Bank records....................................................  ..............  ..............  ..............  ..............           18a-6           18a-6  ..............           18a-6
                                                                                (b)(1)(ii)      (b)(1)(ii)                      (b)(1)(ii)
Bills...........................................................  ..............  ..............  ..............  ..............           18a-6           18a-6  ..............           18a-6
                                                                                (b)(1)(iii)     (b)(1)(iii)                     (b)(1)(iii)
Communications..................................................    17a-4(b)(4)*    17a-4(b)(4)*    17a-4(b)(4)*    17a-4(b)(4)*           18a-6           18a-6           18a-6           18a-6
                                                                                (b)(1)(iv)      (b)(1)(iv)      (b)(2)(ii)      (b)(1)(iv)
Trial balances..................................................  ..............  ..............  ..............  ..............           18a-6           18a-6  ..............           18a-6
                                                                                (b)(1)(v)       (b)(1)(v)                       (b)(1)(v)
Account documents...............................................  ..............  ..............  ..............  ..............           18a-6           18a-6           18a-6           18a-6
                                                                                (b)(1)(vi)      (b)(1)(vi)     (b)(2)(iii)      (b)(1)(vi)
Written agreements..............................................    17a-4(b)(7)*    17a-4(b)(7)*    17a-4(b)(7)*    17a-4(b)(7)*           18a-6           18a-6           18a-6           18a-6
                                                                                (b)(1)(vii)     (b)(1)(vii)      (b)(2)(iv)     (b)(1)(vii)
Information supporting financial reports........................    17a-4(b)(8)*    17a-4(b)(8)*    17a-4(b)(8)*    17a-4(b)(8)*           18a-6           18a-6           18a-6           18a-6
                                                                                (b)(1)(viii)    (b)(1)(viii)       (b)(2)(v)    (b)(1)(viii)
Rule 15c3-4 risk management records (OTC derivatives dealers      ..............  ..............  ..............  ..............           18a-6           18a-6  ..............           18a-6
 only)..........................................................                                                                      (b)(1)(ix)      (b)(1)(ix)                      (b)(1)(ix)
Credit risk determinations......................................  ..............  ..............  ..............  ..............  ..............           18a-6  ..............  ..............
                                                                                (b)(1)(x)
Regulation SBSR information.....................................    17a-4(b)(14)    17a-4(b)(14)    17a-4(b)(14)    17a-4(b)(14)           18a-6           18a-6           18a-6           18a-6
                                                                                (b)(1)(xi)      (b)(1)(xi)      (b)(2)(vi)      (b)(1)(xi)
Records relating to business conduct standards..................  ..............    17a-4(b)(15)    17a-4(b)(15)    17a-4(b)(15)           18a-6           18a-6           18a-6           18a-6
                                                                                (b)(1)(xii)     (b)(1)(xii)     (b)(2)(vii)     (b)(1)(xii)
Special entity documents........................................  ..............    17a-4(b)(16)    17a-4(b)(16)    17a-4(b)(16)           18a-6           18a-6           18a-6           18a-6
                                                                                (b)(1)(xiii)    (b)(1)(xiii)    (b)(2)(viii)    (b)(1)(xiii)
Associated person's employment application......................  ..............  ..............  ..............  ..............     18a-6(d)(1)     18a-6(d)(1)     18a-6(d)(1)     18a-6(d)(1)
Regulatory authority reports....................................  ..............  ..............  ..............  ..............           18a-6           18a-6           18a-6           18a-6
                                                                                (d)(2)(i)       (d)(2)(i)      (d)(2)(ii)       (d)(2)(i)
Compliance, supervisory, and procedures manuals.................  ..............  ..............  ..............  ..............           18a-6           18a-6           18a-6           18a-6
                                                                                (d)(3)(i)       (d)(3)(i)      (d)(3)(ii)       (d)(3)(i)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Life of the enterprise and of any successor enterprise
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Corporate documents.............................................       17a-4(d)*       17a-4(d)*       17a-4(d)*       17a-4(d)*        18a-6(c)        18a-6(c)  ..............        18a-6(c)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* The Commission is amending these pre-existing paragraphs of Rule 17a-4 to account for the security-based swap and swap activities of broker-dealers, including broker-dealer SBSDs and MSBSPs.

3. Amendments to Rule 17a-5 and New Rule 18a-7
    Rule 17a-5, the broker-dealer reporting rule, requires, among other
things, that broker-dealers file periodic unaudited reports about their
financial and operational condition using the FOCUS Report form; and
that broker-dealers annually file financial statements and certain
reports, as well as reports covering those statements and reports
prepared by an independent public accountant registered with the PCAOB,
in accordance with PCAOB standards.
    Rule 17a-5 is being amended to account for the security-based swap
activities of entities subject to its requirements and new Rule 18a-7--
which is modeled on Rule 17a-5; is being adopted to establish reporting
requirements for SBSDs and MSBSPs that will not be subject to Rule 17a-
5.\576\ A stand-alone broker-dealer, including a stand-alone OTC
derivatives dealer, will continue to be subject to Rule 17a-5.\577\
Similarly, a broker-dealer, other than an

OTC derivatives dealer, that is also an SBSD will be subject to Rule
17a-5. A broker-dealer, including an OTC derivatives dealer, that is
also an MSBSP will be subject to Rule 17a-5. A stand-alone SBSD will be
subject to Rule 18a-7. Similarly, an SBSD that is also an OTC
derivatives dealer will be subject to Rule 18a-7. A stand-alone MSBSP
will be subject to Rule 18a-7. Finally, a bank SBSD or MSBSP will be
subject to Rule 18a-7.
---------------------------------------------------------------------------

    \576\ See section II.B.3.a. of this release (discussing the
requirement to file annual reports and the qualifications of
independent public accountants).
    \577\ Paragraph (p) of Rule 17a-5 provides that an OTC
derivatives dealer may comply with Rule 17a-5 by complying with the
provisions of Rule 17a-12.
---------------------------------------------------------------------------

4. Amendments to Rule 17a-11 and New Rule 18a-8
    Rule 17a-11 specifies the circumstances under which a broker-dealer
must notify the Commission and other securities regulators about its
financial or operational condition, as well as the form that the notice
must take. The Commission is amending Rule 17a-11 to account for the
security-based swap activities of broker-dealers.\578\ The Commission
is adopting new Rule 18a-8--which is modeled on Rule 17a-11, as
amended--to establish notification requirements for stand-alone SBSDs
and MSBSPs, and bank SBSDs and MSBSPs.\579\ The amendments to Rule 17a-
11 and new Rule 18a-8 establish a number of new collections of
information, as summarized in the table below.
---------------------------------------------------------------------------

    \578\ See paragraph (f) of Rule 17a-11, as amended.
    \579\ See Rule 18a-8, as adopted.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Non-SBSD/       Non-model                                          Model          Non-model
                                                                 MSBSP broker-   broker-dealer    ANC broker-    Broker-dealer  stand[dash]alone    stand-alone     Bank SBSDs      Stand-alone
                                                                    dealers          SBSDs       dealer SBSDs       MSBSPs            SBSDs            SBSDs                          MSBSPs
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net capital below minimum.....................................  ..............  ..............  ..............  ..............            18a-8            18a-8  ..............  ..............
                                                                                (a)(1)(i)        (a)(1)(i)
Tentative net capital below minimum...........................  ..............  ..............  ..............  ..............            18a-8   ..............  ..............  ..............
                                                                                (a)(1)(ii)
Tangible net worth below minimum..............................  ..............  ..............  ..............  ..............  ................  ..............  ..............           18a-8
                                                                                (a)(2)
Early warning of net capital..................................  ..............  ..............  ..............  ..............      18a-8(b)(1)      18a-8(b)(1)  ..............  ..............
Early warning of tentative net capital........................  ..............  ..............  ..............  ..............            18a-8   ..............  ..............  ..............
                                                                                (b)(2)
Early warning of tangible net worth...........................  ..............  ..............  ..............  ..............  ................  ..............  ..............     18a-8(b)(3)
Backtesting exception.........................................  ..............  ..............  ..............  ..............      18a-8(b)(4)   ..............  ..............  ..............
Notice of adjustment of reported capital category.............  ..............  ..............  ..............  ..............  ................  ..............        18a-8(c)  ..............
Failure to make and keep current books and records............  ..............  ..............  ..............  ..............         18a-8(d)         18a-8(d)        18a-8(d)        18a-8(d)
Material weakness.............................................  ..............  ..............  ..............  ..............         18a-8(e)         18a-8(e)  ..............  ..............
Failure to make a required special reserve deposit............       17a-11(f)       17a-11(f)       17a-11(f)  ..............         18a-8(g)         18a-8(g)        18a-8(g)  ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5. Amendments to Rule 17a-12
    The amendments to Rule 17a-12, the OTC derivatives dealer reporting
rule,\580\ require OTC derivatives dealers to file FOCUS Report Part
II, as amended, instead of FOCUS Report Part IIB by replacing the
phrase ``Part II'' with the phrase ``Part IIB'' each time it appears in
the rule.\581\
---------------------------------------------------------------------------

    \580\ OTC derivatives dealers dually registered as SBSDs are
subject to the reporting requirements of Rule 18a-7.
    \581\ OTC derivatives dealers dually registered as SBSDs or
MSBSPs will also file FOCUS Report Part II.
---------------------------------------------------------------------------

6. New Rule 18a-9
    The Commission is adopting new Rule 18a-9, which is modeled on Rule
17a-13, to require stand-alone SBSDs to examine and count the
securities they physically hold, account for the securities that are
subject to their control or direction but are not in their physical
possession, verify the locations of securities under certain
circumstances, and compare the results of the count and verification
with their records. Rule 18a-9 does not include a parallel requirement
for every requirement in Rule 17a-13.\582\ In addition, Rule 18a-9 does
not apply to stand-alone MSBSPs because the customer protection
rationale for Rules 17a-13 and 18a-9 is not as pertinent to stand-alone
MSBSPs.
---------------------------------------------------------------------------

    \582\ The Commission is not including in Rule 18a-9, as adopted,
provisions that would parallel the provisions in paragraphs (a)(1),
(2), and (3) and (e) of Rule 17a-13. These paragraphs of Rule 17a-13
provide exemptions from complying with Rule 17a-13 for certain types
of broker-dealers. The Commission believes that SBSDs will not limit
their activities to the types of activities in which the exempt
broker-dealers engage.
---------------------------------------------------------------------------

7. Amendments to Rule 18a-10
    Rule 18a-10 permits certain SBSDs that are registered as swap
dealers and that predominantly engage in a swaps business to elect to
comply with the capital, margin, and segregation requirements of the
CEA and the CFTC's rules in lieu of complying with the capital, margin,
and segregation requirements of Rules 18a-1, 18a-3, and 18a-4.\583\ The
Commission is amending Rule 18a-10 to permit firms that will operate
under the rule to elect to comply with the recordkeeping and reporting
requirements of the CEA and the CFTC's rules in lieu of complying with
Rules 18a-5, 18a-6, 18a-7, 18a-8, and 18a-9.\584\
---------------------------------------------------------------------------

    \583\ See Capital, Margin, and Segregation Adopting Release, 84
FR at 43943-46.
    \584\ See Rule 18a-10, as amended.
---------------------------------------------------------------------------

    As discussed above, Rule 17a-11 specifies the circumstances under
which a broker-dealer must notify the Commission and other regulators
about its financial or operational condition, as well as the form of
the notice. Stand-alone and bank SBSDs and MSBSPs are subject to Rule
18a-8, which is modeled on Rule 17a-11 and is designed to provide the
Commission with the ability to take effective proactive steps to
respond when a firm is experiencing or likely to experience financial
difficulty.\585\ A stand-alone SBSD operating under Rule 18a-10,
however, may comply with the notification requirements of the CFTC's
rules in lieu of complying with Rule 18a-8. In order to retain a
requirement that the SBSD provide notice to the Commission if it is
experiencing or likely to experience financial difficulty, the
Commission is

adding paragraph (b)(4) to Rule 18a-10. This paragraph provides that
the SBSD must simultaneously notify the Commission if the firm is
required to send a notice concerning its capital, books and records,
liquidity, margin operations, or segregation operations to the CFTC by
transmitting to the Commission a copy of the notice being sent to the
CFTC.\586\
---------------------------------------------------------------------------

    \585\ See Recordkeeping and Reporting Proposing Release, 79 FR
at 25247.
    \586\ See paragraph (b)(4) of Rule 18a-10, as amended.
---------------------------------------------------------------------------

8. Amendments to Rule 3a71-6
    In May 2016, the Commission adopted Rule 3a71-6 to provide that
foreign SBSDs and MSBSPs could satisfy applicable business conduct
requirements under Section 15F by complying with comparable regulatory
requirements of a foreign jurisdiction, subject to certain conditions.
The Commission is amending Rule 3a71-6 to provide foreign SBSDs and
MSBSPs with the option to apply for substituted compliance to satisfy
the recordkeeping and reporting requirements of Section 15F of the
Exchange Act and Rules 18a-5, 18a-6, 18a-7, 18a-8, and 18a-9
thereunder.\587\
---------------------------------------------------------------------------

    \587\ See paragraph (d)(6) of Rule 3a71-6, as amended.
---------------------------------------------------------------------------

B. Use of Information

    Rules 17a-3 and 17a-4, as amended, and new Rules 18a-5 and 18a-6
are designed, among other things, to promote the prudent operation of
broker-dealers, SBSDs, and MSBSPs, and to assist the Commission, SROs,
and state securities regulators in conducting effective
examinations.\588\ Thus, the collections of information under the
amendments to Rules 17a-3 and 17a-4, and new Rules 18a-5 and 18a-6, are
expected to facilitate the examinations of broker-dealers, SBSDs, and
MSBSPs.
---------------------------------------------------------------------------

    \588\ See, e.g., Books and Records Requirements for Brokers and
Dealers Under the Securities Exchange Act of 1934, 66 FR at 55818
(``The Commission has required that broker-dealers create and
maintain certain records so that, among other things, the
Commission, [SROs], and State Securities Regulators . . . may
conduct effective examinations of broker-dealers'' (footnote
omitted)).
---------------------------------------------------------------------------

    Rules 17a-5, 17a-11, 17a-12, and 18a-10, as amended, and new Rules
18a-7 and 18a-8 are designed to promote compliance with the financial
responsibility requirements for broker-dealers, SBSDs, and MSBSPs,
facilitate regulators' oversight and examinations of such firms, and
promote transparency of their financial condition and operation.
    Rule 18a-9 is designed to promote an SBSD's custody of securities
and accurate accounting for securities.
    The Commission plans to use the information collected pursuant to
Rule 3a71-6, as amended, to evaluate requests for substituted
compliance determinations with respect to the recordkeeping and
reporting requirements applicable to foreign SBSDs and MSBSPs.

C. Respondents

    The Commission estimated the number of respondents in the proposing
release. The Commission received no comment on these estimates and
continues to believe they are appropriate. However, the Commission is
updating its estimated number of broker-dealers to reflect the number
of broker-dealers registered with the Commission as of December 31,
2018 (instead of April 1, 2013 as reflected in the proposing release),
and is revising the number of respondents with respect to certain
rules, as discussed below, to reflect the amendments to Rule 18a-10.
The following chart summarizes the Commission's estimated number of
respondents:
[GRAPHIC] [TIFF OMITTED] TR16DE19.000

    Consistent with prior releases, based on available data regarding
the single-name CDS market--which the Commission believes will comprise
the majority of security-based swaps--the Commission estimates that the
number of MSBSPs likely will be five or fewer and, in actuality, may be
zero.\589\ Therefore, to capture the likely number of MSBSPs that may
be subject to the collections of information for purposes of this PRA,
the Commission estimates for purposes of this PRA that five entities
will register with the Commission as MSBSPs.
---------------------------------------------------------------------------

    \589\ See Registration Process for Security-Based Swap Dealers
and Major Security-Based Swap Participants, 80 FR at 48990. See also
Further Definition of ``Swap Dealer,'' ``Security-Based Swap
Dealer,'' ``Major Swap Participant,'' ``Major Security-Based Swap
Participant'' and ``Eligible Contract Participant'', 77 FR at 30727.
---------------------------------------------------------------------------

    The Commission estimates there will be one broker-dealer FCM MSBSP
for the purposes of calculating PRA

burdens, in recognition that broker-dealer MSBSPs and stand-alone
MSBSPs are subject to different burdens under the new and amended rules
in certain instances.\590\ However, by definition, an MSBSP's primary
business is not engaging in security-based swap activity, so it would
be rare for an MSBSP to qualify as a broker-dealer and/or FCM but not
an SBSD. Such an MSBSP would be engaged in the business of effecting
securities transactions,\591\ but not in the business of effecting
security-based swap transactions \592\ or commodities, securities
futures products, or swaps \593\ and yet involved in enough security-
based swap transactions to be required to register as an MSBSP.\594\
---------------------------------------------------------------------------

    \590\ The Commission believes that the broker-dealer MSBSP would
register as an FCM, since the broker-dealer may find it beneficial
to hedge security and security-based swap positions with futures
contracts, options on futures, or swaps. See Registration of
Security-Based Swap Dealers and Major Security-Based Swap
Participants, 76 FR at 65814.
    \591\ See Section 3(a)(4) of the Exchange Act.
    \592\ See Section 3(a)(71) of the Exchange Act.
    \593\ See 7 U.S.C. 1a(28).
    \594\ See Section 3(a)(67) of the Exchange Act.
---------------------------------------------------------------------------

    Consistent with prior releases, the Commission estimates that 50 or
fewer entities ultimately may be required to register with the
Commission as SBSDs, and 16 broker-dealers will likely seek to register
as SBSDs.\595\ The Commission believes that all 16 broker-dealer SBSDs
also will be registered as FCMs, since SBSDs may find it beneficial to
hedge security-based swap positions with futures contracts, options on
futures, or swaps.\596\
---------------------------------------------------------------------------

    \595\ See Capital, Margin, and Segregation Adopting Release, 84
FR at 43959; Recordkeeping and Reporting Proposing Release, 79 FR at
25260.
    \596\ See Registration Process for Security-Based Swap Dealers
and Major Security-Based Swap Participants, 80 FR at 79002.
---------------------------------------------------------------------------

    Because many of the dealers that currently engage in OTC
derivatives activities are banks, the Commission estimates that
approximately 75% of the 34 non-broker-dealer SBSDs will register as
bank SBSDs (i.e., 25 firms), and the remaining 25% will register as
stand-alone SBSDs (i.e., 9 firms).\597\ The Commission believes that
none of the bank SBSDS will register as FCMs, because of the burden
associated with complying with three different supervisors' regulatory
requirements.\598\ However, the Commission cannot precisely estimate
how many of the nine stand-alone SBSDs will register as FCMs. The
Commission anticipates that entities that want to clear security-based
swaps for others may also want to clear swaps for others and,
therefore, may need to register as FCMs.\599\ The Commission also
anticipates that some stand-alone SBSDs that deal in non-cleared
security-based swaps will generally seek exemption from the omnibus
segregation requirements in Rule 18a-4. In order to qualify for the
exemption, these firms cannot clear security-based swap transactions
for others. The Commission believes that stand-alone SBSDs that seek
this exemption and thus will not clear security-based swaps for others
likely also would not clear swaps for others, which obviates the need
for these SBSDs to register as an FCM.\600\ For purposes of developing
paperwork burden estimates in connection with the recently adopted
capital, margin, and segregation requirements, the Commission estimated
six of nine stand-alone SBSDs would avail themselves of the exemption
under paragraph (f) of Rule 18a-4.\601\ Consistent with that estimate,
the Commission estimates that the remaining three of the nine stand-
alone SBSDs will also be registered as FCMs.
---------------------------------------------------------------------------

    \597\ The Commission does not anticipate that any firms will be
dually registered as a broker-dealer and a bank.
    \598\ The Commission understands that affiliates of banks
(rather than banks) register as FCMs.
    \599\ See Registration Process for Security-Based Swap Dealers
and Major Security-Based Swap Participants, 80 FR at 79002.
    \600\ See Capital, Margin, and Segregation Adopting Release, 84
FR at 44025.
    \601\ See Capital, Margin, and Segregation Adopting Release, 84
FR at 43959.
---------------------------------------------------------------------------

    Of the nine stand-alone SBSDs, the Commission estimates that, based
on its experience with ANC broker-dealers and OTC derivatives dealers,
four of the nine stand-alone SBSDs will apply to operate as stand-alone
SBSDs which will use internal models to compute net capital under Rule
18a-1.\602\ This estimate has been reduced from six in the proposing
release \603\ to account for the adoption of Rule 18a-10, which will
enable stand-alone SBSDs to elect the full alternative compliance
mechanism and comply with certain CFTC rules in lieu of Commission
rules, including recordkeeping and reporting rules. Finally, in the
proposing release, the Commission estimated that three stand-alone
SBSDs would not apply to use models.\604\ This estimate has been
modified from three to two in the final release to account for the
nonbank SBSDs that will elect the full alternative compliance mechanism
under Rule 18a-10.
---------------------------------------------------------------------------

    \602\ VaR models, while more risk-sensitive than standardized
haircuts, tend to substantially reduce the amount of the deductions
to tentative net capital in comparison to the standardized haircuts
because the models recognize more offsets between related positions
than the standardized haircuts. Therefore, the Commission expects
that stand-alone SBSDs that have the capability to use internal
models to calculate net capital would choose to do so.
    \603\ See Recordkeeping and Reporting Proposing Release, 79 FR
at 25260.
    \604\ See id.
---------------------------------------------------------------------------

    Of the 16 broker-dealer FCM SBSDs, the Commission estimates that
ten firms will operate as ANC broker-dealer SBSDs, which use internal
models to compute net capital under Rule 15c3-1.\605\
---------------------------------------------------------------------------

    \605\ Currently, 5 broker-dealers are registered as ANC broker-
dealers. The Commission has previously estimated that all current
and future ANC broker-dealers will also register as SBSDs. See
Recordkeeping and Reporting Proposing Release; Capital Rule for
Certain Security-Based Swap Dealers, 79 FR at 25261.
---------------------------------------------------------------------------

    As of December 31, 2018, there were 3,764 broker-dealers registered
with the Commission. The Commission estimates that 25 registered
broker-dealers will be engaged in security-based swap activities but
will not be required to register as an SBSD or MSBSP. Other than OTC
derivatives dealers, which are subject to significant limitations on
their activities, broker-dealers historically have not participated in
a significant way in security-based swap trading for at least two
reasons.\606\ First, because the Exchange Act has not previously
defined security-based swaps as securities, security-based swaps have
not been required to be traded through registered broker-dealers.\607\
Second, a broker-dealer engaging in security-based swap activities is
currently subject to existing regulatory requirements with respect to
those activities, including capital, margin, segregation, and
recordkeeping requirements. The existing financial responsibility
requirements make it more costly to conduct these activities in a
broker-dealer than in an unregulated entity. As a result, security-
based swap activities are mostly concentrated in affiliates of broker-
dealers, not broker-dealers themselves.\608\
---------------------------------------------------------------------------

    \606\ See Capital, Margin, and Segregation Adopting Release, 84
FR at 43960; Recordkeeping and Reporting Proposing Release, 79 FR at
25261.
    \607\ See Section 761 of the Dodd-Frank Act (amending definition
of ``security'' in Section 3 of the Exchange Act).
    \608\ See International Swaps and Derivatives Association
(``ISDA''), Margin Survey 2015 (Aug. 2015) (``ISDA Margin Survey
2015''), available at http://www2.isda.org/attachment/Nzc4MQ==/Margin%20survey%202015%20FINAL.pdf. The ISDA Margin Survey is
conducted annually to examine the state of collateral use and
management among derivatives dealers and end-users. The appendix to
the survey lists firms that responded to the survey, including
broker-dealers. See id.
---------------------------------------------------------------------------

    Finally, for purposes of estimating the number of respondents with
respect to the amendments to Rule 3a71-6, applications for substituted
compliance may be filed by foreign financial authorities, or by non-
U.S. SBSDs or

MSBSPs. Consistent with prior estimates, the Commission staff expects
that there may be approximately 22 non-U.S. entities that may
potentially register as SBSDs.\609\ Potentially, all such non-U.S.
SBSDs, or some subset thereof, may seek to rely on substituted
compliance in connection with the requirements adopted in this
document.\610\ For purposes of this PRA, however, consistent with prior
estimates, the Commission estimates that three of these security-based
swap entities will submit such applications in connection with the
Commission's recordkeeping, reporting, and notification
requirements.\611\
---------------------------------------------------------------------------

    \609\ See Trade Acknowledgment and Verification of Security-
Based Swap Transactions, 81 FR at 39832.
    \610\ It is possible that some subset of MSBSPs will be non-U.S.
MSBSPs and seek to rely on substituted compliance. See Trade
Acknowledgment and Verification of Security-Based Swap Transactions,
81 FR at 39832.
    \611\ See id. at 38392.
---------------------------------------------------------------------------

D. Total Initial and Annual Recordkeeping and Reporting Burden

1. Amendments to Rule 17a-3 and New Rule 18a-5
    The amendments to Rule 17a-3 and new Rule 18a-5 will impose
collection of information requirements that result in initial and
annual burdens for broker-dealers, SBSDs, and MSBSPs. The Commission
estimates that these amendments to Rule 17a-3 will impose the following
initial and annual burdens: \612\
---------------------------------------------------------------------------

    \612\ See paragraphs (a)(1) and (3), (a)(5)(ii), (a)(6)(ii),
(a)(7)(ii), (a)(8)(ii), (a)(9)(iv), and (a)(25) through (30) of Rule
17a-3, as amended.

------------------------------------------------------------------------
             Burden                 Initial burden       Annual burden
------------------------------------------------------------------------
New security-based swap records.  Per firm: 70 hours  Per firm: 42
                                  Industry: 2,940      hours.
                                   hours..            Industry: 1,764
                                                       hours.
New burdens applicable to broker- Per firm: 60 hours  Per firm: 75
 dealer SBSDs and MSBSPs..        Industry: 1,020      hours.
                                   hours..            Industry: 1,275
                                                       hours.
New burdens applicable to broker- Per firm: 20 hours  Per firm: 25
 dealer SBSDs.                    Industry: 320        hours.
                                   hours..            Industry: 400
                                                       hours.
                                 ---------------------------------------
    Total--Amendments to Rule     Industry: 4,280     Industry: 3,439
     17a-3.                        hours..             hours.
------------------------------------------------------------------------

    The Commission estimates that new Rule 18a-5 will impose the
following initial and annual burdens: \613\
---------------------------------------------------------------------------

    \613\ See paragraphs (a)(1) through (10) and (12) through (17)
and (b)(1) through (13) of Rule 18a-5, as adopted.

------------------------------------------------------------------------
             Burden                 Initial burden       Annual burden
------------------------------------------------------------------------
Burdens applicable to stand-      Per firm: 260       Per firm: 325
 alone SBSDs and MSBSPs.           hours and $1,000.   hours and $4,650.
                                  Industry: 2,600     Industry: 3,250
                                   hours and $10,000.  hours and
                                                       $46,500.
Burdens applicable to stand-      Per firm: 60 hours  Per firm: 75
 alone SBSDs.                     Industry: 360        hours.
                                   hours.             Industry: 450
                                                       hours.
Burdens applicable to bank SBSDs  Per firm: 200       Per firm: 250
 and MSBSPs.                       hours.              hours.
                                  Industry: 5,000     Industry: 6,250
                                   hours.              hours.
Burdens applicable to bank SBSDs  Per firm: 60 hours  Per firm: 75
                                  Industry: 1,500      hours.
                                   hours.             Industry: 1,875
                                                       hours.
                                 ---------------------------------------
    Total--New Rule 18a-5.......  Industry: 9,460     Industry: 11,825
                                   hours and $10,000.  hours and
                                                       $46,500.
------------------------------------------------------------------------

Estimated Hours and Costs of Amendments to Rule 17a-3
    In the proposing release, the Commission estimated that many of the
amendments to Rule 17a-3 are not expected to impose an initial
burden.\614\ The Commission received no comment on these estimates and
continues to believe they are appropriate.
---------------------------------------------------------------------------

    \614\ See Recordkeeping and Reporting Proposing Release, 79 FR
at 25262-63.
---------------------------------------------------------------------------

    The Commission is amending Rule 17a-3 to require broker-dealers to
make and keep current various records for security-based swaps.\615\
The Commission estimates that these amendments will impose on each
broker-dealer that engages in security-based swap activities an initial
burden of 70 hours and an ongoing burden of approximately ten minutes
per business day, or 42 hours per year.\616\ The Commission estimates
that there are 42 respondents.\617\ Thus, the Commission estimates that
the amendments will add to the industry an estimated initial burden of
2,940 hours \618\ and an ongoing burden of 1,764 hours per year.\619\
---------------------------------------------------------------------------

    \615\ See paragraphs (a)(1) and (3), (a)(5)(ii), (a)(6)(ii),
(a)(7)(ii), (a)(8)(ii), (a)(9)(iv), and (a)(26) and (27) of Rule
17a-3, as amended.
    \616\ (10 minutes per business day / 60 minutes per hour) x 251
business days per year = 42 hours per year. There were 251 business
days in 2018.
    \617\ 16 broker-dealer SBSDs + 1 broker-dealer MSBSP + 25 stand-
alone broker-dealers engaged in security-based swap activities = 42
broker-dealers engaged in security-based swap activities.
    \618\ 70 hours per year x 42 broker-dealers engaged in security-
based swap activities = 2,940 hours per year. These internal hours
likely will be performed by a compliance manager.
    \619\ 42 hours per year x 42 broker-dealers engaged in security-
based swap activities = 1,764 hours per year. These internal hours
likely will be performed by a compliance clerk.
---------------------------------------------------------------------------

    The amendments to Rule 17a-3 require three additional types of
records to be made and kept current by broker-dealer SBSDs and
MSBSPs.\620\ Because the burden to run the applicable calculation or
comply with the

applicable standard is accounted for in the PRA estimates for Rules
18a-3, 15Fi-2, 15Fh-1 through 15Fh-5, and 15Fk-1,\621\ the burden
imposed by these new requirements is the requirement to make and keep
current a written record of these tasks. The Commission estimates that
paragraphs (a)(25), (a)(28), and (a)(30) of Rule 17a-3, as amended,
will impose an initial burden of 60 hours per firm and an ongoing
annual burden of 75 hours per firm. The Commission estimates that there
are 17 respondents (16 broker-dealer SBSDs and 1 broker-dealer MSBSP),
adding to the industry an initial burden of 1,020 hours \622\ and an
ongoing burden of 1,275 hours per year.\623\
---------------------------------------------------------------------------

    \620\ See paragraphs (a)(25), (28), and (30) of Rule 17a-3, as
amended (adopting recordkeeping requirements for Rule 18a-3
calculations, unverified transactions, and compliance with business
conduct requirements, respectively).
    \621\ See Capital, Margin, and Segregation Adopting Release, 84
FR at 43963; Trade Acknowledgment and Verification of Security-Based
Swap Transactions, 81 FR at 39807; Business Conduct Standards for
Security-Based Swap Dealers and Major Security-Based Swap
Participants, 76 FR at 42443-48.
    \622\ 60 hours x 17 broker-dealer SBSDs and MSBSPs = 1,020
hours. These internal hours likely will be performed by a compliance
manager.
    \623\ 75 hours per year x 17 broker-dealer SBSDs and MSBSPs =
1,275 hours per year. These internal hours likely will be performed
by a compliance clerk.
---------------------------------------------------------------------------

    The amendments to Rule 17a-3 require one additional type of record
to be made and kept current by broker-dealer SBSDs.\624\ Because the
burden to run the applicable calculation or comply with the applicable
standard is accounted for in the PRA estimate for Rule 15Fh-6,\625\ the
burden imposed by this requirement is the requirement to make and keep
current a written record of these tasks. The Commission estimates that
new paragraph (a)(29) of Rule 17a-3 will impose an initial burden of 20
hours per firm and an ongoing annual burden of 25 hours per firm. The
Commission estimates that there are 16 broker-dealer SBSDs, adding to
the industry an initial burden of 320 hours \626\ and an ongoing burden
of 400 hours per year.\627\
---------------------------------------------------------------------------

    \624\ See paragraph (a)(29) of Rule 17a-3, as amended (political
contributions).
    \625\ See Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, 81 FR at 29959.
    \626\ 20 hours x 16 broker-dealer SBSDs = 320 hours. These
internal hours likely will be performed by a compliance manager.
    \627\ 25 hours per year x 16 broker-dealer SBSDs = 400 hours per
year. These internal hours likely will be performed by a compliance
clerk.
---------------------------------------------------------------------------

    The Commission received no comments regarding its hour and cost
burden estimates for the amendments to Rule 17a-3. However, the
estimated initial burden for Rule 17a-3 is increased to reflect that
the requirements to make and keep possession or control and special
reserve account computation records now apply to all broker-dealers
engaged in security-based swap activities (instead of just broker-
dealer SBSDs).\628\ Other than this change, the Commission continues to
believe its hour and cost burden estimates for the amendments to Rule
17a-3 are appropriate.
---------------------------------------------------------------------------

    \628\ See Rule 17a-3, as amended (paragraph (a)(26) (compliance
with Rule 15c3-3(p) possession or control requirements); paragraph
(a)(27) (Rule 15c3-3(p) reserve account computations)).
---------------------------------------------------------------------------

Estimated Hours and Costs of New Rule 18a-5
    The Commission estimates that new Rule 18a-5 will cause a stand-
alone SBSD or MSBSP to incur an initial dollar cost of approximately
$1,000 to purchase recordkeeping system software and an ongoing dollar
cost of $4,650 per year for associated equipment and systems
development. The Commission estimates that there are 10 respondents (6
stand-alone SBSDs and 4 stand-alone MSBSPs), resulting in an estimated
industry-wide initial burden of $10,000 \629\ and an industry-wide
ongoing burden of $46,500 per year.\630\
---------------------------------------------------------------------------

    \629\ $1,000 x 10 stand-alone SBSDs and MSBSPs = $10,000.
    \630\ $4,650 per year x 10 stand-alone SBSDs and MSBSPs =
$46,500 per year.
---------------------------------------------------------------------------

    New Rule 18a-5 is not expected to increase the initial and ongoing
dollar costs that bank SBSDs and MSBSPs incur to purchase recordkeeping
system software and for equipment and systems development. Banks are
already subject to recordkeeping requirements by their prudential
regulators,\631\ so they should already own or have established the
requisite recordkeeping system software. Although bank SBSDs and MSBSPs
may need to program the software to begin collecting additional
records, the Commission expects these services to be performed in-
house, and these hour burdens are estimated below.
---------------------------------------------------------------------------

    \631\ See, e.g., 12 CFR 12.3 (Department of Treasury); 12 CFR
219.21 through 219.24 (Federal Reserve); 12 CFR 344.4 (FDIC).
---------------------------------------------------------------------------

    New Rule 18a-5 requires 13 types of records to be made and kept
current by stand-alone SBSDs and MSBSPs.\632\ New Rule 18a-5 imposes
the burden to make and keep current these records, but does not require
the firm to perform the underlying task.\633\ Therefore, after
consideration of the estimated burdens under Rule 17a-3, as amended,
the Commission estimates that these 13 paragraphs will impose on each
firm an initial burden of 260 hours and an ongoing annual burden of 325
hours. The Commission estimates that there are 10 respondents (6 stand-
alone SBSDs and 4 stand-alone MSBSPs), resulting in an estimated
industry-wide initial burden of 2,600 hours \634\ and an industry-wide
ongoing annual burden of 3,250 hours.\635\
---------------------------------------------------------------------------

    \632\ See Rule 18a-5, as adopted (paragraph (a)(1) (trade
blotters); paragraph (a)(2) (general ledgers); paragraph (a)(3)
(ledgers of customer and non-customer accounts); paragraph (a)(4)
(stock record); paragraph (a)(5) (memoranda of proprietary orders);
paragraph (a)(6) (confirmations); paragraph (a)(7) (accountholder
information); paragraph (a)(8) (options positions); paragraph (a)(9)
(trial balances and computation of net capital); paragraph (a)(10)
(associated person's application); paragraph (a)(12) (Rule 18a-3
calculations); paragraph (a)(15) (unverified transactions);
paragraph (a)(17) (compliance with business conduct standards)).
    \633\ In estimating the burden associated with Rules 18a-5 and
18a-6, as adopted, the Commission recognizes that entities that will
register stand-alone SBSDs and MSBSPs likely make and keep some
records today as a matter of routine business practice, but the
Commission does not have information about the records that such
entities currently keep. Therefore, the Commission assumes that
these entities currently keep no records when it estimates the PRA
burden for these entities.
    \634\ 260 hours x 10 stand-alone SBSDs and MSBSPs = 2,600 hours.
These internal hours likely will be performed by a compliance
manager.
    \635\ 325 hours per year x 10 stand-alone SBSDs and MSBSPs =
3,250 hours per year. These internal hours likely will be performed
by a compliance clerk.
---------------------------------------------------------------------------

    New Rule 18a-5 requires three types of records to be made and kept
current by stand-alone SBSDs.\636\ Because the burden to run the
applicable calculation or comply with the applicable standard is
accounted for in the PRA estimates for Rules 18a-4 and 15Fh-6,\637\ the
burden imposed by these new requirements is the requirement to make and
keep current a written record of these tasks. The Commission estimates
that these three paragraphs will impose an initial burden of 60 hours
per firm and an ongoing annual burden of 75 hours per firm. The
Commission estimates that there are 6 stand-alone SBSDs, resulting in
an industry-wide initial burden of 360 hours \638\ and an industry-wide
ongoing burden of 450 hours per year.\639\
---------------------------------------------------------------------------

    \636\ See Rule 18a-5, as adopted (paragraph (a)(13) (compliance
with Rule 18a-4 possession or control requirements); paragraph
(a)(14) (Rule 18a-4 reserve account computations); and paragraph
(a)(16) (political contributions)).
    \637\ See Capital, Margin, and Segregation Adopting Release, 84
FR at 43964-67; Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, 81 FR at 29959.
    \638\ 60 hours x 6 stand-alone SBSDs = 360 hours. These internal
hours likely will be performed by a compliance manager.
    \639\ 75 hours per year x 6 stand-alone SBSDs = 450 hours per
year. These internal hours likely will be performed by a compliance
clerk.
---------------------------------------------------------------------------

    New Rule 18a-5 requires ten types of records to be made and kept
current by bank SBSDs and MSBSPs, all of which are limited to the
firm's business as an SBSD or MSBSP.\640\ New Rule 18a-5

imposes the burden to make and keep current these records, but does not
require the firm to perform the underlying task. Therefore, after
consideration of the estimated burdens under Rule 17a-3, as amended,
the Commission estimates that these ten paragraphs will impose on each
firm an initial burden of 200 hours per firm and an ongoing burden of
250 hours per firm. The Commission estimates that there are 25
respondents (25 bank SBSDs and no bank MSBSPs), resulting in an
estimated industry-wide initial burden of 5,000 hours \641\ and an
industry-wide ongoing burden of 6,250 hours per year.\642\
---------------------------------------------------------------------------

    \640\ See Rule 18a-5, as adopted (paragraph (b)(1) (trade
blotters); paragraph (b)(2) (ledgers for customer and non-customer
accounts); paragraph (b)(3) (stock record); paragraph (b)(4)
(memoranda of brokerage orders); paragraph (b)(5) (memoranda of
proprietary orders); paragraph (b)(6) (confirmations); paragraph
(b)(7) accountholder information); paragraph (b)(8) (associated
person's application); paragraph (b)(11) (unverified transactions);
and paragraph (b)(13) (compliance with business conduct
requirements)).
    \641\ 200 hours x 25 bank SBSDs = 5,000 hours. These internal
hours likely will be performed by a compliance manager.
    \642\ 250 hours per year x 25 bank SBSDs = 6,250 hours per year.
These internal hours likely will be performed by a compliance clerk.
---------------------------------------------------------------------------

    New Rule 18a-5 requires three types of records to be made and kept
current by bank SBSDs, all of which are limited to the firm's business
as an SBSD.\643\ Because the burden to run the applicable calculation
or comply with the applicable standard is accounted for in the PRA
estimates for Rules 18a-4 and 15Fh-6,\644\ the burden imposed by these
new requirements is the requirement to make and keep current a written
record of these tasks. The Commission estimates that these three
paragraphs will impose an initial burden of 60 hours per firm and an
ongoing annual burden of 75 hours per firm. The Commission estimates
that there are 25 bank SBSDs, resulting in an industry-wide initial
burden of 1,500 hours \645\ and an industry-wide ongoing burden of
1,875 hours per year.\646\
---------------------------------------------------------------------------

    \643\ See Rule 18a-5, as adopted (paragraph (b)(9) (compliance
with Rule 18a-4 possession or control requirements); paragraph
(b)(10) (Rule 18a-4 reserve account computations); and paragraph
(b)(12) (political contributions)).
    \644\ See Capital, Margin, and Segregation Adopting Release, 84
FR at 43964-67; Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, 81 FR at 29959.
    \645\ 60 hours x 25 bank SBSDs = 1,500 hours. These internal
hours likely will be performed by a compliance manager.
    \646\ 75 hours per year x 25 bank SBSDs = 1,875 hours per year.
These internal hours likely will be performed by a compliance clerk.
---------------------------------------------------------------------------

    The Commission received no comments regarding its hour and cost
burden estimates for new Rule 18a-5 and continues to believe they are
appropriate.
Estimated Hours and Costs of the Limited Alternative Compliance
Mechanism
    As discussed above, the Commission is adopting the limited
alternative compliance mechanism. The registrant's obligation to
preserve these records will continue for the retention period specified
for that category of record as set forth in Rule 17a-4 or Rule 18a-6,
as applicable.
    The Commission believes that registrants who choose to use the
limited alternative compliance mechanism will incur lower costs and
hour burdens, especially with respect to initial compliance burdens,
than they would pursuant to the standard compliance requirements.
Indeed, were that not the case, registrants would be unlikely to use
the limited alternative compliance mechanism. However, for purposes of
this Paperwork Reduction Act analysis, the Commission is making the
conservative estimate that no firms will utilize the limited
alternative compliance mechanism.
2. Amendments to Rule 17a-4 and New Rule 18a-6
    The amendments to Rule 17a-4 and new Rule 18a-6 impose collection
of information requirements that will result in initial and ongoing
burdens for broker-dealers, SBSDs, MSBSPs, and certain third-party
custodians. The Commission estimates that the amendments to Rule 17a-4
will impose the following initial and annual burdens: \647\
---------------------------------------------------------------------------

    \647\ See paragraphs (b)(1) and (4), (b)(8)(v) through (viii)
and (xvi), and (b)(14), (15), and (16) of Rule 17a-4, as amended

------------------------------------------------------------------------
             Burden                 Initial burden       Annual burden
------------------------------------------------------------------------
Recorded telephone calls........  Per firm: 13 hours  Per firm: 6 hours
                                  Industry: 221        and $2,000.
                                   hours.             Industry: 102
                                                       hours and
                                                       $34,000.
New burdens applicable to all     Per firm: 65 hours  Per firm: 30 hours
 broker-dealers.                  Industry: 2,730      and $600.
                                   hours.             Industry: 1,260
                                                       hours and
                                                       $25,200.
New burdens applicable to broker- Per firm: 65 hours  Per firm: 30 hours
 dealer SBSDs and MSBSPs.         Industry: 1,105      and $600.
                                   hours.             Industry: 510
                                                       hours and
                                                       $10,200.
New burdens applicable to broker- Per firm: 13 hours  Per firm: 6 hours
 dealer SBSDs.                    Industry: 208        and $120.
                                   hours.             Industry: 96 hours
                                                       and $1,920.
                                 ---------------------------------------
    Total--Amendments to Rule     Industry: 4,264     Industry: 1,968
     17a-4.                        hours.              hours and
                                                       $40,720.
------------------------------------------------------------------------

    The Commission estimates that new Rule 18a-6 will impose the
following initial and annual burdens: \648\
---------------------------------------------------------------------------

    \648\ See paragraphs (a)(1) and (2), (b)(1)(i) through (xiii),
(b)(2)(i) through (viii), (c), (d)(1), (d)(2)(i) and (ii), (d)(3)(i)
and (ii), and (f) of Rule 18a-6, as adopted.

------------------------------------------------------------------------
             Burden                 Initial burden      Annual 'Burden
------------------------------------------------------------------------
Burdens applicable to stand-      Per firm: 364       Per firm: 280
 alone SBSDs and MSBSPs.           hours.              hours and $5,720.
                                  Industry: 3,640     Industry: 2,800
                                   hours.              hours and
                                                       $57,200.
Burdens applicable to stand-      Per firm: 44 hours  Per firm: 30 hours
 alone SBSDs.                     Industry: 264        and $360.
                                   hours.             Industry: 180
                                                       hours and $2,160.
Burdens applicable to model       Per firm: 18 hours  Per firm: 10 hours
 stand-alone SBSDs.               Industry: 72 hours   and $120.
                                                      Industry: 40 hours
                                                       and $480.

Burdens applicable to bank SBSDs  Per firm: 247       Per firm: 190
 and MSBSPs.                       hours.              hours and $4,520.
                                  Industry: 6,175     Industry: 4,750
                                   hours.              hours and
                                                       $113,000.
Burdens applicable to bank SBSDs  Per firm: 57 hours  Per firm: 40 hours
                                  Industry: 1,425      and $480.
                                   hours.             Industry: 1,000
                                                       hours and
                                                       $12,000.
Burdens applicable to third-      Per firm: 0 hours.  Per firm: 2 hours.
 party custodians.                Industry: 0 hours.  Industry: 35
                                                       hours.
                                 ---------------------------------------
    Total--New Rule 18a-6.......  Industry: 11,576    Industry: 8,805
                                   hours.              hours and
                                                       $184,840.
------------------------------------------------------------------------

Estimated Hours and Costs of Amendments to Rule 17a-4
    In the proposing release, the Commission estimated that many of the
amendments to Rule 17a-4 are not expected to impose an initial
burden.\649\ The Commission received no comment on these estimates and
continues to believe they are appropriate.
---------------------------------------------------------------------------

    \649\ See Recordkeeping and Reporting Proposing Release, 79 FR
at 25266.
---------------------------------------------------------------------------

    The Commission is amending Rule 17a-4 to require broker-dealer
SBSDs and MSBSPs to retain telephone calls that are already recorded
and are related to the broker-dealer SBSD's and broker-dealer MSBSP's
business as such.\650\ Because the retention of telephonic recordings
is only required if the broker-dealer SBSD or broker-dealer MSBSP
voluntarily chooses to record, the Commission's burden estimate does
not include the cost of recording phone calls. Therefore, the burdens
imposed by the amendment will be to provide adequate physical space and
computer hardware and software for storage. The Commission estimates
that the amendment will impose an initial burden of 13 hours per firm.
The Commission estimates that there are 17 respondents (16 broker-
dealer SBSDs and 1 broker-dealer MSBSP), resulting in an estimated
industry-wide initial burden of 221 hours.\651\
---------------------------------------------------------------------------

    \650\ See paragraph (b)(4) of Rule 17a-4, as amended.
    \651\ 13 hours x 17 broker-dealer SBSDs and MSBSPs = 221 hours.
These internal hours likely will be performed by a senior database
administrator.
---------------------------------------------------------------------------

    The Commission estimates that each firm will incur an annual burden
of approximately 6 hours to confirm that telephonic communications are
being retained in accordance with Rule 17a-4, and approximately $2,000
for server, equipment, and systems development costs. The Commission
estimates that there are 17 respondents (16 broker-dealer SBSDs and 1
broker-dealer MSBSP), resulting in an estimated industry-wide ongoing
annual cost of 102 hours \652\ and $34,000.\653\
---------------------------------------------------------------------------

    \652\ 6 hours x 17 broker-dealer SBSDs and MSBSPs = 102 hours.
These internal hours likely will be performed by a compliance clerk.
    \653\ $2,000 x 17 broker-dealer SBSDs and MSBSPs = $34,000.
---------------------------------------------------------------------------

    The amendments to Rule 17a-4 add five types of records to be
preserved by broker-dealers.\654\ Because the burden to create these
records is already accounted for in the PRA estimates for Rule 17a-3,
Rule 15c3-1, or Regulation SBSR,\655\ the Commission estimates that
these amendments will impose an initial burden of 65 hours per firm and
an ongoing annual burden of 30 hours and $600 per firm.\656\ The
Commission estimates that there are 42 respondents--16 broker-dealer
SBSDs, 1 broker-dealer MSBSP, and 25 stand-alone broker-dealers engaged
in security-based swap activities.\657\ Thus, these amendments will add
to the industry an estimated initial burden of 2,730 hours \658\ and an
ongoing annual burden of 1,260 hours \659\ and $25,200.\660\
---------------------------------------------------------------------------

    \654\ See Rule 17a-4, as amended (paragraph (b)(1) (cross-
referencing paragraph (a)(26) of Rule 17a-3, as amended (compliance
with possession or control requirements for security-based swap
customers); paragraph (a)(27) of Rule 17a-3, as amended (Rule 18a-4
reserve account computations)); paragraph (b)(8)(v) through (viii)
(identifying information about swaps); paragraph (b)(8)(xvi) (risk
margin calculation); and paragraph (b)(14) (Regulation SBSR
information)).
    \655\ See Commission, Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 17a-3 (Oct.
19, 2016), available at https://www.reginfo.gov/public/do/DownloadDocument?objectID=68827501; Commission, Supporting Statement
for the Paperwork Reduction Act Information Collection Submission
for Rule 15c3-1 (May 26, 2017), available at https://www.reginfo.gov/public/do/DownloadDocument?objectID=74206901;
Regulation SBSR--Reporting and Dissemination of Security-Based Swap
Information, 81 FR 53545.
    \656\ Unless otherwise noted, the estimates for this rule
consider the burden of providing adequate physical space and
computer hardware and software for storage, preserving these records
for the requisite time period, and producing them when requested.
    \657\ 16 broker-dealer SBSDs + 1 broker-dealer MSBSP + 25 stand-
alone broker-dealers engaged in security-based swap activities = 42
broker-dealers engaged in security-based swap activities.
    \658\ 65 hours x 42 respondents = 2,730 hours. These internal
hours likely will be performed by a senior database administrator.
    \659\ 30 hours per year x 42 respondents = 1,260 hours per year.
These internal hours likely will be performed by a compliance clerk.
    \660\ $600 x 42 respondents = $25,200.
---------------------------------------------------------------------------

    The amendments to Rule 17a-4 add five types of records to be
preserved by broker-dealer SBSDs and MSBSPs.\661\ Because the burden to
create these records is accounted for in the PRA estimates for Rule
17a-3 or for Rules 15Fh-1 through 15Fh-5 and 15Fk-1,\662\ the
Commission estimates that these amendments will impose an initial
burden of 65 hours per firm and an ongoing annual burden of 30 hours
and $600 per firm. The Commission estimates that there are 17
respondents (16 broker-dealer SBSDs and 1 broker-dealer MSBSP), adding
to the industry an initial burden of 1,105 hours \663\ and an ongoing
annual burden of 510 hours \664\ and $10,200.\665\
---------------------------------------------------------------------------

    \661\ See Rule 17a-4, as amended (paragraph (b)(1), cross-
referencing paragraph (a)(25) of Rule 17a-3, as amended (Rule 18a-3
calculations); paragraph (b)(1), cross-referencing paragraph (a)(28)
of Rule 17a-3, as amended (unverified transactions); paragraph
(b)(1), cross-referencing paragraph (a)(30) of Rule 17a-3, as
amended (compliance with business conduct standards); paragraph
(b)(15) (documents and notices related to the business conduct
standards); and paragraph (b)(16) (special entity documents).
    \662\ See Commission, Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 17a-3;
section IV.D.1. of this release; Business Conduct Standards for
Security-Based Swap Dealers and Major Security-Based Swap
Participants, 81 FR at 29959.
    \663\ 65 hours x 17 broker-dealer SBSDs and MSBSPs = 1,105
hours. These internal hours likely will be performed by a senior
database administrator.
    \664\ 30 hours per year x 17 broker-dealer SBSDs and MSBSPs =
510 hours per year. These internal hours likely will be performed by
a compliance clerk.
    \665\ $600 x 17 broker-dealer SBSDs and MSBSPs = $10,200.
---------------------------------------------------------------------------

    The amendments to Rule 17a-4 add one type of record to be preserved
by broker-dealer SBSDs.\666\ Because the burden to create this record
is accounted for in the PRA estimate for

Rule 17a-3, as amended,\667\ the Commission estimates that the
amendment will impose an initial burden of 13 hours per firm and an
ongoing annual burden of 6 hours and $120 per firm. The Commission
estimates that there are 16 broker-dealer SBSDs, adding to the industry
an initial burden of 208 hours,\668\ and an ongoing annual burden of 96
hours \669\ and $1,920.\670\
---------------------------------------------------------------------------

    \666\ See paragraph (b)(1) of Rule 17a-4, as amended (cross-
referencing paragraph (a)(29) of Rule 17a-3, as amended (political
contributions)).
    \667\ See section IV.D.1. of this release.
    \668\ 13 hours x 16 broker-dealer SBSDs = 208 hours. These
internal hours likely will be performed by a senior database
administrator.
    \669\ 6 hours per year x 16 broker-dealer SBSDs = 96 hours per
year. These internal hours likely will be performed by a compliance
clerk.
    \670\ $120 x 16 broker-dealer SBSDs = $1,920.
---------------------------------------------------------------------------

    The Commission received no comments regarding its hour and cost
burden estimates for the amendments to Rule 17a-4. However, the
estimated burden for Rule 17a-4 is increased to reflect that the
requirements to make and keep possession or control and special reserve
account computation records now apply to all broker-dealers engaged in
security-based swap activities (instead of just broker-dealer
SBSDs).\671\ Other than this change, the Commission continues to
believe its hour and cost burden estimates for the amendments to Rule
17a-3 are appropriate.
---------------------------------------------------------------------------

    \671\ See paragraph (b)(1) of Rule 17a-3, as amended (cross-
referencing paragraph (a)(26) (compliance with Rule 15c3-3(p)
possession or control requirements); paragraph (a)(27) (Rule 15c3-
3(p) reserve account computations)).
---------------------------------------------------------------------------

Estimated Hours and Costs of New Rule 18a-6
    New Rule 18a-6 requires 27 types of records to be preserved by
stand-alone SBSDs and MSBSPs.\672\ The Commission estimates that the
record preservation requirements applicable to stand-alone SBSDs and
MSBSPs will impose an initial burden of 364 hours \673\ and an ongoing
annual burden of 280 hours and $5,720 per firm. The Commission
estimates that there are 10 respondents (6 stand-alone SBSDs and 4
stand-alone MSBSPs), resulting in an estimated industry-wide initial
burden of 3,640 hours,\674\ and an industry-wide ongoing annual burden
of 2,800 hours \675\ and $57,200.\676\
---------------------------------------------------------------------------

    \672\ See Rule 18a-6, as adopted (paragraph (a)(1), cross-
referencing paragraph (a)(1) of Rule 18a-5, as adopted (trade
blotters); paragraph (a)(1), cross-referencing paragraph (a)(2) of
Rule 18a-5, as adopted (general ledgers); paragraph (a)(1), cross-
referencing paragraph (a)(3) of Rule 18a-5, as adopted (ledgers of
customer and non-customer accounts); paragraph (a)(1), cross-
referencing paragraph (a)(4) of Rule 18a-5, as adopted (stock
record); paragraph (b)(1)(i), cross-referencing paragraph (a)(5) of
Rule 18a-5, as adopted (memoranda of proprietary orders); paragraph
(b)(1)(i), cross-referencing paragraph (a)(6) of Rule 18a-5, as
adopted (confirmations); paragraph (b)(1)(i), cross-referencing
paragraph (a)(7) of Rule 18a-5, as adopted (accountholder
information); paragraph (b)(1)(i), cross-referencing paragraph
(a)(8) of Rule 18a-5, as adopted (options positions); paragraph
(b)(1)(i), cross-referencing paragraph (a)(9) of Rule 18a-5, as
adopted (trial balances and computation of net capital); paragraph
(b)(1)(i), cross-referencing paragraph (a)(12) of Rule 18a-5, as
adopted (Rule 18a-3 calculations); paragraph (b)(1)(i), cross-
referencing paragraph (a)(15) of Rule 18a-5, as adopted (unverified
transactions); paragraph (b)(1)(i), cross-referencing paragraph
(a)(17) of Rule 18a-5, as adopted (compliance with business conduct
standards); paragraph (b)(1)(ii) (bank records); paragraph
(b)(1)(iii) (bills); paragraph (b)(1)(iv) (communications);
paragraph (b)(1)(v) (trial balances); paragraph (b)(1)(vi) (account
documents); paragraph (b)(1)(vii) (written agreements); paragraph
(b)(1)(viii) (information supporting financial reports); paragraph
(b)(1)(ix) (Rule 15c3-4 risk management records); paragraph
(b)(1)(xi) (Regulation SBSR information); paragraph (b)(1)(xii)
(records relating to business conduct standards); paragraph
(b)(1)(xiii) (special entity documents); paragraph (c) (corporate
documents); paragraph (d)(1) (associated person's employment
application); paragraph (d)(2)(i) (regulatory authority reports);
and paragraph (d)(3)(i) (compliance, supervisory, and procedures
manuals)). Unless otherwise noted, new Rule 18a-6 does not require
firms to create records or perform the underlying task, so the
estimates for this rule consider the burden of providing adequate
physical space and computer hardware and software for storage,
preserving these records for the requisite time period, and
producing them when requested.
    \673\ The Commission believes that any initial dollar cost
associated with Rule 18a-6, as adopted, is already accounted for in
the PRA estimate for Rule 18a-5, as adopted, which includes the cost
of recordkeeping system software.
    \674\ 364 hours x 10 stand-alone SBSDs and MSBSPs = 3,640 hours.
These internal hours likely will be performed by a senior database
administrator.
    \675\ 280 hours per year x 10 stand-alone SBSDs and MSBSPs =
2,800hours per year. These internal hours likely will be performed
by a compliance clerk.
    \676\ $5,720 per year x 10 stand-alone SBSDs and MSBSPs =
$57,200 per year.
---------------------------------------------------------------------------

    New Rule 18a-6 requires three types of records to be preserved by
stand-alone SBSDs.\677\ The Commission estimates that the relevant
portions of paragraph (b)(1)(i) of new Rule 18a-6 will impose an
initial burden of 44 hours per firm,\678\ and an ongoing annual burden
of 30 hours and $360 per firm. The Commission estimates that there are
6 stand-alone SBSDs, resulting in an industry-wide initial burden of
264 hours \679\ and an industry-wide ongoing annual burden of 180 hours
\680\ and $2,160.\681\
---------------------------------------------------------------------------

    \677\ See paragraph (b)(1)(i) of Rule 18a-6, as adopted (cross-
referencing paragraph (a)(13) of Rule 18a-5, as adopted (compliance
with Rule 18a-4 possession or control requirements); paragraph
(a)(14) of Rule 18a-5, as adopted (Rule 18a-4 reserve account
computations); and paragraph (a)(16) of Rule 18a-5, as adopted
(political contributions)). The burden to create these records is
accounted for in the PRA estimate for new Rule 18a-5. See section
IV.D.1. of this release.
    \678\ The Commission believes that any initial dollar cost
associated with Rule 18a-6, as adopted, is already accounted for in
the PRA estimate for Rule 18a-5, as adopted, which includes the cost
of recordkeeping system software.
    \679\ 44 hours x 6 stand-alone SBSDs = 264 hours. These internal
hours likely will be performed by a senior database administrator.
    \680\ 30 hours per year x 6 stand-alone SBSDs = 180 hours per
year. These internal hours likely will be performed by a compliance
clerk.
    \681\ $360 per year x 6 stand-alone SBSDs = $2,160 per year.
---------------------------------------------------------------------------

    New Rule 18a-6 requires one type of record to be preserved by
stand-alone SBSDs authorized to use models to compute capital.\682\ The
Commission estimates that paragraph (b)(1)(x) will impose an initial
burden of 18 hours \683\ and an ongoing annual burden of ten hours and
$120 per stand-alone SBSD authorized to use models. The Commission
estimates that there are 4 stand-alone SBSDs authorized to use models
to compute capital, resulting in an industry-wide initial burden of 72
hours \684\ and an industry-wide ongoing annual burden of 40 hours
\685\ and $480.\686\
---------------------------------------------------------------------------

    \682\ See Rule 18a-6, as adopted (paragraph (b)(1)(x) (credit
risk determinations)). The burden of actually performing the
underlying task and creating the written record is already accounted
for in the PRA estimate for Rule 18a-1. See Capital, Margin, and
Segregation Adopting Release, 84 FR at 43961-63.
    \683\ The Commission believes that any initial dollar cost
associated with new Rule 18a-6 is already accounted for in the PRA
estimate for Rule 18a-5, as adopted, which includes the cost of
recordkeeping system software.
    \684\ 18 hours x 4 model stand-alone SBSDs = 72 hours. These
internal hours likely will be performed by a senior database
administrator.
    \685\ 10 hours per year x 4 model stand-alone SBSDs = 40 hours
per year. These internal hours likely will be performed by a
compliance clerk.
    \686\ $120 per year x 4 model stand-alone SBSDs = $480 per year.
---------------------------------------------------------------------------

    New Rule 18a-6 requires 18 types of records to be preserved by bank
SBSDs and MSBSPs, all of which are limited to the firm's business as an
SBSD or MSBSP.\687\ After consideration of the

similar burdens imposed by Rule 17a-4, as amended, the Commission
estimates that new Rule 18a-6 will impose on bank SBSDs and MSBSPs an
initial burden of 247 hours per firm \688\ and an ongoing burden of 190
hours and $4,520 per firm. The Commission estimates that there are 25
respondents (25 bank SBSDs and no bank MSBSPs), resulting in an
estimated industry-wide initial burden of 6,175 hours \689\ and an
industry-wide ongoing annual burden of 4,750 hours \690\ and
$113,000.\691\
---------------------------------------------------------------------------

    \687\ See Rule 18a-6, as adopted (paragraph (a)(2), cross-
referencing paragraph (b)(1) of Rule 18a-5, as adopted (trade
blotters); paragraph (a)(2), cross-referencing paragraph (b)(2) of
Rule 18a-5, as adopted (ledgers of security-based swap customers and
non-customers); paragraph (a)(2), cross-referencing paragraph (b)(3)
of Rule 18a-5, as adopted (stock records); paragraph (b)(2)(i),
cross-referencing paragraph (b)(4) of Rule 18a-5, as adopted
(memoranda of brokerage orders); paragraph (b)(2)(i), cross-
referencing paragraph (b)(5) of Rule 18a-5, as adopted (memoranda of
proprietary orders); paragraph (b)(2)(i), cross-referencing
paragraph (b)(6) of Rule 18a-5, as adopted (confirmations);
paragraph (b)(2)(i), cross-referencing paragraph (b)(7) of Rule 18a-
5, as adopted (accountholder information); paragraph (b)(2)(i),
cross-referencing paragraph (b)(11) of Rule 18a-5, as adopted
(unverified transactions); paragraph (b)(2)(i), cross-referencing
paragraph (b)(13) of Rule 18a-5, as adopted (compliance with
external business conduct requirements); paragraph (b)(2)(ii)
(communications); paragraph (b)(2)(iii) (account documents);
paragraph (b)(2)(iv) (written agreements); paragraph (b)(2)(vi)
(Regulation SBSR information); paragraph (b)(2)(vii) (records
relating to business conduct standards); paragraph (b)(2)(viii)
(special entity documents); paragraph (d)(1) (associated person's
employment application); paragraph (d)(2)(ii) (regulatory authority
reports); paragraph (d)(3)(ii) (compliance, supervisory, and
procedures manuals)).
    \688\ The Commission believes that any initial dollar cost
associated with Rule 18a-6, as adopted, is already accounted for in
the PRA estimate for Rule 18a-5, as adopted, which includes the cost
of recordkeeping system software.
    \689\ 247 hours x 25 bank SBSDs = 6,175 hours. These internal
hours likely will be performed by a senior database administrator.
    \690\ 190 hours per year x 25 bank SBSDs = 4,750 hours per year.
These internal hours likely will be performed by a compliance clerk.
    \691\ $4,520 per year x 25 bank SBSDs = $113,000 per year.
---------------------------------------------------------------------------

    New Rule 18a-6 requires four types of records to be preserved by
bank SBSDs, all of which are limited to the firm's business as an
SBSD.\692\ The Commission estimates that paragraphs (b)(2)(i) and (v)
of new Rule 18a-6 will impose an initial burden of 57 hours per firm
\693\ and an ongoing annual burden of 40 hours and $480 per firm. The
Commission estimates that there are 25 bank SBSDs, resulting in an
industry-wide initial burden of 1,425 hours \694\ and an industry-wide
ongoing annual burden of 1,000 hours \695\ and $12,000.\696\
---------------------------------------------------------------------------

    \692\ See Rule 18a-6, as adopted (paragraph (b)(2)(i), cross-
referencing paragraph (b)(9) (compliance with Rule 18a-4 possession
or control requirements) of Rule 18a-5, as adopted; paragraph
(b)(2)(i), cross-referencing paragraph (b)(10) (Rule 18a-4 reserve
account computations) of Rule 18a-5, as adopted; paragraph
(b)(2)(i), cross-referencing paragraph (b)(12) (political
contributions) of Rule 18a-5, as adopted; and paragraph (b)(2)(v)
(Rule 18a-4 reserve account computations)). The burden to perform
the underlying task or create these records is accounted for in the
PRA estimates for new Rules 18a-4 and 18a-5. See Capital, Margin,
and Segregation Adopting Release, 84FR at 43964-67; section IV.D.1.
of this release.
    \693\ The Commission believes that any initial dollar cost
associated with new Rule 18a-6 is already accounted for in the PRA
estimate for Rule 18a-5, as adopted, which includes the cost of
recordkeeping system software.
    \694\ 57 hours x 25 bank SBSDs = 1,425 hours. These internal
hours likely will be performed by a compliance manager and a senior
database administrator.
    \695\ 40 hours per year x 25 bank SBSDs = 1,000 hours per year.
These internal hours likely will be performed by a compliance clerk.
    \696\ $480 per year x 25 bank SBSDs = $12,000 per year.
---------------------------------------------------------------------------

    Paragraph (f) of new Rule 18a-6 requires third-party custodians for
non-broker-dealer SBSDs and non-broker-dealer MSBSPs to file with the
Commission a written undertaking and surrender the SBSD or MSBSP's
records upon the Commission's request.\697\ The obligation to provide
documents upon the Commission's request does not impose a new burden,
since this requirement merely changes the respondent's identity rather
than adding to the quantity of burdens. Thus, the burden is the
requirement to prepare and file a written undertaking. The Commission
estimates that 50% of the 35 non-broker-dealer SBSDs and non-broker-
dealer MSBSPs will retain a third-party custodian, resulting in
approximately 17.5 written undertakings. The Commission estimates that
paragraph (f) of new Rule 18a-6 will impose an ongoing annual burden of
2 hours per written undertaking, resulting in an industry-wide ongoing
burden of 35 hours per year.\698\
---------------------------------------------------------------------------

    \697\ See paragraph (f) of Rule 18a-6, as adopted.
    \698\ 2 hours per year x 17.5 written undertakings = 35 hours
per year. These internal hours likely will be performed by an
attorney.
---------------------------------------------------------------------------

    The Commission received no comments regarding its hour and cost
burden estimates for new Rule 18a-6 and continues to believe they are
appropriate.
3. Amendments to Rule 17a-5 and New Rule 18a-7
    The amendments to Rule 17a-5 and new Rule 18a-7 will impose
collection of information requirements that result in annual burdens
for broker-dealers, SBSDs, and MSBSPs. The Commission estimates that
the amendments to Rule 17a-5 will impose the following initial and
annual burdens: \699\
---------------------------------------------------------------------------

    \699\ See paragraph (a)(1)(ii) of Rule 17a-5, as amended.

------------------------------------------------------------------------
             Burden                 Initial burden       Annual burden
------------------------------------------------------------------------
FOCUS Report Part II (ANC broker- Per firm: 25 hours  Per firm: 228
 dealer SBSDs).                   Industry: 250        hours.
                                   hours.             Industry: 2,280
                                                       hours.
FOCUS Report Part II (non-model   Per firm: 50 hours  Per firm: 240
 broker-dealer SBSDs).            Industry: 300        hours.
                                   hours.             Industry: 1,440
                                                       hours.
FOCUS Report Part II (broker-     Per firm: 35 hours  Per firm: 204
 dealer MSBSPs).                  Industry: 35 hours   hours.
                                                      Industry: 204
                                                       hours.
FOCUS Report Part II (stand-      Per firm: 20 hours  Per firm: 120
 alone broker-dealers engaged in  Industry: 500        hours.
 security-based swap activities).  hours.             Industry: 3,000
                                                       hours.
                                 ---------------------------------------
    Total--Amendments to Rule     Industry: 1,085     Industry: 6,924
     17a-5.                        hours.              hours.
------------------------------------------------------------------------

    The Commission estimates that Rule 18a-7 will impose the following
initial and annual burdens: \700\
---------------------------------------------------------------------------

    \700\ See paragraphs (a)(1) through (3), (b), (c), (d), (e),
(f), and (i) of Rule 18a-7, as adopted.

------------------------------------------------------------------------
             Burden                 Initial burden       Annual burden
------------------------------------------------------------------------
Additional ANC reports..........  Per firm: 0 hours.  Per firm: 120
                                  Industry: 0 hours.   hours.
                                                      Industry: 480
                                                       hours.
Customer statements.............  Per firm: 10 hours  Per firm: 1 hours.
                                  Industry: 100       Industry: 10
                                   hours.              hours.
Annual report (stand-alone SBSDs  Per firm: 0 hours.  Per firm: 70 hours
 not exempt from Rule 18a-4).     Industry: 0 hours.   and $6.70.
                                                      Industry: 0 hours
                                                       and $0.
Annual report (stand-alone SBSDs  Per firm: 0 hours.  Per firm: 17 hours
 exempt from Rule 18a-4).         Industry: 0 hours.   and $6.70.
                                                      Industry: 102
                                                       hours and $40.2.

Annual report (stand-alone        Per firm: 0 hours.  Per firm: 10 hours
 MSBSPs).                         Industry: 0 hours.   and $6.70.
                                                      Industry: 40 hours
                                                       and $26.80.
Statement regarding accountant..  Per firm: 10 hours  Per firm: 2 hours
                                  Industry: 100        and 50[cent].
                                   hours.             Industry: 20 hours
                                                       and $5.00.
Engagement of accountant (stand-  Per firm: 0 hours.  Per firm:
 alone SBSDs not exempt from      Industry: 0 hours.   $450,000.
 Rule 18a-4).                                         Industry: $0.
Engagement of accountant (stand-  Per firm: 0 hours.  Per firm:
 alone SBSDs exempt from Rule     Industry: 0 hours.   $303,000.
 18a-4).                                              Industry:
                                                       $1,818,000.
Engagement of accountant (stand-  Per firm: 0 hours.  Per firm:
 alone MSBSPs).                   Industry: 0 hours.   $300,000.
                                                      Industry:
                                                       $1,200,000.
Notice of change of fiscal year.  Per firm: 0 hours.  Per firm: 1 hour
                                  Industry: 0 hours.   and 50[cent].
                                                      Industry: 1 hour
                                                       and 50[cent].
FOCUS Report Part II (stand-      Per firm: 160       Per firm: 192
 alone SBSDs).                     hours.              hours.
                                  Industry: 960       Industry: 1,152
                                   hours.              hours.
FOCUS Report Part II (stand-      Per firm: 40 hours  Per firm: 48
 alone MSBSPs).                   Industry: 160        hours.
                                   hours.             Industry: 192
                                                       hours.
FOCUS Report Part IIC (bank       Per firm: 36 hours  Per firm: 16
 SBSDs).                          Industry: 900        hours.
                                   hours.             Industry: 400
                                                       hours.
                                 ---------------------------------------
    Total--New Rule 18a-7.......  Industry: 2,220     Industry: 2,397
                                   hours.              hours and
                                                       $3,018,072.5.
------------------------------------------------------------------------

Estimated Hours and Costs of Amendments to Rule 17a-5
    In the proposing release, the Commission estimated that many of the
amendments to Rule 17a-5 are not expected to impose an initial
burden.\701\ The Commission received no comment on these estimates and
continues to believe they are appropriate.
---------------------------------------------------------------------------

    \701\ See Recordkeeping and Reporting Proposing Release, 79 FR
at 25270. The Commission does not estimate a change in the burden
associated with the new lines added to the FOCUS Report, as compared
with Form SBS in the proposing release, because the addition of new
lines is offset by the deletion of other lines, such as the deletion
of lines in the Statement of Income (Loss) or Statement of
Comprehensive Income, as Applicable. In addition, many of the new
lines are not so much new burdens as different burdens, since in the
absence of these new lines, firms would still be required to report
this same information, except that it would be reported on a
different line. For example, in the Statement of Financial
Condition, excess cash collateral pledged on derivative transactions
(Line 6) is currently reported under other assets (Line 15).
---------------------------------------------------------------------------

    Paragraph (a)(1)(ii) of Rule 17a-5, as amended, will require
broker-dealer SBSDs and MSBSPs to file FOCUS Report Part II, as
amended, monthly instead of filing the applicable part of the FOCUS
Report quarterly.\702\ Part II, Part IIA, and Part II CSE of the FOCUS
Report each impose a different burden on respondents due to their
varying lengths and calculations, so the burden of filing FOCUS Report
Part II, as amended, depends on which part of the FOCUS Report the firm
is currently required to file.
---------------------------------------------------------------------------

    \702\ See paragraph (a)(1)(ii) of Rule 17a-5, as amended.
---------------------------------------------------------------------------

    ANC broker-dealer SBSDs will be required to file FOCUS Report Part
II, as amended, instead of FOCUS Report Part II CSE. Although FOCUS
Report Part II, as amended, is modeled on Part II CSE, the burden on
ANC broker-dealer SBSDs will increase, because ANC broker-dealer SBSDs
will be required to complete additional sections and line items
eliciting more detail about their security-based swap and swap
activities.\703\ In consideration of these additional requirements, the
Commission estimates that the requirement for ANC broker-dealer SBSDs
to file FOCUS Report Part II, as amended, every month will add an
initial burden of 25 hours per firm and an ongoing annual burden of 228
hours per firm. The Commission estimates that there are ten ANC broker-
dealer SBSDs, adding to the industry an initial burden of 250 hours
\704\ and an ongoing burden of 2,280 hours per year.\705\
---------------------------------------------------------------------------

    \703\ ANC broker-dealer SBSDs will be required to complete the
following new sections: (1) Computation for Determination of
Security-Based Swap Customer Reserve Requirements; (2) Possession or
Control for Security-Based Swap Customers; (3) Schedule 1--Aggregate
Securities, Commodities, and Swaps Positions; and (4) Schedule 4--
Geographic Distribution of Derivatives Exposures for Ten Largest
Countries.
    \704\ 25 hours x 10 ANC broker-dealer SBSDs = 250 hours. These
internal hours likely will be performed by a compliance manager.
    \705\ 228 hours per year x 10 ANC broker-dealer SBSDs = 2,280
hours per year. These internal hours likely will be performed by a
compliance manager.
---------------------------------------------------------------------------

    Non-model broker-dealer SBSDs will be required to file FOCUS Report
Part II, as amended, instead of Part II or Part IIA of the FOCUS
Report. Given that SBSDs are expected to be larger and relatively
sophisticated firms, the Commission assumes that all non-model broker-
dealer SBSDs are carrying firms that file Part II. Although sections of
Part II are also found in FOCUS Report Part II, as amended, the burden
on non-model broker-dealer SBSDs will increase (but not as much as for
ANC broker-dealer SBSDs), because non-model broker-dealer SBSDs will be
required to file monthly instead of quarterly and will complete
additional sections and line items eliciting more detail about their
security-based swap and swap activities.\706\ In consideration of these
additional requirements, the Commission estimates that the

requirement for non-model broker-dealer SBSDs to file FOCUS Report Part
II, as amended, every month will add an initial burden of 50 hours per
firm and an ongoing annual burden of 240 hours per firm. The Commission
estimates that there are 6 non-model broker-dealer SBSDs, adding to the
industry an initial burden of 300 hours \707\ and an ongoing burden of
1,440 hours per year.\708\
---------------------------------------------------------------------------

    \706\ Non-model broker-dealer SBSDs will be required to complete
the following new sections: (1) Financial and Operational Data--
Operational Deductions from Capital--Note A; (2) Financial and
Operational Data--Potential Operational Charges Not Deducted from
Capital--Note B; (3) Computation for Determination of PAB
Requirements; (4) Computation for Determination of Security-Based
Swap Customer Reserve Requirements; (5) Possession or Control for
Security-Based Swap Customers; (6) Schedule 1--Aggregate Securities,
Commodities, and Swaps Positions; (7) Schedule 2--Credit
Concentration Report for Fifteen Largest Current Exposures in
Derivatives; (8) Schedule 3--Portfolio Summary of Derivatives
Exposures by Internal Credit Rating; and (9) Schedule 4--Geographic
Distribution of Derivatives Exposures for Ten Largest Countries. In
addition, non-model broker-dealer SBSDs also registered as FCMs will
be required to file the following sections not included on Pre-
Amendment FOCUS Report Part II, but which the CFTC already requires
FCMs to file as part of Form 1-FR-FCM: (1) Computation of CFTC
Minimum Capital Requirement; (2) Statement of Segregation
Requirements and Funds in Segregation for Customers Trading on U.S.
Commodity Exchanges; (3) Statement of Cleared Swaps Customer
Segregation Requirements and Funds in Cleared Swaps Customer
Accounts under Section 4d(f) of the Commodity Exchange Act; (4)
Statement of Segregation Requirements and Funds in Segregation for
Customers' Dealer Options Accounts; and (5) Statement of Secured
Amounts and Funds Held in Separate Accounts for Foreign Futures and
Foreign Options Customers Pursuant to CFTC Regulation 30.7. The
Commission does not estimate a burden for these 5 sections from Form
1-FR-FCM, since the CFTC already requires FCMs to file these 5
sections on a monthly basis (17 CFR 1.10(b)(1)(i)), and therefore,
the hourly burden is already accounted for in the PRA estimate for
the CFTC's Rule 1.10 (1 CFR 1.10). In addition, the Commission does
not anticipate that FCMs will be required to file both the CFTC's
Form 1-FR-FCM and the Commission's FOCUS Report Part II, as amended.
    \707\ 50 hours x 6 non-model broker-dealer SBSDs = 300 hours.
These internal hours likely will be performed by a compliance
manager.
    \708\ 240 hours per year x 6 non-model broker-dealer SBSDs =
1,440 hours per year. These internal hours likely will be performed
by a compliance manager.
---------------------------------------------------------------------------

    Broker-dealer MSBSPs will be required to file FOCUS Report Part II,
as amended, instead of Part II or Part IIA of the FOCUS Report. Given
that MSBSPs are expected to be larger and relatively sophisticated
firms, the Commission assumes that broker-dealer MSBSPs are carrying
firms that file Part II. Although sections of Part II are also found in
FOCUS Report Part II, as amended, the burden on broker-dealer MSBSPs
will increase (but not as much as for broker-dealer SBSDs), because
broker-dealer MSBSPs will be required to file monthly instead of
quarterly and will complete additional sections and line items
eliciting more detail about their security-based swap and swap
activities.\709\ In consideration of these additional requirements, the
Commission estimates that the requirement for broker-dealer MSBSPs to
file FOCUS Report Part II, as amended, every month will add an initial
burden of 35 hours per firm and an ongoing annual burden of 204 hours
per firm. The Commission estimates that there will be one broker-dealer
MSBSP, meaning that the estimated burden on the industry will be the
same as for a single broker-dealer MSBSP.
---------------------------------------------------------------------------

    \709\ Broker-dealer MSBSPs will be required to complete the
following new sections: (1) Financial and Operational Data--
Operational Deductions from Capital--Note A; (2) Financial and
Operational Data--Potential Operational Charges Not Deducted from
Capital--Note B; (3) Computation for Determination of PAB
Requirements; and (4) Schedule 1--Aggregate Securities, Commodities,
and Swaps Positions. In addition, broker-dealer MSBSPs also
registered as FCMs will be required to file the following sections
not included on Pre-Amendment FOCUS Report Part II, but which the
CFTC already requires FCMs to file as part of Form 1-FR-FCM: (1)
Computation of CFTC Minimum Capital Requirement; (2) Statement of
Segregation Requirements and Funds in Segregation for Customers
Trading on U.S. Commodity Exchanges; (3) Statement of Cleared Swaps
Customer Segregation Requirements and Funds in Cleared Swaps
Customer Accounts under Section 4d(f) of the Commodity Exchange Act;
(4) Statement of Segregation Requirements and Funds in Segregation
for Customers' Dealer Options Accounts; and (5) Statement of Secured
Amounts and Funds Held in Separate Accounts for Foreign Futures and
Foreign Options Customers Pursuant to CFTC Regulation 30.7. The
Commission does not estimate a burden for these 5 sections from Form
1-FR-FCM, since the CFTC already requires FCMs to file these 5
sections on a monthly basis (17 CFR 1.10(b)(1)(i)), and therefore,
the hourly burden is already accounted for in the PRA estimate for
the CFTC's Rule 1.10 (1 CFR 1.10). In addition, the Commission does
not anticipate that FCMs will be required to file both the CFTC's
Form 1-FR-FCM and the Commission's FOCUS Report Part II, as amended.
---------------------------------------------------------------------------

    Stand-alone non-model broker-dealers that engage in security-based
swap activities will be required to file FOCUS Report Part II, as
amended, instead of the currently existing FOCUS Report Part II.
Although sections of Part II are also found in FOCUS Report Part II, as
amended, the burden on stand-alone non-model broker-dealers engaged in
security-based swap activities will increase, because stand-alone non-
model broker-dealers will be required to complete additional line items
eliciting more detail about their security-based swap and swap
activities.\710\ In consideration of these additional requirements, the
Commission estimates that the requirement for stand-alone non-model
broker-dealers engaged in security-based swap activities to file FOCUS
Report Part II, as amended, will add an initial burden of 20 hours per
firm and an ongoing annual burden of 120 hours per firm. The Commission
estimates that there are 25 stand-alone non-model broker-dealers
engaged in security-based swap activities, adding to the industry an
initial burden of 500 hours \711\ and an ongoing burden of 3,000 hours
per year.\712\
---------------------------------------------------------------------------

    \710\ Stand-alone non-model broker-dealers that engage in
security-based swap activities will be required to complete the
following new sections: (1) Computation for Determination of PAB
Requirements; (2) Computation for Determination of Security-Based
Swap Customer Reserve Requirements; (3) Possession or Control for
Security-Based Swap Customers; and (4) Schedule 1--Aggregate
Securities, Commodities, and Swaps Positions. In addition, non-model
broker-dealer SBSDs also registered as FCMs will be required to file
the following sections not included on Pre-Amendment FOCUS Report
Part II, but which the CFTC already requires FCMs to file as part of
Form 1-FR-FCM: (1) Computation of CFTC Minimum Capital Requirement;
(2) Statement of Segregation Requirements and Funds in Segregation
for Customers Trading on U.S. Commodity Exchanges; (3) Statement of
Cleared Swaps Customer Segregation Requirements and Funds in Cleared
Swaps Customer Accounts under Section 4d(f) of the Commodity
Exchange Act; (4) Statement of Segregation Requirements and Funds in
Segregation for Customers' Dealer Options Accounts; and (5)
Statement of Secured Amounts and Funds Held in Separate Accounts for
Foreign Futures and Foreign Options Customers Pursuant to CFTC
Regulation 30.7. The Commission does not estimate a burden for these
5 sections from Form 1-FR-FCM, since the CFTC already requires FCMs
to file these 5 sections on a monthly basis (17 CFR 1.10(b)(1)(i)),
and therefore, the hourly burden is already accounted for in the PRA
estimate for the CFTC's Rule 1.10 (1 CFR 1.10). In addition, the
Commission does not anticipate that FCMs will be required to file
both the CFTC's Form 1-FR-FCM and the Commission's FOCUS Report Part
II, as amended.
    \711\ 20 hours x 25 stand-alone non-model broker-dealers engaged
in security-based swap activities = 500 hours. These internal hours
likely will be performed by a compliance manager.
    \712\ 120 hours per year x 25 stand-alone non-model broker-
dealers engaged in security-based swap activities = 3,000 hours per
year. These internal hours likely will be performed by a compliance
manager.
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    The Commission received no comments regarding its hour and cost
burden estimates for new Rule 17a-5 and continues to believe they are
appropriate. However, the estimated burden for Rule 17a-5 is decreased
to reflect that stand-alone non-model broker-dealers are no longer
required to complete Schedules 2 through 4 of the FOCUS Report. Other
than this change, the Commission continues to believe its hour and cost
burden estimates for the amendments to Rule 17a-5 are appropriate.
Estimated Hours and Costs of New Rule 18a-7
    New Rule 18a-7, which is modeled on Rule 17a-5, as amended, will
require non-broker-dealer SBSDs and non-broker-dealer MSBSPs to satisfy
certain reporting requirements.\713\
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    \713\ See Rule 18a-7, as adopted.
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    New Rule 18a-7 will require stand-alone SBSDs authorized to use
models to compute capital to periodically file certain additional
reports relating to their use of internal models to calculate net
capital.\714\ After consideration of the Supporting Statement
accompanying the most recent extension of Rule 17a-5, which estimates
that the requirement to file additional ANC reports imposes a burden of
120 hours per respondent,\715\ the Commission estimates that paragraph
(a)(3) of new Rule 18a-7 will impose an annual burden of 120 hours per
model stand-alone SBSD. The Commission estimates that there are 4 model
stand-alone SBSDs, resulting in an industry-wide ongoing burden of 480
hours per year.\716\
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    \714\ See paragraph (a)(3) of Rule 18a-7, as adopted.
    \715\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-5 (May 26, 2017),
available at https://www.reginfo.gov/public/do/DownloadDocument?objectID=74209001 (4 hours per monthly report x 12
months per year + 8 hours per quarterly report x 4 quarters per year
+ 40 hours per annual report = 120 hours per year).
    \716\ 120 hours per year x 4 model stand-alone SBSDs = 480 hours
per year. These internal hours likely would be performed by a
compliance manager.
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    New Rule 18a-7 will require stand-alone SBSDs and MSBSPs to
disclose certain financial statements on their

internet websites.\717\ After consideration of the Supporting Statement
accompanying the most recent extension of Rule 17a-5, which requires
similar disclosures by mail instead of on the firm's website,\718\ the
Commission staff's experience with burden estimates for similar
collections of information, and the estimated initial web development
costs, the Commission estimates that paragraph (b) of new Rule 18a-7
will impose an initial burden of ten hours per firm and an annual
burden of one hour per firm. The Commission estimates that there are 10
respondents (6 stand-alone SBSDs and 4 stand-alone MSBSPs), resulting
in an industry-wide initial burden of 100 hours \719\ and an industry-
wide ongoing burden of 10 hours per year.\720\
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    \717\ See paragraph (b) of Rule 18a-7, as adopted. The
Commission does not anticipate a dollar cost to establish a website
and a toll-free number under this paragraph, because the Commission
believes firms that are large enough to register as an SBSD or MSBSP
already maintain a toll-free number for their customers and already
have an internet website. See Broker-Dealer Exemption from Sending
Certain Financial Information to Customers, Exchange Act Release No.
48272 (Aug. 1, 2003), 68 FR 46446, 46450 (Aug. 6, 2003).
    \718\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-5. See section
II.B.3.a. of this release for a discussion of the similarities
between paragraph (c) of Rule 17a-5, as amended and paragraph (b) of
Rule 18a-7, as adopted.
    \719\ 10 hours x 10 stand-alone SBSDs and MSBSPs = 100 hours.
These internal hours likely would be performed by a compliance
manager.
    \720\ 1 hour per year x 10 stand-alone SBSDs and MSBSPs = 10
hours per year. These internal hours likely would be performed by a
compliance clerk.
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    New Rule 18a-7 will require stand-alone SBSDs and MSBSPs to file
with the Commission an annual report consisting of certain financial
reports, and attach to the financial report an oath or
affirmation.\721\ Based on the Commission staff's experience with the
burden imposed by current Rule 17a-5's annual reports requirement and
related postage costs,\722\ the Commission estimates that paragraphs
(c) and (d) of new Rule 18a-7 will impose on stand-alone MSBSPs an
annual burden of 10 hours and $6.70 per firm. The Commission estimates
that there are 4 stand-alone MSBSPs, resulting in an industry-wide
ongoing burden of 40 hours \723\ and $26.80 per year.\724\ In the
proposing release, the Commission estimated that many of the amendments
to Rule 17a-5 are not expected to impose an initial burden.\725\ The
Commission received no comment on these estimates and continues to
believe they are appropriate.
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    \721\ See paragraphs (c) and (d) of Rule 18a-7, as adopted.
    \722\ As of May 2018, a priority mail flat rate envelope costs
$6.70, based on costs obtained on the U.S. Postal Service website,
available at www.usps.gov. Firms that file electronically will not
incur this cost.
    \723\ 10 hours per year x 4 stand-alone MSBSPs = 40 hours per
year. These internal hours likely would be performed by a senior
accountant.
    \724\ $6.70 per year x 4 stand-alone MSBSPs = $26.80 per year.
    \725\ See Recordkeeping and Reporting Proposing Release, 79 FR
at 25270.
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    Stand-alone SBSDs not exempt from Rule 18a-4 will be required to
include a compliance report with their annual reports.\726\ Thus, after
consideration of the Supporting Statement accompanying the most recent
extension of Rule 17a-5, which estimates that each compliance report
takes approximately 60 hours to prepare,\727\ the Commission estimates
that paragraphs (c) and (d) of new Rule 18a-7 will impose an annual
burden of 70 hours and $6.70 per stand-alone SBSD that files a
compliance report. The Commission estimates that there are no stand-
alone SBSDs that will file a compliance report, resulting in an
industry-wide ongoing burden of 0 hours \728\ and $0 per year.\729\
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    \726\ See paragraph (c)(1)(i)(B) of Rule 18a-7, as adopted.
    \727\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-5.
    \728\ 70 hours per year x 2 stand-alone SBSDs = 210 hours per
year. These internal hours likely would be performed by a senior
accountant.
    \729\ $6.70 per year x 2 stand-alone SBSDs = $20.10 per year.
Firms that file electronically will not incur this cost. As
discussed above, the Commission estimates that of the 9 stand-alone
SBSDs, 6 will avail themselves of the exemption from Rule 18a-4, and
the remaining 3 will be registered as FCMs. The Commission also
believes that the three stand-alone SBSDs that are registered as
FCMs will also elect to avail themselves of the full alternative
compliance mechanism. Consequently, the Commission estimates that
there will be no stand-alone SBSDs not exempt from Rule 18a-4. See
section IV.C of this release.
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    Stand-alone SBSDs exempt from Rule 18a-4 will be required to
include an exemption report with their annual reports.\730\ Thus, after
consideration of the Supporting Statement accompanying the most recent
extension of Rule 17a-5, which estimates that each exemption report
takes approximately 7 hours to prepare,\731\ the Commission estimates
that paragraphs (c) and (d) of new Rule 18a-7 will impose an annual
burden of 17 hours and $6.70 per stand-alone SBSD that files an
exemption report. The Commission estimates that there are 6 stand-alone
SBSDs that will file an exemption report, resulting in an industry-wide
ongoing burden of 102 hours \732\ and $40.20 per year.\733\
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    \730\ See paragraph (c)(1)(i)(B) of Rule 18a-7, as adopted.
    \731\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-5.
    \732\ 17 hours per year x 6 stand-alone SBSDs = 102 hours per
year. These internal hours likely would be performed by a senior
accountant.
    \733\ $6.70 per year x 6 stand-alone SBSDs = $40.20 per year.
Firms that file electronically will not incur this cost.
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    New Rule 18a-7 will require stand-alone SBSDs and MSBSPs to file a
statement regarding the independent public accountant engaged to audit
the firm's annual reports.\734\ In addition to postage costs, the
Supporting Statement accompanying the most recent extension of Rule
17a-5 estimates that the parallel requirement in Rule 17a-5 will impose
a two-hour burden on each introducing broker-dealer to file an updated
statement, and a more significant ten-hour burden on each carrying
broker-dealer, since the changes may require renegotiating the carrying
broker-dealer's agreement with its independent public accountant.\735\
Consistent with that Supporting Statement, the Commission estimates
that paragraph (e) of new Rule 18a-7 will impose an initial burden of
ten hours per firm and an annual burden of 2 hours and 50 cents per
firm.\736\ The Commission estimates that there are 10 respondents (6
stand-alone SBSDs and 4 stand-alone MSBSPs), resulting in an industry-
wide initial burden of 100 hours \737\ and an industry-wide ongoing
burden of 20 hours \738\ and $5.00 per year.\739\
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    \734\ See paragraph (e) of Rule 18a-7, as adopted.
    \735\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-5.
    \736\ It currently costs 50 cents to send a one ounce retail
domestic first-class letter through the U.S. Postal Service. See
U.S. Postal Service, First-Class Mail, available at http://pe.usps.com/text/dmm300/Notice123.htm#_c011 (last visited May 10,
2018).
    \737\ 10 hours x 13 stand-alone SBSDs and MSBSPs = 130 hours.
These internal hours likely would be performed by a senior
accountant.
    \738\ 2 hours per year x 10 stand-alone SBSDs and MSBSPs = 20
hours per year. These internal hours likely would be performed by a
compliance clerk.
    \739\ $0.50 per year x 10 stand-alone SBSDs and MSBSPs = $5.00
per year.
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    New Rule 18a-7 will require stand-alone SBSDs and MSBSPs to engage
an independent public accountant to provide reports covering the firm's
annual reports.\740\ As discussed above, the Commission is modifying
the provisions of Rule 18a-7 to allow stand-alone SBSDs and MSBSPs, as
well as an SBSD also registered as an OTC derivatives dealer, to engage
an independent public accountant that is not registered with the PCAOB,
and to permit the accountant to use GAAS in the United States or PCAOB

standards.\741\ The Supporting Statement accompanying the most recent
extension of Rule 17a-5 estimates that it will cost each carrying firm
$300,000 to retain an independent public accountant to audit its
financial statements and $150,000 to examine its compliance
report.\742\ Stand-alone MSBSPs are not required to file a compliance
or exemption report, while stand-alone SBSDs will be required to retain
an independent public accountant to review their compliance report (if
they are not exempt from Rule 18a-4) or exemption report (if they are
exempt from Rule 18a-4).
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    \740\ See paragraph (f) of Rule 18a-7, as adopted.
    \741\ See section II.B.3.a. of this release (discussing the
requirement to file annual reports and the qualifications of
independent public accountants).
    \742\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-5.
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    Therefore, the Commission estimates that paragraph (f) of new Rule
18a-7 will impose an annual cost of $300,000 on each stand-alone MSBSP.
The Commission estimates that there are 4 stand-alone MSBSPs, resulting
in an industry-wide ongoing burden of $1,200,000 per year.\743\ The
Commission estimates that paragraph (f) of new Rule 18a-7 will impose
on stand-alone SBSDs exempt from Rule 18a-4 an annual cost of $303,000
per firm,\744\ since both their financial statements and exemption
report will need to be audited. The Commission estimates that there are
6 stand-alone SBSDs exempt from Rule 18a-4, resulting in an industry-
wide ongoing burden of $1,818,000 per year.\745\ The Commission
estimates that paragraph (f) of new Rule 18a-7 will impose on stand-
alone SBSDs not exempt from Rule 18a-4 an annual cost of $450,000 per
firm,\746\ since both their financial statements and compliance report
will need to be audited. The Commission estimates that there are no
stand-alone SBSDs not exempt from Rule 18a-4, resulting in an industry-
wide ongoing burden of $0 per year.\747\
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    \743\ $300,000 per year x 4 stand-alone MSBSPs = $1,200,000 per
year.
    \744\ $300,000 per year (financial statements) + $3,000 per year
(exemption report) = $303,000 per year.
    \745\ $303,000 per year x 6 stand-alone SBSDs = $1,818,000 per
year.
    \746\ $300,000 per year (financial statements) + $150,000 per
year (compliance report) = $450,000 per year.
    \747\ $450,000 per year x 0 stand-alone SBSDs = $0 per year. As
discussed above, the Commission estimates that of the 9 stand-alone
SBSDs, 6 will avail themselves of the exemption from Rule 18a-4, and
the remaining 3 will be registered as FCMs. The Commission also
believes that the three stand-alone SBSDs that are registered as
FCMs will also elect to avail themselves of the full alternative
compliance mechanism. Consequently, the Commission estimates that
there will be no stand-alone SBSDs not exempt from Rule 18a-4. See
section IV.C of this release.
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    New Rule 18a-7 will require stand-alone SBSDs and MSBSPs to notify
the Commission of a change in fiscal year.\748\ Based on the Commission
staff's experience with the parallel requirement under Rule 17a-5, and
the Supporting Statement accompanying the most recent extension of Rule
17a-11, which estimates that each financial notice takes approximately
1 hour to prepare and file with the Commission,\749\ the Commission
estimates that paragraph (i) of new Rule 18a-7 will impose a burden of
1 hour and 50 cents on a firm planning to change its fiscal year. The
Commission estimates that each year, 1 firm will change its fiscal
year, such that the estimated burden on the industry will be 1 hour and
50 cents per year.
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    \748\ See paragraph (i) of Rule 18a-7, as adopted.
    \749\ See Commission, Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 17a-11
(July 24, 2017), available at https://www.reginfo.gov/public/do/DownloadDocument?objectID=75553601.
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    New Rule 18a-7 will require stand-alone SBSDs and MSBSPs to file
FOCUS Report Part II, as amended, monthly,\750\ and will require bank
SBSDs and MSBSPs to file new FOCUS Report Part IIC quarterly.\751\
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    \750\ See paragraph (a)(1) of Rule 18a-7, as adopted.
    \751\ See paragraph (a)(2) of Rule 18a-7, as adopted.
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    Stand-alone SBSDs will be required to file FOCUS Report Part II, as
amended, on a monthly basis.\752\ FOCUS Report Part II, as amended,
includes eleven sections and four schedules applicable to stand-alone
SBSDs.\753\ Stand-alone SBSDs dually registered as FCMs will be
required to complete five additional sections, all of which the CFTC
already requires FCMs to file as part of Form 1-FR-FCM.\754\ In
consideration of these additional requirements, the Commission
estimates that the requirement for stand-alone SBSDs to file FOCUS
Report Part II, as amended, every month will impose an initial burden
of 160 hours per firm and an ongoing annual burden of 192 hours per
firm. The Commission estimates that there are 6 stand-alone SBSDs,
resulting in an industry-wide initial burden of 960 hours \755\ and an
industry-wide ongoing burden of 1,152 hours per year.\756\
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    \752\ See paragraph (a)(1) of Rule 18a-7, as adopted.
    \753\ Stand-alone SBSDs will be required to complete the
following sections and schedules: (1) Statement of Financial
Condition; (2) either Computation of Net Capital (Filer Authorized
to Use Models) or Computation of Net Capital (Filer Not Authorized
to Use Models); (3) Computation of Minimum Regulatory Capital
Requirements (Non-Broker-Dealer); (4) Statement of Income (Loss);
(5) Capital Withdrawals; (6) Capital Withdrawals--Recap; (7)
Financial and Operational Data; (8) Financial and Operational Data--
Operational Deductions from Capital--Note A; (9) Financial and
Operational Data--Potential Operational Charges Not Deducted from
Capital--Note B; (10) Computation for Determination of Security-
Based Swap Customer Reserve Requirements; (11) Possession or Control
for Security-Based Swap Customers; (12) Schedule 1--Aggregate
Securities, Commodities, and Swaps Positions; (13) Schedule 2--
Credit Concentration Report for Fifteen Largest Exposures in
Derivatives; (14) Schedule 3--Portfolio Summary of Derivatives
Exposures by Internal Credit Rating; and (15) Schedule 4--Geographic
Distribution of Derivatives Exposures for Ten Largest Countries.
    \754\ Stand-alone SBSDs also registered as FCMs will be required
to file the following sections: (1) Computation of CFTC Minimum
Capital Requirement; (2) Statement of Segregation Requirements and
Funds in Segregation for Customers Trading on U.S. Commodity
Exchanges; (3) Statement of Cleared Swaps Customer Segregation
Requirements and Funds in Cleared Swaps Customer Accounts under
Section 4d(f) of the Commodity Exchange Act; (4) Statement of
Segregation Requirements and Funds in Segregation for Customers'
Dealer Options Accounts; and (5) Statement of Secured Amounts and
Funds Held in Separate Accounts for Foreign Futures and Foreign
Options Customers Pursuant to CFTC Regulation 30.7. The Commission
does not estimate a burden for these five sections, since the CFTC
already requires FCMs to file these five sections on a monthly basis
(17 CFR 1.10(b)(1)(i)), and therefore, the hourly burden is already
accounted for in the PRA estimate for the CFTC's Rule 1.10 (1 CFR
1.10). In addition, the Commission does not anticipate that FCMs
will be required to file both the CFTC's Form 1-FR-FCM and the
Commission's FOCUS Report Part II, as amended.
    \755\ 160 hours x 6 stand-alone SBSDs = 960 hours. These
internal hours likely would be performed by a senior compliance
manager.
    \756\ 192 hours per year x 6 stand-alone SBSDs = 1,152 hours per
year. These internal hours likely would be performed by a senior
compliance manager.
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    Stand-alone MSBSPs will be required to file FOCUS Report Part II,
as amended, on a monthly basis.\757\ FOCUS Report Part II, as amended,
includes three sections and four schedules applicable to stand-alone
MSBSPs.\758\ Stand-alone MSBSPs dually registered as FCMs will be
required to complete five additional sections, all of which the CFTC
already requires FCMs to file as part of Form 1-FR-FCM.\759\ In

consideration of these additional requirements, the Commission
estimates that the requirement for stand-alone MSBSPs to file FOCUS
Report Part II, as amended, every month will impose an initial burden
of 40 hours per firm and an ongoing annual burden of 48 hours per firm.
The Commission estimates that there are 4 stand-alone MSBSPs, resulting
in an industry-wide initial burden of 160 hours \760\ and an industry-
wide ongoing burden of 192 hours per year.\761\
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    \757\ See paragraph (a)(1) of Rule 18a-7, as adopted.
    \758\ Stand-alone MSBSPs will be required to complete the
following sections and schedules: (1) Statement of Financial
Condition; (2) Computation of Tangible Net Worth; (3) Statement of
Income (Loss); (4) Schedule 1--Aggregate Securities, Commodities,
and Swaps Positions; (5) Schedule 2--Credit Concentration Report for
Fifteen Largest Exposures in Derivatives; (6) Schedule 3--Portfolio
Summary of Derivatives Exposures by Internal Credit Rating; and (7)
Schedule 4 -Geographic Distribution of Derivatives Exposures for Ten
Largest Countries.
    \759\ Stand-alone MSBSPs also registered as FCMs will be
required to file the following sections: (1) Computation of CFTC
Minimum Capital Requirement; (2) Statement of Segregation
Requirements and Funds in Segregation for Customers Trading on U.S.
Commodity Exchanges; (3) Statement of Cleared Swaps Customer
Segregation Requirements and Funds in Cleared Swaps Customer
Accounts under Section 4d(f) of the Commodity Exchange Act; (4)
Statement of Segregation Requirements and Funds in Segregation for
Customers' Dealer Options Accounts; and (5) Statement of Secured
Amounts and Funds Held in Separate Accounts for Foreign Futures and
Foreign Options Customers Pursuant to CFTC Regulation 30.7. The
Commission does not estimate a burden for these 5 sections, since
the CFTC already requires FCMs to file these 5 sections on a monthly
basis (17 CFR 1.10(b)(1)(i)), and therefore, the hourly burden is
already accounted for in the PRA estimate for the CFTC's Rule 1.10
(1 CFR 1.10). In addition, the Commission does not anticipate that
FCMs will be required to file both the CFTC's Form 1-FR-FCM and the
Commission's FOCUS Report Part II, as amended.
    \760\ 40 hours x 4 stand-alone MSBSPs = 160 hours. These
internal hours likely will be performed by a senior compliance
manager.
    \761\ 48 hours per year x 4 stand-alone MSBSPs = 192 hours per
year. These internal hours likely will be performed by a senior
compliance manager.
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    Bank SBSDs will be required to file new FOCUS Report Part IIC on a
quarterly basis.\762\ New FOCUS Report Part IIC includes five sections
and one schedule applicable to bank SBSDs.\763\ The Commission does not
expect new FOCUS Report Part IIC to impose a significant burden on bank
SBSDs, because two of the five sections require the firm to file
calculations already computed in accordance with Rule 18a-3, and the
other three sections either mirror or are scaled down versions of
schedules to FFIEC Form 031, which banks are already required to file
with their prudential regulator (although they will need to transpose
this information from FFIEC Form 031 to FOCUS Report Part IIC).
Although bank SBSDs dually registered as FCMs will be required to
complete five additional sections, the CFTC already requires FCMs to
file these schedules on Form 1-FR-FCM.\764\ In consideration of these
additional requirements, the Commission estimates that the requirement
for bank SBSDs to file FOCUS Report Part IIC quarterly will impose an
initial burden of 36 hours per firm and an ongoing annual burden of 16
hours per firm. The Commission estimates that there are 25 bank SBSDs,
resulting in an industry-wide initial burden of 900 hours \765\ and an
industry-wide ongoing burden of 400 hours per year.\766\
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    \762\ See paragraph (a)(2) of Rule 18a-7, as adopted.
    \763\ Bank SBSDs will be required to complete the following
sections and schedules: (1) Balance Sheet (Information as Reported
on FFIEC Form 031--Schedule RC); (2) Regulatory Capital (Information
as Reported on FFIEC Form 031--Schedule RC-R); (3) Income Statement
(Information as Reported on FFIEC Form 031--Schedule RI); (4)
Computation for Determination of Security-Based Swap Customer
Reserve Requirements; (5) Possession or Control for Security-Based
Swap Customers; and (6) Schedule 1--Aggregate Security-Based Swap
and Swap Positions.
    \764\ Bank SBSDs also registered as FCMs will be required to
file the following sections: (1) Computation of CFTC Minimum Capital
Requirement; (2) Statement of Segregation Requirements and Funds in
Segregation for Customers Trading on U.S. Commodity Exchanges; (3)