The Commission does not include U.S. public holidays in estimating
the number of business days per year, given that many broker-dealers
trading security-based swaps operate internationally.
    \952\ 16 broker-dealer SBSDs + 1 broker-dealer MSBSP + 25 non-
SBSD/MSBSP broker-dealers engaged in security-based swap activities
= 42 broker-dealers engaged in security-based swap activities.
    \953\ 30 hours/year x 42 broker-dealers engaged in security-
based swap activities = 1,260 hours/year. These internal hours
likely would be performed by a compliance manager.
    \954\ 42 hours/year x 42 broker-dealers engaged in security-
based swap activities = 1,764 hours/year. These internal hours
likely would be performed by a compliance clerk.
---------------------------------------------------------------------------

    The proposed amendments to Rule 17a-3 would require three
additional types of records to be made and kept current by broker-
dealer SBSDs and broker-dealer MSBSPs.\955\ Because the burden to run
the applicable calculation or comply with the applicable standard is
accounted for in the PRA estimates for proposed Rules 18a-3,\956\ 15Fi-
1,\957\ 15Fh-1 through 15Fh-5, and 15Fk-1,\958\ 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 proposed to be amended,
would impose an initial burden of 60 hours per firm and an ongoing
annual burden of seventy-five hours per firm. The Commission estimates
that there are seventeen respondents (sixteen broker-dealer SBSDs and
one broker-dealer MSBSP), adding to the industry an initial burden of
1,020 hours \959\ and an ongoing burden of 1,275 hours per year.\960\
---------------------------------------------------------------------------

    \955\ See paragraphs (a)(25), (a)(28), and (a)(30) of Rule 17a-
3, as proposed to be amended (proposing recordkeeping requirements
for Rule 18a-3 calculations, unverified transactions, and compliance
with external business conduct requirements, respectively).
    \956\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70297.
    \957\ See Trade Acknowledgment and Verification of Security-
Based Swap Transactions, 76 FR 3869-3870.
    \958\ See Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, 76 FR 42443-
42448.
    \959\ 60 hours x 17 broker-dealer SBSDs and broker-dealer MSBSPs
= 1,020 hours. These internal hours likely would be performed by a
compliance manager.
    \960\ 75 hours/year x 17 broker-dealer SBSDs and broker-dealer
MSBSPs = 1,275 hours/year. These internal hours likely would be
performed by a compliance clerk.
---------------------------------------------------------------------------

    The proposed amendments to Rule 17a-3 would require three
additional types of records to be made and kept current by broker-
dealer SBSDs.\961\ Because the burden to run the applicable calculation
or comply with the applicable standard is accounted for in the PRA
estimates for proposed Rules 18a-4 \962\ and 15Fh-6,\963\ 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)(26), (a)(27), and (a)(29) of Rule 17a-3, as proposed to
be amended, would impose an initial burden of sixty hours per firm and
an ongoing annual burden of seventy-five hours per firm. The Commission
estimates that there are sixteen broker-dealer SBSDs, adding to the
industry an initial burden of 960 hours \964\ and an ongoing burden of
1,200 hours per year.\965\
---------------------------------------------------------------------------

    \961\ See Rule 17a-3, as proposed to be amended (paragraph
(a)(26) (compliance with proposed Rule 18a-4 possession or control
requirements); paragraph (a)(27) (proposed Rule 18a-4 reserve
account computations); and paragraph (a)(29) (political
contributions)).
    \962\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70297-70299.
    \963\ See Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, 76 FR 42447.
    \964\ 60 hours x 16 broker-dealer SBSDs = 960 hours. These
internal hours likely would be performed by a compliance manager.
    \965\ 75 hours/year x 16 broker-dealer SBSDs = 1,200 hours/year.
These internal hours likely would be performed by a compliance
clerk.
---------------------------------------------------------------------------

    The Commission proposes to add paragraph (a)(24) to Rule 17a-3,
which would require ANC broker-dealers to make and keep current certain
records relating to the firm's monthly liquidity stress test.\966\
Because the burden of actually performing the liquidity stress test and
creating a liquidity funding plan is already accounted for in the PRA
estimate for Rule 15c3-1, as proposed to be amended,\967\ the burden
imposed by paragraph (a)(24) of Rule 17a-3, as proposed to be amended,
is the requirement to make and keep current a written record of these
tasks. The Commission estimates that paragraph (a)(24) would impose on
each ANC broker-dealer an initial burden of twenty hours and an ongoing
burden of twenty-five hours per year. The Commission estimates that
there are ten

ANC broker-dealers (all of which are assumed to be dually registered as
SBSDs), adding to the industry an initial burden of 200 hours \968\ and
an ongoing burden of 250 hours per year.\969\
---------------------------------------------------------------------------

    \966\ See paragraph (a)(24) of Rule 17a-3, as proposed to be
amended.
    \967\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70294.
    \968\ 20 hours x 10 ANC broker-dealers = 200 hours. These
internal hours likely would be performed by a compliance manager.
    \969\ 25 hours/year x 10 ANC broker-dealers = 250 hours/year.
These internal hours likely would be performed by a compliance
clerk.
---------------------------------------------------------------------------

Estimated Hours and Costs of Proposed Rule 18a-5
    Dollar Costs. The Commission estimates that proposed Rule 18a-5
would cause a stand-alone SBSD or stand-alone 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 thirteen respondents (nine stand-alone SBSDs and four stand-alone
MSBSPs), resulting in an estimated industry-wide initial burden of
$13,000 \970\ and an industry-wide ongoing burden of $60,450 per
year.\971\
---------------------------------------------------------------------------

    \970\ $1,000 x 13 stand-alone SBSDs and stand-alone MSBSPs =
$13,000.
    \971\ $4,650/year x 13 stand-alone SBSDs and stand-alone MSBSPs
= $60,450/year.
---------------------------------------------------------------------------

    Proposed Rule 18a-5 is not expected to increase the initial and
ongoing dollar costs that bank SBSDs and bank MSBSPs incur to purchase
recordkeeping system software and for equipment and systems
development. Banks are already subject to recordkeeping requirements by
the prudential regulators,\972\ so they already own or have established
the requisite recordkeeping system software. Although bank SBSDs and
bank 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.
---------------------------------------------------------------------------

    \972\ See, e.g., 12 CFR 12.3 (Department of Treasury); 12 CFR
219.21 et seq. (Federal Reserve); 12 CFR 344.4 (FDIC).
---------------------------------------------------------------------------

    Hour Burden. Proposed Rule 18a-5 would require thirteen types of
records to be made and kept current by stand-alone SBSDs and stand-
alone MSBSPs.\973\ Proposed Rule 18a-5 imposes the burden to make and
keep current these records, but does not require the firm to perform
the underlying task.\974\ Therefore, after consideration of the
estimated burdens under Rule 17a-3, as proposed to be amended, the
Commission estimates that paragraphs (a)(1) through (a)(10), (a)(12),
(a)(15), and (a)(17) of proposed Rule 18a-5 would impose on each firm
an initial burden of 260 hours and an ongoing annual burden of 325
hours. The Commission estimates that there are thirteen respondents
(nine stand-alone SBSDs and four stand-alone MSBSPs), resulting in an
estimated industry-wide initial burden of 3,380 hours \975\ and an
industry-wide ongoing annual burden of 4,225 hours.\976\
---------------------------------------------------------------------------

    \973\ See proposed Rule 18a-5 (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) (proposed Rule
18a-3 calculations); paragraph (a)(15) (unverified transactions);
paragraph (a)(17) (compliance with external business conduct
standards)).
    \974\ In estimating the burden associated with proposed Rules
18a-5 and 18a-6, the Commission recognizes that entities that would
register stand-alone SBSDs and stand-alone 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 is
estimating the PRA burden for these entities based on the assumption
that they currently keep no records.
    \975\ 260 hours x 13 stand-alone SBSDs and stand-alone MSBSPs =
3,380 hours. These internal hours likely would be performed by a
compliance manager.
    \976\ 325 hours/year x 13 stand-alone SBSDs and stand-alone
MSBSPs = 4,225 hours/year. These internal hours likely would be
performed by a compliance clerk.
---------------------------------------------------------------------------

    Proposed Rule 18a-5 would require three types of records to be made
and kept current by stand-alone SBSDs.\977\ Because the burden to run
the applicable calculation or comply with the applicable standard is
accounted for in the PRA estimates for proposed Rules 18a-4 \978\ and
15Fh-6, \979\ 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)(13), (a)(14), and (a)(16)
of proposed Rule 18a-5 would impose an initial burden of sixty hours
per firm and an ongoing annual burden of seventy-five hours per firm.
The Commission estimates that there are nine stand-alone SBSDs,
resulting in an industry-wide initial burden of 540 hours \980\ and an
industry-wide ongoing burden of 675 hours per year.\981\
---------------------------------------------------------------------------

    \977\ See proposed Rule 18a-5 (paragraph (a)(13) (compliance
with proposed Rule 18a-4 possession or control requirements);
paragraph (a)(14) (proposed Rule 18a-4 reserve account
computations); and paragraph (a)(16) (political contributions)).
    \978\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70297-70299.
    \979\ See Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, 76 FR 42447.
    \980\ 60 hours x 9 stand-alone SBSDs = 540 hours. These internal
hours likely would be performed by a compliance manager.
    \981\ 75 hours/year x 9 stand-alone SBSDs = 675 hours/year.
These internal hours likely would be performed by a compliance
clerk.
---------------------------------------------------------------------------

    Paragraph (a)(11) of proposed Rule 18a-5 would require ANC stand-
alone SBSDs to make and keep current certain records relating to the
monthly liquidity stress test.\982\ Because the burden of actually
performing the liquidity stress test and creating a liquidity funding
plan is already accounted for in the PRA estimate for proposed Rule
18a-1,\983\ the burden imposed by paragraph (a)(11) of proposed Rule
18a-5 is the requirement to make and keep current a written record of
these tasks. The Commission estimates that paragraph (a)(11) would
impose on each ANC broker-dealer an initial burden of twenty hours and
an ongoing burden of twenty-five hours per year. The Commission
estimates that there are six ANC stand-alone SBSDs, resulting in an
industry-wide initial burden of 120 hours \984\ and an industry-wide
ongoing burden of 150 hours per year.\985\
---------------------------------------------------------------------------

    \982\ See paragraph (a)(11) of proposed Rule 18a-5.
    \983\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70294.
    \984\ 20 hours x 6 ANC stand-alone SBSDs = 120 hours. These
internal hours likely would be performed by a compliance manager.
    \985\ 25 hours/year x 6 ANC stand-alone SBSDs = 150 hours/year.
These internal hours likely would be performed by a compliance
clerk.
---------------------------------------------------------------------------

    Proposed Rule 18a-5 would require ten types of records to be made
and kept current by bank SBSDs and bank MSBSPs, all of which are
limited to the firm's business as an SBSD or MSBSP.\986\ Proposed 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
proposed to be amended, the Commission estimates that paragraphs (b)(1)
through (b)(8), (b)(11), and (b)(13) of proposed Rule 18a-5 would
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 twenty-five respondents (twenty-five bank SBSDs and no bank
MSBSPs), resulting in an estimated industry-wide initial burden of
5,000 hours \987\ and an industry-wide ongoing burden of 6,250 hours
per year.\988\
---------------------------------------------------------------------------

    \986\ See proposed Rule 18a-5 (paragraph (b)(1) (trade
blotters); paragraph (b)(2) (general ledgers); 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 external business conduct requirements)).
    \987\ 200 hours x 25 bank SBSDs = 5,000 hours. These internal
hours likely would be performed by a compliance manager.
    \988\ 250 hours/year x 25 bank SBSDs = 6,250 hours/year. These
internal hours likely would be performed by a compliance clerk.
---------------------------------------------------------------------------

    Proposed Rule 18a-5 would require 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.\989\ Because the burden to run the applicable
calculation or comply with the applicable standard is accounted for in
the PRA estimates for proposed Rules 18a-4\990\ and 15Fh-6,\991\ 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 (b)(9), (b)(10), and (b)(12) of proposed Rule 18a-5
would impose an initial burden of sixty hours per firm and an ongoing
annual burden of seventy-five hours per firm. The Commission estimates
that there are twenty-five bank SBSDs, resulting in an industry-wide
initial burden of 1,500 hours\992\ and an industry-wide ongoing burden
of 1,875 hours per year.\993\
---------------------------------------------------------------------------

    \989\ See proposed Rule 18a-5 (paragraph (b)(9) (compliance with
proposed Rule 18a-4 possession or control requirements); paragraph
(b)(10) (proposed Rule 18a-4 reserve account computations); and
paragraph (b)(12) (political contributions)).
    \990\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70297-70299.
    \991\ See Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, 76 FR 42447.
    \992\ 60 hours x 25 bank SBSDs = 1,500 hours. These internal
hours likely would be performed by a compliance manager.
    \993\ 75 hours/year x 25 bank SBSDs = 1,875 hours/year. These
internal hours likely would be performed by a compliance clerk.
---------------------------------------------------------------------------

2. Proposed Amendments to Rule 17a-4 and Proposed Rule 18a-6
    The proposed amendments to Rule 17a-4 and proposed Rule 18a-6 would
impose collection of information requirements that result in initial
and ongoing burdens for broker-dealers, SBSDs, MSBSPs, and certain
third-party custodians. Current Rule 17a-4 imposes an estimated annual
burden of 254 hours per firm and $5,000 and a total industry burden of
1,196,086 hours and $23,545,000.\994\ The Commission estimates that the
proposed amendments to Rule 17a-4 would impose the following initial
and annual burdens:
---------------------------------------------------------------------------

    \994\ See Commission, Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 17a-4
(Sept. 12, 2013), available at http://www.reginfo.gov/public/do/DownloadDocument?documentID=422180&version=0.

------------------------------------------------------------------------
           Burden                Initial burden         Annual burden
------------------------------------------------------------------------
Recorded telephone calls      Per firm: 13 hours..  Per firm: 6 hours
 \995\.                       Industry: 221 hours.   and $2,000
                                                    Industry: 102 hours
                                                     and $34,000.
New burdens applicable to     Per firm: 39 hours..  Per firm: 18 hours
 all broker-dealers \996\.    Industry: 1,638        and $360
                               hours.               Industry: 756 hours
                                                     and $15,120.
New burdens applicable to     Per firm: 65 hours..  Per firm: 30 hours
 broker-dealer SBSDs and      Industry: 1,105        and $600
 broker-dealer MSBSPs \997\.   hours.               Industry: 510 hours
                                                     and $10,200.
New burdens applicable to     Per firm: 39 hours..  Per firm: 18 hours
 broker-dealer SBSDs \998\.   Industry: 624 hours.   and $360
                                                    Industry: 288 hours
                                                     and $5,760.
New burdens applicable to     Per firm: 13 hours..  Per firm: 6 hours
 ANC broker-dealers \999\.    Industry: 130 hours.   and $120
                                                    Industry: 60 hours
                                                     and $1,200.
Total--Proposed amendments    Industry: 3,718       Industry: 1,716
 to Rule 17a-4.                hours.                hours and $66,280.
------------------------------------------------------------------------

    The Commission estimates that proposed Rule 18a-6 would impose the
following initial and annual burdens:
---------------------------------------------------------------------------

    \995\ See paragraph (b)(4) of Rule 17a-4, as proposed to be
amended.
    \996\ See paragraphs (b)(1), (b)(8)(v) through (viii),
(b)(8)(xvi), and (b)(14) of Rule 17a-4, as proposed to be amended.
    \997\ See paragraphs (b)(1), (b)(15), and (b)(16) of Rule 17a-4,
as proposed to be amended.
    \998\ See paragraph (b)(1) of Rule 17a-4, as proposed to be
amended.
    \999\ See paragraph (b)(1) of Rule 17a-4, as proposed to be
amended.

------------------------------------------------------------------------
           Burden                Initial burden         Annual burden
------------------------------------------------------------------------
Burdens applicable to stand-  Per firm: 364 hours.  Per firm: 280 hours
 alone SBSDs and stand-alone  Industry: 4,732        and $5,720.
 MSBSPs \1000\.                hours.               Industry: 3,640
                                                     hours and $74,360.
Burdens applicable to stand-  Per firm: 44 hours..  Per firm: 30 hours
 alone SBSDs \1001\.          Industry: 396 hours.   and $360.
                                                    Industry: 270 hours
                                                     and $3,240.
Burdens applicable to ANC     Per firm: 31 hours..  Per firm: 20 hours
 stand-alone SBSDs \1002\.    Industry: 186 hours.   and $240.
                                                    Industry: 120 hours
                                                     and $1,440.
Burdens applicable to bank    Per firm: 247 hours.  Per firm: 190 hours
 SBSDs and bank MSBSPs        Industry: 6,175        and $4,520.
 \1003\.                       hours.               Industry: 4,750
                                                     hours and $113,000.
Burdens applicable to bank    Per firm: 57 hours..  Per firm: 40 hours
 SBSDs \1004\.                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 \1005\.     Industry: 0 hours...  Industry: 38 hours.
Total--Proposed Rule 18a-6..  Industry: 12,914      Industry: 9,818
                               hours.                hours and $204,078.
------------------------------------------------------------------------

Estimated Hours and Costs of Current Rule 17a-4
---------------------------------------------------------------------------

    \1000\ See paragraphs (a)(1), (b)(1)(i) through (ix), (b)(1)(xi)
through (xiii), (c), (d)(1), (d)(2)(i), and (d)(3)(i) of proposed
Rule 18a-6.
    \1001\ See paragraph (b)(1)(i) of proposed Rule 18a-6.
    \1002\ See paragraphs (b)(1)(i) and (b)(1)(x) of proposed Rule
18a-6.
    \1003\ See paragraphs (a)(2), (b)(2)(i) through (iv), (b)(2)(vi)
through (viii), (d)(1), (d)(2)(ii), and (d)(3)(ii) of proposed Rule
18a-6.
    \1004\ See paragraphs (b)(2)(i) and (b)(2)(v) of proposed Rule
18a-6.
    \1005\ See paragraph (f) of proposed Rule 18a-6.
---------------------------------------------------------------------------

    The Supporting Statement accompanying the most recent extension of
Rule 17a-4's collection estimates that each registered broker-dealer
spends 254 hours to ensure it is in compliance with Rule 17a-4 and
produce records promptly when required, and $5,000 each year on
physical space and computer hardware and software to store the
requisite documents and information.\1006\ Given that 4,545 broker-
dealers were registered with the Commission as of April 1, 2013,
current Rule 17a-4 creates an estimated industry-wide ongoing annual
cost of 1,154,430 hours \1007\ and $22,725,000.\1008\
---------------------------------------------------------------------------

    \1006\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-4.
    \1007\ 254 hours/year x 4,545 registered broker-dealers =
1,154,430 hours/year.
    \1008\ $5,000/year x 4,545 registered broker-dealers =
$22,725,000/year.
---------------------------------------------------------------------------

Estimated Hours and Costs of Proposed Amendments to Rule 17a-4
    Many of the proposed amendments to Rule 17a-4 are not expected to
change the estimated burden imposed by Rule 17a-4. Most of the
additional proposed amendments discussed in section II.A.3.b. of this
release are largely clarifying changes that do not affect the
Commission's burden estimate. Similarly, paragraph (m)(5) of Rule 17a-
4, as proposed to be amended, which adds a definition for business as
such,\1009\ is a clarifying amendment that should not affect the rule's
burden.
---------------------------------------------------------------------------

    \1009\ See paragraph (m)(5) of Rule 17a-4, as proposed to be
amended.
---------------------------------------------------------------------------

    The Commission believes there is no burden associated with its
proposal that a broker-dealer retain a record of the proof of money
balances of all ledger accounts in the form of trial balances, and a
record of the computation of aggregate indebtedness and net
capital.\1010\ Since Rule 17a-3 requires broker-dealers to make these
records, the Commission understands that it is already industry
practice for broker-dealers to also keep these records. In addition,
Rule 17a-4 already requires broker-dealers to keep records containing
substantially similar information,\1011\ so that the same record would
likely also include the information required by this proposed amendment
to Rule 17a-4.
---------------------------------------------------------------------------

    \1010\ See paragraph (b)(1) of Rule 17a-4, as proposed to be
amended (cross-referencing paragraph (a)(11) of Rule 17a-3, as
proposed to be amended (proof of money balances)).
    \1011\ See Rule 17a-4, as proposed to be amended (paragraph
(b)(5) (trial balances, computations of aggregate indebtedness and
net capital); paragraph (b)(8)(i) (money balance and position in
securities accounts payable to customers); paragraph (b)(8)(i)
(money balance and position in securities accounts payable to non-
customers)).
---------------------------------------------------------------------------

    The Commission believes there is no burden associated with its
proposal that a security-based swap customer or non-customer's written
agreements be maintained with his or her account records,\1012\ because
the Commission understands that it is already industry practice to keep
written agreements with the relevant person's account records.
---------------------------------------------------------------------------

    \1012\ See paragraph (b)(4) of Rule 17a-4, as proposed to be
amended.
---------------------------------------------------------------------------

    Certain proposed amendments to Rule 17a-4 would require broker-
dealer SBSDs and broker-dealer MSBSPs to retain certain new records but
would no longer require them to retain other records required to be
kept by non-SBSD/MSBSP broker-dealers. Specifically, broker-dealer
SBSDs and broker-dealer MSBSPs must preserve proposed Form SBS instead
of Form X-17A-5,\1013\ possession or control information for security-
based swap customers under proposed Rule 18a-4 instead of under Rule
15c3-3,\1014\ and Forms SBSE-BD and SBSE-W instead of Forms BD and
BDW.\1015\ These proposed amendments are not expected to significantly
change the number of documents that the broker-dealer must preserve,
but simply the type of document that must be preserved--a factor that
is not expected to affect Rule 17a-4's burden.
---------------------------------------------------------------------------

    \1013\ See paragraph (b)(8) of Rule 17a-4, as proposed to be
amended.
    \1014\ See paragraph (b)(8)(xiv) of Rule 17a-4, as proposed to
be amended.
    \1015\ See paragraph (d) of Rule 17a-4, as proposed to be
amended.
---------------------------------------------------------------------------

    The Commission proposes to amend paragraph (b)(4) of Rule 17a-4 to
require broker-dealer SBSDs and broker-dealer MSBSPs to retain
telephone calls that have already been recorded and are related to the
broker-dealer SBSD's and broker-dealer MSBSP's security-based swap
business.\1016\ Paragraph (b)(4) of Rule 17a-4, as proposed to be
amended, only requires the retention of telephonic recordings the
broker-dealer SBSD or broker-dealer MSBSP voluntarily chooses to
record, so the Commission's burden estimate does not include the cost
of recording phone calls. Therefore, the burdens imposed by the
proposed amendment would be to provide adequate physical space and
computer hardware and software for storage. The Commission estimates
that the proposed amendment to paragraph (b)(4) of Rule 17a-4 would
impose an initial burden of 13 hours per firm. The Commission estimates
that there are seventeen respondents (sixteen broker-dealer SBSDs and
one broker-dealer MSBSP), resulting in an estimated industry-wide
initial burden of 221 hours.\1017\
---------------------------------------------------------------------------

    \1016\ See paragraph (b)(4) of Rule 17a-4, as proposed to be
amended.
    \1017\ 13 hours x 17 broker-dealer SBSDs and broker-dealer
MSBSPs = 221 hours. These internal hours likely would be performed
by a senior database administrator.
---------------------------------------------------------------------------

    The Commission estimates that each firm would incur an annual
burden of approximately six 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 seventeen respondents
(sixteen broker-dealer SBSDs and one broker-dealer MSBSP), resulting in
an estimated industry-wide ongoing annual cost of 102 hours \1018\ and
$34,000.\1019\
---------------------------------------------------------------------------

    \1018\ 6 hours x 17 broker-dealer SBSDs and broker-dealer MSBSPs
= 102 hours. These internal hours likely would be performed by a
compliance clerk.
    \1019\ $2,000 x 17 broker-dealer SBSDs and broker-dealer MSBSPs
= $34,000.
---------------------------------------------------------------------------

    The proposed amendments to Rule 17a-4 would add three types of
records to be preserved by broker-dealers.\1020\ Because the burden to
create these records is already accounted for in the PRA estimates for
Rule 17a-3,\1021\ Rule 15c3-1,\1022\ or in proposed Regulation
SBSR,\1023\ the burdens imposed by these new requirements are to ensure
there is adequate physical space and computer hardware and software for
storage, ensure these records are preserved for the requisite time
period, and produce them when requested. The Commission estimates that
the proposed amendments to paragraphs (b)(8)(v)-

(viii) and proposed paragraphs (b)(8)(xvi) and (b)(14) of Rule 17a-4
would impose an initial burden of thirty-nine hours per firm and an
ongoing annual burden of eighteen hours and $360 per firm. The
Commission estimates that there are forty-two respondents--sixteen
broker-dealer SBSDs, one broker-dealer MSBSP, and twenty-five non-SBSD/
MSBSP broker-dealers engaged in security-based swap activities.\1024\
Thus, these proposed amendments would add to the industry an estimated
initial burden of 1,638 hours \1025\ and an ongoing annual burden of
756 hours \1026\ and $15,120.\1027\
---------------------------------------------------------------------------

    \1020\ See Rule 17a-4, as proposed to be amended (paragraph
(b)(8)(v) through (viii) (identifying information about swaps);
paragraph (b)(8)(xvi) (risk margin calculation); and paragraph
(b)(14) (Regulation SBSR information)).
    \1021\ See id. See also Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 17a-3.
    \1022\ See Commission, Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 15c3-1
(July 1, 2010), available at http://www.reginfo.gov/public/do/DownloadDocument?documentID=184515&version=1.
    \1023\ See Regulation SBSR--Reporting and Dissemination of
Security-Based Swap Information, 75 FR 75246-75250.
    \1024\ 16 broker-dealer SBSDs + 1 broker-dealer MSBSP + 25 non-
SBSD/MSBSP broker-dealers engaged in security-based swap activities
= 42 broker-dealers engaged in security-based swap activities.
    \1025\ 39 hours x 42 respondents = 1,638 hours. These internal
hours likely would be performed by a senior database administrator.
    \1026\ 18 hours/year x 42 respondents = 756 hours/year. These
internal hours likely would be performed by a compliance clerk.
    \1027\ $360 x 42 respondents = $15,120.
---------------------------------------------------------------------------

    The proposed amendments to Rule 17a-4 would add five types of
records to be preserved by broker-dealer SBSDs and broker-dealer
MSBSPs.\1028\ Because the burden to create these records is accounted
for in the PRA estimates for Rule 17a-3,\1029\ or proposed Rules 15Fh-1
through 15Fh-5 and 15Fk-1,\1030\ the burdens imposed by these proposed
amendments are to ensure there is adequate physical space and computer
hardware and software for storage, ensure these records are preserved
for the requisite time period, and produce them when requested. The
Commission estimates that the proposed amendments to paragraph (b)(1)
and proposed new paragraphs (b)(15) and (b)(16) of Rule 17a-4 would
impose an initial burden of sixty-five hours per firm and an ongoing
annual burden of thirty hours and $600 per firm. The Commission
estimates that there are seventeen respondents (sixteen broker-dealer
SBSDs and one broker-dealer MSBSP), adding to the industry an initial
burden of 1,105 hours\1031\ and an ongoing annual burden of 510 hours
\1032\ and $10,200.\1033\
---------------------------------------------------------------------------

    \1028\ See Rule 17a-4, as proposed to be amended (paragraph
(b)(1), cross-referencing paragraph (a)(25) of Rule 17a-3, as
proposed to be amended (proposed Rule 18a-3 calculations); paragraph
(b)(1), cross-referencing paragraph (a)(28) of Rule 17a-3, as
proposed to be amended (unverified transactions); paragraph (b)(1),
cross-referencing paragraph (a)(30) of Rule 17a-3, as proposed to be
amended (compliance with external business conduct standards);
paragraph (b)(15) (documents and notices related to the external
business conduct standards); and paragraph (b)(16) (special entity
documents).
    \1029\ See Commission, Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 17a-3. See
also section IV.D.1. of this release.
    \1030\ See Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, 76 FR 42443-
42448.
    \1031\ 65 hours x 17 broker-dealer SBSDs and broker-dealer
MSBSPs = 1,105 hours. These internal hours likely would be performed
by a senior database administrator.
    \1032\ 30 hours/year x 17 broker-dealer SBSDs and broker-dealer
MSBSPs = 510 hours/year. These internal hours likely would be
performed by a compliance clerk.
    \1033\ $600 x 17 broker-dealer SBSDs and broker-dealer MSBSPs =
$10,200.
---------------------------------------------------------------------------

    The proposed amendments to Rule 17a-4 would add three types of
records to be preserved by broker-dealer SBSDs.\1034\ Because the
burden to create these records is accounted for in the PRA estimate for
Rule 17a-3, as proposed to be amended,\1035\ the burdens imposed by
these new requirements are to ensure there is adequate physical space
and computer hardware and software for storage, ensure these records
are preserved for the requisite time period, and produce them when
requested. The Commission estimates that the proposed amendments to
paragraph (b)(1) of Rule 17a-4 would impose an initial burden of
thirty-nine hours per firm and an ongoing annual burden of eighteen
hours and $360 per firm. The Commission estimates that there are 16
broker-dealer SBSDs, adding to the industry an initial burden of 624
hours\1036\ and an ongoing annual burden of 288 hours\1037\ and
$5,760.\1038\
---------------------------------------------------------------------------

    \1034\ See paragraph (b)(1) of Rule 17a-4, as proposed to be
amended (cross-referencing paragraph (a)(26) of Rule 17a-3, as
proposed to be amended (compliance with proposed Rule 18a-4
possession or control requirements); paragraph (a)(27) of Rule 17a-
3, as proposed to be amended (proposed Rule 18a-4 reserve account
computations); and paragraph (a)(29) of Rule 17a-3, as proposed to
be amended (political contributions)).
    \1035\ See section IV.D.1. of this release.
    \1036\ 39 hours x 16 broker-dealer SBSDs = 624 hours. These
internal hours likely would be performed by a senior database
administrator.
    \1037\ 18 hours/year x 16 broker-dealer SBSDs = 288 hours/year.
These internal hours likely would be performed by a compliance
clerk.
    \1038\ $360 x 16 broker-dealer SBSDs = $5,760.
---------------------------------------------------------------------------

    Paragraph (b)(1) of Rule 17a-4, as proposed to be amended, would
require ANC broker-dealers to preserve certain records relating to the
firm's monthly liquidity stress test.\1039\ Because the burden to
create this record is accounted for in the PRA estimate for Rule 17a-3,
as proposed to be amended,\1040\ the burdens this new requirement would
impose on ANC broker-dealers are to ensure there is adequate physical
space and computer hardware and software for storage, ensure these
records are preserved for the requisite time period, and produce them
when requested. The Commission estimates that the proposed amendment to
paragraph (b)(1) of Rule 17a-4 would impose an initial burden of
thirteen hours per firm and an ongoing annual burden of six hours and
$120 per firm. The Commission estimates that there are ten ANC broker-
dealers (all of which are assumed to be dually registered as SBSDs),
adding to the industry an initial burden of 130 hours\1041\ and an
ongoing annual burden of sixty hours\1042\ and $1,200.\1043\
---------------------------------------------------------------------------

    \1039\ See paragraph (b)(1) of Rule 17a-4, as proposed to be
amended (cross-referencing paragraph (a)(24) of Rule 17a-3, as
proposed to be amended).
    \1040\ See section IV.D.1. of this release.
    \1041\ 13 hours x 10 ANC broker-dealers = 130 hours. These
internal hours likely would be performed by a compliance manager and
a senior database administrator.
    \1042\ 6 hours/year x 10 ANC broker-dealers = 60 hours/year.
These internal hours likely would be performed by a compliance
clerk.
    \1043\ $120 x 10 ANC broker-dealers = $1,200.
---------------------------------------------------------------------------

Estimated Hours and Costs of Proposed Rule 18a-6
    Proposed Rule 18a-6 would require twenty-seven types of records to
be preserved by stand-alone SBSDs and stand-alone MSBSPs.\1044\
Proposed Rule

18a-6 does not require the firm to create these records or perform the
underlying task, so the burdens imposed by these requirements would be
to provide adequate physical space and computer hardware and software
for storage, preserve these records for the requisite time period, and
produce them when requested.\1045\ The Commission estimates that the
proposed record preservation requirements applicable to stand-alone
SBSDs and stand-alone MSBSPs would impose an initial burden of 364
hours,\1046\ and an ongoing annual burden of 280 hours and $5,720 per
firm. The Commission estimates that there are thirteen respondents
(nine stand-alone SBSDs and four stand-alone MSBSPs), resulting in an
estimated industry-wide initial burden of 4,732 hours,\1047\ and an
industry-wide ongoing annual burden of 3,640 hours\1048\ and
$74,360.\1049\
---------------------------------------------------------------------------

    \1044\ See proposed Rule 18a-6 (paragraph (a)(1), cross-
referencing paragraph (a)(1) of proposed Rule 18a-5 (trade
blotters); paragraph (a)(1), cross-referencing paragraph (a)(2) of
proposed Rule 18a-5 (general ledgers); paragraph (a)(1), cross-
referencing paragraph (a)(3) of proposed Rule 18a-5 (ledgers of
customer and non-customer accounts); paragraph (a)(1), cross-
referencing paragraph (a)(4) of proposed Rule 18a-5 (stock record);
paragraph (a)(1), cross-referencing paragraph (a)(5) of proposed
Rule 18a-5 (memoranda of proprietary orders); paragraph (a)(1),
cross-referencing paragraph (a)(6) of proposed Rule 18a-5
(confirmations); paragraph (a)(1), cross-referencing paragraph
(a)(7) of proposed Rule 18a-5 (accountholder information); paragraph
(a)(1), cross-referencing paragraph (a)(8) of proposed Rule 18a-5
(options positions); paragraph (a)(1), cross-referencing paragraph
(a)(9) of proposed Rule 18a-5 (trial balances and computation of net
capital); paragraph (a)(1), cross-referencing paragraph (a)(12) of
proposed Rule 18a-5 (proposed Rule 18a-3 calculations); paragraph
(a)(1), cross-referencing paragraph (a)(15) of proposed Rule 18a-5
(unverified transactions); paragraph (a)(1), cross-referencing
paragraph (a)(17) of proposed Rule 18a-5 (compliance with external
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)).
    \1045\ See supra note 974.
    \1046\ The Commission believes that any initial dollar cost
associated with proposed Rule 18a-6 is already accounted for in the
PRA estimate for proposed Rule 18a-5, which includes the cost of
recordkeeping system software.
    \1047\ 364 hours x 13 stand-alone SBSDs and stand-alone MSBSPs =
4,732 hours. These internal hours likely would be performed by a
senior database administrator.
    \1048\ 280 hours/year x 13 stand-alone SBSDs and stand-alone
MSBSPs = 3,640 hours/year. These internal hours likely would be
performed by a compliance clerk.
    \1049\ $5,720/year x 13 stand-alone SBSDs and stand-alone MSBSPs
= $74,360/year.
---------------------------------------------------------------------------

    Proposed Rule 18a-6 would require three types of records to be
preserved by stand-alone SBSDs.\1050\ Because the burden to create
these records is accounted for in the PRA estimate for proposed Rule
18a-5,\1051\ the burdens imposed by these requirements are to ensure
there is adequate physical space and computer hardware and software for
storage, ensure these records are preserved for the requisite time
period, and produce them when requested. The Commission estimates that
the relevant portions of paragraph (b)(1)(i) of proposed Rule 18a-6
would impose an initial burden of forty-four hours per firm,\1052\ and
an ongoing annual burden of thirty hours and $360 per firm. The
Commission estimates that there are nine stand-alone SBSDs, resulting
in an industry-wide initial burden of 396 hours\1053\ and an industry-
wide ongoing annual burden of 270 hours\1054\ and $3,240.\1055\
---------------------------------------------------------------------------

    \1050\ See paragraph (b)(1)(i) of proposed Rule 18a-6 (cross-
referencing paragraph (a)(13) of proposed Rule 18a-5 (compliance
with proposed Rule 18a-4 possession or control requirements);
paragraph (a)(14) of proposed Rule 18a-5 (proposed Rule 18a-4
reserve account computations); and paragraph (a)(16) of proposed
Rule 18a-5 (political contributions)).
    \1051\ See section IV.D.1. of this release.
    \1052\ The Commission believes that any initial dollar cost
associated with proposed Rule 18a-6 is already accounted for in the
PRA estimate for proposed Rule 18a-5, which includes the cost of
recordkeeping system software.
    \1053\ 44 hours x 9 stand-alone SBSDs = 396 hours. These
internal hours likely would be performed by a senior database
administrator.
    \1054\ 30 hours/year x 9 stand-alone SBSDs = 270 hours/year.
These internal hours likely would be performed by a compliance
clerk.
    \1055\ $360/year x 9 stand-alone SBSDs = $3,240/year.
---------------------------------------------------------------------------

    Proposed Rule 18a-6 would require two types of records to be
preserved by ANC stand-alone SBSDs.\1056\ Because the burden of
actually performing the underlying task and creating the written record
is already accounted for in the PRA estimates for proposed Rules 18a-1
\1057\ and 18a-5,\1058\ the burden is the requirement to preserve these
records for at least three years. The Commission estimates that
paragraph (b)(1)(x) and paragraph (b)(1)(i)'s cross-reference to
paragraph (a)(11) of proposed Rule 18a-5 would impose an initial burden
of thirty-one hours \1059\ and an ongoing annual burden of twenty hours
and $240 per ANC stand-alone SBSD. The Commission estimates that there
are six ANC stand-alone SBSDs, resulting in an industry-wide initial
burden of 186 hours \1060\ and an industry-wide ongoing annual burden
of 120 hours \1061\ and $1,440.\1062\
---------------------------------------------------------------------------

    \1056\ See proposed Rule 18a-6 (paragraph (b)(1)(i), cross-
referencing paragraph (a)(11) of proposed Rule 18a-5 (liquidity
stress test); and paragraph (b)(1)(x) (credit risk determinations)).
    \1057\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70294.
    \1058\ See section IV.D.1. of this release.
    \1059\ The Commission believes that any initial dollar cost
associated with proposed Rule 18a-6 is already accounted for in the
PRA estimate for proposed Rule 18a-5, which includes the cost of
recordkeeping system software.
    \1060\ 31 hours x 6 ANC stand-alone SBSDs = 186 hours. These
internal hours likely would be performed by a senior database
administrator.
    \1061\ 20 hours/year x 6 ANC stand-alone SBSDs = 120 hours/year.
These internal hours likely would be performed by a compliance
clerk.
    \1062\ $240/year x 6 ANC stand-alone SBSDs = $1,440/year.
---------------------------------------------------------------------------

    Proposed Rule 18a-6 would require eighteen types of records to be
preserved by bank SBSDs and bank MSBSPs, all of which are limited to
the firm's business as an SBSD or MSBSP.\1063\ Proposed Rule 18a-6 does
not require the firm to create these records or perform the underlying
task, so the burdens imposed by these requirements are to ensure there
is adequate physical space and computer hardware and software for
storage, ensure these records are preserved for the requisite time
period, and produce them when requested. Therefore, after consideration
of the similar burdens imposed by Rule 17a-4, as proposed to be
amended, the Commission estimates that proposed Rule 18a-6 would impose
on bank SBSDs and bank MSBSPs an initial burden of 247 hours per firm
\1064\ and an ongoing burden of 190 hours and $4,520 per firm. The
Commission estimates that there are twenty-five respondents (twenty-
five bank SBSDs and no bank MSBSPs), resulting in an estimated
industry-wide initial burden of 6,175 hours \1065\ and an industry-wide
ongoing annual burden of 4,750 hours \1066\ and $113,000.\1067\
---------------------------------------------------------------------------

    \1063\ See proposed Rule 18a-6 (paragraph (a)(2), cross-
referencing paragraph (b)(1) of proposed Rule 18a-5 (trade
blotters); paragraph (a)(2), cross-referencing paragraph (b)(2) of
proposed Rule 18a-5 (ledgers of security-based swap customers and
non-customers); paragraph (a)(2), cross-referencing paragraph (b)(3)
of proposed Rule 18a-5 (stock records); paragraph (b)(2)(i), cross-
referencing paragraph (b)(4) of proposed Rule 18a-5 (memoranda of
brokerage orders); paragraph (b)(2)(i), cross-referencing paragraph
(b)(5) of proposed Rule 18a-5 (memoranda of proprietary orders);
paragraph (b)(2)(i), cross-referencing paragraph (b)(6) of proposed
Rule 18a-5 (confirmations); paragraph (b)(2)(i), cross-referencing
paragraph (b)(7) of proposed Rule 18a-5 (accountholder information);
paragraph (b)(2)(i), cross-referencing paragraph (b)(11) of proposed
Rule 18a-5 (unverified transactions); paragraph (b)(2)(i), cross-
referencing paragraph (b)(13) of proposed Rule 18a-5 (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)).
    \1064\ The Commission believes that any initial dollar cost
associated with proposed Rule 18a-6 is already accounted for in the
PRA estimate for proposed Rule 18a-5, which includes the cost of
recordkeeping system software.
    \1065\ 247 hours x 25 bank SBSDs = 6,175 hours. These internal
hours likely would be performed by a senior database administrator.
    \1066\ 190 hours/year x 25 bank SBSDs = 4,750 hours/year. These
internal hours likely would be performed by a compliance clerk.
    \1067\ $4,520/year x 25 bank SBSDs = $113,000/year.
---------------------------------------------------------------------------

    Proposed Rule 18a-6 would require four types of records to be
preserved by bank SBSDs, all of which are limited to the firm's
business as an SBSD.\1068\ Because the burden to perform the underlying
task or create these records is accounted for in the PRA estimates

for proposed Rule 18a-4 \1069\ and Rule 18a-5, as proposed to be
amended,\1070\ the burdens imposed by these new requirements are to
ensure there is adequate physical space and computer hardware and
software for storage, ensure these records are preserved for the
requisite time period, and produce them when requested. The Commission
estimates that paragraphs (b)(9), (b)(10), and (b)(12) of proposed Rule
18a-6 would impose an initial burden of fifty-seven hours per firm
\1071\ and an ongoing annual burden of forty hours and $480 per firm.
The Commission estimates that there are twenty-five bank SBSDs,
resulting in an industry-wide initial burden of 1,425 hours \1072\ and
an industry-wide ongoing annual burden of 1,000 hours \1073\ and
$12,000.\1074\
---------------------------------------------------------------------------

    \1068\ See proposed Rule 18a-6 (paragraph (b)(2)(i), cross-
referencing paragraph (b)(9) (compliance with proposed Rule 18a-4
possession or control requirements) of proposed Rule 18a-5;
paragraph (b)(2)(i), cross-referencing paragraph (b)(10) (proposed
Rule 18a-4 reserve account computations) of proposed Rule 18a-5;
paragraph (b)(2)(i), cross-referencing paragraph (b)(12) (political
contributions) of proposed Rule 18a-5; and paragraph (b)(2)(v)
(proposed Rule 18a-4 reserve account computations)).
    \1069\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70297-70299.
    \1070\ See section IV.D.1. of this release.
    \1071\ The Commission believes that any initial dollar cost
associated with proposed Rule 18a-6 is already accounted for in the
PRA estimate for proposed Rule 18a-5, which includes the cost of
recordkeeping system software.
    \1072\ 57 hours x 25 bank SBSDs = 1,425 hours. These internal
hours likely would be performed by a compliance manager and a senior
database administrator.
    \1073\ 40 hours/year x 25 bank SBSDs = 1,000 hours/year. These
internal hours likely would be performed by a compliance clerk.
    \1074\ $480/year x 25 bank SBSDs = $12,000/year.
---------------------------------------------------------------------------

    Paragraph (f) of proposed Rule 18a-6 would require 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.\1075\ 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 thirty-eight non-broker-dealer
SBSDs and non-broker-dealer MSBSPs would retain a third-party
custodian, resulting in nineteen written undertakings. The Commission
estimates paragraph (f) of proposed Rule 18a-6 would impose an ongoing
annual burden of two hours per written undertaking, resulting in an
industry-wide ongoing burden of thirty-eight hours per year.\1076\
---------------------------------------------------------------------------

    \1075\ See paragraph (f) of proposed Rule 18a-6.
    \1076\ 2 hours/year x 19 written undertakings = 38 hours/year.
These internal hours likely would be performed by an attorney.
---------------------------------------------------------------------------

3. Proposed Amendments to Rule 17a-5 and Proposed Rule 18a-7
    The proposed amendments to Rule 17a-5 and proposed Rule 18a-7 would
impose collection of information requirements that result in annual
time burdens for broker-dealers, SBSDs, and MSBSPs. The Commission
estimates that the proposed amendments to Rule 17a-5 would impose the
following initial and annual burdens:

------------------------------------------------------------------------
           Burden                Initial burden         Annual burden
------------------------------------------------------------------------
Liquidity stress test \1077\  Per firm: 0 hours...  Per firm: 12 hours.
                              Industry: 0 hours...  Industry: 120 hours.
Form SBS (ANC broker-dealer   Per firm: 25 hours..  Per firm: 228 hours.
 SBSDs) \1078\.               Industry: 250 hours.  Industry: 2,280
                                                     hours.
Form SBS (non-model broker-   Per firm: 50 hours..  Per firm: 240 hours.
 dealer SBSDs) \1079\.        Industry: 300 hours.  Industry: 1,440
                                                     hours.
Form SBS (broker-dealer       Per firm: 40 hours..  Per firm: 210 hours.
 MSBSPs) \1080\.              Industry: 40 hours..  Industry: 210 hours.
Total--Proposed amendments    Industry: 590 hours.  Industry: 4,050
 to Rule 17a-5.                                      hours.
------------------------------------------------------------------------

    The Commission estimates that proposed Rule 18a-7 would impose the
following initial and annual burdens:
---------------------------------------------------------------------------

    \1077\ See paragraph (a)(5)(vii) of Rule 17a-5, as proposed to
be amended.
    \1078\ See paragraph (a)(1)(iv) of Rule 17a-5, as proposed to be
amended.
    \1079\ See paragraph (a)(1)(iv) of Rule 17a-5, as proposed to be
amended.
    \1080\ See paragraph (a)(1)(iv) of Rule 17a-5, as proposed to be
amended.

------------------------------------------------------------------------
           Burden                Initial burden         Annual burden
------------------------------------------------------------------------
Additional ANC reports        Per firm: 0 hours...  Per firm: 132 hours.
 \1081\.                      Industry: 0 hours...  Industry: 792 hours.
Customer statements \1082\..  Per firm: 10 hours..  Per firm: 1 hours.
                              Industry: 130 hours.  Industry: 13 hours.
Annual report (stand-alone    Per firm: 0 hours...  Per firm: 70 hours
 SBSDs) \1083\.               Industry: 0 hours...   and $5.60
                                                    Industry: 630 hours
                                                     and $50.40.
Annual report (stand-alone    Per firm: 0 hours...  Per firm: 10 hours
 MSBSPs) \1084\.              Industry: 0 hours...   and $5.60.
                                                    Industry: 40 hours
                                                     and $22.40.
Statement regarding           Per firm: 10 hours..  Per firm: 2 hours
 accountant \1085\.           Industry: 130 hours.   and 46.
                                                    Industry: 26 hours
                                                     and $5.98.
Engagement of accountant      Per firm: 0 hours...  Per firm: $450,000.
 (stand-alone SBSDs) \1086\.  Industry: 0 hours...  Industry:
                                                     $4,050,000.
Engagement of accountant      Per firm: 0 hours...  Per firm: $300,000.
 (stand-alone MSBSPs) \1087\. Industry: 0 hours...  Industry:
                                                     $1,200,000.
Notice of change of fiscal    Per firm: 0 hours...  Per firm: 1 hour and
 year \1088\.                 Industry: 0 hours...   46.
                                                    Industry: 1 hour and
                                                     46.
Form SBS (stand-alone SBSDs)  Per firm: 160 hours.  Per firm: 192 hours.
 \1089\.                      Industry: 1,440       Industry: 1,728
                               hours.                hours.
Form SBS (stand-alone         Per firm: 40 hours..  Per firm: 48 hours.
 MSBSPs) \1090\.              Industry: 160 hours.  Industry: 192 hours.

Form SBS (bank SBSDs) \1091\  Per firm: 36 hours..  Per firm: 16 hours.
                              Industry: 900 hours.  Industry: 400 hours.
Total--Proposed Rule 18a-7..  Industry: 2,890       Industry: 3,978
                               hours.                hours and
                                                     $5,250,079.24.
------------------------------------------------------------------------

Estimated Hours and Costs of Proposed Amendments to Rule 17a-5
---------------------------------------------------------------------------

    \1081\ See paragraph (a)(3) of proposed Rule 18a-7.
    \1082\ See paragraph (b) of proposed Rule 18a-7.
    \1083\ See paragraphs (c) and (d) of proposed Rule 18a-7.
    \1084\ See paragraphs (c) and (d) of proposed Rule 18a-7.
    \1085\ See paragraph (e) of proposed Rule 18a-7.
    \1086\ See paragraph (f) of proposed Rule 18a-7.
    \1087\ See paragraph (f) of proposed Rule 18a-7.
    \1088\ See paragraph (j) of proposed Rule 18a-7.
    \1089\ See paragraph (a)(1) of proposed Rule 18a-7.
    \1090\ See paragraph (a)(1) of proposed Rule 18a-7.
    \1091\ See paragraph (a)(2) of proposed Rule 18a-7.
---------------------------------------------------------------------------

    No Change in Estimated Burden. Many of the proposed amendments to
Rule 17a-5 are not expected to change the estimated burden imposed by
Rule 17a-5. Most of the additional proposed amendments discussed in
section II.B.3.b. of this release are clarifying changes that should
not affect the Commission's burden estimate.
    The Commission is proposing that the financial report prepared by
Form SBS filers include statements and supporting schedules from
proposed Form SBS instead of from Form X-17A-5.\1092\ This is not so
much a new burden as a different burden, since in the absence of this
proposed amendment, these firms would be required to file statements
and supporting schedules from Form X-17A-5 instead. In addition, the
burden of preparing these statements and supporting schedules is
already accounted for in the PRA burden for proposed Form SBS
(discussed below).
---------------------------------------------------------------------------

    \1092\ See paragraph (d)(2) of Rule 17a-5, as proposed to be
amended.
---------------------------------------------------------------------------

    The Commission does not estimate an additional burden associated
with its proposal that the compliance report include statements as to a
broker-dealer SBSD's compliance with proposed Rule 18a-4,\1093\ because
the burden to comply with proposed Rule 18a-4 is largely already
accounted for in the PRA estimate for proposed Rule 18a-4.\1094\ To the
extent that the burden is not already accounted for in the PRA estimate
for proposed Rule 18a-4, the Commission believes that broker-dealer
SBSDs and broker-dealer MSBSPs would already have a system in place for
confirming compliance with proposed Rule 18a-4, in accordance with best
practices. In addition, the Commission believes that the sixteen
broker-dealers expected to register as SBSDs should already have
procedures in place for confirming compliance since they are already
required to confirm compliance with analogous Rule 15c3-3 (which Rule
18a-4 is modeled on).
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    \1093\ See paragraph (d)(3) of Rule 17a-5, as proposed to be
amended.
    \1094\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70297-70299.
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    The Commission is proposing to amend Rule 17a-5 to require that
broker-dealers attach Part III of Form X-17A-5 to the annual
report.\1095\ However, the Commission does not expect this amendment to
increase Rule 17a-5's burden, since broker-dealers currently file Part
III with their audited annual report pursuant to staff guidance and
Rule 617.\1096\
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    \1095\ See paragraph (e)(2) of Rule 17a-5, as proposed to be
amended.
    \1096\ See 17 CFR 249.617; Commission, Division of Trading and
Markets, Broker-Dealer Notices and Reports, available at http://www.sec.gov/divisions/marketreg/bdnotices.htm. In addition, Part III
of Form X-17A-5, as proposed to be amended, would add a reference to
Rule 17a-12, which applies to OTC derivatives dealers. Rule 17a-12
does not explicitly require OTC derivatives dealers to complete Part
III of Form X-17A-5, but this proposed amendment to Part III of Form
X-17A-5 is not expected to result in a burden increase since all
[four] OTC derivatives dealers already voluntarily file Part III
with their audited annual reports.
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    Liquidity Stress Test. The Commission proposes to add paragraph
(a)(5)(vii) to Rule 17a-5, which would require ANC broker-dealers to
file the results of the firm's monthly liquidity stress test with the
Commission.\1097\ Because the burden of actually performing the
liquidity stress test and creating a liquidity funding plan is already
accounted for in the PRA estimate for the proposed amendments to Rule
15c3-1,\1098\ the burden imposed by proposed paragraph (a)(5)(vii) is
the requirement to file a copy of the results with the Commission. The
Commission estimates that paragraph (a)(5)(vii) to Rule 17a-5, as
proposed to be amended, would impose an annual burden of twelve hours
per ANC broker-dealer.\1099\ The Commission estimates that there are
ten ANC broker-dealers (all of which are assumed to be dually
registered as SBSDs), resulting in an industry-wide ongoing burden of
120 hours per year.\1100\
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    \1097\ See paragraph (a)(5)(vii) of Rule 17a-5, as proposed to
be amended.
    \1098\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70294.
    \1099\ 1 hour/filing x 12 months/year = 12 hours/year. These
internal hours likely would be performed by a compliance manager.
    \1100\ 12 hours/year x 10 ANC broker-dealers = 120 hours/year.
These internal hours likely would be performed by a compliance
manager.
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    Proposed Form SBS. Paragraph (a)(1)(iv) of Rule 17a-5, as proposed
to be amended, would require broker-dealer SBSDs and broker-dealer
MSBSPs to file proposed Form SBS monthly instead of filing the
applicable part of Form X-17A-5 quarterly.\1101\ Part II, Part IIA, and
Part II CSE of Form X-17A-5 each impose a different burden on
respondents due to their varying lengths and calculations, so the
burden of filing proposed Form SBS depends on which part of Form X-17A-
5 the firm is currently required to file.
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    \1101\ Compare 17 CFR 240.17a-5(a)(3)(ii) and (iii), with
paragraph (a)(4)(iv) of Rule 17a-5, as proposed to be amended.
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    ANC broker-dealer SBSDs would be required to file proposed Form SBS
instead of Part II CSE of Form X-17A-5. Although proposed Form SBS is
modeled on Part II CSE, the burden on ANC broker-dealer SBSDs would
increase, because ANC broker-dealer SBSDs would file monthly instead of
quarterly and would complete additional sections and line items
eliciting more detail about their security-based swap and swap
activities.\1102\ In consideration of these additional requirements,
the Commission estimates that the requirement for ANC broker-dealer
SBSDs to file proposed Form SBS every month would add an initial burden
of twenty-five 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\1103\ and an ongoing burden of 2,280 hours per year.\1104\
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    \1102\ ANC broker-dealer SBSDs would be required to complete the
following new sections: (1) Computation for Determination of the
Amount to be Maintained in the Special Account for the Exclusive
Benefit of Security-Based Swap Customers--Rule 18a-4, Appendix A;
(2) Information for Possession or Control Requirements under Rule
18a-4; (3) Schedule 1--Aggregate Securities, Commodities, and Swaps
Positions; and (4) Schedule 4--Geographic Distribution of
Derivatives Exposures for Ten Largest Countries.
    \1103\ 25 hours x 10 ANC broker-dealer SBSDs = 250 hours. These
internal hours likely would be performed by a compliance manager.
    \1104\ 228 hours/year x 10 ANC broker-dealer SBSDs = 2,280
hours/year. These internal hours likely would be performed by a
compliance manager.
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    Non-model broker-dealer SBSDs would be required to file proposed
Form SBS instead of Part II or Part IIA of Form X-17A-5. 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
proposed Form SBS, the burden on non-model broker-dealer SBSDs would
increase (but not as much as for ANC broker-dealer SBSDs), because non-
model broker-dealer SBSDs would file monthly instead of quarterly and
would complete additional sections and line items eliciting more detail
about their security-based swap and swap activities.\1105\ In
consideration of these additional requirements, the Commission
estimates that the requirement for non-model broker-dealer SBSDs to
file proposed Form SBS every month would add an initial burden of fifty
hours per firm and an ongoing annual burden of 240 hours per firm. The
Commission estimates that there are six non-model broker-dealer SBSDs,
adding to the industry an initial burden of 300 hours\1106\ and an
ongoing burden of 1,440 hours per year.\1107\
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    \1105\ Non-model broker-dealer SBSDs would 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 the Amount to be
Maintained in the Special Account for the Exclusive Benefit of
Security-Based Swap Customers--Rule 18a-4, Appendix A; (5)
Information for Possession or Control Requirements under Rule 18a-4;
(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 would be required to file the following sections
not included on Part II, but which the CFTC already requires or has
proposed to require 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)(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 proposed Form SBS.
    \1106\ 50 hours x 6 non-model broker-dealer SBSDs = 300 hours.
These internal hours likely would be performed by a compliance
manager.
    \1107\ 240 hours/year x 6 non-model broker-dealer SBSDs = 1,440
hours/year. These internal hours likely would be performed by a
compliance manager.
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    Broker-dealer MSBSPs would be required to file proposed Form SBS
instead of Part II or Part IIA of Form X-17A-5. 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 proposed
Form SBS, the burden on broker-dealer MSBSPs would increase (but not as
much as for broker-dealer SBSDs), because broker-dealer MSBSPs would
file monthly instead of quarterly and would complete additional
sections and line items eliciting more detail about their security-
based swap and swap activities.\1108\ In consideration of these
additional requirements, the Commission estimates that the requirement
for broker-dealer MSBSPs to file proposed Form SBS every month would
add an initial burden of forty hours per firm and an ongoing annual
burden of 210 hours per firm. The Commission estimates that there would
be one broker-dealer MSBSP, such that the estimated burden on the
industry would be the same as for a single broker-dealer MSBSP.
---------------------------------------------------------------------------

    \1108\ Broker-dealer MSBSPs would be required to complete the
following new sections: (1) Computation of Tangible Net Worth (which
is only 3 lines long); (2) Financial and Operational Data--
Operational Deductions from Capital--Note A; (3) Financial and
Operational Data--Potential Operational Charges Not Deducted from
Capital--Note B; (4) Computation for Determination of PAB
Requirements; (5) Schedule 1--Aggregate Securities, Commodities, and
Swaps Positions; (6) Schedule 2--Credit Concentration Report for
Fifteen Largest Exposures in Derivatives; (7) Schedule 3--Portfolio
Summary of Derivatives Exposures by Internal Credit Rating; and (8)
Schedule 4--Geographic Distribution of Derivatives Exposures for Ten
Largest Countries. In addition, broker-dealer MSBSPs also registered
as FCMs would be required to file the following sections not
included on Part II, but which the CFTC already requires or has
proposed to require 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)(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 proposed Form SBS.
---------------------------------------------------------------------------

Estimated Hours and Costs of Proposed Rule 18a-7
    Proposed Rule 18a-7, which is modeled on Rule 17a-5, as proposed to
be amended, would require non-broker-dealer SBSDs and non-broker-dealer
MSBSPs to satisfy certain reporting requirements.\1109\
---------------------------------------------------------------------------

    \1109\ See proposed Rule 18a-7.
---------------------------------------------------------------------------

    Additional ANC reports. Paragraph (a)(3) of proposed Rule 18a-7
would require ANC stand-alone SBSDs to periodically file certain
additional reports relating to their use of internal models to
calculate net capital.\1110\ 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,\1111\ as well as the proposal to
amend Rule 17a-5 to require ANC broker-dealers to file the results of
their monthly liquidity stress tests with the additional ANC
reports,\1112\ the Commission estimates that paragraph (a)(3) of
proposed Rule 18a-7 would impose an annual burden of 132 hours per ANC
stand-alone SBSD.\1113\ The Commission estimates that there are six ANC
stand-alone SBSDs, resulting in an industry-wide ongoing burden of 792
hours per year.\1114\
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    \1110\ See paragraph (a)(3) of proposed Rule 18a-7.
    \1111\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-5 (4 hours/monthly
report x 12 months/year + 8 hours/quarterly report x 4 quarters/year
+ 40 hours/annual report = 120 hours/year).
    \1112\ See paragraph (a)(5)(vii) of Rule 17a-5, as proposed to
be amended.
    \1113\ 120 hours/year + 1 hour/liquidity stress test filing x 12
months/year = 132 hours/year. These internal hours likely would be
performed by a compliance manager.
    \1114\ 132 hours/year x 6 ANC stand-alone SBSDs = 792 hours/
year. These internal hours likely would be performed by a compliance
manager.
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    Customer Statements. Paragraph (b) of proposed Rule 18a-7 would
require stand-alone SBSDs and stand-alone MSBSPs to disclose certain
financial statements on their Internet Web

sites.\1115\ 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 Web site,\1116\
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 proposed Rule
18a-7 would impose an initial burden of ten hours per firm and an
annual burden of one hour per firm. The Commission estimates that there
are thirteen respondents (nine stand-alone SBSDs and four stand-alone
MSBSPs), resulting in an industry-wide initial burden of 130 hours
\1117\ and an industry-wide ongoing burden of thirteen hours per
year.\1118\
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    \1115\ See paragraph (b) of proposed Rule 18a-7. The Commission
does not anticipate a dollar cost to establish a Web site 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 Web site. 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).
    \1116\ 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 and paragraph (b) of proposed
Rule 18a-7.
    \1117\ 10 hours x 13 stand-alone SBSDs and stand-alone MSBSPs =
130 hours. These internal hours likely would be performed by a
compliance manager.
    \1118\ 1 hour/year x 13 stand-alone SBSDs and stand-alone MSBSPs
= 13 hours/year. These internal hours likely would be performed by a
compliance clerk.
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    Annual Reports. Paragraph (c) of proposed Rule 18a-7 would require
stand-alone SBSDs and stand-alone MSBSPs to file with the Commission an
annual report consisting of certain financial reports.\1119\ In
addition, paragraph (d) of proposed Rule 18a-7 requires the filing firm
to attach Part III of Form X-17A-5 to the annual report.\1120\ Part III
must include an oath or affirmation, which implicitly requires a senior
officer or a trusted delegate to review the annual report. Based on the
Commission staff's experience with the burden imposed by current Rule
17a-5's annual report requirement and related postage costs,\1121\ the
Commission estimates that paragraphs (c) and (d) of proposed Rule 18a-7
would impose on stand-alone MSBSPs an annual burden of ten hours and
$5.60 per firm. The Commission estimates that there are four stand-
alone MSBSPs, resulting in an industry-wide ongoing burden of forty
hours \1122\ and $22.40 per year.\1123\
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    \1119\ See paragraph (c) of proposed Rule 18a-7.
    \1120\ See paragraph (d) of proposed Rule 18a-7.
    \1121\ As of May 2013, a priority mail flat rate envelope costs
$5.60, based on costs obtained on the U.S. Postal Service Web site
at www.usps.gov.
    \1122\ 10 hours/year x 4 stand-alone MSBSPs = 40 hours/year.
These internal hours likely would be performed by a senior
accountant.
    \1123\ $5.60/year x 4 stand-alone MSBSPs = $22.40/year.
---------------------------------------------------------------------------

    Unlike stand-alone MSBSPs, stand-alone SBSDs would be required to
include a compliance report with their annual reports.\1124\ Thus,
after consideration of the Commission's recent release adopting
amendments to Rule 17a-5, which estimates that each compliance report
takes approximately sixty hours to prepare,\1125\ the Commission
estimates that paragraphs (c) and (d) of proposed Rule 18a-7 would
impose an annual burden of seventy hours and $5.60 per stand-alone
SBSD. The Commission estimates that there are nine stand-alone SBSDs,
resulting in an industry-wide ongoing burden of 630 hours \1126\ and
$50.40 per year. \1127\
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    \1124\ See paragraph (c)(1)(i)(B) of proposed Rule 18a-7.
    \1125\ See Broker-Dealer Reports, 78 FR 51960.
    \1126\ 70 hours/year x 9 stand-alone SBSDs = 630 hours/year.
These internal hours likely would be performed by a senior
accountant.
    \1127\ $5.60/year x 9 stand-alone SBSDs = $50.40/year.
---------------------------------------------------------------------------

    Statement regarding Independent Public Accountant. Paragraph (e) of
proposed Rule 18a-7 would require stand-alone SBSDs and stand-alone
MSBSPs to file a statement regarding the independent public accountant
engaged to audit the firm's annual reports.\1128\ In addition to
postage costs, the Commission's recent release estimates that the
parallel requirement in Rule 17a-5 would 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 would require renegotiating the carrying broker-dealer's
agreement with its independent public accountant.\1129\ Consistent with
that release, the Commission estimates that paragraph (e) of proposed
Rule 18a-7 would impose an initial burden of ten hours per firm and an
annual burden of two hours and 46 cents per firm.\1130\ The Commission
estimates that there are thirteen respondents (nine stand-alone SBSDs
and four stand-alone MSBSPs), resulting in an industry-wide initial
burden of 130 hours \1131\ and an industry-wide ongoing burden of
twenty-six hours \1132\ and $5.98 per year.\1133\
---------------------------------------------------------------------------

    \1128\ See paragraph (e) of proposed Rule 18a-7.
    \1129\ See Broker-Dealer Reports, 78 FR 51962.
    \1130\ It currently costs 46 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, https://www.usps.com/ship/first-class.htm (last visited Oct. 25, 2013).
    \1131\ 10 hours x 13 stand-alone SBSDs and stand-alone MSBSPs =
130 hours. These internal hours likely would be performed by a
senior accountant.
    \1132\ 2 hours/year x 13 stand-alone SBSDs and stand-alone
MSBSPs = 26 hours/year. These internal hours likely would be
performed by a compliance clerk.
    \1133\ 46/year x 13 stand-alone SBSDs and stand-alone MSBSPs =
$5.98/year.
---------------------------------------------------------------------------

    Engagement of the Independent Public Accountant. Paragraph (f) of
proposed Rule 18a-7 would require stand-alone SBSDs and stand-alone
MSBSPs to engage an independent public accountant to provide reports
covering the firm's annual reports.\1134\ The Commission's recent
release adopting amendments to Rule 17a-5 estimates that it would 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.\1135\ Given that SBSDs and MSBSPs are expected to be
larger and relatively sophisticated firms, the Commission assumes that
they are carrying firms that would incur the $300,000 cost to audit
their financial statements. However, since only stand-alone SBSDs are
required to file a compliance report,\1136\ only they (and not stand-
alone MSBSPs) would be required to retain an independent public
accountant to review their compliance reports.
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    \1134\ See paragraph (f) of proposed Rule 18a-7.
    \1135\ See Broker-Dealer Reports, 78 FR 51963.
    \1136\ See paragraph (c)(1)(i)(B) of proposed Rule 18a-7.
---------------------------------------------------------------------------

    Therefore, the Commission estimates that paragraph (f) of proposed
Rule 18a-7 would impose an annual cost of $300,000 on each stand-alone
MSBSP. The Commission estimates that there are four stand-alone MSBSPs,
resulting in an industry-wide ongoing burden of $1,200,000 per
year.\1137\ The Commission estimates that paragraph (f) of proposed
Rule 18a-7 would impose on stand-alone SBSDs an annual cost of $450,000
per firm,\1138\ since both their financial statements and compliance
report would need to be audited. The Commission estimates that there
are nine stand-alone SBSDs, resulting in an industry-wide ongoing
burden of $4,050,000 per year.\1139\
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    \1137\ $300,000/year x 4 stand-alone MSBSPs = $1,200,000/year.
    \1138\ $300,000/year (financial statements) + $150,000/year
(compliance report) = $450,000/year.
    \1139\ $450,000/year x 9 stand-alone SBSDs = $4,050,000/year.
---------------------------------------------------------------------------

    Notice of Change in Fiscal Year. Paragraph (j) of proposed Rule
18a-7 would require stand-alone SBSDs and stand-alone MSBSPs to notify
the Commission of a change in fiscal

year.\1140\ 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 one hour to prepare and
file with the Commission,\1141\ the Commission estimates that paragraph
(j) of proposed Rule 18a-7 would impose a burden of one hour and 46
cents on a firm planning to change its fiscal year. The Commission
estimates that each year, one firm will change its fiscal year, such
that the estimated burden on the industry would be one hour and 46
cents per year.
---------------------------------------------------------------------------

    \1140\ See paragraph (j) of proposed Rule 18a-7.
    \1141\ See Commission, Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 17a-11
(June 29, 2012), available at http://www.reginfo.gov/public/do/DownloadDocument?documentID=332313&version=1.
---------------------------------------------------------------------------

    Proposed Form SBS. Proposed Rule 18a-7 would require stand-alone
SBSDs and stand-alone MSBSPs to file proposed Form SBS monthly,\1142\
and would require bank SBSDs and bank MSBSPs to file proposed Form SBS
quarterly.\1143\ Stand-alone SBSDs and stand-alone MSBSPs would be
required to complete more sections of proposed Form SBS than bank SBSDs
and bank MSBSPs, and would therefore experience a greater burden.
---------------------------------------------------------------------------

    \1142\ See paragraph (a)(1) of proposed Rule 18a-7.
    \1143\ See paragraph (a)(2) of proposed Rule 18a-7.
---------------------------------------------------------------------------

    Stand-alone SBSDs would be required to file proposed Form SBS on a
monthly basis.\1144\ Proposed Form SBS includes eleven sections and
five schedules applicable to stand-alone SBSDs.\1145\ Stand-alone SBSDs
dually registered as FCMs would be required to complete five additional
sections, all of which the CFTC already requires or has proposed to
require FCMs to file as part of Form 1-FR-FCM.\1146\ In consideration
of these additional requirements, the Commission estimates that the
requirement for stand-alone SBSDs to file proposed Form SBS every month
would 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 nine stand-alone SBSDs, resulting in an industry-wide initial
burden of 1,440 hours \1147\ and an industry-wide ongoing burden of
1,728 hours per year.\1148\
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    \1144\ See paragraph (a)(1) of proposed Rule 18a-7.
    \1145\ Stand-alone SBSDs would 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 the Amount to
be Maintained in the Special Account for the Exclusive Benefit of
Security-Based Swap Customers--Rule 18a-4, Appendix A; (11)
Information for Possession or Control Requirements under Rule 18a-4;
(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.
    \1146\ Stand-alone SBSDs also registered as FCMs would 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)(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 proposed Form SBS.
    \1147\ 160 hours x 9 stand-alone SBSDs = 1,440 hours. These
internal hours likely would be performed by a senior compliance
manager.
    \1148\ 192 hours/year x 9 stand-alone SBSDs = 1,728 hours/year.
These internal hours likely would be performed by a senior
compliance manager.
---------------------------------------------------------------------------

    Stand-alone MSBSPs would be required to file proposed Form SBS on a
monthly basis.\1149\ Proposed Form SBS includes three sections and five
schedules applicable to stand-alone MSBSPs.\1150\ Stand-alone MSBSPs
dually registered as FCMs would be required to complete five additional
sections, all of which the CFTC already requires or has proposed to
require FCMs to file as part of Form 1-FR-FCM.\1151\ In consideration
of these additional requirements, the Commission estimates that the
requirement for stand-alone MSBSPs to file proposed Form SBS every
month would impose an initial burden of forty hours per firm and an
ongoing annual burden of sixty hours per firm. The Commission estimates
that there are four stand-alone MSBSPs, resulting in an industry-wide
initial burden of 160 hours \1152\ and an industry-wide ongoing burden
of 192 hours per year.\1153\
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    \1149\ See paragraph (a)(1) of proposed Rule 18a-7.
    \1150\ Stand-alone MSBSPs would 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.
    \1151\ Stand-alone MSBSPs also registered as FCMs would 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)(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 proposed Form SBS.
    \1152\ 40 hours x 4 stand-alone MSBSPs = 160 hours. These
internal hours likely would be performed by a senior compliance
manager.
    \1153\ 48 hours/year x 4 stand-alone MSBSPs = 192 hours/year.
These internal hours likely would be performed by a senior
compliance manager.
---------------------------------------------------------------------------

    Bank SBSDs would be required to file proposed Form SBS on a
quarterly basis.\1154\ Proposed Form SBS includes five sections and one
schedule applicable to bank SBSDs.\1155\ The Commission does not expect
proposed Form SBS 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 proposed 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 would need to transpose this
information from FFIEC Form 031 to Form SBS). Although bank SBSDs
dually registered as FCMs would be required to complete 5 additional
sections, the CFTC already requires or has proposed to require FCMs to
file these schedules on Form 1-FR-

FCM.\1156\ In consideration of these additional requirements, the
Commission estimates that the requirement for bank SBSDs to file
proposed Form SBS quarterly would impose an initial burden of 36 hours
per firm and an ongoing annual burden of sixteen hours per firm. The
Commission estimates that there are twenty-five bank SBSDs, resulting
in an industry-wide initial burden of 900 hours\1157\ and an industry-
wide ongoing burden of 400 hours per year.\1158\
---------------------------------------------------------------------------

    \1154\ See paragraph (a)(2) of proposed Rule 18a-7.
    \1155\ Bank SBSDs would 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 the Amount to be Maintained in the
Special Account for the Exclusive Benefit of Security-Based Swap
Customers--Rule 18a-4, Appendix A; (5) Information for Possession or
Control Requirements under Rule 18a-4; and (6) Schedule 1 -
Derivative Positions.
    \1156\ Bank SBSDs also registered as FCMs would 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)(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 proposed Form SBS.
    \1157\ 36 hours x 25 bank SBSDs = 900 hours. These internal
hours likely would be performed by a senior compliance manager.
    \1158\ 16 hours/year x 25 bank SBSDs = 400 hours/year. These
internal hours likely would be performed by a senior compliance
manager.
---------------------------------------------------------------------------

    Bank MSBSPs would be required to file proposed Form SBS on a
quarterly basis.\1159\ Proposed Form SBS includes three sections and
one schedule applicable to bank MSBSPs.\1160\ Bank MSBSPs dually
registered as FCMs would be required to complete five additional
sections, all of which the CFTC already requires or has proposed to
require FCMs to file as part of Form 1-FR-FCM.\1161\ However, the
Commission does not expect any banks to register with the Commission as
MSBSPs and therefore does not anticipate these requirements to impose
an additional burden.\1162\
---------------------------------------------------------------------------

    \1159\ See paragraph (a)(2) of proposed Rule 18a-7.
    \1160\ Bank MSBSPs would 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); and (4)
Schedule 1 -Derivative Positions.
    \1161\ Bank MSBSPs also registered as FCMs would 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)(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 proposed Form SBS.
    \1162\ The Commission estimates that the requirement for bank
MSBSPs to file proposed Form SBS quarterly would impose an initial
burden of 16 hours per firm and an ongoing annual burden of 8 hours
per firm.
---------------------------------------------------------------------------

4. Proposed Amendments to Rule 17a-11 and Proposed Rule 18a-8
    The proposed amendments to Rule 17a-11 and proposed Rule 18a-8
would impose collection of information requirements that result in
annual time burdens for broker-dealers, SBSDs, and MSBSPs. Current Rule
17a-11 imposes an estimated annual burden of 1 hour per firm and a
total industry burden of 443 hours.\1163\ The Commission estimates that
the proposed amendments to Rule 17a-11 would impose the following
initial and annual burdens:
---------------------------------------------------------------------------

    \1163\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-11.
    \1164\ See paragraph (e) of Rule 17a-11, as proposed to be
amended.
    \1165\ See paragraph (f) of Rule 17a-11, as proposed to be
amended.
    \1166\ See paragraph (g) of Rule 17a-11, as proposed to be
amended.

------------------------------------------------------------------------
                  Burden                            Annual burden
------------------------------------------------------------------------
New notice of insufficient liquidity        Per notice: 1 hour
 reserve \1164\.                            Industry: 1 hour.
New notice of failure to deposit in Rule    Per notice: 1 hour
 18a-4 account \1165\.                      Industry: 100 hours.
New notices filed by exchanges and          Per notice: 1 hour
 national securities associations \1166\.   Industry: 10 hours.
Total--Proposed amendments to Rule 17a-11.  Industry: 111 hours.
------------------------------------------------------------------------

    The Commission estimates that proposed Rule 18a-8 would impose an
annual burden of 4.6 hours per year.
    Estimated Ongoing Hours and Costs of Current Rule 17a-11
    In the Supporting Statement accompanying the most recent extension
of Rule 17a-11's collection, the Commission estimates that it takes one
hour to prepare and file a notice required under Rule 17a-11.\1167\
Given that 443 Rule 17a-11 notices were filed in 2012, current Rule
17a-11 creates an estimated industry-wide ongoing burden of 443 hours
per year.\1168\
---------------------------------------------------------------------------

    \1167\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-11.
    \1168\ 1 hour/notice x 443 notices/year = 443 hours/year. These
internal hours likely would be performed by a compliance manager.
---------------------------------------------------------------------------

    Estimated Hours and Costs of Proposed Amendments to Rule 17a-11
    The Commission proposes to add paragraph (b)(6) to Rule 17a-11,
which would require broker-dealer MSBSPs to notify the Commission if
their tangible net worth falls below $20 million.\1169\ Because the
burden of actually calculating the firm's tangible net worth is already
accounted for in the PRA estimate for proposed Rule 18a-2,\1170\ the
burden imposed by paragraph (b)(6) of Rule 17a-11, as proposed to be
amended, is the requirement to notify the Commission when the firm's
tangible net worth falls to a certain level. However, the Commission
does not expect to receive any notices under this provision, since the
Commission expects only one broker-dealer MSBSP, which would already be
subject to the more stringent net capital requirements applicable to
broker-dealers. Thus, the Commission does not expect paragraph (b)(6)
of Rule 17a-11, as proposed to be amended, to impose an additional
burden.
---------------------------------------------------------------------------

    \1169\ See paragraph (b)(6) of Rule 17a-11, as proposed to be
amended.
    \1170\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70290.
---------------------------------------------------------------------------

    The Commission proposes to add paragraph (e) to Rule 17a-11, which
would require ANC broker-dealers to notify the Commission if the
monthly liquidity stress test indicates that the firm's liquidity
reserve is insufficient.\1171\ Because the burden of actually
performing the liquidity stress test is already accounted for in the
PRA estimate for Rule 15c3-1,\1172\ the burden imposed by paragraph (e)
of Rule 17a-11, as proposed to be amended, is the requirement to notify
the Commission of certain adverse test results. Given the similarity in
the rules, the Commission estimates that each required notice would
take one hour to prepare and

file.\1173\ The Commission does not expect to receive many notices
under paragraph (e) of Rule 17a-11, given that it did not receive any
Rule 17a-11 notices from ANC broker-dealers in 2012. However, since the
Commission estimates that 4 additional firms will register as ANC
broker-dealers, the Commission estimates that one notice per year would
be filed under paragraph (e) of Rule 17a-11, resulting in an industry-
wide ongoing burden of one hour per year.\1174\
---------------------------------------------------------------------------

    \1171\ See paragraph (e) of Rule 17a-11, as proposed to be
amended.
    \1172\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70294.
    \1173\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-11.
    \1174\ 1 notice/year x 1 hour/notice = 1 hour/year. This
internal hour likely would be performed by a compliance manager.
---------------------------------------------------------------------------

    The Commission proposes to add paragraph (f) to Rule 17a-11, which
requires broker-dealer SBSDs to notify the Commission if they fail to
make a deposit required under proposed Rule 18a-4.\1175\ Because the
burden to calculate the reserve amount is already accounted for in the
PRA estimate for proposed Rule 18a-4,\1176\ the burden imposed by
paragraph (f) of Rule 17a-11, as proposed to be amended, is the
requirement to notify the Commission when the firm fails to act in
accordance with proposed Rule 18a-4. Given the similarity in the rules,
the Commission estimates that each required notice would take one hour
to prepare and file.\1177\ Based on Commission experience with the
number of notices filed under current Rule 17a-11,\1178\ the Commission
estimates that 100 notices would be filed each year under paragraph (f)
of Rule 17a-11, as proposed to be amended, resulting in an industry-
wide ongoing burden of 100 hours per year.\1179\
---------------------------------------------------------------------------

    \1175\ See paragraph (f) of Rule 17a-11, as proposed to be
amended.
    \1176\ See Capital, Margin, and Segregation Requirements for
Security-Based Swap Dealers and Major Security-Based Swap
Participants and Capital Requirements for Broker-Dealers, 77 FR
70297-70299.
    \1177\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-11.
    \1178\ See id. (noting that in 2011, the Commission received
approximately 465 notices under Rule 17a-11).
    \1179\ 100 notices/year x 1 hour/notice = 100 hours/year. These
internal hours likely would be performed by a compliance manager.
---------------------------------------------------------------------------

    The Commission proposes to redesignate paragraph (f) of Rule 17a-11
as paragraph (g) and to require a broker-dealer's national securities
exchange (``NSE'') or national securities association (``NSA'') to
notify the Commission if it learns that the broker-dealer failed to
provide a notice required under any paragraph of Rule 17a-11 (instead
of just paragraphs (b) through (e) of Rule 17a-11).\1180\ Thus, NSEs
and NSAs would be subject to new burdens to file a delinquent broker-
dealer's notices under new paragraphs (e) (liquidity stress test) and
(f) (failure to deposit in Rule 18a-4 account). After considering the
similar Rule 17a-11 requirement, the Commission estimates that each
required notice would take one hour to prepare and file.\1181\ Based on
Commission experience with the number of notices currently filed by
NSEs and NSAs, the Commission estimates that ten notices would be filed
pursuant to the amendment to paragraph (g) of Rule 17a-11, as proposed
to be amended, resulting in an estimated industry-wide ongoing burden
of 10 hours per year.\1182\
---------------------------------------------------------------------------

    \1180\ See paragraph (g) of Rule 17a-11, as proposed to be
amended.
    \1181\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-11.
    \1182\ 10 notices/year x 1 hour/notice = 10 hours/year. These
internal hours likely would be performed by a compliance manager.
---------------------------------------------------------------------------

    Estimated Hours and Costs of Proposed Rule 18a-8
    Proposed Rule 18a-8 would require non-broker-dealer SBSDs and non-
broker-dealer MSBSPs to notify the Commission of certain indicia of
their financial condition.\1183\ The Commission estimates that each
Rule 18a-8 notice would take approximately fifty-five minutes to
prepare and file, in contrast to its estimate that a Rule 17a-11 notice
would take one hour to prepare and file,\1184\ because stand-alone
SBSDs and stand-alone MSBSPs do not have a DEA with which to file a
copy of the Rule 17a-11 notice and bank SBSDs and bank MSBSPs are not
required to file the Rule 17a-11 notice with their prudential
regulator.\1185\
---------------------------------------------------------------------------

    \1183\ See proposed Rule 18a-8.
    \1184\ See Supporting Statement for the Paperwork Reduction Act
Information Collection Submission for Rule 17a-11.
    \1185\ Compare paragraph (h) of Rule 17a-11, as proposed to be
amended, with paragraph (h) proposed Rule 18a-8.
---------------------------------------------------------------------------

    The Commission estimates that it would receive approximately five
Rule 18a-8 notices per year, based on the substantially smaller pool of
possible respondents, as compared with current Rule 17a-11. Under
current Rule 17a-11, there are approximately 4,327 possible
respondents--4,545 registered broker-dealers, minus 218 broker-dealers
registered pursuant to section 15(b)(11)(A) of the Exchange Act.\1186\
In contrast, the Commission estimates that there would be thirty-eight
non-broker-dealer SBSDs and non-broker-dealer MSBSPs (twenty-five bank
SBSDs, nine stand-alone SBSDs, and four stand-alone MSBSPs). Assuming
that each of the five Rule 18a-8 notices takes fifty-five minutes to
prepare and file, the Commission estimates proposed Rule 18a-8 would
result in an industry-wide ongoing burden of 4.6 hours per year.\1187\
---------------------------------------------------------------------------

    \1186\ Rule 17a-11 does not apply to a broker-dealer registered
pursuant to section 15(b)(11)(A) of the Exchange Act (15 U.S.C.
78o(b)(11)(A)) that is not a member of either a national securities
exchange or a national securities association. See paragraph (j) of
Rule 17a-11, as proposed to be amended. The Commission estimates
that there are approximately 4,327 broker-dealers subject to Rule
17a-11 after consulting with the National Futures Association (4,545
registered broker-dealers--218 broker-dealers registered pursuant to
section 15(b)(11)(A) of the Exchange Act = 4,327 Rule 17a-11
respondents).
    \1187\ 5 notices/year x (55 minutes/notice/60 minutes/hour) =
4.6 hours/year. These internal hours likely would be performed by a
compliance manager.
---------------------------------------------------------------------------

5. Proposed Rule 18a-9
    Proposed Rule 18a-9, which is modeled on Rule 17a-13, would require
stand-alone SBSDs to establish a securities count program.\1188\ As
explained below, the Commission estimates that proposed Rule 18a-9
would impose an industry-wide initial burden of 225 hours and an
industry-wide ongoing burden of 900 hours per year.
---------------------------------------------------------------------------

    \1188\ See proposed Rule 18a-9.
---------------------------------------------------------------------------

    The current approved PRA estimate for Rule 17a-13 estimates a
securities count program imposes an average ongoing cost of 100 hours
per year.\1189\ The Commission is using this estimate, and therefore
estimates that proposed Rule 18a-9 would impose an ongoing annual
burden of 100 hours per stand-alone SBSD. The Commission estimates that
there are nine stand-alone SBSDs, resulting in an estimated industry-
wide ongoing burden of 900 hours per year.\1190\
---------------------------------------------------------------------------

    \1189\ See Commission, Supporting Statement for the Paperwork
Reduction Act Information Collection Submission for Rule 17a-13 (May
3, 2011), available at http://www.reginfo.gov/public/do/DownloadDocument?documentID=245864&version=1.
    \1190\ 100 hours/year x 9 stand-alone SBSDs = 900 hours/year.
These internal hours likely would be performed by an operations
specialist.
---------------------------------------------------------------------------

    The Commission also estimates that proposed Rule 18a-9 would impose
an initial burden of twenty-five hours per firm. The records required
by proposed Rule 18a-9 should already be recorded by the systems
implemented under proposed Rules 18a-5 and 18a-6, and accordingly, the
resulting initial burden is largely already accounted for under these
rules.\1191\ However, the Commission estimates that the initial cost to
establish procedures for conducting the securities count

program, including identifying the persons involved in the program,
would create an initial burden of approximately twenty-five hours per
stand-alone SBSD, or 225 hours for the estimated nine stand-alone
SBSDs.\1192\
---------------------------------------------------------------------------

    \1191\ However, the Commission assumes that stand-alone SBSDs
and stand-alone MSBSPs do not currently have a securities count
program in place.
    \1192\ 25 hours x 9 stand-alone SBSDs = 225 hours. These
internal hours likely would be performed by a senior operations
manager.
---------------------------------------------------------------------------

E. Collection of Information Is Mandatory

    The collections of information pursuant to the proposed amendments
and new rules are mandatory, as applicable, for broker-dealers, SBSDs,
and MSBSPs.

F. Confidentiality

    The broker-dealer annual reports filed with the Commission are not
confidential, except that if the statement of financial condition is
bound separately from the balance of the annual reports, and each page
of the balance of the annual reports is stamped ``confidential,'' then
the balance of the annual reports shall be deemed confidential to the
extent permitted by law.\1193\ Subject to certain exceptions,\1194\ if
there are material weaknesses, the accountant's report on the
compliance report must be made available for customers' inspection and,
consequently, it would not be deemed confidential.\1195\ Subject to
certain exceptions,\1196\ a broker-dealer must furnish to its customers
its unaudited financial statements,\1197\ and must provide annually a
balance sheet with appropriate notes prepared in accordance with
generally accepted accounting principles and which must be audited if
the broker-dealer is required to file audited financial statements with
the Commission.\1198\
---------------------------------------------------------------------------

    \1193\ See paragraph (e)(3) of Rule 17a-5, as proposed to be
amended.
    \1194\ See paragraph (c)(1)(i) through (iii) of Rule 17a-5, as
proposed to be amended.
    \1195\ See paragraph (c)(2)(iv) of Rule 17a-5, as proposed to be
amended.
    \1196\ See paragraph (c)(1)(i)-(iii) of Rule 17a-5, as proposed
to be amended.
    \1197\ See paragraph (c)(3) of Rule 17a-5, as proposed to be
amended.
    \1198\ See paragraph (c)(2)(i) of Rule 17a-5, as proposed to be
amended.
---------------------------------------------------------------------------

    The stand-alone SBSD and stand-alone MSBSP annual reports filed
with the Commission are not confidential, except that if the statement
of financial condition is bound separately from the balance of the
annual reports, and each page of the balance of the annual reports is
stamped ``confidential,'' then the balance of the annual reports shall
be deemed confidential to the extent permitted by law.\1199\ Stand-
alone SBSDs and stand-alone MSBSPs must also make publicly available on
their Web sites audited and unaudited financial statements, and also
make these documents available in writing, upon request, to any person
that has a security-based swap account.\1200\ A stand-alone SBSD would
also be required to disclose on its Web site at the same time: (1) a
statement of the amount of the firm's net capital and required net
capital and other information, if applicable, related to the firm's net
capital;\1201\ and (2) if, in connection with the firm's most recent
annual reports, the report of the independent public accountant
identifies one or more material weaknesses, a copy of the report.\1202\
---------------------------------------------------------------------------

    \1199\ See paragraph (d)(2) of proposed Rule 18a-7.
    \1200\ See paragraph (b) of proposed Rule 18a-7.
    \1201\ See paragraph (b)(1)(ii) of proposed Rule 18a-7.
    \1202\ See paragraphs (b)(1)(iii) of proposed Rule 18a-7.
---------------------------------------------------------------------------

    With respect to the other information collected under the proposed
amendments and proposed rules, the firm can request the confidential
treatment of the information.\1203\ If such a confidential treatment
request is made, the Commission anticipates that it will keep the
information confidential subject to applicable law.\1204\
---------------------------------------------------------------------------

    \1203\ See 17 CFR 200.83. Information regarding requests for
confidential treatment of information submitted to the Commission is
available on the Commission's Web site at http://www.sec.gov/foia/howfo2.htm#privacy.
    \1204\ See, e.g., 5 U.S.C. 552 et seq.; 15 U.S.C. 78x (governing
the public availability of information obtained by the Commission).
---------------------------------------------------------------------------

G. Retention Period for Recordkeeping Requirements

    Rule 17a-4, as proposed to be amended, specifies the required
retention periods for a broker-dealer.\1205\ Proposed Rule 18a-6
specifies the required retention periods for non-broker-dealer SBSDs
and non-broker-dealer MSBSPs.\1206\ Many of the required records must
be retained for three years; certain other records must be retained for
longer periods.\1207\
---------------------------------------------------------------------------

    \1205\ See Rule 17a-4, as proposed to be amended.
    \1206\ See proposed Rule 18a-6.
    \1207\ See Rule 17a-4, as proposed to be amended; proposed Rule
18a-6.
---------------------------------------------------------------------------

H. Request for Comment

    Pursuant to 44 U.S.C. 3306(c)(2)(B), the Commission requests
comment on the proposed collections of information in order to:
     Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
Commission, including whether the information would have practical
utility;
     Evaluate the accuracy of the Commission's estimates of the
burden of the proposed collections of information;
     Determine whether there are ways to enhance the quality,
utility, and clarity of the information to be collected; and
     Evaluate whether there are ways to minimize the burden of
the collection of information on those who respond, including through
the use of automated collection techniques or other forms of
information technology.
    In addition, the Commission requests comment, including empirical
data in support of comments, in response to the following questions:
    1. The Commission does not expect any banks to register with the
Commission as MSBSPs. Is this expectation correct? If not, please
provide a suggested estimate and empirical support for it.
    2. The Commission estimates that 26 FCMs will register with the
Commission as SBSDs or MSBSPs--16 broker-dealer SBSDs, 9 stand-alone
SBSDs, and 1 broker-dealer MSBSP. Is this estimate accurate? If so,
provide empirical support for the Commission's estimate. If not, please
provide a suggested estimate and empirical support for it.
    3. The Commission believes that broker-dealers do not rely on
paragraph (b)(2) of Rule 17a-3, which exempts from Rule 17a-3
transactions cleared by a bank if the bank keeps the requisite records
for the broker-dealer.\1208\ Is this correct? If not, please provide
the estimated burden associated with the Commission's proposal to
eliminate paragraph (b)(2) of Rule 17a-3.
---------------------------------------------------------------------------

    \1208\ See 17 CFR 240.17a-3(b)(2).
---------------------------------------------------------------------------

    4. Do stand-alone SBSDs and stand-alone MSBSPs already have record
making, record preservation, and reporting systems in place? If so,
please identify them so they can be taken into account in the
Commission's burden estimates under proposed Rules 18a-5 through 18a-9.
    5. The Commission believes there is no burden associated with its
proposed amendment to paragraph (b)(1) of Rule 17a-4, which would add a
cross-reference to paragraph (a)(11) of Rule 17a-3, as proposed to be
amended (regarding proof of money balances). Is this estimate
reasonable? Explain why or why not.
    Persons submitting comments on the collection of information
requirements should direct their comments to the Office of Management
and Budget, Attention: Desk Officer for the Securities and Exchange
Commission, Office of Information and Regulatory Affairs, Washington,
DC 20503, and

should also send a copy of their comments to Kevin M. O'Neill, Deputy
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090, and refer to File No. S7-05-14. OMB is
required to make a decision concerning the collections of information
between thirty and sixty days after publication of this document in the
Federal Register; therefore, comments to OMB are best assured of having
full effect if OMB receives them within thirty days of this
publication. Requests for the materials submitted to OMB by the
Commission with regard to these collections of information should be in
writing, refer to File No. S7-05-14, and be submitted to the Securities
and Exchange Commission, Records Management, Office of Filings and
Information Services, 100 F Street, NE., Washington, DC 20549.

V. Economic Analysis

A. Introduction

    The Commission is sensitive to the costs and benefits of its rules.
Some of these costs and benefits stem from statutory mandates, while
others are affected by the discretion exercised in implementing the
mandates. The following economic analysis seeks to identify and
consider the benefits and costs--including the effects on efficiency,
competition, and capital formation--that would result from the proposed
new recordkeeping, reporting, notification, and securities count rules
for stand-alone SBSDs, stand-alone MSBSPs, bank SBSDs, and bank MSBSPs
and from the proposed amendments to Rules 17a-3, 17a-4, 17a-5, and 17a-
11. The costs and benefits considered in proposing these new rules and
amendments are discussed below and have informed the policy choices
described throughout this release.
    As discussed more fully in section II. above, pursuant to sections
15F and 17(a) of the Exchange Act, the Commission is proposing to amend
Rules 17a-3, 17a-4, 17a-5, and 17a-11 to establish recordkeeping,
reporting, and notification requirements for broker-dealer SBSDs and
broker-dealer MSBSPs to account for their security-based swap
activities.\1209\ Pursuant to section 15F(f) of the Exchange Act, the
Commission is proposing new Rules 18a-5 through 18a-9 to establish
recordkeeping, reporting, and notification requirements for stand-alone
SBSDs, stand-alone MSBSPs, bank SBSDs, and bank MSBSPs, and securities
count requirements for stand-alone SBSDs. Finally, pursuant to sections
15F(f) and 17(a) of the Exchange Act, the Commission is proposing new
Form SBS that would be used by all types of SBSDs and MSBSPs to report
financial information and, in the case of broker-dealer SBSDs and