scale in a linear fashion with the
number of published ratings, other costs (such as the development of
new disclosure templates and implementing new systems) are fixed.''
\2125\ The commenter stated that these ``fixed costs have a
disproportionate impact on smaller firms.'' \2126\ As discussed below,
the Commission based some of its burden estimates for three of the
proposed amendments or new rules on the number of NRSRO credit ratings
outstanding or the number of credit analysts employed by NRSROs and has
reviewed these estimates to determine whether they should be modified
in response to these comments.
---------------------------------------------------------------------------

    \2123\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33500.
    \2124\ See A.M. Best Letter.
    \2125\ See DBRS Letter.
    \2126\ See id.
---------------------------------------------------------------------------

    First, the Commission based its estimate of the one-time and annual
burden associated with the amendments to the instructions for Exhibit 1
to Form NRSRO on the number of NRSRO credit ratings outstanding. In
response to the above comments, the Commission is adding to its one-
time burden estimate to account for aspects of the burden that do not
depend on the number of NRSRO credit ratings outstanding. For example,
some of the burden associated with establishing systems for determining
performance statistics according to the amended instructions may not
depend on the number of credit ratings in the start-date cohort.\2127\
---------------------------------------------------------------------------

    \2127\ See section IV.D.2. of this release (discussing the PRA
burden resulting from the amendments to the instructions for Exhibit
1 to Form NRSRO).
---------------------------------------------------------------------------

    Second, the Commission based its estimate of the annual burden
associated with publishing the form and due diligence certifications
with the

taking of a rating action under paragraph (a) of Rule 17g-7, as
proposed, in part, on its estimate of the number of rating actions
taken by NRSROs. The annual burden estimate also included a component
representing the time an NRSRO would spend to update its standard
disclosures and to tailor disclosures to particular rating actions. In
addition, the Commission estimated a one-time burden to develop the
standardized disclosures and to create the systems, protocols, and
procedures for generating the forms to accompany rating actions.
However, while the Commission agrees that its estimate in the proposal
may have been low, as discussed in detail below (and above in section
II.G. of this release), the Commission has modified the proposed
requirements in a number of ways that will mitigate to some degree the
burden of compliance with the requirements. The Commission is therefore
not increasing its estimate of the annual and one-time burdens to
update disclosures and create systems and procedures to comply with the
rule.\2128\
---------------------------------------------------------------------------

    \2128\ See section IV.D.6. of this release (discussing the PRA
burden resulting from the amendments to Rule 17g-7).
---------------------------------------------------------------------------

    Third, the Commission based its estimate of the one-time and annual
burden attributable to establishing, maintaining, enforcing, and
documenting standards of training, experience, and competence for the
individuals it employs to determine credit ratings pursuant to Rule
17g-9, as proposed, on the number of credit analysts employed by
NRSROs. In response to the above comments, the Commission is adding to
its burden estimate for this rule to account for a fixed burden that
does not depend on the number of credit analysts employed by an NRSRO,
in recognition of the fact that the burden associated with
establishing, maintaining, enforcing, and documenting standards of
training, experience, and competence for credit analysts may not be
directly proportional to the number of credit analysts employed by an
NRSRO.\2129\
---------------------------------------------------------------------------

    \2129\ See section IV.D.8. of this release (discussing the PRA
burden resulting from Rule 17g-9).
---------------------------------------------------------------------------

    The Commission is updating its estimates of the number of NRSRO
credit ratings outstanding and the number of NRSRO credit analysts
based on more recent information submitted to the Commission by the
NRSROs on Form NRSRO. The Commission now estimates that NRSROs have a
total of 2,437,046 credit ratings outstanding in all classes of credit
ratings.\2130\ The Commission further estimates that NRSROs employ a
total of 4,218 credit analysts.\2131\
---------------------------------------------------------------------------

    \2130\ See Table 2 in section I.B.2.a. of this release. In the
proposing release, the Commission estimated that NRSROs had a total
of 2,905,824 credit ratings outstanding in all classes of credit
ratings. See Nationally Recognized Statistical Rating Organizations,
76 FR at 33500.
    \2131\ See Table 1 in section I.B.2.a. of this release. In the
proposing release, the Commission estimated that NRSROs employed a
total of 3,520 credit analysts. See Nationally Recognized
Statistical Rating Organizations, 76 FR at 33500.
---------------------------------------------------------------------------

    Finally, in the proposing release, the Commission based some of its
estimates for purposes of the PRA on the number of Exchange Act-ABS
offerings per year.\2132\ For purposes of these estimates, the
Commission estimated that there would be approximately 2,067 Exchange
Act-ABS offerings per year.\2133\ The Commission estimates that in
calendar year 2013 there were approximately 715 offering of Exchange
Act-ABS.\2134\ The Commission believes that the more recent data on the
number of offerings of Exchange Act-ABS should be used for purposes of
the PRA estimates given significant difference between the 715
offerings per year estimate (which is based on data for calendar year
2013) and the 2,067 offerings per year estimate (which was derived from
older data).\2135\ Consequently, the Commission is revising the
estimate from 2,067 offerings per year to 715 offerings per year.
---------------------------------------------------------------------------

    \2132\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33506, 33509-33510.
    \2133\ See id. at 33506, 33509-33510. See also Disclosure for
Asset-Backed Securities Required by Section 943 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, 76 FR at 4507-4508
(providing an estimate of 2,067 upon which the estimate in the
proposing release was based).
    \2134\ See Table 6 in section I.B.2.b. of this release.
    \2135\ Disclosure for Asset-Backed Securities Required by
Section 943 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, 76 FR at 4508, n.217 (noting that the 2,067 estimate
was based, in part, on the average number of registered and Rule
144A offerings of asset-backed securities over the period 2004-
2009).
---------------------------------------------------------------------------

1. Amendments to Rule 17g-1
    The Commission is amending paragraph (i) of Rule 17g-1 to require
that an NRSRO make Form NRSRO and Exhibits 1 through 9 to Form NRSRO
freely available on an easily accessible portion of its corporate
Internet Web site.\2136\ The amendment removes the option for an NRSRO
to make the form publicly available ``through another comparable,
readily accessible means'' as an alternative to Internet Web site
disclosure.
---------------------------------------------------------------------------

    \2136\ See section II.E.2. of this release (providing a more
detailed discussion of this amendment).
---------------------------------------------------------------------------

    As stated above, the Commission believes that a Form NRSRO and
Exhibits 1 through 9 will be ``easily accessible'' if they can be
accessed through a clearly and prominently labeled hyperlink (including
through a hyperlink labeled ``Regulatory Disclosures'') on the homepage
of the NRSRO's corporate Internet Web site. NRSROs may need to make
changes to their corporate Internet Web sites to place clearly and
prominently labeled hyperlinks to Form NRSRO and Exhibits 1 through 9
on the Web sites.\2137\ In the proposing release, the Commission
estimated that reconfiguring a corporate Internet Web site for this
purpose would take an average of approximately five hours (and would be
accomplished by NRSROs using their corporate Internet Web site
administrators), resulting in an estimated industry-wide one-time
burden of approximately fifty hours.\2138\ The Commission did not
receive comment on this estimate and is adopting the amendment as
proposed. Therefore, the Commission is retaining this estimate without
revision.
---------------------------------------------------------------------------

    \2137\ See section II.E.2. of this release.
    \2138\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33501 (5 hours x 10 NRSROs = 50 hours).
---------------------------------------------------------------------------

    The Commission also is amending paragraph (i) of Rule 17g-1 to
require that NRSROs make their most recent Exhibit 1 freely available
in writing to any individual who requests a copy of the Exhibit to
implement the rulemaking mandated in section 15E(q)(2)(D) of the
Exchange Act.\2139\
---------------------------------------------------------------------------

    \2139\ See 15 U.S.C. 78o-7(q)(2)(D).
---------------------------------------------------------------------------

    In the proposing release, the Commission stated that it believed
that NRSROs would need to establish procedures and protocols for
receiving and processing these requests and that this would take an
average of approximately forty-eight hours per NRSRO, resulting in an
industry-wide one-time hour burden of approximately 480 hours.\2140\
The Commission did not receive comment on this estimate and is adopting
the amendments as proposed. Therefore, the Commission is retaining this
estimate without revision.
---------------------------------------------------------------------------

    \2140\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33501 (10 NRSROs x 48 hours = 480 hours).
---------------------------------------------------------------------------

    The Commission also estimated that each NRSRO would on average
receive approximately 200 requests per year and would spend an average
of twenty minutes processing each request, resulting in an industry-
wide annual hour burden of approximately 670 hours.\2141\ The
Commission did not receive comments on this estimate and is adopting
the amendments as

proposed. Therefore, the Commission is retaining this estimate without
revision.
---------------------------------------------------------------------------

    \2141\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33501 (200 requests x 20 minutes per request
= 67 hours per year; 10 NRSROs x 67 hours per year = 670 hours per
year).
---------------------------------------------------------------------------

    In response to comments stating that NRSROs should be able to
charge the requesting individual postage and handling fees,\2142\ the
Commission agrees, as stated above, that an NRSRO may charge a
reasonable postage and handling fee.\2143\ Because NRSROs may choose
not to pass the postage costs on to persons requesting the exhibit in
writing, the Commission estimates that the cost of postage will be
approximately two dollars per request, for an industry-wide annual cost
of approximately $4,000.\2144\
---------------------------------------------------------------------------

    \2142\ See DBRS Letter; S&P Letter.
    \2143\ See section II.E.2. of this release.
    \2144\ 200 requests x $2.00 = $400; 10 NRSROs x $400 = $4,000.
---------------------------------------------------------------------------

    The Commission is also amending paragraphs (e), (f), and (g) of
Rule 17g-1 to require NRSROs to use the Commission's EDGAR system to
electronically submit Form NRSRO and the required exhibits to the form
to the Commission as PDF documents in the format required by the EDGAR
Filer Manual, as defined in Rule 11 of Regulation S-T.\2145\ NRSROs
currently submit these documents to the Commission in paper form.
---------------------------------------------------------------------------

    \2145\ See section II.L. of this release (providing a more
detailed discussion of these amendments).
---------------------------------------------------------------------------

    The Commission estimated in the proposing release that each NRSRO
would spend an average of approximately four and \3/4\ hours becoming
familiar with the EDGAR filing system, resulting in an estimated
industry-wide one-time hour burden of forty-seven and a half
hours.\2146\
---------------------------------------------------------------------------

    \2146\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33501 (10 NRSROs x 4.75 hours = 47.5 hours).
---------------------------------------------------------------------------

    An NRSRO stated that it would have no objection to the proposal,
that providing the information as PDF documents would be ``the most
preferred and simplest'' way to provide the information, and that
providing the information in and XBRL or XML format would not provide
additional analytical benefit and could make it more difficult for
users to access Form NRSRO.\2147\ Another NRSRO, however, stated that
the Commission's estimate of the cost of the proposal ``accounts for
only a small fraction of the expected cost of compliance'' as ``an
NRSRO will have to familiarize itself with the roughly 35 Rules of
Regulation S-T as well as the first two volumes of the EDGAR Filer
Manual (which currently total more than 600 pages) and related EDGAR
technical guidance.'' \2148\ This commenter also stated that the
Commission did not estimate ``the expense an NRSRO would incur in
compiling Form NRSRO, its exhibits, and the annual reports into an
EDGAR-acceptable format.'' \2149\ However, the commenter did not
provide a different estimate of the costs associated with the proposal.
---------------------------------------------------------------------------

    \2147\ See S&P Letter.
    \2148\ See DBRS Letter.
    \2149\ See id.
---------------------------------------------------------------------------

    In response to the comment from an NRSRO that the Commission's
proposed cost estimate for the proposal ``accounts for only a small
fraction of the expected cost of compliance'' and that instead PDF
copies of the required submissions should be transmitted via
email,\2150\ the Commission notes that it has modified the proposed
amendments to require that the electronic submissions be made on EDGAR
as PDF documents, which, as noted above, another NRSRO described as
``the most preferred and simplest'' way to provide the
information.\2151\ The Commission also points out that not all of
Regulation S-T or the EDGAR Filer Manual applies to NRSRO submissions,
in particular, as these submissions will be made as PDF
documents.\2152\ Moreover, having the reports submitted via the EDGAR
system--rather than to a Commission email box--will assist the
Commission staff in storing and accessing these records in furtherance
of the Commission's NRSRO oversight function.
---------------------------------------------------------------------------

    \2150\ See DBRS Letter.
    \2151\ See S&P Letter.
    \2152\ See EDGAR Filer Manual, available at http://www.sec.gov/info/edgar/edmanuals.htm. Significant portions of the manual relate
to public company filing of information on various Commission forms
and to filing forms in formats other than PDF (ASCII, HTML, XML, or
XBRL). The third volume of the manual relates to the filing of Form
N-SAR by investment management companies registered with the
Commission.
---------------------------------------------------------------------------

    In response to the comment that the Commission underestimated the
burden of becoming familiar with the EDGAR system,\2153\ the Commission
is revising its estimate, based on staff experience, from 4 and \3/4\
hours on a one-time basis as the amount of time, on average, an NRSRO
would need to spend to become familiar with the EDGAR system to sixteen
hours, for an industry-wide one-time burden of approximately 160
hours.\2154\ This includes developing an understanding of how to use
the system for both submitting Forms NRSRO (and applicable exhibits)
and for submitting the Rule 17g-3 annual reports. The Commission is
allocating this one-time hour burden and corresponding cost solely to
Rule 17g-1.
---------------------------------------------------------------------------

    \2153\ See DBRS Letter.
    \2154\ 16 hours x 10 NRSROs = 160 hours. In addition, as
discussed below in section IV.D.12. of this PRA analysis, the
Commission estimates that the one-time industry-wide burden
resulting from filing Form ID to gain access to the EDGAR system to
be approximately two and half hours, for a total industry-wide one-
time burden of approximately 162.5 hours.
---------------------------------------------------------------------------

    The Commission stated in the proposing release that it did not
believe that changing the method of submitting Form NRSRO and Exhibits
1 through 9 from a paper submission to an electronic submission would
increase the current annual hour burden for Rule 17g-1.\2155\ An NRSRO
stated that the Commission failed to consider the significant ongoing
expenses of monitoring changes in EDGAR filing requirements.\2156\
Because the amendments to Rule 17g-1 require the submission to be made
in PDF (the simplest process), the Commission does not believe that
changes to the EDGAR filer manual generally will impact the NRSROs.
However, the Commission agrees with the commenter that NRSROs will need
to spend some time each year reviewing changes to the EDGAR filer
manual to determine whether they relate to the NRSRO's
submissions.\2157\ Consequently, the Commission now estimates, based on
Commission staff experience, that each NRSRO will spend an average of
approximately two hours per year monitoring changes in EDGAR filing
requirements, resulting in a total industry-wide annual hour burden of
approximately twenty hours.\2158\ This includes monitoring changes in
EDGAR filing requirements for both submitting Forms NRSRO and for
submitting the Rule 17g-3 annual reports.
---------------------------------------------------------------------------

    \2155\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33501.
    \2156\ See DBRS Letter.
    \2157\ See, e.g., Adoption of Updated EDGAR Filer Manual,
Securities Act Release No. 9600 (June 16, 2014), 79 FR 35280 (June
20, 2014); Adoption of Updated EDGAR Filer Manual, Securities Act
Release No. 9554 (Mar. 4, 2014), 79 FR 13216 (Mar. 10, 2014). The
Commission succinctly summarizes the updates to the EDGAR filer
manual in these releases, which are less than ten pages long.
    \2158\ 10 NRSROs x 2 hours = 20 hours.
---------------------------------------------------------------------------

    The Commission is allocating the one-time and annual hour burdens
and corresponding costs of the requirement to submit Form NRSRO and the
Rule 17g-3 annual reports to the Commission electronically on EDGAR as
PDF documents solely to Rule 17g-1.
    The Commission therefore estimates that the total industry-wide
one-time hour burden resulting from the amendments to Rule 17g-1 is
approximately 690 hours \2159\ to reconfigure NRSROs' corporate
Internet Web sites, to establish procedures and protocols for receiving
and processing requests for a paper copy of Exhibit 1, and for becoming
familiar with the EDGAR system, and the total industry-wide annual
burden is approximately

690 hours to process requests for a paper copy of Exhibit 1 and to
monitor changes in EDGAR filing requirements.\2160\ The Commission
further estimates that the total industry-wide annual external cost to
NRSROs resulting from the amendments to Rule 17g-1 is approximately
$4,000.
---------------------------------------------------------------------------

    \2159\ 50 hours + 480 hours + 160 hours = 690.
    \2160\ 670 hours + 20 hours = 690 hours.
---------------------------------------------------------------------------

2. Amendments to Form NRSRO Instructions
    The Commission is amending the instructions for Exhibit 1 to Form
NRSRO.\2161\ The amendments standardize the production and presentation
of the 1-year, 3-year, and 10-year transition and default statistics
that an NRSRO must disclose in the exhibit. The performance statistics
must be presented in a format specified in the instructions, which
include a sample ``Transition/Default Matrix.'' The amendments also
will enhance the information to be disclosed by, for example, requiring
statistics to be produced and presented for subclasses of structured
finance products and for credit ratings where the obligation was paid
off or the credit rating was withdrawn for reasons other than a default
or the obligation was paid off.
---------------------------------------------------------------------------

    \2161\ See section II.E.1. of this release (providing a more
detailed discussion of the amendments).
---------------------------------------------------------------------------

    In the proposing release, the Commission stated that it believed
that the burdens attributable to the amendments to the instructions for
Exhibit 1 should be based on the number of NRSRO credit ratings
outstanding (which, based on annual certifications submitted by the
NRSROs for the 2009 calendar year end, totaled 2,905,824 credit ratings
outstanding across the ten NRSROs), that the one-time hour burden would
be approximately three seconds per outstanding credit rating, and that
the annual hour burden would be approximately one and a half seconds
per outstanding credit rating, for an industry-wide one-time burden of
approximately 2,420 hours and an industry-wide annual burden of
approximately 1,210 hours.\2162\
---------------------------------------------------------------------------

    \2162\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33502.
---------------------------------------------------------------------------

    An NRSRO stated that collecting the data required for purposes of
the proposed amendments to the instructions for Exhibit 1 to Form NRSRO
would be burdensome, and this NRSRO suggested that NRSROs be exempt
from the requirement to include historical data to the extent that the
NRSRO does not already capture such information ``in a readily
retrievable format.'' \2163\ Another NRSRO stated that the definition
of paid off as applied to obligors ``is not practicable'' because some
obligors do not have rated debt outstanding and it would be difficult
to track whether all obligations of an obligor are paid off.\2164\ In
addition, an NRSRO objected to basing burden estimates on the number of
credit ratings outstanding or the number of credit analysts employed by
NRSROs, stating that the burden estimates ``must include the amount of
legal and compliance resources necessary to implement systemic and
simultaneous changes.'' \2165\
---------------------------------------------------------------------------

    \2163\ See Moody's Letter.
    \2164\ See S&P Letter.
    \2165\ See A.M. Best Letter. See also DBRS Letter.
---------------------------------------------------------------------------

    As discussed in section II.E.1. of this release, in response to
comment, the Commission has modified the proposed instructions for
Exhibit 1 to Form NRSRO. The final amendments provide that, except for
the issuers of asset-backed securities class of credit ratings, to
determine the number of credit ratings outstanding as of the beginning
of the applicable period, the NRSRO must include only credit ratings
assigned to an obligor as an entity or, if there is no such credit
rating, the credit rating of the obligor's senior unsecured debt,
instead of all of the credit ratings of individual securities or money-
market instruments issued by the obligor. Because the Commission has
narrowed the scope of the types of credit ratings that will have to be
included in the performance statistics for four of the five classes of
credit ratings, this should substantially reduce the amount of
historical information that will need to be analyzed. The Commission
has also revised the standard definition of paid off, in response to
comment,\2166\ to eliminate the prong that applied to credit ratings of
obligors as entities. The Commission has clarified that the rule does
not require NRSROs to track the outcomes of obligors, securities, or
money market instruments after the credit ratings assigned to them have
been withdrawn, in response to comments from two NRSROs,\2167\ one of
which stated that ``the proposed requirement to separately track rating
withdrawals, because of repayments and other reasons, likely would be
impractical in many cases.'' \2168\
---------------------------------------------------------------------------

    \2166\ See S&P Letter.
    \2167\ See Moody's Letter; S&P Letter.
    \2168\ See S&P Letter.
---------------------------------------------------------------------------

    The Commission believes that it is appropriate to base some of the
burden estimates attributable to the amendments to the instructions for
Exhibit 1 on the number of NRSRO credit ratings outstanding, as the
time required to retrieve information will depend on the number of
credit ratings outstanding and the time required to calculate the
performance statistics should be greater for a larger start-date
cohort. However, as stated above, in response to comment, the
Commission is adding to its one-time burden estimate to account for
burden that does not depend on the number of NRSRO credit ratings
outstanding.\2169\ For example, some of the burden associated with
establishing systems for determining performance statistics according
to the amended instructions may not depend on the number of credit
ratings outstanding. While commenters did not provide an estimate of
the amount of one-time burden that would be unrelated to the number of
credit ratings outstanding, the Commission is adding to the one-time
hour burden estimated in the proposing release a one-time hour burden
that is not linked to the number of credit ratings outstanding.
Specifically, the Commission estimates, based on Commission staff
experience, a one-time burden of approximately fifty hours per NRSRO,
for an industry-wide total of approximately 500 hours on a one-time
basis,\2170\ attributable to the amendments to the instructions for
Exhibit 1 that is in addition to the one-time burden based on the
number of credit ratings outstanding.
---------------------------------------------------------------------------

    \2169\ See A.M. Best Letter; DBRS Letter.
    \2170\ 50 hours x 10 NRSROs = 500 hours.
---------------------------------------------------------------------------

    In order to be conservative, the Commission is not revising its
time per credit rating estimates as a result of the modifications to
the proposed amendments to the instructions for Exhibit 1 in the final
rule, although the modifications may result in lower burdens compared
to those of the proposed amendments. However, the Commission is
updating its estimate of the number of NRSRO credit ratings
outstanding. Based on the annual certifications submitted by the NRSROs
for the 2013 calendar year, there were approximately 2,437,046 credit
ratings outstanding across all ten NRSROs.\2171\ The Commission
therefore estimates that the industry-wide one-time hour burden for
NRSROs to establish systems to process the relevant information
necessary to complete Exhibit 1 to Form NRSRO that is based on the
number of outstanding credit ratings is approximately 2,031 hours
\2172\ and that

the industry-wide annual burden is approximately 1,015 hours.\2173\
---------------------------------------------------------------------------

    \2171\ See Table 2 in section I.B.2.a. of this release.
    \2172\ 2,437,046 credit ratings x 3 seconds = 2,030.9 hours
(rounded to 2,031 hours).
    \2173\ 2,437,046 credit ratings x 1.5 seconds = 1015.4 hours
(rounded to 1015 hours).
---------------------------------------------------------------------------

    The Commission therefore estimates that the total industry-wide
one-time hour burden to NRSROs resulting from the amendments to the
instructions for Exhibit 1 to Form NRSRO is approximately 2,531
hours\2174\ to establish systems for determining performance statistics
according to the amended instructions and that the annual burden is
approximately 1,015 hours to calculate and format the performance
statistics according to the amended instructions.
---------------------------------------------------------------------------

    \2174\ 500 hours + 2,031 hours = 2,531 hours.
---------------------------------------------------------------------------

3. Amendments to Rule 17g-2
    The Commission is adding paragraph (a)(9) to Rule 17g-2 to identify
the policies and procedures with respect to look-back reviews an NRSRO
is required to establish, maintain, and enforce pursuant to section
15E(h)(4)(A) of the Exchange Act and paragraph (c) of Rule 17g-8 as a
record that must be made and retained.\2175\ In addition, the
Commission is adding the following paragraphs to Rule 17g-2 to identify
records that must be retained: (1) Paragraph (b)(12) identifies the
internal control structure an NRSRO must establish, maintain, enforce,
and document pursuant to section 15E(c)(3)(A) of the Exchange Act;
\2176\ (2) paragraph (b)(13) identifies the policies and procedures
with respect to the procedures and methodologies used to determine
credit ratings an NRSRO is required to establish, maintain, enforce,
and document pursuant to paragraph (a) of Rule 17g-8; \2177\ (3)
paragraph (b)(14) identifies the policies and procedures with respect
to credit rating symbols, numbers, or scores an NRSRO must establish,
maintain, enforce, and document pursuant to paragraph (b) of Rule 17g-
8; \2178\ and (4) paragraph (b)(15) identifies the standards of
training, experience, and competence for credit analysts an NRSRO must
establish, maintain, enforce, and document pursuant to Rule 17g-
9.\2179\ In addition, in a modification from the proposal, the
Commission is amending paragraph (c) of Rule 17g-2 to provide that
records identified in paragraphs (a)(9), (b)(12), (b)(13), (b)(14), and
(b)(15) of Rule 17g-2 must be retained until three years after the date
record is replaced with an updated record, instead of three years after
the date the record is made or received (the retention period for other
records identified in paragraphs (a) and (b) of Rule 17g-2).\2180\
---------------------------------------------------------------------------

    \2175\ See section II.C.2. of this release (providing a more
detailed discussion of this amendment).
    \2176\ See section II.A.2. of this release (providing a more
detailed discussion of this amendment).
    \2177\ See section II.F.2. of this release (providing a more
detailed discussion of this amendment).
    \2178\ See section II.J.2. of this release (providing a more
detailed discussion of this amendment).
    \2179\ See section II.I.2. of this release (providing a more
detailed discussion of this amendment).
    \2180\ See paragraph (c) of Rule 17g-2.
---------------------------------------------------------------------------

    With respect to paragraph (b)(12) of Rule 17g-2, one commenter
stated that the requirement to document internal controls is
burdensome, particularly for smaller NRSROs, and argued that an NRSRO
should be allowed to establish its own documentation policies and
procedures.\2181\ However, the Commission is not imposing documentation
requirements. Rather, section 15E(c)(3)(A) of the Exchange Act requires
an NRSRO, among other things, to document its internal control
structure.\2182\
---------------------------------------------------------------------------

    \2181\ See A.M. Best Letter.
    \2182\ See 15 U.S.C. 78o-7(c)(3)(A).
---------------------------------------------------------------------------

    The Commission is adding paragraph (a)(9) to Rule 17g-2 to require
NRSROs to make and retain a record documenting the policies and
procedures with respect to look-back reviews an NRSRO is required to
establish, maintain, and enforce under section 15E(h)(4)(A) of the
Exchange Act and paragraph (c) of proposed Rule 17g-8. The Commission
is providing estimates below in section IV.D.7. of this PRA analysis to
address the burdens associated with Rule 17g-8, including the one-time
and annual hour burdens that will result from establishing,
maintaining, enforcing, and documenting the policies and procedures
with respect to look-back reviews required by section 15E(h)(4)(A) of
the Exchange Act and paragraph (c) of Rule 17g-8.
    Consequently, for purposes of Rule 17g-2, the Commission is
providing estimates of the one-time and annual hour burdens resulting
from the requirement to retain the records that are identified in
paragraphs (a)(9), (b)(12), (b)(13), (b)(14), and (b)(15) of Rule 17g-
2. The Commission believes that the one-time hour burden will result
from the NRSRO needing to update its record retention policies and
procedures to incorporate these new records that will need to be
retained. NRSROs already have a recordkeeping system in place to comply
with the retention requirements of Rule 17g-2 before today's
amendments. The Commission estimated in the proposing release that each
NRSRO would spend an average of approximately twenty hours updating its
record retention policies and procedures, resulting in an industry-wide
one-time hour burden of approximately 200 hours.\2183\ The Commission
did not receive comment on this estimate.
---------------------------------------------------------------------------

    \2183\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33503 (10 NRSROs x 20 hours = 200 hours).
---------------------------------------------------------------------------

    The Commission estimated in the proposing release that it would
take approximately one hour per record each year to retain updated
versions of these records,\2184\ for an annual hour burden for each
NRSRO attributable to these proposals of approximately five
hours,\2185\ and an industry-wide annual hour burden of approximately
fifty hours.\2186\ The Commission did not receive comment on this
estimate and, except for the amendment to paragraph (c) requiring that
the record be retained until three years after the date the record is
replaced with an updated record, is adopting the amendments to Rule
17g-2 as proposed. The Commission believes that the amendment to
paragraph (c) of Rule 17g-2 will not affect the burdens estimated for
Rule 17g-2 in the proposing release because the amendment removes an
ambiguity in the proposal that could be read to make the retention
period shorter than the Commission intended and shorter than the
retention period upon which the Commission's estimate in the proposing
release was based. Therefore, the Commission is retaining the one-hour
per record estimate in the proposing release without revision.
---------------------------------------------------------------------------

    \2184\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33503.
    \2185\ 5 records x 1 hour = 5 hours.
    \2186\ 10 NRSROs x 5 hours = 50 hours.
---------------------------------------------------------------------------

    The Commission is repealing paragraph (d)(2) of Rule 17g-2 (the 10%
Rule) and re-codifying, with substantial amendments, the requirements
in former paragraph (d)(3) of Rule 17g-2 in paragraph (b) of Rule 17g-7
(the 100% Rule).\2187\ The one-time and annual hour burdens resulting
from the enhancements to the 100% Rule are discussed below in section
IV.D.6. of this release, which addresses the one-time and annual hour
burdens resulting from the amendments to Rule 17g-7.
---------------------------------------------------------------------------

    \2187\ See section II.E.2. of this release (providing a more
detailed discussion of these amendments).
---------------------------------------------------------------------------

    Consequently, the Commission estimates that the total industry-wide
one-time hour burden for NRSROs resulting from the amendments to Rule
17g-2 to update their record retention policies and procedures to
incorporate these new records that will need to be retained is
approximately 200 hours and

the annual hour burden to retain the records is approximately fifty
hours.\2188\
---------------------------------------------------------------------------

    \2188\ The adjusted industry-wide annual hour burden for Rule
17g-2 before today's amendments was 4,000 hours. The elimination of
the requirements in paragraph (d)(2) of Rule 17g-2 will subtract
seventy hours from that amount. See Amendments to Rules for
Nationally Recognized Statistical Rating Organizations, 74 FR at
6472. In addition, the re-codification of paragraph (d)(3) of Rule
17g-2 in paragraph (b) of Rule 17g-7 will subtract an additional 450
hours from the adjusted industry-wide annual hour burden for Rule
17g-2 and that burden will be attributed to the industry-wide annual
hour burden for Rule 17g-7. See Amendments to Rules for Nationally
Recognized Statistical Rating Organizations, 74 FR at 63853; section
IV.D.6. of this release. Consequently, after these subtractions, the
adjusted industry-wide annual hour burden for Rule 17g-2 will be
3,480 hours (4,000 hours-70 hours-450 hours = 3,480 hours). The
amendments to add paragraphs (a)(9), (b)(12), (b)(13), (b)(14), and
(b)(15) to Rule 17g-2 being adopted today will, as discussed above,
add approximately fifty hours to the adjusted industry-wide annual
hour burden resulting in a total adjusted industry-wide annual hour
burden of 3,530 hours (3,480 hours + 50 hours = 3,530 hours).
---------------------------------------------------------------------------

4. Amendments to Rule 17g-3
    The Commission is amending paragraphs (a) and (b) of Rule 17g-
3.\2189\ The amendment to paragraph (a) adds paragraph (a)(7) to
require an NRSRO to include an additional report--a report on the
NRSRO's internal control structure--with its annual submission of
reports to the Commission pursuant to Rule 17g-3. The amendment to
paragraph (b) of Rule 17g-3 requires that the NRSRO's CEO or, if the
firm does not have a CEO, an individual performing similar functions,
must provide a signed statement attesting to information in the report
that must be attached to the report.
---------------------------------------------------------------------------

    \2189\ See section II.A.3. of this release (providing a more
detailed discussion of these amendments).
---------------------------------------------------------------------------

    In the proposing release, the Commission stated that because NRSROs
already should have developed processes and protocols to prepare the
annual reports required by Rule 17g-3, the internal hour burden
associated with the first submission of the report on the NRSRO's
internal control structure would not be materially different than the
hour burden associated with submitting subsequent reports, although the
time required to prepare subsequent reports could decrease
incrementally over time as the NRSRO gains experience with the
requirement.\2190\ The Commission stated that an NRSRO likely would
engage outside counsel to analyze the requirements for the report and
to assist in drafting and reviewing the first report, that the time
outside counsel would spend on this work would depend on the size and
complexity of the NRSRO, and that an attorney would spend an average of
approximately 100 hours assisting an NRSRO and its CEO or other
qualified individual in drafting and reviewing the first report,
resulting in an industry-wide external one-time hour burden of
approximately 1,000 hours.\2191\ Based on industry sources, the
Commission estimated that the cost of outside counsel would be
approximately $400 per hour,\2192\ and that the average one-time cost
to an NRSRO would be approximately $40,000,\2193\ resulting in an
industry-wide one-time cost of approximately $400,000.\2194\
---------------------------------------------------------------------------

    \2190\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33504.
    \2191\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33504 (10 NRSROs x 100 hours = 1,000 hours).
    \2192\ See Proposed Rules for Nationally Recognized Statistical
Rating Organizations, 74 FR 63889 (providing an estimate of $400 per
hour to engage outside counsel).
    \2193\ 100 hours x $400 = $40,000.
    \2194\ 10 NRSROs x $40,000 = $400,000.
---------------------------------------------------------------------------

    In connection with the proposed amendments to Rule 17g-7, an NRSRO
stated that the Commission underestimated the hourly rate for retaining
outside counsel.\2195\ The commenter, however, did not provide
alternative estimate of the hourly rate. Based on staff experience, the
Commission is retaining the hourly rate without revision.\2196\
---------------------------------------------------------------------------

    \2195\ See DBRS Letter.
    \2196\ See Proposed Rules for Nationally Recognized Statistical
Rating Organizations, 74 FR at 63889 (``Based on industry sources,
the Commission estimates that the cost of outside counsel would be
approximately $400 per hour'').
---------------------------------------------------------------------------

    In terms of the annual burden relating to the submission of the
reports, the Commission estimated, based on staff experience, that each
NRSRO would spend on average approximately 150 hours preparing the
internal controls report, resulting in an industry-wide annual burden
of approximately 1,500 hours.\2197\
---------------------------------------------------------------------------

    \2197\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33504 (10 NRSROs x 150 hours = 1,500 hours).
---------------------------------------------------------------------------

    In addition, the Commission stated that an NRSRO likely would
continue to engage outside counsel to assist in preparing the reports
(after filing the first report) and that the time outside counsel would
spend assisting in the preparation of subsequent reports would be less
than the time spent on preparing the first report, since the counsel's
work will not need to include an initial analysis of the new
requirements. Consequently, the Commission estimated that an attorney
would spend an average of approximately fifty hours assisting an NRSRO
and its CEO or other qualified individual in drafting and reviewing the
report, resulting in an industry-wide annual hour burden of
approximately 500 hours.\2198\ As stated above, the Commission
estimated that the cost of outside counsel would be approximately $400
per hour.\2199\ For these reasons, the Commission estimated that the
average annual cost to an NRSRO to comply with this requirement would
be approximately $20,000,\2200\ resulting in an industry-wide annual
cost of approximately $200,000.\2201\ The Commission did not receive
comment on the hour estimates. As proposed, paragraph (a)(7) of Rule
17g-3 would require that the internal controls report contain a
description of the responsibility of management in establishing and
maintaining an effective control structure and an assessment of the
effectiveness of the internal control structure. In response to
comment, paragraph (a)(7), as adopted, has been modified from the
proposal to require that the report describe material weaknesses
identified in the internal control structure during the fiscal year and
how they were addressed and to state whether the internal control
structure was effective as of the end of the fiscal year.\2202\ In
order to include an assessment of the effectiveness of the NRSRO's
internal control structure in the annual internal controls report, the
NRSRO will need to identify any material weaknesses in the internal
control structure. In addition, since the statute requires that the
internal control structure be ``effective,'' the NRSRO will have to
remediate any such weaknesses to comply with the statutory
requirement.\2203\ Therefore, the Commission does not believe the
modifications discussed above necessitate adjusting the burdens from
those that were proposed.
---------------------------------------------------------------------------

    \2198\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33504 (10 NRSROs x 50 hours = 500 hours).
The Commission is adopting paragraph (a)(7) of Rule 17g-3 as
proposed. Accordingly, this estimate remains unchanged from the
Commission's preliminary estimate in the proposing release.
    \2199\ See also Proposed Rules for Nationally Recognized
Statistical Rating Organizations, 74 FR 63889 (``Based on industry
sources, the Commission estimates that the cost of outside counsel
would be approximately $400 per hour'').
    \2200\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33504 (50 hours x $400 = $20,000).
    \2201\ See id. (10 NRSROs x $20,000 = $200,000).
    \2202\ See section II.A.3. of this release (providing a more
detailed discussion of these modifications).
    \2203\ See 15 U.S.C. 78o-7(c)(3)(A).
---------------------------------------------------------------------------

    However, the modifications to the amendment from the proposal also
require that the internal controls report include a description of
material weaknesses identified during the fiscal year and how they were
remediated. The Commission believes that documenting these items for
inclusion

in the internal controls report will take NRSROs an average of
approximately fifteen hours per year, resulting in an internal burden
of approximately 165 hours per NRSRO per year for preparing the
internal controls report, resulting in a total industry-wide annual
burden of approximately 1,650 hours.\2204\
---------------------------------------------------------------------------

    \2204\ 150 hours + 15 hours = 165 hours; 165 hours x 10 NRSROs =
1,650 hours.
---------------------------------------------------------------------------

    As discussed above in section IV.D.1. of this release, the
amendments to Rule 17g-3 also require that the annual reports be
submitted electronically on the Commission's EDGAR system.\2205\ The
discussion of the Commission's estimates of the burdens associated with
the requirement to submit the Rule 17g-3 annual reports electronically
through the EDGAR system in the proposing release, relevant comments on
those burdens, the Commission's responses to those comments, and the
Commission's final burden estimates (which are revised in response to
comments) are discussed in section IV.D.1. of this release. Further, as
discussed below in section IV.D.12. of this release, the Commission
estimates there will be burdens to complete Form ID for purposes of
submitting Form NRSRO (and Exhibits 1 through 9) and the Rule 17g-3
annual reports electronically through EDGAR. For purposes of this PRA
analysis, the Commission is allocating the burdens discussed above to
Rule 17g-1 and Form ID.
---------------------------------------------------------------------------

    \2205\ See section II.L. of this release (providing a more
detailed discussion of this amendment).
---------------------------------------------------------------------------

    The Commission therefore estimates that the amendments to Rule 17g-
3 will result in a total industry-wide one-time cost for NRSROs of
approximately $400,000 to engage outside counsel to analyze the
requirements for the internal controls report, a total industry-wide
annual hour burden of approximately 1,650 hours to prepare the internal
controls report, and a total industry-wide annual cost of approximately
$200,000 to engage outside counsel to assist in the preparation of the
annual internal controls report.
5. Amendments to Rule 17g-5
    The Commission is adding paragraph (a)(3)(iii)(E) to Rule 17g-5 to
require an NRSRO to obtain an additional representation from the
issuer, sponsor, or underwriter of an asset-backed security that the
issuer, sponsor, or underwriter will post on the Rule 17g-5 Web site,
promptly after receipt, any executed Form ABS Due Diligence-15E
delivered by a person employed to provide third-party due diligence
services with respect to the security.\2206\ This provision, which was
not included in the proposal, may require NRSROs to redraft the
agreement templates they use with respect to obtaining representations
from issuers, sponsors, or underwriters as required under Rule 17g-5.
Based on staff experience, the Commission estimates that an NRSRO will
spend approximately two hours on a one-time basis to redraft these
templates, for a total industry-wide one-time burden of approximately
6,720 hours.\2207\ In addition, based on the Commission's estimate that
there will be 715 offerings of Exchange Act-ABS per year,\2208\ the
Commission estimates that issuers, sponsors, and underwriters will need
to post approximately 715 Forms ABS Due Diligence-15E on Rule 17g-5 Web
sites per year (in addition to the information that is already posted
to the Web sites). Based on staff experience, the Commission estimates
that it will take the issuer, sponsor, or underwriter approximately ten
minutes to upload each form and post it to the Web site, for a total
industry-wide annual burden of approximately 119 hours.\2209\
---------------------------------------------------------------------------

    \2206\ See sections II.G.5. and II.H.2. of this release
(providing a more detailed discussion of this provision).
    \2207\ 336 issuers, sponsors, and underwriters x 2 hours = 672
hours; 672 hours x 10 NRSROs = 6,720 hours.
    \2208\ See Table 6 in section I.B.2.b. of this release. Issuers,
underwriters, and NRSROs may not use providers of third-party due
diligence services with respect to every issuance of Exchange Act-
ABS. For example, the Commission believes that providers of third-
party due diligence services are used primarily for RMBS
transactions. See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33471. However, the Commission's estimate
uses the total number of estimated Exchange Act-ABS offerings (as
opposed to a lesser amount based on an estimate of RMBS offerings)
because the use of providers of third-party due diligence services
may migrate to other types of Exchange Act-ABS.
    \2209\ 715 Forms ABS Due Diligence-15E per year x 10 minutes =
119.17 hours, rounded to 119 hours.
---------------------------------------------------------------------------

    The Commission is adding paragraph (c)(8) to Rule 17g-5 to prohibit
an NRSRO from issuing or maintaining a credit rating where a person
within the NRSRO who participates in determining or monitoring the
credit rating, or developing or approving procedures or methodologies
used for determining the credit rating, including qualitative and
quantitative models, also: (1) Participates in sales or marketing of a
product or service of the NRSRO or a product or service of an affiliate
of the NRSRO; or (2) is influenced by sales or marketing
considerations.\2210\ As a consequence of the new absolute prohibition,
the Commission believes that an NRSRO will need to update the written
policies and procedures to address and manage conflicts of interest the
NRSRO must establish, maintain, and enforce under section 15E(h) of the
Exchange Act and Rule 17g-5. The Commission estimates below that it
will take an NRSRO an average of approximately 100 hours to establish
and make a record of its policies and procedures with respect to look-
back reviews.\2211\ Based on Commission staff experience, the
Commission estimates that updating the conflicts of interest policies
and procedures would take an NRSRO an average of approximately 100
hours, for an industry-wide one-time burden of approximately 1,000
hours.\2212\
---------------------------------------------------------------------------

    \2210\ See section II.B.1. of this release (providing a more
detailed discussion of this provision).
    \2211\ See section IV.D.7. of this release.
    \2212\ 100 hours x 10 NRSROs = 1,000 hours.
---------------------------------------------------------------------------

    Exhibit 7 to Form NRSRO requires an NRSRO to provide a copy of the
written policies and procedures in the exhibit. Paragraph (e) of Rule
17g-1 requires an NRSRO to promptly file with the Commission an update
of its registration on Form NRSRO when information on the form is
materially inaccurate. The update of registration must be filed
electronically on the Commission's EDGAR system. The Commission
estimates, based on staff experience, that it would take an NRSRO an
average of approximately twenty-five hours on a one-time basis to
prepare and file the update of registration to account for the update
of the NRSRO's written policies and procedures to address and manage
conflicts of interest, for an industry-wide one-time burden of
approximately 250 hours and a total industry-wide one-time burden of
approximately 1,250 hours to update the NRSRO's conflicts of interest
policies and procedures and to prepare and file an update of
registration to account for the update of the NRSRO's written policies
and procedures.\2213\
---------------------------------------------------------------------------

    \2213\ 10 NRSROs x 25 hours = 250 hours; 1,000 hours + 250 hours
= 1,250 hours. See also Oversight of Credit Rating Agencies
Registered as Nationally Recognized Statistical Rating
Organizations, 72 FR at 33614 (providing a PRA estimate of twenty-
five hours for an NRSRO to prepare and furnish an update of its
registration).
---------------------------------------------------------------------------

    The Commission is adding paragraph (f) to Rule 17g-5, which
provides that upon written application by an NRSRO the Commission may
exempt, either unconditionally or on specified terms and conditions,
the NRSRO from paragraph (c)(8) of Rule 17g-5 if the Commission finds
that due to the small size of the NRSRO it is not appropriate to
require the separation of the production of credit ratings from sales
and marketing activities and the exemption is in the public
interest.\2214\

Based on staff experience, the Commission believes that an NRSRO
applying for the exemption would likely engage outside counsel to
assist in drafting an exemption request, that counsel would spend an
average of approximately fifty hours for a cost of approximately
$20,000 to assist in drafting the request, and that the NRSRO would
likely spend an average of approximately 150 hours to draft and submit
the application to the Commission.\2215\
---------------------------------------------------------------------------

    \2214\ See section II.B.2. of this release (providing a more
detailed discussion of this provision).
    \2215\ 50 hours x $400 per hour for outside counsel = $20,000.
---------------------------------------------------------------------------

6. Amendments to Rule 17g-7
    The Commission is incorporating the disclosure requirement with
respect to representations, warranties, and enforcement mechanisms in
Rule 17g-7 before today's amendments into paragraph (a) of Rule 17g-7
and is adding to paragraph (a) significant disclosure provisions that
require an NRSRO, when taking certain rating actions, to publish a form
containing information about the credit rating resulting from or
subject to the rating action as well as any certification of a provider
of third-party due diligence services received by the NRSRO that
relates to the credit rating.\2216\
---------------------------------------------------------------------------

    \2216\ See section II.G. of this release (providing a more
detailed discussion of these amendments).
---------------------------------------------------------------------------

    With respect to the one-time burden attributable to paragraph (a)
of Rule 17g-7, the Commission estimated in the proposing release that
an NRSRO would spend an average of approximately 5,000 hours to develop
the standardized disclosures and create the systems, protocols, and
procedures for populating the form with information generated and
collected during the rating process, allocated 75% of these burden
hours (3,750 hours) to internal burden and 25% of these burden hours
(1,250 hours) to external burden, and estimated a $400 per hour cost
for outside professionals such as counsel and information technology
consultants, resulting in an industry-wide one-time hour burden of
approximately 50,000 hours and an industry-wide one-time cost of
approximately $5,000,000.\2217\ As discussed below, the Commission is
not modifying its estimate with respect to the one-time burden
attributable to paragraph (a) of Rule 17g-7. Further, as stated above,
in response to a comment stating that the Commission's estimate of $400
per hour for retaining outside counsel is too low,\2218\ the Commission
notes that the commenter did not provide an alternative estimate of the
hourly rate. Based on staff experience, the Commission is retaining the
hourly rate without revision.\2219\
---------------------------------------------------------------------------

    \2217\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33505. This estimate was based on the
Commission's estimate for the amount of time it would take a
securitizer to set-up a system to make the disclosures required by
Form ABS-15G. See Disclosure for Asset-Backed Securities Required by
Section 943 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, 76 FR at 4507. The Commission significantly
increased the estimate for Form ABS-15G because the form required
pursuant to Rule 17g-7 contains substantially more qualitative
information.
    \2218\ See DBRS Letter.
    \2219\ See Proposed Rules for Nationally Recognized Statistical
Rating Organizations, 74 FR at 63889 (``Based on industry sources,
the Commission estimates that the cost of outside counsel would be
approximately $400 per hour''); Disclosure for Asset-Backed
Securities Required by Section 943 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, 76 FR at 4507-4506 (providing an
estimate of $400 an hour to engage outside professionals).
---------------------------------------------------------------------------

    With respect to the annual hour burden for paragraph (a) of Rule
17g-7, the Commission stated in the proposing release that it believed
that the estimate should be divided into two components: The amount of
time an NRSRO would spend to update its standardized disclosures and to
tailor disclosures to particular rating actions and asset classes; and
the amount of time the NRSRO would spend generating and publishing each
form and attaching the required certifications to the form.\2220\ With
regard to the first component, the Commission estimated that an NRSRO
would spend an average of approximately 500 hours per year updating the
standardized disclosures, for an industry-wide annual hour burden of
5,000 hours.\2221\ The Commission stated that it believed that the
burden attributable to the second component should be based on the
number of rating actions taken per year by the NRSROs because the
requirement to generate and publish the form and attach the
certifications will be triggered upon the taking of a rating
action.\2222\ The Commission further estimated that the ten NRSROs take
approximately 2,909,958 credit rating actions per year,\2223\ and
estimated that the time it would take to generate a form with the
required disclosures and to publish the form with the credit rating
would be an average of approximately fifteen minutes, for an industry-
wide annual hour burden of approximately 727,490 hours, which would be
allocated to the NRSROs based on the number of credit ratings they have
outstanding.\2224\
---------------------------------------------------------------------------

    \2220\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33505.
    \2221\ See id.
    \2222\ See id.
    \2223\ Based on information submitted to the Commission by
NRSROs, the Commission estimated that NRSROs took approximately
2,000,000 rating actions in 2009, consisting of upgrades,
downgrades, placements on credit watch, and withdrawals of credit
ratings. The Commission also estimated that NRSROs would issue
expected or preliminary ratings primarily with respect to new
issuances of structured finance products, which the Commission
estimated at 2,067 per year, plus other issuances, for a total of
4,134 preliminary ratings per year. The Commission also estimated
that approximately 415,117 initial credit ratings are issued per
year and that 490,707 affirmations are issued per year. See
Nationally Recognized Statistical Rating Organizations, 76 FR at
33505-33506
    \2224\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33505-33506.
---------------------------------------------------------------------------

    The Commission received comments from NRSROs stating that the
Commission underestimated these costs and time burdens.\2225\ However,
these commenters did not provide estimates of the costs and time
burden. Another NRSRO generally objected to the use of the number of
credit ratings outstanding to estimate the burden of the proposed
amendments and new rules, because ``the burden analysis must take into
account not only the number of ratings or analysts in isolation, but
also must include the legal and compliance resources necessary to
implement systemic and simultaneous changes.'' \2226\
---------------------------------------------------------------------------

    \2225\ See A.M. Best Letter; DBRS Letter; Morningstar Letter.
    \2226\ See A.M. Best Letter. See also DBRS Letter.
---------------------------------------------------------------------------

    In part in response to comments,\2227\ the Commission has modified
paragraph (a) of Rule 17g-7 from the proposal in a number of ways to
reduce burdens.\2228\ For example, the Commission narrowed the scope of
rating actions that will trigger the disclosure requirement and
provided an exemption for certain rating actions involving foreign
obligors or foreign-issued securities or money market instruments. The
Commission also significantly reduced the reporting requirements
relating to representations, warranties, and enforcement mechanisms.
All of these modifications were made in response to concerns about
burdens raised by commenters.\2229\ Based on the comments above, the
Commission believes it underestimated the amount of the burden in the
proposing release. However, the Commission also believes the
modifications discussed above will ease the burden to the extent that
they will compensate for the amount by which the Commission
underestimated the burden. Consequently, the Commission is retaining
the original burden estimate.
---------------------------------------------------------------------------

    \2227\ See A.M. Best Letter; DBRS Letter; Morningstar Letter.
    \2228\ See section II.G. of this release (providing a more
detailed discussion of these modifications).
    \2229\ See A.M. Best Letter; ASF Letter; Better Markets Letter;
CFA/AFR Letter; DBRS Letter; Deloitte Letter; FSR Letter; Moody's
Letter; S&P Letter.
---------------------------------------------------------------------------

    The Commission continues to believe that the estimate of the time
required to

generate and publish the form and attach the certifications should be
based on the number of rating actions taken per year by the NRSROs
because the requirement will be triggered upon the taking of a rating
action. Based on staff experience, the Commission believes that
expected or preliminary credit ratings are published primarily (but not
exclusively) with respect to new issuances of structured finance
products. The Commission estimates that there will be approximately 715
offerings of structured finance products per year.\2230\ As stated in
the proposing release, the Commission, based on staff experience,
believes that expected or preliminary credit ratings are used in other
types of offerings as well and, therefore, is increasing that estimate
by 100%, to 1,430 preliminary or expected credit ratings per
year.\2231\
---------------------------------------------------------------------------

    \2230\ See Table 6 in section I.B.2.b. of this release.
    \2231\ 715 x 2 = 1,430. See also Nationally Recognized
Statistical Rating Organizations, 76 FR at 33506.
---------------------------------------------------------------------------

    In terms of estimating the number of initial credit ratings, as
stated above, the Commission estimates that there are approximately
2,437,046 credit ratings outstanding across all ten NRSROs.\2232\ Based
on staff experience, as stated in the proposing release, the Commission
estimates that the average maturity of rated securities and money
market instruments is approximately seven years.\2233\ Consequently,
assuming 2,437,046 is the approximate average number of credit ratings
outstanding at any given time, the Commission estimates that
approximately 348,149 initial credit ratings are issued per year.\2234\
---------------------------------------------------------------------------

    \2232\ See Table 2 in section I.B.2.a. of this release.
    \2233\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33506.
    \2234\ 2,437,046 credit ratings/7 = 348,149 credit ratings. In
other words, the Commission estimates that issuers pay in full all
outstanding principal and interest outstanding with respect to
approximately 348,149 rated securities or money market instruments
and, consequently, the credit ratings for these securities and money
market instruments are withdrawn. Those withdrawn credit ratings, in
turn, are replaced by 348,149 initial (or new) credit ratings.
Outstanding credit ratings assigned to securities and money market
instruments are withdrawn for other reasons, including that the
security or money market instrument went into default. In addition,
a percent of the outstanding credit ratings are assigned to obligors
as entities and, therefore, these credit ratings would not be
withdrawn because an obligation was extinguished. However, the
credit ratings might be withdrawn for other reasons, including that
the obligor went into default. Nonetheless, the Commission continues
to believe these estimates are reasonable approximations of the
number of initial credit ratings determined per year. See Nationally
Recognized Statistical Rating Organizations, 76 FR at 33506, n.1011.
---------------------------------------------------------------------------

    Based on information submitted to the Commission by NRSROs pursuant
to paragraph (a)(6) of Rule 17g-3,\2235\ the Commission estimates that
in calendar year 2013 NRSROs made a total of approximately 236,521
credit rating upgrades and downgrades, placed 176,374 credit ratings on
credit watch, and withdrew 191,062 credit ratings. However, the
Commission notes that the definition of rating action in the prefatory
text of paragraph (a) of Rule 17g-7, as adopted, has been modified from
the proposed definition to exclude placements of credit ratings on
credit watch and to only include an affirmation or withdrawal of an
existing credit rating if the affirmation or withdrawal is the result
of a review of the credit rating assigned to the obligor, security, or
money market instrument by the NRSRO using applicable procedures and
methodologies for determining credit ratings. The Commission estimates
that virtually all withdrawals of credit ratings by NRSROs are in
connection with routine debt maturities, calls, or redemptions in which
case the withdrawal would result from the extinguishment of the
debtor's obligation and not from an analysis of the debtor's
creditworthiness. Consequently, virtually all withdrawals would not
result from the application of the NRSRO's rating procedure or
methodology to analyze the creditworthiness of the debtor. Therefore,
virtually all withdrawals under the modified definition of rating
action would not trigger the requirements of paragraph (a) of Rule 17g-
7. Consequently, the Commission is excluding the number of withdrawals
per year from the total number of rating actions per year that will
trigger the requirements of paragraph (a) of Rule 17g-7.
---------------------------------------------------------------------------

    \2235\ See paragraph (a)(6) of Rule 17g-3.
---------------------------------------------------------------------------

    Finally, with respect to affirmations of existing credit ratings,
the Commission believes that NRSROs generally affirm existing credit
ratings at least once a year. Consequently, the Commission estimates
that the number of affirmations would be the total number of credit
ratings outstanding (2,437,046), less the number of credit ratings that
are upgraded and downgraded (236,521), placed on credit watch
(176,374), withdrawn (191,062), and paid off during the year (348,149),
for a total of 1,485,940 estimated NRSRO affirmations of existing
credit ratings.
    Based on these estimates, the Commission estimates that the ten
NRSROs take an aggregate of approximately 2,071,040 credit rating
actions per year, according to the definition of rating action in
paragraph (a) of Rule 17g-7, as adopted.\2236\ The Commission notes
that the exemption in the rule for rating actions involving certain
foreign obligors, securities, or money market instruments could reduce
the number of rating actions that trigger the requirement to publish
the form and any applicable due diligence certifications. However, in
light of the comments arguing that the Commission underestimated the
burden of the rule, taken in conjunction with the modifications from
the proposal that reduce the number of rating actions covered, the
Commission is not adjusting the number of rating actions for the
purposes of these estimates.
---------------------------------------------------------------------------

    \2236\ 236,521 upgrades and downgrades + 1,484,940 affirmations
+ 348,149 initial credit ratings + 1,430 preliminary or expected
credit ratings = 2,071,040 rating actions per year. For purposes of
paragraph (a) of Rule 17g-7, credit ratings placed on credit watch
and withdrawn credit ratings are not included in this calculation
due to the definition of rating action.
---------------------------------------------------------------------------

    The Commission preliminarily estimated that it would take
approximately fifteen minutes on average to generate a form by
populating it with the required disclosures and to publish the form.
Commenters made general statements that the rule would result in
significant burden \2237\ or that the Commission underestimated the
burden.\2238\ Commenters, however, did not provide alternative
estimates of the burden. Nonetheless, the Commission is revising its
estimate, based on staff experience and in light of the comments, to
twenty minutes on average for each rating action, resulting in an
industry-wide annual hour burden of approximately 690,347 hours.\2239\
---------------------------------------------------------------------------

    \2237\ See A.M. Best Letter (``We believe that expanding 17g-7
disclosure requirements to non-asset-backed ratings is extremely
overly-burdensome . . .'').
    \2238\ See DBRS Letter (``DBRS believes that the Commission has
grossly underestimated . . . the amount of time it will take to
compile a disclosure form for each rating action''); Morningstar
Letter (``We disagree with the Commission's estimation that the form
of these certificates will be largely standardized and take 15
minutes to complete per rating action. We believe that the
Commission's estimation is too low since proposed provisions will
not be able to be standardized across rating actions or asset class
types and will still require an individual analysis of the
securities transaction.'') (footnote omitted).
    \2239\ 2,071,040 rating actions x \1/3\ hour = 690,346.67 hours,
rounded to 690,347 hours.
---------------------------------------------------------------------------

    The Commission is not revising its estimate of the amount of time
an NRSRO would spend to update its standardized disclosures and to
tailor disclosures to particular rating actions and asset classes. The
Commission therefore estimates an annual burden per NRSRO of
approximately 500 hours and an industry-wide annual hour burden of
approximately 5,000

hours.\2240\ Based on staff experience, the Commission believes that
the update process will be handled by the NRSROs internally.
---------------------------------------------------------------------------

    \2240\ 500 hours x 10 NRSROs = 5,000 hours.
---------------------------------------------------------------------------

    The Commission is also amending paragraph (b) to Rule 17g-7 to re-
codify the requirements to disclose rating histories that were
contained in paragraph (d)(3) of Rule 17g-2 before today's amendments
(the 100% Rule) and increases the amount of information that must be
disclosed by expanding the scope of the credit ratings that must be
included in the histories and by adding additional data elements that
must be disclosed in the rating history for a particular credit
rating.\2241\
---------------------------------------------------------------------------

    \2241\ See section II.E.3. of this release (providing a more
detailed discussion of these provisions).
---------------------------------------------------------------------------

    In the proposing release, the Commission estimated that the average
one-time burden attributable to the enhancements to the 100% Rule per
NRSRO would be approximately 135 hours to program existing systems and
initially add the ratings histories for all outstanding credit ratings
as of June 26, 2007, for an industry-wide one-time burden of
approximately 1,350 hours, and that the average annual burden per NRSRO
to comply with the increased requirements, including updating and
administering the database, would be approximately forty-five hours per
year, for an industry-wide annual burden of approximately 450
hours.\2242\
---------------------------------------------------------------------------

    \2242\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33506.
---------------------------------------------------------------------------

    One NRSRO stated that constantly updating the database for the 100%
Rule ``would impose an unwarranted burden on NRSROs.'' \2243\ Another
NRSRO stated that NRSROs may not have, or may find it difficult to
obtain, the additional information required by the amendments.\2244\ A
third NRSRO stated that because it does not consider affirmations,
confirmations, placement of credit ratings on watch or review, and
assignment of default status to be credit rating actions and does not
subdivide withdrawn credit ratings into the subcategories of withdrawn
due to default, withdrawn because paid in full, and ``other,'' it does
not capture some of that information in a format that is readily
retrievable and therefore it recommends that the rule exempt NRSROs
from providing historical data to the extent it does not already
capture the data in a readily retrievable format.\2245\ One NRSRO that
generally supported the amendments also stated that NRSROs may not be
able to provide XBRL information as of June 26, 2007, since those
rating actions are beyond the scope of the 3-year record retention
requirement.\2246\ Three NRSROs objected to the requirement to disclose
the legal name and CIK number of the rated obligor or issuer of the
security or money market instrument and the CUSIP of the security or
money market instrument.\2247\ One NRSRO stated that it was
``unnecessarily burdensome'' to require the use of identifiers that may
become obsolete, that require NRSROs to pay a fee, or that may not be
used outside the United States, as long as NRSROs ``use some kind of
identifier system sufficient to identify the rated obligor and
obligation,'' for example, ``an internationally recognized LEI [Legal
Entity Identifier] system.'' \2248\
---------------------------------------------------------------------------

    \2243\ See DBRS Letter.
    \2244\ See S&P Letter.
    \2245\ See Moody's Letter.
    \2246\ See Morningstar Letter.
    \2247\ See DBRS Letter; Moody's Letter; S&P Letter.
    \2248\ See Moody's Letter. As discussed in section II.E.3. of
this release, the Commission believes the requirement to disclose
the CUSIP of the security or money market instrument that is the
subject of the rating action is necessary to make the disclosures
readily searchable.
---------------------------------------------------------------------------

    In response to these comments, the Commission notes that it has
modified paragraph (b) of Rule 17g-7 from the proposal to reduce the
burden.\2249\ To focus the disclosure of rating histories on the rating
actions that are most relevant to evaluating performance, the final
amendments eliminate the proposed requirement to include placements on
watch and affirmations (and the required data associated with these
actions) in the rating histories.\2250\ The final amendments also
significantly shorten the time horizon of historical information that
must be retrieved for inclusion in the rating histories. In particular,
the proposed requirement to include information for all credit ratings
outstanding on or after June 26, 2007 has been replaced with a standard
three-year backward looking requirement that applies irrespective of
when the NRSRO is registered in a class of credit ratings. This,
together with the elimination of two types of rating actions that would
trigger a requirement to add information to a credit rating's history--
placements of the security on credit watch or review and affirmations
of the credit rating--should significantly mitigate the costs of
retrieving and analyzing historical information for the purposes of
making the rating histories disclosures.\2251\ The modifications also
should mitigate to some extent concerns about having to obtain
information that was not traditionally retained by the NRSRO as it will
significantly narrow the scope of such information that will need to be
included in the rating histories. Further, the modifications should
reduce the burden of updating the XBRL data file with new information.
The final amendments also specify a standard for updating the file--no
less frequently than monthly--in response to a suggestion by a
commenter.\2252\ This will make the costs resulting from the
requirement lower than if the file needed to be updated more
frequently. In addition, the final rule prioritizes identifier
disclosure to an LEI and then to a CIK, if the LEI is not
available.\2253\ Finally, the final amendments modify the proposal to
reduce the time period a credit rating history must be retained after
the credit rating is withdrawn from twenty years to fifteen years. This
should reduce the data retention and maintenance costs associated with
the final rule as compared to the proposed rule.
---------------------------------------------------------------------------

    \2249\ See section II.E.3. of this release (providing a more
detailed discussion of the modifications). See also DBRS letter
(stating that the 100% Rule ``would impose an unwarranted burden on
NRSROs''); Moody's Letter (stating that collecting data for past
rating actions ``would require tens of thousands of hours of
analysis'').
    \2250\ See Moody's Letter (stating that it does not consider
these activities to be rating actions).
    \2251\ See Moody's Letter, Morningstar Letter, S&P Letter.
    \2252\ See DBRS Letter.
    \2253\ See DBRS Letter; Moody's Letter; S&P Letter.
---------------------------------------------------------------------------

    The modifications are expected to reduce the burden associated with
the rule. However, the Commission is not decreasing the burden
estimates, notwithstanding the modifications to the rule that reduce
the burdens from the rule as proposed, in light of comments that the
estimates in the proposal were too low.
    In summary, the Commission estimates that the burden associated
with paragraph (a) of Rule 17g-7 will result in a total industry-wide
one-time hour burden to develop the standardized disclosures and create
the systems, protocols, and procedures for populating the form with
information generated and collected during the rating process of
approximately 37,500 hours and a total industry-wide one-time cost of
approximately $5,000,000 to engage outside professionals such as
counsel and information technology consultants to assist in developing
the standardized disclosures and programming existing systems, and a
total industry-wide annual hour burden to update standardized
disclosures, to tailor disclosures to particular rating actions and
asset classes, and to generate and publish each form and attach the
required certifications to the form, of approximately 695,347
hours.\2254\ With respect to the amendments to paragraph (b) of Rule
17g-7, the Commission estimates that

the burden associated with the enhancements to the 100% Rule will
result in a total industry-wide one-time hour burden of approximately
1,350 hours to program existing systems and initially add the ratings
histories for all applicable outstanding credit ratings and a total
industry-wide annual hour burden to comply with the increased
requirements, including updating and administering the database, of
approximately 450 hours.\2255\
---------------------------------------------------------------------------

    \2254\ 5,000 hours + 690,347 hours = 695,347 hours.
    \2255\ As stated above in section IV.D.3. of this release, the
re-codification of paragraph (d)(3) of Rule 17g-2 (the 100% Rule
before today's amendments) in paragraph (b) of Rule 17g-7 will
subtract 450 hours from the industry-wide annual hour burden for
Rule 17g-2. This burden will be attributed to the industry-wide
annual hour burden for Rule 17g-7.
---------------------------------------------------------------------------

7. New Rule 17g-8
    Paragraph (a) of Rule 17g-8 requires an NRSRO to establish,
maintain, enforce, and document policies and procedures with respect to
the procedures and methodologies, including qualitative and
quantitative data and models, the NRSRO uses to determine credit
ratings.\2256\ In the proposing release, the Commission estimated that
an NRSRO would spend an average of approximately 200 hours establishing
the policies and procedures, resulting in an industry-wide one-time
hour burden of approximately 2,000 hours,\2257\ and that an NRSRO would
spend an average of approximately fifty hours per year reviewing the
policies and procedures, updating them (if necessary), and enforcing
them, resulting in an industry-wide annual hour burden of approximately
500 hours.\2258\ The Commission did not receive comments on these
estimates and is adopting the amendments to paragraph (a) of Rule 17g-8
substantially as proposed. The Commission does not believe the
modifications will change the burden estimates as they either remove
ambiguities or make minor wording revisions. Consequently, the
Commission is retaining the estimates without revision.
---------------------------------------------------------------------------

    \2256\ See section II.F.1. of this release (providing a more
detailed discussion of this paragraph).
    \2257\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33507.
    \2258\ See id.
---------------------------------------------------------------------------

    In addition, the Commission estimates that it will take an NRSRO an
average of approximately twenty hours to promptly publish on an easily
accessible portion of its Internet Web site information about material
changes to its procedures and methodologies to determine credit ratings
and the likelihood such changes will result in changes to any current
credit ratings, or a notice of significant errors identified in a
procedure or methodology.
    Paragraph (b) of Rule 17g-8 requires an NRSRO to establish,
maintain, enforce, and document policies and procedures with respect to
the symbols, numbers, or scores it uses to denote credit ratings.\2259\
In the proposing release, the Commission estimated that an NRSRO would
spend an average of approximately 200 hours establishing the policies
and procedures, resulting in an industry-wide one-time hour burden of
approximately 2,000 hours,\2260\ and that an NRSRO would spend an
average of approximately fifty hours per year reviewing the policies
and procedures, updating them (if necessary), and enforcing them,
resulting in an industry-wide annual hour burden of approximately 500
hours.\2261\ The Commission did not receive comment on these estimates
and is adopting the amendments to paragraph (b) of Rule 17g-8
substantially as proposed. The Commission does not believe the
modifications will change the burden estimates as they are minor
wording revisions. Consequently, the Commission is retaining the
estimates without revision.
---------------------------------------------------------------------------

    \2259\ See section II.J.1. of this release (providing a more
detailed discussion of this paragraph).
    \2260\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33507.
    \2261\ See id.
---------------------------------------------------------------------------

    Paragraph (c) of Rule 17g-8 requires that the policies and
procedures an NRSRO is required to establish, maintain, and enforce
pursuant to section 15E(h)(4)(A) of the Exchange Act with respect to
look-back reviews must address instances in which a look-back review
determines that a conflict of interest influenced a credit rating by
including, at a minimum, procedures that are reasonably designed to
ensure that the NRSRO takes certain steps reasonably designed to ensure
the credit rating is no longer influenced by the conflict and that the
existence and an explanation of the conflict is disclosed in the form
required under paragraph (a) of Rule 17g-7.\2262\ In the proposing
release, the Commission estimated that an NRSRO would spend an average
of approximately 100 hours establishing and making a record of the
policies and procedures, resulting in an industry-wide one-time hour
burden of approximately 1,000 hours,\2263\ and that an NRSRO would
spend an average of approximately twenty-five hours per year reviewing,
and, if necessary, updating the policies and procedures and its record
documenting the policies and procedures, maintaining and enforcing the
policies and procedures, and taking steps pursuant to the policies and
procedures when a look-back review determines that a credit rating was
influenced by a conflict, resulting in an average industry-wide annual
hour burden of approximately 250 hours.\2264\ The Commission did not
receive comment on these estimates and is adopting the amendments to
paragraph (c) of Rule 17g-8 with modifications that reduce the burden
in terms of the steps an NRSRO must take pursuant to the policies and
procedures when a look-back review determines that a credit rating was
influenced by a conflict. However, the PRA burden accounts for the time
an NRSRO will spend establishing, reviewing and updating, and
documenting the policies and procedures. The time spent establishing,
reviewing, updating, and documenting the policies and procedures will
not change because of the modifications to the rule from the proposal.
Consequently, the Commission is retaining these estimates without
revision.
---------------------------------------------------------------------------

    \2262\ See section II.C.1. of this release (providing a more
detailed discussion of this paragraph).
    \2263\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33507.
    \2264\ See id.
---------------------------------------------------------------------------

    The Commission therefore estimates that the total industry-wide
one-time hour burden to the NRSROs resulting from Rule 17g-8, as
adopted, is approximately 5,000 hours to: (1) Establish and document
policies and procedures with respect to an NRSRO's procedures and
methodologies to determine credit ratings; (2) establish and document
policies and procedures with respect to the symbols, numbers, or scores
an NRSRO uses to denote credit ratings; and (3) establish and make a
record of its policies and procedures with respect to look-back
reviews.\2265\ The Commission estimates that the total industry-wide
annual hour burden resulting from Rule 17g-8, as adopted, is
approximately 1,250 hours to: (1) Maintain, review, update (if
necessary), and enforce an NRSRO's policies and procedures with respect
to an NRSRO's procedures and methodologies to determine credit ratings;
(2) maintain, review, update (if necessary), and enforce its procedures
and methodologies with respect to the symbols, numbers, or scores it
uses to denote credit ratings; and (3) maintain, review, update (if
necessary), and enforce its policies and procedures with respect to
look-back reviews and its record documenting the policies and

procedures and take steps when a look-back review determines that a
credit rating was influenced by a conflict.\2266\
---------------------------------------------------------------------------

    \2265\ 2,000 hours + 2,000 + 1,000 hours = 5,000 hours. The
burden associated with retaining the record documenting the
procedures is attributed to Rule 17g-2.
    \2266\ 500 hours + 500 hours + 250 hours = 1,250 hours. The
burden associated with retaining the record documenting the
procedures is attributed to Rule 17g-2.
---------------------------------------------------------------------------

8. New Rule 17g-9
    The Commission is adopting Rule 17g-9, which requires an NRSRO to
establish, maintain, enforce, and document standards of training,
experience, and competence for the individuals it employs to determine
credit ratings.\2267\
---------------------------------------------------------------------------

    \2267\ See section II.I.1. of this release (providing a more
detailed discussion of this rule).
---------------------------------------------------------------------------

    The Commission stated in the proposing release that in order to
account for the significant variance in the size and complexity of
NRSROs, the one-time and annual hour burden estimates attributable to
Rule 17g-9 should be based on the number of credit analysts employed by
the NRSROs.\2268\ Based on 2009 annual certifications, the Commission
estimated that NRSROs employed approximately 3,520 credit analysts and
that the one-time burden to establish the standards required under
proposed Rule 17g-9 would be approximately five hours per credit
analyst, resulting in an industry-wide one-time hour burden of 17,600
hours.\2269\ In addition, the Commission allocated 75% of these burden
hours (13,200 hours) to internal burden and 25% of these burden hours
(4,400 hours) to external burden to hire outside professionals to
assist in setting up training programs.\2270\ The Commission stated in
the proposing release that it believed that the annual hour burden to
comply with Rule 17g-9 would be less than the one-time hour burden
since NRSROs will have established the standards of training,
experience, and competence for the individuals they employ to determine
credit ratings. The Commission estimated that the industry-wide annual
hour burden to update the standards and to enforce them would be
approximately one hour per credit analyst employed, resulting in an
industry-wide annual hour burden of approximately 3,520 hours and
allocated 75% of the burden hours (2,640 hours) to internal burden and
the remaining 25% of the burden hours (880 hours) to external
burden.\2271\ The Commission did not receive comment on these
allocation percentages and is retaining them as proposed.
---------------------------------------------------------------------------

    \2268\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33508.
    \2269\ See id.
    \2270\ See id.
    \2271\ See id.
---------------------------------------------------------------------------

    However, as stated above, an NRSRO objected to using the number of
credit ratings or credit analysts in estimating the burdens associated
with the proposal, stating that the burden must also ``include the
amount of legal and compliance resources necessary to implement system
and simultaneous changes'' and that ``the investments will not be
diminished relative to financial resources because an NRSRO may have
fewer analysts or credit ratings issued.'' \2272\ In response to this
comment, the Commission is adding to its burden estimate for Rule 17g-9
to account for burdens that do not depend on the number of credit
analysts employed by an NRSRO. For example, the cost of establishing,
maintaining, enforcing, and documenting standards of training,
experience, and competence for credit analysts, establishing testing
programs, and administering training and testing programs may not be
directly proportional to the number of credit analysts employed by an
NRSRO. The Commission believes that it is appropriate, however, to
retain the burdens based on the number of credit analysts employed by
NRSROs as some of the burden attributable to Rule 17g-9 (for example,
the burden associated with testing credit analysts on their knowledge
of the procedures and methodologies used by the NRSRO to determine
credit ratings) may be proportional to the number of credit analysts
employed by an NRSRO.
---------------------------------------------------------------------------

    \2272\ See A.M. Best Letter. See also DBRS Letter.
---------------------------------------------------------------------------

    Based on staff experience, the Commission estimates that the
additional burden attributable to Rule 17g-9 that does not depend on
the number of credit analysts employed by an NRSRO is approximately 400
hours per NRSRO on a one-time basis and approximately 100 hours per
NRSRO annually, for an industry-wide one-time hour burden of
approximately 4,000 hours and an industry-wide annual hour burden of
approximately 1,000 hours. The Commission continues to believe that it
is appropriate to allocate 75% of the one-time and annual burden hours
to internal burden and the remaining 25% to external burden to hire
outside professionals to assist in establishing and updating credit
analyst training programs. Of the totals, therefore, 3,000 hours are
allocated to internal one-time burden,\2273\ 1,000 hours are allocated
to external one-time burden,\2274\ 750 hours are allocated to internal
annual burden,\2275\ and 250 hours are allocated to external annual
burden.\2276\ The Commission estimated that it would cost $400 per hour
to retain outside professionals, resulting in industry-wide one-time
costs of approximately $400,000 \2277\ and industry-wide annual costs
of approximately $100,000.\2278\
---------------------------------------------------------------------------

    \2273\ 4,000 hours x .75 = 3,000 hours.
    \2274\ 4,000 hours x .25 = 1,000 hours.
    \2275\ 1,000 hours x .75 = 750 hours.
    \2276\ 1,000 hours x .25 = 250 hours.
    \2277\ 1,000 hours x $400 = $400,000. See Nationally Recognized
Statistical Rating Organizations, 76 FR 33508. See also Disclosure
for Asset-Backed Securities Required by Section 943 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, 76 FR at 4507-
4506 (providing an estimate of $400 an hour engage outside
professionals).
    \2278\ 250 hours x $400 = $100,000.
---------------------------------------------------------------------------

    As stated above, the burdens the Commission estimated above that do
not depend on the number of credit analysts are additional to the
burdens that depend on the number of credit analysts. In addition, the
Commission believes that the modifications to Rule 17g-9 from the
proposal will not affect the burden per credit analyst or the
allocation of that burden to internal and external burdens that the
Commission estimated in the proposing release, as those modifications
should not affect the burdens associated with establishing,
maintaining, enforcing, and documenting the standards. However, the
Commission is revising the total number of credit analysts employed by
the NRSROs based on updated information. The Commission now estimates
that NRSROs employ a total of approximately 4,218 credit
analysts.\2279\ Therefore, the Commission estimates the industry-wide
one-time hour burden based on the number of credit analysts employed by
the NRSROs to be approximately 21,090 hours.\2280\ Of this total,
15,818 hours are allocated to internal burden and 5,272 hours are
allocated to external burden.\2281\ The Commission estimates that it
would cost $400 per hour for retaining outside professionals, resulting
in an industry-wide one-time cost of approximately $2,108,800.\2282\
---------------------------------------------------------------------------

    \2279\ See Table 1 in section I.B.2.a. of this release.
    \2280\ 4,218 credit analysts x 5 hours = 21,090 hours.
    \2281\ 21,090 hours x 0.75 = 15,818 hours; 21,090 hours x 0.25 =
5,272 hours. These allocations remain unchanged from the
Commission's preliminary allocation in the proposing release.
    \2282\ 5,272 hours x $400 = $2,108,800.
---------------------------------------------------------------------------

    Similarly, the Commission now estimates an industry-wide annual
hour burden based on the number of credit analysts employed by the
NRSROs of approximately 4,218 hours.\2283\ The Commission is allocating
75% of these burden hours (3,164 hours) to internal burden and 25%
these burden hours

(1,054 hours) to external burden to hire outside professionals to
assist in reviewing and updating training and testing programs.\2284\
The Commission continues to estimate a cost of $400 per hour for
retaining outside professionals, which results in an industry-wide
annual cost of $421,600.\2285\ Finally, although larger NRSROs may
realize economies of scale, the Commission believes that the industry-
wide annual and one-time hour burdens and external costs would be
allocated to each NRSRO based on the number of credit analysts the firm
employs.\2286\
---------------------------------------------------------------------------

    \2283\ 4,218 credit analysts x 1 hour = 4,218 hours.
    \2284\ 4,218 hours x 0.75 = 3,164 hours; 4,218 hours x 0.25 =
1,054 hours.
    \2285\ 1,054 hours x $400 = $421,600. See Disclosure for Asset-
Backed Securities Required by Section 943 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, 76 FR at 4507-4506
(providing an estimate of $400 an hour engage outside
professionals).
    \2286\ See Table 1 in section I.B.2.a. of this release.
---------------------------------------------------------------------------

    Accordingly, the Commission estimates that Rule 17g-9 will result
in a total industry-wide one-time hour burden for NRSROs to establish
and document the standards of training, experience, and competence for
their credit analysts required under the rule and to establish testing
programs of approximately 18,818 hours,\2287\ a total industry-wide
one-time cost of approximately $2,508,800 to hire outside professionals
to assist in setting up training and testing programs,\2288\ a total
industry-wide annual hour burden to maintain, review, update (if
necessary), and enforce the standards and to administer the training
and testing programs of approximately 3,914 hours,\2289\ and a total
industry-wide annual external cost of approximately $521,600 to hire
outside professionals to assist in reviewing and updating training and
testing programs.\2290\
---------------------------------------------------------------------------

    \2287\ 3,000 + 15,818 = 18,818.
    \2288\ $400,000 + $2,108,800 = $2,508,800.
    \2289\ 750 + 3,164 = 3,914.
    \2290\ $100,000 + $421,600 = $521,600.
---------------------------------------------------------------------------

    In addition, the Commission estimates that NRSROs will spend
approximately five hours per credit analyst per year to conduct
periodic testing of their credit analysts, for a total industry-wide
annual hour burden to NRSROs of approximately 21,090 hours.\2291\
---------------------------------------------------------------------------

    \2291\ 4,218 credit analysts x 5 hours = 21,090 hours.
---------------------------------------------------------------------------

9. New Rule 17g-10 and New Form ABS Due Diligence-15E
    The Commission is adopting Rule 17g-10 and Form ABS Due Diligence-
15E. Rule 17g-10 provides that the written certification a provider of
third-party due diligence services must provide to an NRSRO must be
made on Form ABS Due Diligence-15E.\2292\
---------------------------------------------------------------------------

    \2292\ See sections II.H.2. and II.H.3. of this release
(providing a more detailed discussion of this rule and form).
---------------------------------------------------------------------------

    In the proposing release, the Commission estimated that there would
be ten providers of third-party due diligence services and each would
spend an average of approximately 300 hours per firm developing certain
processes and protocols to provide the required information and submit
the certifications, and that 75% of these burden hours (225 hours)
would be internal burden and 25% of these burden hours (75 hours) would
be external burden to hire outside counsel to provide legal advice on
the requirements of the new rule and form.\2293\ The Commission did not
receive comment on these estimates. Further, the modifications to Rule
17g-10 and Form ABS Due Diligence-15E from the proposal will not impact
the one-time hour burden or allocation of that burden to internal and
external burdens because the modifications--which create a ``safe
harbor'' from the requirement to provide the forms to NRSROs--do not
require the third party due diligence provider to expend more effort to
meet the statutory requirement because they will make the process more
certain and efficient. Consequently, the processes and protocols to
meet the safe harbor should be no more complex than would have been the
case if the provider of third-party due diligence services had to
determine each NRSRO that was producing a credit rating in order to
provide the NRSRO with the certification as required by 15E(s)(4)(B) of
the Exchange Act. For these reasons, the Commission is not revising the
estimated one-time and annual hour burdens for the providers of third-
party due diligence services.
---------------------------------------------------------------------------

    \2293\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33509.
---------------------------------------------------------------------------

    However, the Commission now estimates that there are approximately
fifteen providers of third-party due diligence services.\2294\
Accordingly, the Commission estimates that providers of third-party due
diligence services will spend an average of approximately 300 hours per
firm developing these processes and protocols, resulting in an
industry-wide one-time hour burden for providers of third-party due
diligence services of approximately 4,500 hours.\2295\ In addition, the
Commission allocates 75% of these burden hours (3,375 hours) to
internal burden and 25% of these burden hours (1,125 hours) to external
burden to hire outside counsel to provide legal advice on the
requirements of Rule 17g-10 and Form ABS Due Diligence-15E.\2296\ The
Commission estimates $400 per hour for external costs for retaining
outside counsel, resulting in an industry-wide one-time cost of
$450,000.\2297\
---------------------------------------------------------------------------

    \2294\ See section I.B.2.b. of this release.
    \2295\ 15 providers of third-party due diligence services x 300
hours = 4,500 hours. The estimate of 300 hours remains unchanged
from the Commission's preliminary estimate in the proposing release.
See Nationally Recognized Statistical Rating Organizations, 76 FR at
33509. This estimate is based on the Commission's estimate for the
amount of time it would take a securitizer to set-up a system to
make the disclosures required by Form ABS-15G. See Disclosure for
Asset-Backed Securities Required by Section 943 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, 76 FR at 4507-4506.
The Commission, however, has reduced the hour estimate of 850 hours
used for Form ABS-15G by approximately two-thirds because
information required to be provided in proposed Form ABS Due
Diligence-15E is substantially less detailed and complex than the
information required in Form ABS-15G.
    \2296\ 4,500 hours x 0.75 = 3,375 hours; 4,500 hours x 0.25 =
1,150 hours. This allocation remains unchanged from the Commission's
preliminary allocation in the proposing release.
    \2297\ 1,125 hours x $400 = $450,000. See Proposed Rules for
Nationally Recognized Statistical Rating Organizations, 74 FR 63889
(providing an estimate of $400 per hour to engage outside counsel).
---------------------------------------------------------------------------

    With respect to the annual burden, the Commission stated in the
proposing release that the estimate should be based on the number of
issuances per year of Exchange Act-ABS because the requirement to
produce the certification and provide it to NRSROs and issuers or
underwriters will be triggered when an issuer, underwriter, or NRSRO
hires a provider of third-party due diligence services. The Commission
estimated that a provider of third-party due diligence services would
spend approximately thirty minutes to complete and transmit Form ABS
Due Diligence-15E and that there would be an average of 2,067 Exchange
Act-ABS offerings per year, for an industry-wide annual burden of
approximately 1,034 hours.\2298\ The Commission did not receive
comments on this estimate. The Commission believes that the
modification to the proposal creating the ``safe harbor'' will decrease
the annual burden as compared to the burden estimated in the proposal.
In particular, the provider of third-party due diligence services in
many cases may need to submit only one certification to another party;
namely, to the issuer or underwriter that maintains the Rule 17g-5 Web
site. Without a safe harbor, the third party would have needed to
submit the certification to each NRSRO producing a credit rating

for the Exchange Act-ABS, which frequently would include two or more
hired NRSROs and possibly additional non-hired NRSROs. Moreover, the
certainty of meeting the ``safe harbor'' provisions will eliminate the
additional time a third party may have spent seeking to determine
whether it has identified all NRSROs producing a credit rating and
provided them with the certification in accordance with its statutory
obligation to provide the certification to every NRSRO rating the
applicable Exchange Act-ABS. For these reasons, the Commission
believes, based on staff experience, that the modifications will reduce
the burden attributable to Form ABS Due Diligence-15E from thirty
minutes to twenty minutes to complete and transmit Form ABS Due
Diligence-15E.
---------------------------------------------------------------------------

    \2298\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33509 (2,067 offerings x 30 minutes = 1,034
hours).
---------------------------------------------------------------------------

    The Commission estimates that there will be 715 Exchange Act-ABS
offerings per year.\2299\ For these reasons, the Commission estimates
that the industry-wide annual hour burden for providers of third-party
due diligence services resulting from Rule 17g-10 and Form ABS Due
Diligence-15E is approximately 238 hours.\2300\
---------------------------------------------------------------------------

    \2299\ See Table 6 in section I.B.2.b. of this release.
    \2300\ 715 Exchange Act-ABS offerings x 20 minutes = 238.33
hours, rounded to 238 hours.
---------------------------------------------------------------------------

    In summary, the Commission estimates that Rule 17g-10 and Form ABS
Due Diligence-15E will result in a total industry-wide one-time burden
for providers of third-party due diligence services to develop
processes and protocols to provide the required information and submit
the certifications of approximately 3,375 hours, a total industry-wide
one-time cost to hire outside counsel to provide legal advice on the
requirements of the new rule and form of approximately $450,000, and a
total industry-wide annual hour burden to provide the required
information and submit the certifications of approximately 238 hours.
10. New Rule 15Ga-2 and Amendments to Form ABS-15G
    The Commission is adopting Rule 15Ga-2 and amendments to Form ABS-
15G. \2301\ Rule 15Ga-2 requires an issuer or underwriter of certain
Exchange Act-ABS that are to be rated by an NRSRO to furnish the
Commission with a Form ABS-15G on the Commission's EDGAR system
containing the findings and conclusions of any third-party ``due
diligence report'' obtained by the issuer or underwriter at least five
business days prior to the first sale in the offering. Under the rule,
the disclosure will be furnished using Form ABS-15G for both registered
and unregistered offerings of Exchange Act-ABS.
---------------------------------------------------------------------------

    \2301\ See section II.H.1. of this release (providing a more
detailed discussion of this rule and form).
---------------------------------------------------------------------------

    The final rule has been modified from the proposal to provide that
if the disclosure required by Rule 15Ga-2 has been made in the
applicable prospectus, the issuer or underwriter may refer to that
section of the prospectus in Form ABS-15G rather than providing the
findings and conclusions directly in the form. It also has been
modified to provide an exemption for certain offshore issuances of
Exchange Act-ABS. Further, the final rule has been modified so that it
does not apply to issuers or underwriters of municipal Exchange Act-
ABS, but section 15E(s)(4)(A) of the Exchange Act nonetheless requires
an issuer or underwriter of these securities to make publicly available
the findings and conclusions of any third-party due diligence report
obtained by the issuer or underwriter.
    The Commission estimated in the proposing release that the new rule
and amended form would result in a one-time hour burden to issuers and
underwriters in offerings of registered and unregistered Exchange Act-
ABS in connection with developing processes and protocols to provide
the required information to comply with the statutory disclosure
requirement and Rule 15Ga-2, as applicable, including modifying their
existing Form ABS-15G processes and protocols to accommodate the
requirements of Rule 15Ga-2.\2302\ The Commission also estimated that
270 unique issuers would be required to file the form.\2303\ Finally,
the Commission estimated that each issuer would require approximately
100 hours to develop processes and protocols to comply with Rule 15Ga-2
and to modify their existing Form ABS-15G processes and protocols to
provide for the disclosure of the information required pursuant to Rule
15Ga-2 and that this work would be done internally by issuers and
underwriters.\2304\
---------------------------------------------------------------------------

    \2302\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33510.
    \2303\ See id. See also Disclosure for Asset-Backed Securities
Required by Section 943 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, 76 FR at 4506.
    \2304\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33510. This estimate was based on the
Commission's estimate for the amount of time it would take a
securitizer to set up a system to make the disclosures required by
Form ABS-15G as originally adopted by the Commission. See Disclosure
for Asset-Backed Securities Required by Section 943 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, 76 FR at 4507-
4506. The Commission, however, estimated that the hour burden for
amending existing Form ABS-15G processes and protocols will be
significantly lower than the estimate of 850 hours used to initially
develop those processes and protocols. See Nationally Recognized
Statistical Rating Organizations, 76 FR at 33510, n.1069.
---------------------------------------------------------------------------

    The Commission did not receive comments on these estimates.
Further, the Commission does not believe the modifications to the rule
from the proposal will impact the one-time burden because issuers and
underwriters will still need to develop processes and protocols to
provide the required information to comply with Rule 15Ga-2, or section
15E(s)(4)(A) of the Exchange Act in the case of issuers or underwriters
of municipal Exchange Act-ABS, including modifying their existing Form
ABS-15G processes and protocols to accommodate the requirements of Rule
15Ga-2 or the statute, as applicable. The Commission, however, is
adjusting its estimate of the number of unique issuers from
approximately 270 to approximately 336 unique issuers that will be
required to file the form.\2305\ Moreover, this estimate includes
issuers and underwriters of municipal Exchange Act-ABS because, even
though these offerings are excluded from Rule 15Ga-2, the statutory
disclosure requirements apply to them.\2306\ Consequently, the
Commission estimates an industry-wide one-time burden of approximately
33,600 hours.\2307\
---------------------------------------------------------------------------

    \2305\ See Table 6 in section I.B.2.b. of this release. The
Commission recognizes that underwriters also have a requirement to
furnish Form ABS-15G. However, for purposes of calculating PRA
numbers, this discussion is limited to issuers because, as discussed
above in section II.H.1. of this release, only a single Form ABS-15G
is required to be furnished when the issuer and/or one or more
underwriters have obtained the same third-party due diligence
report. See paragraph (b) of Rule 15Ga-2.
    \2306\ Based on the Asset-Backed Alert database, the Commission
estimates there were nine unique sponsors of municipal Exchange Act-
ABS in 2013.
    \2307\ 336 unique issuers x 100 hours = 33,600 hours.
---------------------------------------------------------------------------

    The annual PRA burden associated with Form ABS-15G reflects the
burden associated with preparing and furnishing the form on EDGAR. As
noted above, the amendment to Form ABS-15G will require that it be
furnished by issuers and underwriters in offerings of certain
registered and unregistered Exchange Act-ABS. Consequently, the
Commission believes that the estimate of the annual hour burden for
furnishing Form ABS-15G should be based on an estimate of the number of
Exchange Act-ABS offerings per year. In the proposing release, the
Commission estimated that, on average, there would be approximately
2,067 Exchange Act-ABS offerings per year.\2308\ As discussed above,
the

Commission now estimates that there will be approximately 715 Exchange
Act-ABS offerings.\2309\ Further, the exemption for certain foreign
issued Exchange Act-ABS should reduce the number of Exchange Act-ABS
offerings that trigger the disclosure requirement. However, to be
conservative, the Commission is retaining its estimate of 2,067
Exchange Act offerings per year for purposes of the burden estimates.
Moreover, this estimate includes offerings of municipal Exchange Act-
ABS because, even though these offerings are excluded from Rule 15Ga-2,
the statutory disclosure requirement does apply to them.\2310\
---------------------------------------------------------------------------

    \2308\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33510. See also Disclosure for Asset-Backed
Securities Required by Section 943 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, 76 FR at 4507-4508. As noted
above, issuers, underwriters, and NRSROs may not use providers of
third-party due diligence services with respect to every issuance of
Exchange Act-ABS. For example, the Commission believes that
providers of third-party due diligence services are used primarily
for RMBS transactions. See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33471. However, the Commission's estimate
uses the total number of estimated Exchange Act-ABS offerings (as
opposed to a lesser amount based on an estimate of RMBS offerings)
because the use of providers of third-party due diligence services
may migrate to other types of Exchange Act-ABS.
    \2309\ See Table 6 in section I.B.2.b. of this release.
    \2310\ Based on the Asset-Backed Alert database, the Commission
estimates there were eleven separate offerings of municipal Exchange
Act-ABS in 2013.
---------------------------------------------------------------------------

    In the proposing release, the Commission estimated that an issuer
or underwriter would spend approximately one hour completing and
submitting Form ABS-15G for purposes of meeting the requirement in Rule
15Ga-2 and that this work would be performed internally.\2311\ The
Commission based this estimate on the fact that Form ABS-15G will
elicit much less information when used solely for the purpose of
complying with Rule 15Ga-2.\2312\ In addition, the Commission based
this estimate on the fact that the information required in the form
could be drawn directly from the due diligence reports the Commission
expects providers of third-party due diligence services to generate
with respect to their performance of due diligence services.\2313\
---------------------------------------------------------------------------

    \2311\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33510.
    \2312\ See id. See also Disclosure for Asset-Backed Securities
Required by Section 943 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, 76 FR at 4507 (estimating thirty hours to
prepare the form when filed pursuant to Rule 15Ga-1).
    \2313\ See Nationally Recognized Statistical Rating
Organizations, 76 FR at 33510.
---------------------------------------------------------------------------

    The Commission did not receive comments on these estimates. The
Commission believes that the modification to the proposal providing
that issuers and underwriters will not need to provide the findings and
conclusions directly in Form ABS-15G if the Rule 15Ga-2 disclosures are
included in the applicable prospectus may decrease slightly the hour
burden for issuers and underwriters. However, this reduction in burden
could be offset to the extent that issuers and underwriters decide that
they should keep a record to support their reliance on the off-shore
exemption and because the Commission eliminated the proposed ability
for an issuer or underwriter to rely on a representation from an NRSRO.
Further, although Rule 15Ga-2 excludes issuers and underwriters of
municipal Exchange Act-ABS, issuers and underwriters of these
securities will still incur costs to comply with the statutory
disclosure obligation. Based on staff experience, the Commission
estimates that many of these issuers and underwriters are likely to
satisfy this obligation by furnishing Form ABS-15G on EMMA and that the
time to prepare and submit the form will be one hour (the same as the
time to prepare and submit the form on EDGAR). However, to the extent
that these issuers and underwriters use another means to make the
required information publicly available, such as through a Web site,
the burden could be incrementally more or less, depending on the method
chosen to disclose the information. Accordingly, the Commission
estimates that the industry-wide annual hour burden resulting from Rule
15Ga-2 and the amendments to Form ABS-15G is approximately 715
hours.\2314\
---------------------------------------------------------------------------

    \2314\ 715 Exchange Act-ABS transactions x 1 hour = 715 hours.
---------------------------------------------------------------------------

    For the foregoing reasons, the Commission estimates that Rule 15Ga-
2, the amendments to Form ABS-15G, and section 15E(s)(4)(A) of the
Exchange Act will result in a total industry-wide one-time hour burden
to develop processes and protocols to provide the required information
to comply with Rule 15Ga-2 and/or section 15E(s)(4)(A), including
modifying their existing Form ABS-15G processes and protocols to
accommodate the requirements of Rule 15Ga-2, of approximately 33,600
hours and a total industry-wide annual hour burden to prepare and make
the required disclosures of approximately 715 hours for issuers and
underwriters.
11. Amendments to Regulation S-T
    The Commission is requiring that certain Forms NRSRO (and
applicable exhibits to the form) and all Rule 17g-3 annual reports be
submitted to the Commission electronically using the Commission's EDGAR
system.\2315\ In order to implement this requirement, the Commission is
adopting amendments to Rule 101 of Regulation S-T to require the
electronic submission using the EDGAR system of Form NRSRO (and
applicable exhibits to the form) pursuant to paragraphs (e), (f), and
(g) of Rule 17g-1 and annual reports pursuant to Rule 17g-3.\2316\
---------------------------------------------------------------------------

    \2315\ The Commission is allocating the one-time and annual hour
burdens and costs of these requirements solely to Rule 17g-1. See
section IV.D.1. of this release.
    \2316\ See section II.L. of this release (providing a more
detailed discussion of this amendment).
---------------------------------------------------------------------------

    The Commission is adopting Rule 15Ga-2, which will require an
issuer or underwriter of any Exchange Act-ABS that is to be rated by an
NRSRO to furnish a Form ABS-15G on the EDGAR system containing the
findings and conclusions of any third-party due diligence report
obtained by the issuer or underwriter.\2317\
---------------------------------------------------------------------------

    \2317\ See section II.H.1. of this release (providing a more
detailed discussion of this rule and form).
---------------------------------------------------------------------------

    The amendments revise Regulation S-T. However, the collection of
information requirements are reflected in the burden hours estimated
for Rule 17g-1 and Rule 15Ga-2. The rules in Regulation S-T do not
impose any separate burden. Consistent with historical practice, the
Commission has retained an estimate of one burden hour to Regulation S-
T for administrative convenience.
12. Form ID
    NRSROs will need to file a Form ID with the Commission in order to
gain access to the EDGAR system. Form ID is used to request the
assignment of access codes to make submissions on EDGAR. The current
OMB approved hour burden for Form ID is fifteen minutes per
respondent.\2318\ Thus, the Commission estimates that the total
industry-wide one-time hour burden resulting from filing Form ID will
be approximately two and a half hours.\2319\
---------------------------------------------------------------------------