The lower costs of registered offerings resulting from the proposed
rules would be beneficial to investors in affected funds because funds
bear offering expenses. Lowering offering expenses may, all else equal,
reduce the size of the discount or increase the size of the premium at
which shares of the affected funds trade. In addition, the proposed
rules could reduce the cost to underwriters of participating in
registered offerings of affected funds, and these potential cost
savings could be passed on to the affected funds. Based on the sheer
volume and number

of transactions,\367\ underwriters may have more expertise and
established procedures for the registered offerings of operating
companies, which are subject to the rules we propose to extend to
affected funds. In contrast, underwriters probably have less, or more
concentrated, expertise regarding the requirements for offerings by
affected funds. Standardization in the registered offering space, by
making the offerings of affected funds more similar to those of
operating companies, could make it easier for underwriters to execute
such offerings and may decrease their compliance costs. If underwriters
pass some of the cost savings on to affected funds and their investors,
this could result in cheaper registered offerings for affected funds,
thus encouraging them to raise more capital, which would lead to
enhanced capital formation. Lastly, standardization may encourage a
broader set of underwriters to participate in this market, potentially
decreasing costs for affected funds and investors in these funds.
---------------------------------------------------------------------------

    \367\ For example, in 2017 non-fund issuers raised approximately
$1.3 trillion in 1,846 registered debt offerings and $184 billion in
976 registered equity offerings. See Capital Raising in the U.S.: An
Analysis of the Market for Unregistered Securities Offerings, 2009-
2017, Division of Economic and Risk Analysis White Paper (Aug. 1,
2018), available at https://www.sec.gov/dera/staff-papers/white-papers/dera_white_paper_regulation_d_082018.
---------------------------------------------------------------------------

    The proposed rules could level the securities offering playing
field between affected funds and operating companies and streamline the
registration process for affected funds, consequently making them
potentially more competitive in the market for capital raising. The
proposed rules may also make certain affected funds more competitive
compared to affected funds that either cannot or choose not to rely on
these rules. Thus, the proposed rules would likely enhance competition
in the public capital markets. The increased competition for capital in
turn could lead to potentially better allocation of capital in the
market. The proposed rules may also benefit companies in which affected
funds invest. Small and mid-size companies, because of their size, type
of assets, risk profile, and the general lack of information about
their activities and financial condition, typically find it more
difficult to raise funds from traditional sources of capital such as
bank loans and registered offerings.\368\ This difficulty in sourcing
more traditional financing constrains their ability to invest in
profitable projects and grow. To the extent that the proposed rules
improve capital raising opportunities for BDCs and registered CEFs that
invest in these companies, this may result in investments in a greater
number of small to mid-size U.S. companies, thus alleviating financial
constraints of such companies and contributing to economic growth
generally.\369\
---------------------------------------------------------------------------

    \368\ See, e.g., Alan Berger and Gregory Udell, The Economics of
Small Business Finance: The Roles of Private Equity and Debt Markets
in the Financial Growth Cycle, Journal of Banking and Finance, Vol.
22, 613-673 (1998); Meghana Ayyagari, Asli Demirg[uuml][ccedil]-
Kunt, and Vojislav Maksimovic, How Important are Financing
Constraints? The Role of Finance in the Business Environment, World
Bank Mimeo (2005); Crowdfunding, Securities Act Release No. 9974
(Oct. 30, 2015) [80 FR 71388 (Nov. 16, 2015)].
    \369\ See, e.g., Torsten Beck, Asli Demirg[uuml][ccedil]-Kunt,
and Ross Levine, SMEs, Growth, and Poverty: Cross-Country Evidence,
Journal of Economic Growth, Vol. 10, 197-227 (2005);Ryan Decker,
John Haltiwanger, Ron Jarmin, and Javier Miranda, The Role of
Entrepreneurship in U.S. Job Creation and Economic Dynamism, Journal
of Economic Perspectives, July, 3-24 (2014).
---------------------------------------------------------------------------

2. Facilitated Communication With Investors
    The proposed rules would provide incremental flexibility to funds
in their communications, which may increase the flow of information to
investors.\370\ Currently, affected funds are unable to communicate
about an offering before a registration statement is filed, and their
post-filing communications are subject to prospectus liability under
section 12 of the Securities Act (or must be accompanied or preceded by
the statutory prospectus).
---------------------------------------------------------------------------

    \370\ See supra Part II.E.
---------------------------------------------------------------------------

    This standardization in the communications processes of affected
funds, by making them similar to those of operating companies, would
make it easier for underwriters to execute offerings by affected funds
and thus may decrease their compliance costs, which in turn may lead to
lower offering costs and potentially enhance capital formation.
Additionally, under the proposal, affected funds that would qualify as
WKSIs would be permitted to engage in the widest range of
communications, including free writing prospectuses about an offering
before a registration statement is filed. More generally, affected
funds would be able to engage in certain other pre-filing
communications, use free writing prospectuses after a registration
statement is filed, and use certain communications that are not subject
to prospectus liability. The proposed changes in the communications
rules for affected funds may increase the amount of valuable
information that could be provided to investors before they make
investment decisions, particularly with respect to WKSIs. We believe
that more information could be provided on a timelier basis because the
rules would eliminate regulatory barriers to the dissemination of that
information, and the markets may provide incentives for issuers,
underwriters, and broker-dealers to produce additional information. We
also believe that the increased flexibility of affected funds in their
communications with investors under the free writing prospectus rules
would maintain appropriate investor protection, consistent with the
protections that apply to affected funds' communications under rule
482. For example, the proposed rules that allow affected funds to use
free writing prospectuses are designed to assure that written issuer-
provided or issuer-used information is publicly available.
Additionally, the free writing prospectus will be a section 10(b)
prospectus under the Securities Act and, as such, will be subject to
liability under section 12(a)(2) as well as the anti-fraud provisions
of the federal securities laws.
    Increased information flow can help promote efficient capital
markets because the market may be able to value securities more
accurately. For example, the proposed rules would permit broker-dealers
to disseminate research about an affected fund if certain conditions
are met. While broker-dealers currently may disseminate such research
under rule 482, the proposed amendments to rule 138 would likely reduce
certain costs to broker-dealers associated with rule 482 (e.g., filing
costs and concerns associated with prospectus liability). This could
allow more valuable information about affected funds to reach potential
investors. Another benefit of increasing the information flow is that
investors may become better informed in making portfolio allocation
decisions in accordance with their particular risk-return profiles. In
addition, the proposed rules may benefit broker-dealers who provide
research reports on affected funds by reducing their potential
liability exposure associated with such reports, relative to the
baseline, which may encourage them to provide additional research and
enhance information flow.

C. Potential Costs Resulting From the Proposed Implementation of the
Statutory Mandates

1. Compliance Costs
    We expect the rules we are proposing to implement the statutory
mandate could increase compliance costs for affected funds in certain
respects.\371\ We

are also cognizant of the fact that such an increase could be passed on
to funds' investors. A potential cost of the proposed rules is that
affected funds could incur increased filing or recordkeeping costs
associated with issuer free writing prospectuses,\372\ although
affected funds currently face many of the same filing and recordkeeping
costs under rule 482. For example, the ability of affected funds that
qualify as WKSIs to use free writing prospectuses may increase the
level of these funds' current communications (including communications
prior to filing a registration statement that are presently
prohibited), thus increasing the funds' filing and recordkeeping costs.
We estimate that affected funds that are WKSIs would have additional
annual filing and recordkeeping costs of $200 per affected fund for
free writing prospectuses used before the fund files a registration
statement.\373\ To the extent affected funds use free writing
prospectuses for communications that currently occur under rule 482,
the costs associated with free writing prospectuses could increase, and
the costs associated with rule 482 advertisements could decrease. We
are unable to predict, however, whether affected funds would be more
likely to use free writing prospectuses than rule 482 communications or
to engage in more communications with investors in practice as a result
of the proposed rules.
---------------------------------------------------------------------------

    \371\ See also infra Part IV.E (discussing compliance and other
costs associated with the proposed discretionary amendments).
    \372\ See supra Part II.E.1; infra Part V.B.4 (estimating the
annual paperwork burden for free writing prospectuses under rules
163 and 433 for purposes of the PRA).
    \373\ For purposes of the PRA, we estimate that, on average,
affected funds that are eligible to be WKSIs (estimated as 104
funds) would file two free writing prospectuses under the proposed
amendments to rule 163 each year. We estimate the total incremental
burden would be approximately 0.125 hours and $150 for the service
of outside professionals. See infra Part V.B.4. We monetize the
internal burden of preparing and filing a free writing prospectus by
multiplying the burden hours by an estimated wage rate of $400 per
hour (0.125 x $400 = $50). The estimated wage figure is based on
analysis in previous rulemakings. The total annual cost is
calculated by adding the monetized internal burden ($50) to the cost
of outside professionals ($150).
---------------------------------------------------------------------------

    Affected funds could also incur costs associated with adjusting
their internal procedures for filing prospectus supplements.\374\ Such
costs could stem from the need to augment funds' information technology
systems or train funds' employees, although, as recognized above,
affected funds likely would be able to file fewer prospectus
supplements under the proposal.
---------------------------------------------------------------------------

    \374\ See supra Part II.B.2.b.
---------------------------------------------------------------------------

    Parties that would be required to provide notices under rule
173,\375\ including underwriters and dealers in certain circumstances,
may incur additional costs due to the requirement to notify affected
fund investors that they have purchased shares in a registered
offering. In addition, these same parties would incur costs to
establish procedures for receiving and complying with requests for
final prospectuses. We believe that providing the notice to investors
would not impose a significant incremental cost because the notice can
consist of a pre-printed message that is automatically delivered with
or as part of the confirmation required by Exchange Act rule 10b-
10.\376\ Accordingly, we estimate that the cost of complying with rule
173 would be approximately $0.05 per notice.\377\ We estimate the
annual cost of providing the notification would be approximately
$1,757,081.\378\ For the parties that are required to provide such
notices, these additional costs of complying with rule 173 would be
mitigated to a certain degree by the proposed elimination of the
requirement to supply a final prospectus to each investor.
---------------------------------------------------------------------------

    \375\ See supra Part II.D.
    \376\ See rule 10b-10 under the Exchange Act [17 CFR 240.10b-
10].
    \377\ The Commission has estimated the cost per rule 173 notice
to be $0.05 for operating companies. See Securities Offering Reform
Adopting Release, supra footnote 5, at 44795. We assume the same
cost will apply to rule 173 notices provided to affected fund
investors.
    \378\ For the purpose of the PRA, we estimate that there would
be 43,546 notices per year per affected fund. The annual cost of
providing rule 173 notification is calculated as the number of
affected funds (807) x the number of notices per year (43,546) x the
cost per notice ($0.05). See infra Part V.B.5.
---------------------------------------------------------------------------

2. Other Costs
    Under the proposed rules, affected funds that qualify as WKSIs
would be able to file registration statements and post-effective
amendments that become automatically effective. To the extent that
investors previously benefited from the Commission staff's review of
these filings before they become effective, allowing filings of
affected funds that are WKSIs to become automatically effective may
eliminate such reviews and, as a result, possibly increase the costs to
investors. Allowing affected funds that file short-form registration
statements on Form N-2 to forward incorporate by reference could have a
similar potential impact on investors. However, issuers would still
face liability under the federal securities laws for registration
statement disclosures (e.g., sections 12 and 17 of the Securities Act
and section 10(b) and rule 10b-5 under the Exchange Act), which may
ameliorate the potential costs associated with reduced staff
review.\379\
---------------------------------------------------------------------------

    \379\ Certain of our discretionary amendments may also
ameliorate these costs. See infra Part IV.E.3 (discussing the
benefits and costs of the proposed requirement to disclose material
staff comments) and Part IV.E.2 (discussing the benefits and costs
of the proposed structured data requirements).
---------------------------------------------------------------------------

    More generally, allowing forward incorporation by reference under
the short-form registration instruction could increase the analytical
burden and search costs for potential investors. Currently, affected
funds provide required information in the prospectus that is delivered
to investors, and forward incorporation by reference is not allowed.
Under the proposal, instead of having all the information available in
one location, investors may need to separately access on a website or
request the incorporated materials. As a result, costs to investors for
assembling and assimilating necessary information could increase, with
a potentially stronger effect for retail investors (e.g., because they
generally may not have the technical capabilities or monetary resources
to efficiently search through a multitude of information sources). We
do not have data to assess if, and to what extent, this proposed
revision would be burdensome to investors.
    However, an affected fund making a shelf offering under rule
415(a)(1)(x) is required to file a new registration statement every
three years, which provides investors with a periodic update of
consolidated information.\380\ We are also proposing to require that
affected funds provide in their annual reports certain information
currently disclosed in their prospectuses to make the information more
readily available in one document for investors.\381\ Further,
Securities Act Forms S-3 and F-3 have long permitted incorporation by
reference from the issuer's Exchange Act reports, and investors have
not indicated they are unduly burdened when investing in offerings
registered on these Forms.\382\ Studies have shown, however, that the
majority of investors in operating companies are institutional
investors, whereas the majority of investors in the securities of
affected funds are retail investors, who may face relatively higher
costs associated with searching for information distributed across
multiple documents.\383\ In

addition, the requirement to backward and forward incorporate by
reference certain information into a short-form registration statement
could increase an affected fund's liability with respect to information
that has not previously been incorporated into its registration
statement because this information would now be part of the
registration statement. This could increase costs for relevant funds,
including potential legal costs (e.g., those associated with additional
review of materials that would be incorporated by reference into the
fund's registration statement or counsel and other costs in connection
with potential legal actions). These potential cost increases due to
the proposed rules could be passed on to investors of affected funds.
---------------------------------------------------------------------------

    \380\ See supra footnote 19.
    \381\ See supra Part II.H.2.a.
    \382\ See Securities Offering Reform Adopting Release, supra
footnote 5, at 44796.
    \383\ The average institutional holding is estimated to be
approximately 30% for BDCs and 21% for registered CEFs. See CIFRR
Adopting Release, supra footnote 98, at 64199. The institutional
ownership of U.S. public equities was approximately 67% as of 2010.
See Marshall E. Blume and Donald B. Keim, Working Paper,
Institutional Investors and Stock Market Liquidity: Trends and
Relationships, The Wharton School, University of Pennsylvania (Aug.
21, 2012).
---------------------------------------------------------------------------

    The proposed rules would allow an affected fund to not deliver
final prospectuses to investors if the fund files the final prospectus
with the Commission. We acknowledge, however, that while this procedure
has become commonplace in many aspects of our capital markets, there
may be some investors who would prefer to receive the prospectus
directly. While an investor could request a copy of the final
prospectus under rule 173, there would be burdens on an investor to
make such a request (e.g., loss of time while making the request and a
delay in receiving the prospectus). Thus, investors without home
internet access, depending on their ability and preference to access
fund information electronically, might experience a reduction in their
ability to access a fund's final prospectus. To the extent that a
reduction in this information by such investors decreases how informed
they are about affected funds, it could potentially decrease their
ability to efficiently allocate capital across affected funds and other
investments. However, an investor's purchase commitment and the
resulting contract of sale of securities to the investor in the
offering generally occur before the final prospectus is required to be
delivered under the Securities Act, and this is commonplace in other
parts of our capital markets. Moreover, for sales occurring in the
secondary market, as a result of our existing rules, investors in
securities of reporting issuers generally are not delivered a final
prospectus.\384\
---------------------------------------------------------------------------

    \384\ See Securities Offering Reform Adopting Release, supra
footnote 5, at 44782.
---------------------------------------------------------------------------

D. Alternatives to Proposed Approach To Implementing Statutory Mandates

    We considered certain alternative approaches to implementing the
directives in the BDC Act and Registered CEF Act to allow affected
funds to use the securities offering rules that are available to
operating companies. Although the BDC Act identifies certain required
amendments to our rules and forms, we could have, for example, made
additional modifications to the relevant provisions for affected funds
or further revised the current registration and offering framework
affected funds use.
    For example, as discussed above, we considered modifying the public
float standards in the WKSI definition or the short-form registration
instruction by changing the required level of public float or providing
alternative eligibility criteria, such as net asset value of a certain
size for funds whose shares are not traded on an exchange.\385\ These
alternatives could have allowed more affected funds to qualify as WKSIs
or to file short-form registration statements, with the associated
benefits (e.g., lower costs of registered offerings) and costs (e.g.,
potential higher incidence of disclosures and fund practices that may
not comply with applicable law due to reduced staff review) discussed
above. For example, most interval funds do not list their securities on
an exchange and do not have ``public float,'' and these alternatives
therefore could have permitted these interval funds, as well as other
unlisted affected funds, to qualify as WKSIs or file short-form
registration statements. However, modifying the eligibility criteria in
the WKSI definition or the short-form registration instruction could
give affected funds that do not have the requisite public float under
the current WKSI definition or Form S-3 eligibility requirements an
advantage over operating companies. Further, we do not believe that
affected funds would be likely to have a level of market following at
lower levels of public float than operating companies that would
justify a lower public float threshold or alternative metric to qualify
as a WKSI or to use a short-form registration statement. In addition,
certain of the benefits that flow from WKSI status or the ability to
use a short-form registration statement may be less relevant to
unlisted affected funds that are engaged in continuous offerings.\386\
---------------------------------------------------------------------------

    \385\ See supra Part II.C.
    \386\ See supra paragraph accompanying footnotes 34-37.
---------------------------------------------------------------------------

    Under the BDC Act and the Registered CEF Act, we could have
extended the proposed rules only to BDCs, listed registered CEFs, and
interval funds. Under this approach, unlisted registered CEFs would not
have been able to take advantage of certain benefits of the proposed
rules that would otherwise be available to unlisted BDCs, such as the
cost-savings associated with the final prospectus delivery
reforms.\387\ This alternative also could have saved unlisted
registered CEFs certain compliance costs stemming from the proposed
rulemaking, such as the requirement to report on Form 8-K. However,
excluding unlisted registered CEFs from the proposed rules could create
unnecessary competitive disparities between unlisted registered CEFs
and unlisted BDCs and would not provide investors in unlisted
registered CEFs with the benefits of the new investor protections we
are proposing.
---------------------------------------------------------------------------

    \387\ As previously recognized, unlisted registered CEFs would
not be eligible for certain of the proposed amendments. See supra
Part II.A.
---------------------------------------------------------------------------

E. Discussion of Discretionary Choices

    We discuss below the discretionary amendments that we are
proposing, in light of the proposed changes to implement the BDC Act
and Registered CEF Act and the associated benefits and costs of those
choices. We have tried to quantify the impact of each of the proposals,
but in many cases, reliable, empirical evidence about the effects is
not readily available to the Commission. We do, however, request that
commenters provide us with any empirical evidence relating to these
various choices to the extent that they can.
1. New Registration Fee Payment Method for Interval Funds
    We are proposing a modernized approach to registration fee payment
for interval funds that would require them to pay securities
registration fees using the same method that mutual funds and ETFs use
today. Specifically, the proposal would require interval funds to pay
their registration fees on a net basis once a year, rather than having
to pay registration fees when the fund files its registration
statement.\388\ We believe this approach would make the registration
fee payment process for interval funds more efficient. For example, it
would avoid the possibility that an interval fund would inadvertently
sell more shares than it had registered and would not require the
interval fund to periodically register new shares.
---------------------------------------------------------------------------

    \388\ See supra Part II.G.
---------------------------------------------------------------------------

    We believe the proposal could also benefit interval funds by
reducing their

initial registration fees. In the table below, we have attempted to
quantify the potential initial cost-savings for interval funds under
the proposed modernized approach to registration fee payment over a 3-
year period.\389\
---------------------------------------------------------------------------

    \389\ The estimates are based on data collected for interval
funds that were active as of June 30, 2018. We used their Form N-2
filings and Form N-CSR filings to identify current registration
fees, proceeds from shares issued, and cost of shares redeemed.

------------------------------------------------------------------------
                                                            Average
                                                        registration fee
                                     Current average    that would have
                                     registration fee   been paid under
                                        (paid upon        the proposal
                                      filing) \390\     (paid at the end
                                                         of the fiscal
                                                          year) \391\
------------------------------------------------------------------------
Year 1............................            $31,501             $7,821
Year 2............................  .................              6,550
Year 3............................  .................             20,957
------------------------------------------------------------------------

    Within the current regime, an interval fund would pay on average
$31,501 at the time of filing, and then issue and repurchase securities
over time. Under the proposed regime, the fund would pay its
registration fees on a net basis once a year. Since the proposed rule
would allow interval funds to shift more of the fee payments to the
future, it would decrease their cost of offering securities. An
interval fund would, however, be required to annually file Form 24F-
2.\392\ We estimate the annual burden of filing Form 24F-2 for interval
funds would be $134 per fund.\393\
---------------------------------------------------------------------------

    \390\ The current average registration fee paid in year 1 is the
average of the actual fees reported by the interval funds in the
Calculation of Registration Fee table in Form N-2. For purposes of
this analysis, we assume that interval funds did not register
additional securities in years 2 or 3. If they did, the average
registration fees under the current framework would be higher than
$31,501.
    \391\ For each of the interval funds, the fees in years 1, 2,
and 3 are estimated as [(dollar proceeds from shares issued + dollar
cost of shares redeemed)/$1,000,000] x $121.20. The $121.20 is the
fee rate (per million dollars) that funds pay to register shares for
fiscal year 2019. Then we calculate the average fees per year.
    \392\ As discussed below, interval funds and other funds that
file on Form 24F-2 would be required to file the form in a
structured XML format under the proposed rules.
    \393\ For PRA purposes, we estimate an annual burden per
respondent of filing Form 24F-2 of two hours. See infra Part V.B.7.
At an estimated wage rate of $67 per hour, the annual dollar cost
for filing Form 24F-2 is $132 (2 hours x $67 per hour). This
estimate does not account for burdens associated with filing Form
24F-2 in a structured XML format, which are discussed infra in Part
IV.E.2.
---------------------------------------------------------------------------

    As an alternative, we considered proposing to allow a wider range
of affected funds, such as registered CEFs that are tender offer funds,
to rely on rule 24f-2. This approach would have extended the benefits
of rule 24f-2 to additional affected funds. However, as discussed
above, interval funds have structural similarities to mutual funds and
ETFs that other affected funds do not. In particular, interval funds
routinely repurchase shares at net asset value and are required to
periodically offer to repurchase their shares, and therefore are more
likely to realize the operational benefits of computing registration
fees on a net annual basis than are funds that are not required to
periodically offer to repurchase their shares at net asset value.
2. Structured Data Requirements
    The proposed rules include new structured data reporting
requirements for affected funds. Under the proposal, all affected funds
would be required to tag in Inline XBRL format certain Form N-2
prospectus disclosure items. All affected funds also would be required
to tag the information on the cover page of Form N-2 using Inline XBRL
in accordance with the EDGAR Filer Manual. Finally, BDCs would be
required to tag financial statement information using Inline XBRL.
    Under the proposal, affected funds would be required to tag the
following Form N-2 prospectus disclosure items using Inline XBRL: Fee
Table; Senior Securities Table; Investment Objectives and Policies;
Risk Factors; Share Price Data; and Capital Stock, Long-Term Debt, and
Other Securities.\394\ These items provide important information about
an affected fund's key features, costs, and risks and may be
particularly useful to investors to inform their investment decisions.
With respect to the proposal to require BDCs to tag financial statement
information, unlike operating companies and registered investment
companies, BDCs currently are not required to report any structured
data.\395\ This proposed requirement would extend to BDCs a requirement
that currently applies to operating companies.
---------------------------------------------------------------------------

    \394\ See supra Part II.H.1.c.
    \395\ See supra Part II.H.1.a.
---------------------------------------------------------------------------

    Requiring BDCs to tag financial statement information using Inline
XBRL, and all affected funds to tag in Inline XBRL format certain
important prospectus disclosure items, would provide important benefits
to investors seeking to access information about affected funds,
whether directly or through third-party information providers. By
providing a standardized, interactive, computer-based framework for
reporting, it could further facilitate more efficient comparisons of
important information across affected funds by making it easier to
aggregate and analyze information through automated means, which could
increase competition for investor capital. The proposed Inline XBRL
tagging requirements may also potentially increase the efficiency of
capital formation to the extent that making disclosures available in a
structured format reduces some of the information barriers facing
prospective investors and makes it easier for affected funds to attract
investors. Smaller affected funds in particular may benefit more from
enhanced exposure to investors. If reporting the disclosures in a
structured format increases the availability, or reduces the cost of
collecting and analyzing, key information about affected funds, smaller
affected funds may benefit from improved coverage by third-party
information providers and data aggregators. Further, requiring affected
funds to tag certain prospectus disclosures using Inline XBRL would
facilitate monitoring of these funds by staff and market participants
more generally, which could, for example, increase investor protection
by enhancing staff's ability to monitor for regulatory compliance. This
could mitigate potential costs associated with other aspects of the
proposal, such as automatic shelf registration statements for WKSIs and
short-form registration statements for eligible funds, that could
affect investor protection.\396\
---------------------------------------------------------------------------

    \396\ See supra Part IV.C.2 (discussing these costs).
---------------------------------------------------------------------------

    The proposed cover page tagging requirement would include new

checkboxes that would help identify whether a registration statement
is, for example, an automatic shelf registration statement or a short-
form registration statement.\397\ We already require registrants to tag
all of the information on the cover page of Form 10-K, Form 10-Q, Form
8-K, Form 20-F, and Form 40-F using Inline XBRL in accordance with the
EDGAR Filer Manual. The proposed requirement to tag the Form N-2 cover
page in Inline XBRL is expected to benefit investors, the Commission,
and other data users. Investors would be able to automate their use of
the cover page information, including company name, the Act or Acts to
which the registration statement relates, and checkboxes relating to
the effectiveness of the registration statement. This would enhance
investors' ability to identify, count, sort, and analyze registrants
and disclosures to the extent these data points otherwise would be
formatted, for example, in HTML. The proposed checkboxes, which would
be required to be tagged in Inline XBRL format, would allow investors,
Commission staff, and other data users to distinguish between different
categories of registration statements in much the same way they are
currently able to do for operating companies. The availability of
information in Inline XBRL could enable data users to capture and
analyze cover page information more quickly and at a lower cost, as
well as to search and analyze the information dynamically. It could
also facilitate comparison of information across filers and reporting
periods.
---------------------------------------------------------------------------

    \397\ See supra Part II.H.1.b.
---------------------------------------------------------------------------

    Affected funds would incur some costs to tag and review the
required information in Inline XBRL. Some filers may perform the
tagging in-house while others may retain outside service providers. We
expect the outside service providers to pass along their costs to
filers. Various XBRL preparation solutions have been developed and used
by operating companies and open-end fund filers, and some evidence
suggests that, for operating companies, XBRL tagging costs have
decreased over time.\398\ Inline XBRL is a specification of XBRL that
allows filers to embed XBRL data directly into an HTML document,
eliminating the need to tag a copy of the information in a separate
XBRL exhibit,\399\ which can make XBRL preparation more efficient and
less costly. Costs of Inline XBRL preparation may depend on the
familiarity of the filer and/or its service provider with Inline XBRL.
Incremental costs of compliance with the proposed tagging requirement
would be lower for affected funds whose advisers already are required
to report information for other investment products they offer, such as
open-end funds, in XBRL. Additionally, in a separate rulemaking, we
have required BDCs to tag the cover pages of their 10-K, 10-Q, and 8-K
filings.\400\ Complying with those amendments would result in BDCs
having the ability to also tag the information on the cover page of
Form N-2, and at reduced incremental cost. Nevertheless, we recognize
that some registrants affected by the proposed requirement,
particularly filers with no Inline XBRL experience, likely would incur
initial costs to acquire the necessary expertise and/or software as
well as ongoing costs of tagging required information in Inline XBRL,
and the incremental effect of any initial fixed costs of complying with
the Inline XBRL requirement may be greater for smaller affected funds.
On an ongoing basis, registrants are expected to expend time to tag and
review the tagged information in Inline XBRL using their in-house
staff. Some registrants may also incur an initial cost to license
filing preparation software with Inline XBRL capabilities from a
software vendor, and some may also incur an ongoing licensing cost.
Other registrants may incur an initial cost to modify their existing
filing preparation software to accommodate Inline XBRL preparation.
Some registrants would incur the costs of filing agent services to rely
on a filing agent to prepare their Inline XBRL filings. Initial costs
involving investments in expertise and modifications to disclosure
preparation solutions, or switching to a different software vendor or
outside service provider, may result in a higher compliance cost during
the first year of using Inline XBRL than in subsequent years. We
recognize that some ongoing fixed costs of complying with the Inline
XBRL requirement may be greater for smaller affected funds.
---------------------------------------------------------------------------

    \398\ See, e.g., AICPA sees 45% drop in XBRL costs for small
companies, Aug. 15, 2018, Accounting Today (stating that, according
to an updated survey by AICPA and XBRL US, the cost of formatting
financial statements in XBRL for smaller reporting companies has
declined 45% since 2014 and that 68.6% of the companies paid $5,500
or less on an annual basis (as compared to 29.9% of companies in the
2014 survey) for fully outsourced creation and filing solutions for
their XBRL filings, while 11.8% of the companies surveyed paid
annual costs between $5,500 to as much as $8,000 for their full-
service outsourced solutions).
    \399\ Inline XBRL Adopting Release, supra footnote 166, at
40851.
    \400\ See supra footnote 177.
---------------------------------------------------------------------------

    The costs of compliance with the proposed Inline XBRL requirements
are likely to vary across registrants. On average we estimate that the
compliance cost to BDCs of tagging financial statement information,
certain prospectus disclosure items, and Form N-2 cover page
information using Inline XBRL would be approximately $152,324 per BDC
per year in the 3 years following the adoption of the proposed
rules.\401\ We estimate that the compliance cost to registered CEFs of
tagging in Inline XBRL format certain prospectus disclosure items and
tagging Form N-2 cover page information would be approximately $7,191
per registered CEF per year in the 3 years following the adoption of
the proposed rules.\402\ We note that some recent surveys based on
operating companies suggest that these current PRA-based burden
estimates may be overstated with respect to operating companies, and
particularly smaller reporting companies.\403\ Below, we request
comment on whether our current PRA estimates continue to be
appropriate.
---------------------------------------------------------------------------

    \401\ For BDCs, for the purposes of the PRA, we estimated the
average annual compliance costs in the 3 years following the
adoption of the rule to be 30,503 burden hours of in-house Inline
XBRL preparation and $3,488,200 in outside services. See infra Part
V.B.2. We monetize the burden of in-house Inline XBRL preparation by
multiplying the burden hours by an estimated wage rate of $400 per
hour (30,503 x $400 = $12,201,200). The estimated wage figure is
based on analysis in previous rulemakings. The average cost per BDC
is calculated by adding the monetized internal burden ($12,201,200)
to the cost of outside services ($3,488,200) and dividing by the
number of BDCs (103).
    \402\ For registered CEFs, for the purposes of the PRA, we
estimated the average annual compliance costs in the 3 years
following the adoption of the rule to be 10,725 burden hours of in-
house Inline XBRL preparation and $772,200 in outside services. See
infra Part V.B.2. We monetize the burden of in-house Inline XBRL
preparation by multiplying the burden hours by an estimated wage
rate of $400 per hour (10,725 x $400 = $4,290,000). The estimated
wage figure is based on analysis in previous rulemakings. The
average cost per registered CEF is calculated by adding the
monetized internal burden ($4,290,000) to the cost of outside
services ($772,200) and dividing by the number of registered CEFs
(704).
    \403\ See American Institute of CPAs, XBRL Costs for Small
Companies Have Declined 45%, According to AICPA Study (Aug. 18,
2018), available at https://www.aicpa.org/press/pressreleases/2018/xbrl-costs-have-declined-according-to-aicpa-study.html; CFA
Institute, The Cost of Structured Data: Myth vs. Reality, available
at https://www.cfainstitute.org/-/media/documents/survey/the-cost-of-structured-data-myth-vs-reality-august-2017.ashx.
---------------------------------------------------------------------------

    As an alternative, we could have proposed to allow but not require
affected funds to present cover page, financial statement, and
important prospectus disclosure items information in Inline XBRL.
Compared to the proposed rules, a fully voluntary Inline XBRL program
would lower costs for those filers that do not find Inline XBRL to be
cost efficient. We also could have

proposed requiring the Inline XBRL requirements only for a subset of
affected funds--for example, affected funds that file short-form
registration statements on Form N-2 or WKSIs. We also could have
proposed to permit more than one structured data format or leave the
precise format unspecified. However, a voluntary program or the use of
multiple structured data formats would also reduce potential data
quality benefits compared to mandatory Inline XBRL, as would a program
that captures only a subset of affected funds. If the information were
not submitted by the affected funds in a standardized, structured,
machine-readable format, investors and other data users who wish to
instantly analyze, aggregate, and compare the data would be required to
incur the costs of paying a third-party provider to manually rekey the
data, review the data for data quality problems during the duplication
process, and disseminate the data to the users.\404\ Alternatively,
investors or data users unwilling to pay a third-party provider would
have to incur the time to do that process themselves. In either
scenario, the data would not be usable in as timely a manner if it were
made machine-readable in a standardized format. In addition, under a
voluntary program, data that is not submitted in Inline XBRL would not
be validated, thus decreasing the overall data quality of the data
submitted. Unlike the machine readable XBRL format, data submitted in
unstructured formats (e.g., HTML, ASCII) is not machine readable at the
element level and thereby cannot be validated by EDGAR in any way.
Thus, data submitted in the HTML format by affected funds that opted
not to use Inline XBRL and XBRL data submitted by other affected funds
could be different due to the level of pre-submission validation
activities. Poor data quality reduces any data user's ability to
meaningfully analyze, aggregate, and compare data.
---------------------------------------------------------------------------

    \404\ Some studies have shown that investors use XBRL files
often, even preferring them to non-XBRL files when both are
available. See Yu Cong, Hui Du, and Miklos A. Vasarhelyi, Are XBRL
Files Being Accessed? Evidence from the SEC EDGAR Log File Dataset,
Journal of Information Systems, Vol. 32-3, 23-29 (2018).
---------------------------------------------------------------------------

    As another alternative, we could propose to require the disclosures
to be filed in another structured format, such as the non-Inline XBRL
or XML format. Compared to the proposed Inline XBRL requirement, the
use of the non-Inline XBRL format entails more duplication, which can
adversely affect the quality and usability of the structured data as
well as the efficiency and cost of preparation and review of the
structured data. Compared to the proposed requirement to use Inline
XBRL, the alternative of requiring the use of XML could result in lower
costs for filers. However, compared to the proposed amendments, XML
would provide less flexibility in tagging complex information as well
as less extensive data quality validation capabilities. Given the
complexity of the information required to be tagged and its importance
to investors, Commission staff, and other data users, we believe the
benefits from the use of Inline XBRL would outweigh its higher cost
compared to XML.\405\
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    \405\ In contrast, the information provided in Form 24F-2 is
less complex and is generally only used by fund issuers and
Commission staff for purposes of calculating certain registered
investment companies' registration fees, so we have proposed to
require Form 24F-2 information in a structured XML format rather
than Inline XBRL.
---------------------------------------------------------------------------

    As another alternative, we could have expanded the scope of
prospectus disclosure information required to be tagged in Inline XBRL
under the proposed rules. Compared to the proposed rules, this
alternative would improve the timeliness and usability of the required
disclosure information, but potentially impose additional costs on
affected funds. To the extent that the other required prospectus
disclosures of affected funds contain information that is more specific
to individual funds without sufficient comparability or aggregation
utility, the benefits of having those additional required disclosures
in a structured format may be lower than the more limited subset of
disclosures required to be filed in Inline XBRL under the proposed
rules. As another alternative, we could have narrowed the scope of
prospectus disclosure information required to be tagged in Inline XBRL
under the proposed rules. Compared to the proposed rules, this
alternative could decrease the timeliness and usability of the required
disclosure information, but potentially reduce costs for registrants.
Overall, the prospectus disclosure information proposed to be filed in
Inline XBRL largely parallels the information that is required of
mutual funds and ETFs, and we believe it is likely to be of greatest
utility for investors and others that seek to use the information in a
structured format to assist with investment decisions regarding
affected funds.
    We also are proposing to require registered investment companies
that file Form 24F-2 (including mutual funds and ETFs, as well as
interval funds under our proposed rules) to submit the form in a
structured XML format.\406\ We believe use of a structured data format
would make it easier for issuers to accurately prepare and submit the
information required by Form 24F-2 and would make the submitted
information more useful to Commission staff. Automated validation
processes could help issuers compute registration fees accurately
before submitting the filing, which could reduce administrative burdens
associated with correcting inaccurate filings. A structured filing
format could also facilitate pre-population of previously-filed
information. We estimate the cost of tagging Form 24F-2 in a structured
XML format to be $522 per fund.\407\
---------------------------------------------------------------------------

    \406\ See supra Part II.H.1.d.
    \407\ We assume that the burden of tagging Form 24F-2 in a
structured XML format would be 2 hours for each filing. See infra
Part V.B.7. At an estimated wage rate of $261 per hour, the dollar
cost for filing Form 24F-2 in a structured XML format is $522 (2
hours x $261 per hour) per fund.
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3. Periodic Reporting Requirements
    We are proposing certain new annual report requirements for
affected funds that file a short-form registration statement on Form N-
2. These funds would be required to include in their annual reports
certain information that they currently disclose in their prospectus--a
table of fees and expenses, share price information, and a table of
senior securities--and a discussion of unresolved staff comments.\408\
In addition, all BDCs would be required to include financial highlights
in their registration statements and annual reports.\409\ We also
propose to require all registered CEFs to provide management's
discussion of fund performance in their annual reports.\410\ Finally,
registered CEFs that rely on rule 8b-16 under the Investment Company
Act to avoid annually updating their registration statements would be
required to provide more expansive disclosure about certain key changes
in their annual reports.\411\ We believe these proposed requirements
would promote investor protection by making important information more
readily accessible to investors.
---------------------------------------------------------------------------

    \408\ See supra Part II.H.2.a and Part II.H.2.d.
    \409\ See supra Part II.H.2.c.
    \410\ See supra Part II.H.2.b.
    \411\ See supra Part II.H.5.
---------------------------------------------------------------------------

    With respect to affected funds filing short-form registration
statements on Form N-2, the proposed annual report requirements would
compile certain information that is already available in a fund's
registration statement. This could be beneficial to some investors in
these funds since information would be readily available in one
document instead of investors having the need to

compile it from several sources. As previously noted, given the ability
of affected funds to use forward incorporation by reference under the
short-form registration instruction, these funds' annual reports may
become a more convenient and comprehensive source of information about
a particular seasoned fund, relative to that fund's registration
statement. At the same time, the proposed annual report requirements
may increase the compliance costs for seasoned funds because new
information items would have to be added to the annual report. However,
because the annual report would be incorporated by reference into the
fund's prospectus, requiring disclosure in both the prospectus and
annual report should not require duplicative disclosure. Moreover,
specifying identical disclosure requirements in both places may
facilitate forward incorporation by reference, by making clear that the
same required disclosure will satisfy both requirements. Alternatively,
we could have proposed to require affected funds to include in their
annual reports more or less information from their registration
statements. While requiring less information would reduce costs to
affected funds by reducing the amount of required annual report
disclosure, it could also make it more difficult for investors to find
important fund information. Requiring affected funds to include more
prospectus information in their annual reports than we have proposed
could increase the length and complexity of annual reports and make
them less useful to investors overall. This alternative would also
increase affected funds' compliance costs.
    The proposed requirement to disclose unresolved staff comments in
the annual report is designed to mitigate the concern that other
aspects of the proposal may eliminate some incentives that certain
affected funds may have to resolve staff comments in a timely manner.
This requirement may, however, impose certain compliance costs to the
extent a seasoned fund does not timely resolve staff comments and hence
would be required to provide such disclosure. We do not believe these
disclosure costs would be significant because the information would be
readily available to the affected fund. We recognize, however, there
could be some costs to affected funds associated with compliance and
legal review to the extent an affected fund wanted to provide
additional information in its annual report disclosure beyond that
provided in the fund's written response to the staff's comment (which
would typically already be publicly available on EDGAR).
    With respect to the proposal to require BDCs to provide financial
highlights information, we believe that investors would benefit from
disclosure summarizing a BDC's financial statements. We believe the
costs associated with this proposed requirement should be minimal since
we understand that it is general market practice for BDCs to include
this information in their registration statements.
    We believe the proposal to require registered CEFs to include MDFP
disclosure would be beneficial to investors by helping them assess a
fund's performance over the prior year and complementing other
information in the report, which may make the annual report disclosure
more understandable as a whole. This requirement would also promote
parity between different types of funds, as open-end funds and BDCs are
already required to provide similar disclosure in their annual reports.
This proposed requirement would likely increase compliance burdens for
registered CEFs, to the extent they do not voluntarily provide MDFP
disclosure already. We believe that a majority of registered CEFs
already provide MDFP-like disclosure in their annual shareholder
reports. We estimate the annual cost of providing MDFP disclosure to be
$8,000 per registered CEF,\412\ although this cost would likely be
lower for affected funds that already provide MDFP-like disclosure.
---------------------------------------------------------------------------

    \412\ For the purpose of the PRA, we estimate that the proposed
amendments to require registered CEFs to provide MDFP in their
annual reports would result in an additional 20 burden hours for
registered CEFs. See infra Part V.B.3. We monetize the internal
burden by multiplying the burden hours by an estimated wage rate of
$400 per hour (20 x $400 = $8,000).
---------------------------------------------------------------------------

    We considered proposing additional MDFP requirements, such as
requirements to: (1) Disclose the impact of particular investments
(including large positions and/or significant investments) or
investment types that contributed to or detracted from performance; (2)
explain a fund's performance in relation to its index; (3) explain how
the use of leverage affected fund performance; (4) explain the reason
for and effect of any large cash or temporary defensive positions on
fund performance; (5) explain the effect of any tax strategies, or the
effects of taxes, on fund performance; (6) explain the effect of non-
recurring or non-cash income on fund performance; (7) include general
discussion of purchases and sales of fund shares and the effects of any
share repurchases or tender offers on fund performance; and/or (8)
disclose whether the fund engages in high portfolio turnover and the
effect of portfolio turnover on fund performance. We also considered
proposing changes to the proposed average annual total return table to
provide additional or more useful information to investors, such as
requiring total return based on per-share net asset value, in addition
to (as is proposed) total return based on current market price.
Although one or more of these changes could result in additional,
potentially helpful information for investors, we also considered the
administrative costs that additional disclosure requirements would
impose and have determined not to propose them at this time.
    Under the proposed amendments to rule 8b-16, registered CEFs
relying on the rule would be required to describe certain key changes
that occurred during the relevant year in enough detail to allow
investors to understand each change and how it may affect the fund. We
estimate that approximately 489 registered CEFs relied on rule 8b-16 as
of December 31, 2018.\413\ These registered CEFs also would be required
to preface this disclosure with a legend clarifying that the
disclosures provide only a summary of certain changes that have
occurred in the past year, and that the summary may not reflect all of
the changes that have occurred. We believe this new requirement would
allow investors in funds relying on rule 8b-16 to more easily identify
and understand key information about their investments. Because these
funds are already required to disclose the enumerated changes, the
proposed new requirement would likely add only a small incremental
compliance burden.
---------------------------------------------------------------------------

    \413\ See infra footnote 584.
---------------------------------------------------------------------------

4. New Current Reporting Requirements for Affected Funds
    Currently, registered CEFs generally are not required to report
information on Form 8-K, although listed registered CEFs are subject to
exchange rules that require listed issuers to provide the market
current information in response to certain events. We are proposing to
require that registered CEFs comply with Form 8-K reporting
requirements. Notably, Form 8-K would require disclosure within 4
business days of the relevant event, while the existing regime for
registered CEFs calls for disclosure on an annual or semi-annual basis,
with exchange rules requiring some current disclosure from listed
registered CEFs.
    We are also proposing amendments to Form 8-K to add certain new
reporting

items that would apply to both BDCs and registered CEFs to better
tailor Form 8-K disclosure to these types of investment companies. The
additional reporting items we propose are designed to recognize certain
differences between events that are relevant to affected funds and
those that are relevant to operating companies. The new reportable
events would be triggered if an affected fund has: (1) A material
change to its investment objectives or policies; or (2) a material
write-down in fair value of a significant investment.
    We believe these amendments would improve current reporting of
important information by affected funds to investors and the market,
thus promoting investor protection. For example, the proposed
requirement to file a Form 8-K report when an affected fund materially
changes its investment objectives or policies would provide investors
with more timely information about significant changes to a fund's
investment strategies, which would allow investors to better assess
whether a new investment strategy is aligned with their individual
investment goals. Requiring Form 8-K reporting about material write-
downs of significant investments would give investors more current
information about events that are likely to significantly impact the
value of their investments, particularly with respect to affected
funds' less liquid holdings where there is a lack of market
transparency regarding potential valuation changes between funds'
periodic reports.
    Additionally, while affected funds may provide certain current
information to investors or the market through press releases, and BDCs
must report under existing Form 8-K provisions, requiring all affected
funds to provide information on Form 8-K--including information that is
tailored to the business and structure of affected funds--would better
standardize the types of information that affected funds report and
would make current information about affected funds more readily
accessible in one place (EDGAR). Enhancing the amount of current
information about affected funds available to investors and the market
could facilitate more efficient pricing of affected funds' shares (to
the extent they do not trade at NAV) and could make it easier for an
affected fund to develop a market following, which could improve its
ability to attract new investors.
    Requiring affected funds to provide new current reporting may
increase their compliance costs. For example, registered CEFs generally
are not required to report information on Form 8-K and currently may
not be subject to any disclosure requirements related to certain Form
8-K events. As discussed above, however, 75 registered CEFs reported
information on Form 8-K voluntarily in 2018, whether pursuant to
exchange rules or otherwise.\414\ Additionally, listed registered CEFs,
and any other registered CEFs that make voluntary disclosures on Form
8-K, may be able to leverage their experience with making certain
prompt, public disclosures to comply with Form 8-K requirements. Those
registered CEFs that are not exchange-listed, and that do not currently
report information on Form 8-K, would not have prior experience to
leverage, and thus the relative burdens associated with the proposed
Form 8-K requirements could be higher for these funds if their advisers
do not also advise other funds that file reports on Form 8-K.
---------------------------------------------------------------------------

    \414\ Only 10 of those 75 registered CEFs were unlisted
registered CEFs.
---------------------------------------------------------------------------

    Also, we recognize that certain items in Form 8-K are substantively
the same as or similar to existing disclosure requirements for
registered CEFs, although the existing requirements provide less-timely
disclosure. This should reduce burdens to some extent since registered
CEFs are already familiar with providing such disclosure. However, we
recognize there are certain costs associated with potentially
duplicative disclosure requirements, although we believe these costs
should not be significant. These costs would be associated with
preparing the Form 8-K disclosure. We do not anticipate that the
proposed Form 8-K requirements would increase affected funds'
compliance costs associated with existing disclosure requirements. The
proposed requirements may, to some extent, reallocate certain of
affected funds' existing disclosure costs to preparing Form 8-K
disclosure since affected funds may be able to use the Form 8-K
disclosure to help prepare disclosures that they are currently required
to provide in annual or other periodic reports. Further, we believe it
would be beneficial to investors to retain existing shareholder report
disclosure requirements to reduce potential disruptions to shareholders
and limit discrepancies between different types of funds' shareholder
reports.
    With regard to the new reportable events on Form 8-K that we are
proposing, all affected funds would have to monitor for and report
these new events on Form 8-K, which would likely increase compliance
costs, including costs associated with preparing and filing the new
Form 8-K disclosure. We believe that affected funds will be aware of
information regarding these events, as this information is important
for their operations, and thus it would not impose substantial costs
for them to supply it on Form 8-K. We also believe that these events,
along with those currently covered by Form 8-K, will occur relatively
infrequently. This should reduce the associated reporting burden. The
existing items on Form 8-K generally have not led to frequent reporting
obligations for BDCs. For example, over a 3-year period from June 1,
2015 to May 31, 2018, BDCs filed or furnished approximately 3,080
reports on Form 8-K, with an estimated average of 10 reports per BDC
per year.\415\ Of the 3,080 reports, approximately 931 were furnished
or filed under non-mandatory reporting items--Item 7.01 (Regulation FD
Disclosure) and Item 8.01 (Other Events).\416\ Further, over this 3-
year period, BDCs filed or furnished 25 or fewer reports under 15 of
the 23 mandatory reporting items applicable to non-ABS issuers. We
estimate the overall costs of reporting new information on Form 8-K to
be $19,553,600 per fund for registered CEFs \417\ and $206,000 per fund
for BDCs.\418\
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    \415\ As noted above, as of December 31, 2018, there were 103
BDCs. If we assume there were 103 BDCs over the three-year period
and approximately 1,027 reports each year (3,080/3 = 1,027)
distributed evenly across each BDC, then each BDC would have filed
approximately 10 Form 8-K reports each year (1,027/103 = 10).
    \416\ Some of these 931 reports were filed under Item 9.01
(Financial Statements and Exhibits), in addition to Item 7.01 or
Item 8.01.
    \417\ For purposes of the PRA, we estimate the annual
incremental paperwork burden for CEFs to prepare and file the Form
8-K under the proposed amendments would be approximately 36,663
burden hours of internal time and a cost of approximately $4,888,400
for the services of outside professionals. See infra Part V.B.6. We
monetize the internal burden by multiplying the burden hours by an
estimated wage rate of $400 per hour (36,663 x $400 = $14,665,200).
    \418\ For purposes of the PRA, we estimate the annual
incremental paperwork burden for BDCs to prepare and file the Form
8-K under the proposed amendments would be approximately 386.25
burden hours of internal time and a cost of approximately $51,500
for the services of outside professionals. See infra Part V.B.6. We
monetize the internal time by multiplying the burden hours by an
estimated wage rate of $400 per hour (386.25 x $400 = $154,500).
---------------------------------------------------------------------------

    Also, we are proposing to extend the safe harbor for failure to
report certain Form 8-K items to include the new proposed reporting
items for affected funds. Failure to report under these proposed items
also would not impact an affected fund's eligibility to file a short-
form registration statement on Form N-2. This should limit liability
concerns and the potential impact on an

affected fund's ability to raise capital associated with failing to
timely file a report under these items.
    As an alternative, we could have not proposed to require current
reporting on Form 8-K by certain or all registered CEFs. For example,
we could have proposed to require Form 8-K reporting for only listed
registered CEFs, or only those registered CEFs that qualify as WKSIs or
are eligible to use a short-form registration statement. This approach
would reduce costs for certain registered CEFs, but it would also
create informational disparities among registered CEF investors and
disadvantage investors in unlisted registered CEFs. Unlisted registered
CEFs already may provide less transparency than listed registered CEFs
in certain respects given that unlisted registered CEFs are not
required to provide current information under exchange rules. Further,
if we excluded all registered CEFs from Form 8-K reporting, this
approach would disproportionately advantage registered CEFs as opposed
to BDCs and operating companies, particularly with respect to those
that are permitted to qualify as WKSIs or seasoned issuers.
    We also could have proposed to require affected registered CEFs to
file Form 8-K, but not added any new items tailored to BDCs and
registered CEFs. Such an alternative may decrease the compliance costs
for affected funds, while at the same time addressing the current lack
of parity between registered CEFs and BDCs in terms of current
reporting to investors and the market. We believe, however, that the
proposed reporting items would enhance the information flow to
investors and the market by providing timely and important value-
relevant information. We also believe that it enhances parity between
affected funds and operating companies with respect to the amount of
current information available to investors since affected funds are
unlikely to report information under several existing Form 8-K items.
    As a further alternative, we could have proposed to tailor the Form
8-K requirements to affected funds by identifying certain items these
funds would not be required to report. This approach could have reduced
costs to affected funds by expressly providing that they are not
required to monitor for or report certain events. However, while we
believe that certain items will never or very rarely create reporting
obligations for affected funds, excluding affected funds from certain
reporting requirements may unduly complicate Form 8-K and may not
provide tangible benefits since affected funds are unlikely to be
subject to such reporting requirements regardless of whether we provide
specific exclusions.
    Finally, rather than propose to require affected funds to report
information about material write-downs of significant investments, we
could have proposed to require them to file Form 8-K reports when they
experience a significant decline in NAV. This approach would apply more
generally to all affected funds (rather than only those funds that hold
significant investments) and would likely result in more Form 8-K
reporting by affected funds, which could increase the flow of
information to investors that is relevant to their investment
decisions. While additional reporting could also increase costs to
affected funds, a decline in NAV could be easier for affected funds to
monitor and report. However, some affected funds already publicly
disclose their NAVs on a daily or weekly basis, which could result in
any associated Form 8-K reporting providing stale information. Since
affected funds disclose their NAVs at different frequencies--ranging
from daily to semi-annually--establishing a baseline for measuring a
decline in NAV would present certain difficulties and would likely
result in either inconsistent reporting standards across affected funds
or less-relevant reporting by certain funds.
5. Online Availability of Information Incorporated by Reference
    We are proposing to modernize Form N-2's requirements for backward
incorporation by reference by all affected funds.\419\ Affected funds
would no longer be required to deliver to new investors information
that they have incorporated by reference. Instead, we are proposing
that these funds make the incorporated materials and corresponding
prospectus and SAI readily available and accessible on a website
maintained by or for the fund and identified in the fund's prospectus
or SAI.
---------------------------------------------------------------------------

    \419\ See supra Part II.H.4.
---------------------------------------------------------------------------

    We believe that this new requirement would improve the
information's overall accessibility to investors. In particular, this
new requirement would make the incorporated information, prospectus,
and SAI more accessible to retail investors, who we believe may be more
inclined to look at a fund's website for information than to search the
EDGAR system.\420\ Affected funds would also be required to provide
incorporated materials upon request free of charge. In addition, the
proposed rule would increase the likelihood that fund investors view
the information in their preferred format, and thereby increase their
use of the information to make investment decisions.
---------------------------------------------------------------------------

    \420\ For example, results from a 2011 investor testing
sponsored by the Commission (available at www.sec.gov/comments/s7-08-15/s70815.shtml) suggest that an investor looking for a fund's
annual report is most likely to seek it out on the fund's website.
Additionally, a 2015 survey by the Investment Company Institute
(available at http://www.ici.org/research/stats/factbook) suggests
an increasing trend of U.S. households using the internet for
financial purposes.
---------------------------------------------------------------------------

    We do not expect that this proposal would result in a substantial
reduction in the amount of the information affected funds deliver to
investors through the mail or electronically, because we expect that
most affected funds would rely on rules 172 and 173, as we propose to
amend them, to satisfy their prospectus delivery obligations. An issuer
that uses these rules will satisfy its final prospectus delivery
obligations by filing the prospectus with the Commission rather than
delivering the prospectus and any incorporated material to
investors.\421\
---------------------------------------------------------------------------

    \421\ See supra Part II.D.
---------------------------------------------------------------------------

    We do not believe this requirement would generate significant
compliance costs for affected funds because many funds currently post
their annual and semi-annual reports and other fund information on
their websites. We estimate the annual cost to comply with the proposed
website posting requirements to be $478 per fund.\422\
---------------------------------------------------------------------------

    \422\ For the purpose of the PRA, we estimate an average burden
to comply with the website posting requirements of 2 hours per fund.
See infra Part V.B.1. The expected compliance cost associated with
the proposed website posting requirements is calculated by
multiplying the 2-hour burden by the estimated hourly wage based on
published rates for webmasters ($239). See also Variable Contract
Summary Prospectus Proposing Release, supra footnote 172, at 61832.
---------------------------------------------------------------------------

    Affected funds may also incur printing and mailing costs under the
proposal if some investors request paper copies of the prospectus \423\
or of information that has been incorporated by reference into the
prospectus or SAI but not delivered with the prospectus or SAI.\424\ In
another release, the Commission estimated that the annual printing and
mailing cost associated with providing copies of prospectuses and other
documents upon request would be approximately $500 per registrant.\425\
We are similarly proposing a requirement to send prospectuses and
related information here, and we have no reason to assume significant
differences in the average lengths of the associated materials or the
frequency of

investor requests under this proposal. We estimate that the printing
and mailing costs associated with the proposed requirements would be
approximately $750 per fund in recognition that the requirement to
deliver information that has been incorporated by reference may result
in greater overall costs since affected funds that are eligible to file
short-form registration statements under the proposal would be able to
use incorporation by reference more frequently.\426\ We anticipate,
however, that investors may be less likely to request copies of
materials that have been incorporated by reference into an affected
fund's prospectus or SAI, so we believe this requirement would only
incrementally increase costs.
---------------------------------------------------------------------------

    \423\ See supra footnote 109.
    \424\ See supra Part II.H.4.
    \425\ See Variable Contract Summary Prospectus Proposing
Release, supra footnote 172, at 61812, 61832.
    \426\ We do not have specific data regarding how often investors
may request copies of prospectuses or incorporated materials, how
many materials affected funds would incorporate by reference into
their prospectuses or SAIs, and how lengthy those materials would
be, so we request comment on this estimate.
---------------------------------------------------------------------------

    Alternatively, we could have left Form N-2's backward incorporation
by reference requirements as-is and continued to require funds to
deliver incorporated materials to new investors. Because current
General Instruction F of Form N-2 does not require affected funds to
make incorporated materials available online, funds would not have to
incur costs associated with website posting. However, because affected
funds that choose to rely on rules 172 and 173, as proposed, would be
deemed to have delivered their disclosures upon filing with the
Commission instead of giving them to investors, the current backward
incorporation delivery requirement would not result in the delivery of
incorporated materials to their investors, thus making less accessible
the disclosure materials that might affect their investment decision.

F. Request for Comments

    We request comment on the potential costs and benefits of the
proposed rules and whether the rules, if adopted, would promote
efficiency, competition, and capital formation or have an impact or
burden on competition. Commenters are requested to provide empirical
data, estimation methodologies, and other factual support for their
views, particularly as they relate to costs and benefits estimates. Our
specific questions follow.
     We seek information that would help us quantify or
otherwise qualitatively assess the benefits of the proposed rules.
Please provide any data, studies, or other evidence that would allow us
to quantify some or all of the benefits. Are there any other benefits
from the proposed rules?
     We seek information that would help us quantify compliance
and other costs resulting from the proposed rules. Please provide any
data, studies, or other evidence that would allow us to quantify some
or all of the costs. Are there any other potential costs of the
proposed rules?
     Are our estimates of the compliance costs of requiring
affected funds to tag in Inline XBRL format certain information
reasonable? Is there a fixed component of the XBRL reporting? Are there
any other types of costs that should be considered? Are affected funds
more likely perform the tagging in-house or retain outside service
providers?
     Are our estimates of the compliance costs of requiring
registered CEFs to include MDFP disclosure in their annual reports
reasonable? Are there any other types of costs that should be
considered?
     Are our estimates of the compliance costs of requiring
registered CEFs to report information on Form 8-K, and requiring
affected funds to provide new current reporting on Form 8-K,
reasonable? Are there any other types of costs that should be
considered?
     Are our estimates of the compliance costs of requiring
affected funds to make the incorporated materials and corresponding
prospectus and SAI readily available and accessible on a website
maintained by or for the fund reasonable? Are our estimates of the
compliance costs of requiring affected funds to deliver a copy of
information incorporated by reference into its prospectus or SAI to
investors upon request reasonable? Are there any other types of costs
that should be considered?
     Are our estimates of the compliance costs of requiring
registered investment companies that file Form 24F-2 to file it in an
XML format reasonable? Are there any other types of costs that should
be considered?
     Are there any other potential effects on competition,
efficiency, and capital formation that could result from the proposed
rules?

V. Paperwork Reduction Act Analysis

A. Background

    Certain provisions of the proposed amendments contain ``collection
of information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (PRA).\427\ We are submitting the proposed
amendments to the Office of Management and Budget (OMB) for review in
accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The hours and
costs associated with preparing disclosure, filing forms, and retaining
records constitute reporting and cost burdens imposed by the
collections of information. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
unless it displays a currently valid control number. The titles for the
collection of information are:
---------------------------------------------------------------------------

    \427\ 44 U.S.C. 3501 et seq.
    \428\ Recently, we issued a release that, among other things,
proposed to retitle this information collection as ``Registered
Investment Company Interactive Data.'' See Variable Contract Summary
Prospectus Proposing Release, supra footnote 172. If adopted, the
proposed amendments to require BDCs to provide structured data would
be included in this information collection. In light of these
proposed amendments, we propose to rename this information
collection as ``Investment Company Interactive Data'' to reflect
that this information collection would be applicable to BDCs as well
as registered investment companies.
    \429\ The paperwork burdens for the rules under section 8(b) of
the Investment Company Act are imposed through the forms and reports
that are subject to the requirements in these rules and are
reflected in the PRA burdens of those documents. To avoid a PRA
inventory reflecting duplicative burdens and for administrative
convenience, we assign a one-hour burden to these rules.

------------------------------------------------------------------------
                                                            OMB control
                          Title                                 No.
------------------------------------------------------------------------
Form N-2................................................       3235-0026
Mutual Fund Interactive Data \428\......................       3235-0642
Rule 30e-1..............................................       3235-0025
Form 10-K...............................................       3235-0063
Family of rules under section 8(b) of the Investment           3235-0176
 Company Act of 1940 \429\..............................
Rule 163................................................       3235-0619
Rule 433................................................       3235-0617
Rule 173................................................       3235-0618
Form 8-K................................................       3235-0060
Form 24F-2..............................................       3235-0456
------------------------------------------------------------------------

    The rules, forms, and regulations listed above were adopted under
the Securities Act, the Exchange Act, or the Investment Company Act.
They set forth the disclosure requirements for registration statements,
prospectuses, periodic and current reports, and certified shareholder
reports that are prepared by registrants to help investors make
informed investment and voting decisions. They also permit additional
communications by registrants during a registered offering. The
proposed amendments, if adopted, would allow affected funds to use the
securities offering rules that are already available to operating
companies. In addition, the proposed rules would include amendments to
our rules and forms intended to tailor the disclosure and regulatory
framework to affected funds.

    The Mutual Fund Interactive Data collection of information
references current requirements for certain registered investment
companies to submit to the Commission information included in their
registration statements, or information included in or amended by any
post-effective amendments to such registration statements, in response
to certain items of Form N-1A in interactive data format. It also
references the requirement for funds to submit an Interactive Data File
to the Commission for any form of prospectus filed pursuant to rule
497(c) or (e) that includes information in response to same items of
Form N-1A. The proposed amendments would include several new structured
data requirements, including requirements for: (1) BDCs to submit
financial statement information using Inline XBRL format; (2) affected
funds to include structured cover page information in their
registration statements on Form N-2 using Inline XBRL format; and (3)
affected funds to tag certain prospectus information using Inline XBRL
format.\430\ Although the proposed interactive data filing requirements
would be included in the proposed Form N-2 instructions, we are
separately reflecting the hour and cost burdens for these requirements
in the burden estimate for Mutual Fund Interactive Data and not in the
estimate for Form N-2.
---------------------------------------------------------------------------

    \430\ We are also proposing new requirements for funds that file
on Form 24F-2 to submit the form in XML format. We account for the
burdens associated with this proposed requirement in infra Part
V.B.7.
---------------------------------------------------------------------------

    The information collection requirements related to registration
statements and Exchange Act reports would be mandatory. In addition,
there would be no mandatory retention period for the information
disclosed, and the information gathered would be made publicly
available. The information collection requirements related to the
communications and prospectus delivery proposals would apply only to
affected funds and other offering participants choosing to rely on
them. There would be a mandatory record retention period with respect
to the communications and prospectus delivery information collections.
Under rule 433, issuers and offering participants must retain all free
writing prospectuses that have been used, for three years following the
date of the initial bona fide offering of the securities in question
that were not filed with the Commission. Moreover, free writing
prospectuses that are made by or on behalf of an affected fund, and
free writing prospectuses that are broadly disseminated by another
offering participant, would have to be filed and would be publicly
available on EDGAR, whereas free writing prospectuses prepared by or on
behalf of, or used or referred to, by offering participants other than
the issuer would not have to be filed.

B. Summary of the Proposed Amendments and Impact on Information
Collections

    We are proposing amendments to several rules and forms that would
modify the registration, communications, and offering processes for
affected funds under the Securities Act and Investment Company Act. The
proposals are designed to carry out the requirements of section 803 of
the BDC Act and section 509 of the Registered CEF Act. The proposed
amendments generally would allow affected funds to use the securities
offering rules that are already available to operating companies.
    The proposed amendments would principally affect five aspects of
the application of our securities offering rules to affected funds.
First, the proposed amendments would streamline the registration
process under the Securities Act for affected funds to allow them to
sell securities more quickly and efficiently under a shelf registration
process tailored to affected funds. Second, the proposed amendments
would allow affected funds to qualify as WKSIs under rule 405 under the
Securities Act. Third, the proposed amendments would allow affected
funds to satisfy final prospectus delivery requirements using the same
method as operating companies. Fourth, the proposed amendments would
allow affected funds to use communications rules currently available to
operating companies, such as the use of certain factual business
information, forward-looking information, a ``free writing
prospectus,'' and broker-dealer research reports. Finally, the proposed
amendments would tailor affected funds' disclosure and regulatory
framework in light of the proposed amendments to the offering rules
applicable to them. These amendments include new structured data
requirements, new disclosure requirements for annual reports, a new
requirement for registered CEFs to file current reports on Form 8-K
(including new Form 8-K items tailored to registered CEFs and BDCs),
and a proposal to require interval funds to pay securities registration
fees using the same method that mutual funds and ETFs use today.
    We anticipate that several provisions of the proposed amendments
would increase the burdens and costs for affected funds that would be
subject to the proposed amendments. We have estimated the average
number of hours an affected fund would spend to prepare and file the
information collections and the average hourly rate for the services of
outside professionals. In deriving our estimates, we recognize that the
burdens will likely vary among individual affected funds based on a
number of factors, including their size and the nature of their
investment activities. In addition, some affected funds may experience
costs in excess of our estimates, and some may experience less than the
estimated average costs.
1. Proposed Amendments to Form N-2 Registration Statement
    Form N-2 is the form used by an affected fund to register offerings
under the Securities Act and, as applicable, to register as an
investment company under the Investment Company Act.
    The proposed amendments to Form N-2 would increase the existing
disclosure burdens of the form by requiring:
     Affected funds to use new checkboxes on the cover page to
provide information about the fund, the purpose of the filing, and the
type of offering, including whether the form is being used for
automatic shelf registration; \431\
---------------------------------------------------------------------------

    \431\ See supra Part II.H.1.b; see also proposed checkboxes to
Form N-2.
---------------------------------------------------------------------------

     BDCs to include financial highlights disclosure in their
registration statements, as registered CEFs are currently required to
do; \432\
---------------------------------------------------------------------------

    \432\ See supra Part II.H.2.c; see also proposed amendments to
Instruction 1 to Item 4 of Form N-2.
---------------------------------------------------------------------------

     Affected funds to provide new undertakings to be furnished
in registration statements being filed pursuant to rule 415; \433\ and
---------------------------------------------------------------------------

    \433\ See supra footnote 53 and accompanying paragraph; see also
proposed Items 34.4-7 of Form N-2.
---------------------------------------------------------------------------

     Affected funds to make certain documents available online
if they incorporate them by reference, including the prospectus, SAI,
and any Exchange Act reports filed under section 13 or section 15(d) of
the Exchange Act that are incorporated by reference into the fund's
prospectus or SAI.\434\
---------------------------------------------------------------------------

    \434\ See supra Part II.H.4; see also proposed General
Instruction F.4.a of Form N-2.
---------------------------------------------------------------------------

    At the same time, the proposed amendments to Form N-2 would
decrease existing burdens for the form by:

     Permitting eligible affected funds to forward incorporate
by reference Exchange Act reports, which would reduce the need for such
funds to file a post-effective amendment or a prospectus supplement to
update information in the registration statement.\435\
---------------------------------------------------------------------------

    \435\ See supra Part II.B.2.c; see also proposed General
Instruction F.3.b of Form N-2.
---------------------------------------------------------------------------

    The Commission has previously estimated that there are 136 initial
registration statements and 30 post-effective amendments to initial
registration statements filed on Form N-2 annually.\436\ Under the
most-recently approved PRA estimates, we estimate that the hour burden
for preparing and filing an initial registration statement on Form N-2
is 515 hours, and the hour burden for preparing and filing a post-
effective amendment is 107 hours.\437\ Under these estimates, the
aggregate annual hour burden for preparing and filing initial
registration statements is therefore 70,040 hours (136 initial
registration statements x 515 hours), and the current estimated
aggregate annual hour burden for preparing and filing post-effective
amendments is 3,210 hours (30 post-effective amendments x 107 hours).
Thus, under these estimates, the current total annual hour burden for
Form N-2 is estimated to be 73,250 hours (70,040 hours + 3,210 hours).
In addition, under currently-approved PRA estimates, the aggregate
annual cost burden for Form N-2 is $4,668,396,\438\ and the average
annual cost burden is approximately $28,123 per fund.
---------------------------------------------------------------------------

    \436\ These estimates are based on the last time the form's
information collections were approved, pursuant to a submission for
a PRA extension in 2016.
    \437\ The paperwork burdens for Form N-2 include the burdens of
preparing and filing prospectus supplements. While affected funds
may file fewer prospectus supplements under the proposed amendments,
we are uncertain as to the extent, if any, of the reduction in the
number of prospectus supplements that affected funds would file
under the proposals. See supra Part II.B.
    \438\ This estimate includes the cost of outside counsel,
independent auditors and the services of other professionals
retained to assist in the preparation and filing of the form.
---------------------------------------------------------------------------

    Based on staff analysis of the number of initial Form N-2 filings
and post-effective amendments made during the three-year period from
January 1, 2016 through December 31, 2018, we adjusted the currently-
approved estimate of Form N-2 filings for purposes of this PRA
analysis. Based on the three-year average of this adjusted number of
Form N-2 filings, we currently estimate that there are 138 initial
registration statements and 302 post-effective amendments to initial
registration statements filed on Form N-2 annually.\439\
---------------------------------------------------------------------------

    \439\ Based on staff analysis of the number of Form N-2 filings,
the numbers of initial registration statement and post-effective
amendments filed on Form N-2 were as follows: 129 initial Form N-2s
and 290 post-effective amendments in calendar year 2016; 140 initial
Form N-2s and 320 post-effective amendments in calendar year 2017;
and 144 initial Form N-2s and 296 post-effective amendments in
calendar year 2018.
---------------------------------------------------------------------------

    We anticipate that the proposed amendments to Form N-2 would, on
net, decrease the information collection burdens of the form. Our
estimates of the hour and cost burdens of the proposed amendments are
based on several estimates and assumptions.
    First, we estimated the paperwork burdens of the proposed
amendments that would increase the burdens of Form N-2. We expect that
the proposed new checkbox requirements and undertakings would
incrementally increase the paperwork burden on affected funds because
affected funds would be required only to indicate which, if any, of the
new checkboxes were applicable, and include the appropriate undertaking
if one is required. Accordingly, we estimate that the proposed
checkboxes and undertakings together would slightly increase the
incremental paperwork burden of the form by 0.5 hours for an aggregate
annual burden of 404 hours.\440\ The proposed amendment to require BDCs
to include financial highlights disclosure would also result in an
increase in the burdens associated with the form. However, we note that
BDCs currently provide this information in their Form N-2 filings.
Accordingly, we estimate the proposed financial highlights disclosure
requirement would incrementally increase the paperwork burden by 1.5
hours for an aggregate annual burden of 155 hours.\441\ We estimate
that the proposed amendment to require funds to make available online
its prospectus, SAI, and any Exchange Act reports that are incorporated
by reference into the fund's prospectus or SAI would incrementally
increase the paperwork burden of the form by 2 hours for an aggregate
annual burden of 1,614 hours.\442\ In determining this estimate, we
assumed that all eligible affected funds would take advantage of the
incorporation by reference proposals and that the burdens of website
posting of incorporated documents would be comparable to the burdens
estimated for similar document posting requirements.\443\ Based on
this, we estimate that these amendments would increase the aggregate
annual burden of Form N-2 by 2,173 hours,\444\ and would result in an
internal cost equivalent of $658,419.\445\
---------------------------------------------------------------------------

    \440\ We calculated this estimate as follows: 807 (103 BDCs +
704 registered CEFs) funds subject to the requirement x 0.5 hours.
For convenience, the estimated burden has been rounded to the
nearest whole number. Our estimate of costs and paperwork burdens
that BDCs could incur may be over-estimates. See supra footnote 339
and accompanying text.
    \441\ We calculated this estimate as follows: 103 BDCs subject
to the requirement x 1.5 hours. For convenience, the estimated
burden has been rounded to the nearest whole number.
    \442\ We calculated this estimate as follows: 807 (103 BDCs +
704 registered CEFs) funds subject to the requirement x 2 hours.
    \443\ See, e.g., Variable Contract Summary Prospectus Proposing
Release, supra footnote 172.
    \444\ We calculated this estimate as follows: 404 hours (see
supra footnote 440) + 155 hours (see supra footnote 441) + 1,614
hours (see supra footnote 442) = 2,173 hours.
    \445\ The internal time cost equivalent of $658,419 is
calculated by multiplying the hour burden (2,173 hours) by the
estimated hourly wage of $303. The estimated wage figure is based on
published rates for Compliance Attorneys ($352), Senior Programmers
($319), and Webmasters ($239). These hourly figures are from SIFMA's
Management & Professional Earnings in the Securities Industry 2013,
modified to account for an 1,800-hour work year; multiplied by 5.35
to account for bonuses, firm size, employee benefits and overheard;
and adjusted to account for the effects of inflation. The estimated
wage rate was further based on the estimate that Compliance
Attorneys, Senior Programmers, and Webmasters would divide time
equally, resulting in a weighted wage rate of $303 (($352 + $319 +
$239)/3 = $303.33).
---------------------------------------------------------------------------

    We also estimated the paperwork burdens of the amendments that we
anticipate would decrease the burdens of Form N-2. As we noted above,
the proposal to permit the use of forward incorporation by reference
would reduce the need for affected funds eligible to use the proposed
short-form registration statement to file a post-effective amendment to
update the registration statement. This would result in the filing of
fewer post-effective amendments than under the current regulatory
regime. Based on the staff's examination of Form N-2 filings during the
three-year period from January 1, 2016 through December 31, 2018, we
estimate that approximately 544 (or 60%) of the post-effective
amendments filed during this period were made to update information in
the registration statement under the Securities Act.\446\ We estimate
that 62% of affected funds (501 out of 807) would be eligible to use
forward incorporation by reference under the proposed amendments.
Consequently, we assumed that based on the number of affected funds
that

would be eligible to forward incorporate under the proposed amendments,
the number of post-effective amendments filed annually to update the
registration statement under the Securities Act would be reduced by 62%
or approximately 112 filings annually.\447\ For purposes of the PRA, we
estimate that this would decrease the aggregate annual burden of Form
N-2 by 11,984 hours and would result in a reduction in the cost burden
for Form N-2 by $3,149,776.\448\
---------------------------------------------------------------------------

    \446\ (290 post-effective amendments in 2016 + 320 post-
effective amendments in 2017 + 296 post-effective amendments in 2018
= 906 post-effective amendments) x 60% = approximately 544 post-
effective amendments.
    \447\ We calculated this estimate as follows: (544 post-
effective amendments to update information in the registration
statement under the Securities Act)/3 years = approximately 181
post-effective amendments per year) x 62% = approximately 112 post-
effective amendments per year.
    \448\ We calculated these estimates as follows: 112 post-
effective amendments x 107 hours = 11,984 hours; 112 post-effective
amendments x $28,123 = $3,149,776.
---------------------------------------------------------------------------

    For purposes of the PRA, we estimate that the proposed amendments
to Form N-2 would result in a net reduction of the annual paperwork
burden by approximately 9,811 hours of internal personnel time \449\
and result in a reduction of the cost by approximately $2,491,357.\450\
---------------------------------------------------------------------------

    \449\ We calculated this estimate as follows: Estimate of
increased aggregate annual burden hours (+2,173 hours, see supra
footnote 444) plus estimate of decreased aggregate annual burden
hours (-11,984 hours, see supra footnote 448) = net decrease of
9,811 hours.
    \450\ We calculated this estimate as follows: Estimate of
internal cost equivalent associated with proposed amendments to Form
N-2 ($658,419, see supra footnote 445) plus estimate of decreased
cost burden associated with proposed amendment to Form N-2
($3,149,776, see supra footnote 448) = net decrease of $2,491,357.
---------------------------------------------------------------------------

2. Proposed Structured Data Reporting Requirements
    We are proposing to amend Form N-2, as well as Regulation S-T,\451\
to require certain new structured data reporting requirements for
registered CEFs and BDCs. Specifically, the proposed amendments would:
\452\
---------------------------------------------------------------------------

    \451\ 17 CFR 232.10 et seq. [OMB Control No. 3235-0424] (which
specifies the requirements that govern the electronic submission of
documents). Specifically, we are proposing to amend rule 405 of
Regulation S-T. The additional collection of information burden that
will result from the proposed amendments to rule 405 of Regulation
S-T and to Form N-2, to require structured data reporting for
affected funds, are included in our burden estimates for the
``Investment Company Interactive Data'' collection of information,
and do not impose any separate burden aside from that described in
our discussion of the burden estimates for this collection of
information.
    \452\ We are also proposing amendments to Form 24F-2 to require
submission of this filing in a structured XML format. We discuss the
PRA burdens of this proposal and other proposed amendments to the
form below. See infra Part V.B.7.
---------------------------------------------------------------------------

     Require BDCs to submit financial statement information
using Inline XBRL format; \453\
---------------------------------------------------------------------------

    \453\ See supra Part II.H.1.a; see also proposed amendments to
rule 405 of Regulation of S-T.
---------------------------------------------------------------------------

     Require all affected funds to include structured cover
page information in their registration statements on Form N-2 using
Inline XBRL, including the tagging of the proposed new checkboxes to
the cover page of Form N-2; \454\ and
---------------------------------------------------------------------------

    \454\ See supra Part II.H.1.b; see also proposed General
Instruction H.2.a to Form N-2.
---------------------------------------------------------------------------

     Require all affected funds to tag certain Form N-2
disclosure items using Inline XBRL.\455\
---------------------------------------------------------------------------

    \455\ See supra Part II.H.1.c; see also proposed General
Instruction H.2.a-c to Form N-2. The proposed amendments would
require the following prospectus disclosure items be tagged using
Inline XBRL: Fee Table; Senior Securities Table; Investment
Objectives and Policies; Risk Factors; Share Price Data; and Capital
Stock, Long-Term Debt, and Other Securities.
    A seasoned fund filing a short-form registration statement on
Form N-2 also would be required to tag any information that is
incorporated by reference from an Exchange Act report, such as those
on Forms N-CSR, 10-K, or 8-K, in response to a disclosure item of
the registration statement that is required to be tagged. See supra
footnote 186 and accompanying text.
---------------------------------------------------------------------------

    Operating companies filing registration statements under the
Securities Act or reports under the Exchange Act are required to submit
the information from the financial statements accompanying their
registration statements and reports in Inline XBRL format. BDCs are
currently excluded from these Inline XBRL requirements. The Commission
previously estimated that operating companies submitting financial
information in Inline XBRL format file, on average, 4.5 responses per
year that contain interactive data, and that each response required 54
burden hours of internal time to prepare and cost $6,175 for outside
services.\456\ The proposed amendments would subject BDCs to the same
Inline XBRL reporting requirements. Therefore, we assume that BDCs
would on average file the same number of filings containing financial
statement information in Inline XBRL and would experience similar
burden hours and costs as do operating companies.
---------------------------------------------------------------------------

    \456\ See Inline XBRL Adopting Release, supra footnote 166, at
40869. A recent survey suggests that these current burden estimates
may be overstated with respect to smaller reporting companies. See
American Institute of CPAs, XBRL Costs for Small Companies Have
Declined 45%, According to AICPA Study (Aug. 18, 2018), available at
https://www.aicpa.org/press/pressreleases/2018/xbrl-costs-have-declined-according-to-aicpa-study.html. Below, we request comment on
whether our current PRA estimates continue to be appropriate.
---------------------------------------------------------------------------

    The proposed amendments to require affected funds to tag certain
Form N-2 prospectus disclosure items using Inline XBRL largely parallel
similar information required by Form N-1A risk/return summary that must
be tagged in Inline XBRL format. We have previously estimated that
mutual funds and ETFs file 1.36 responses per year containing mutual
fund risk/return data in Inline XBRL format, and that the risk/return
XBRL requirements require funds to expend 10.5 hours of internal time
per response and cost $900 to purchase software and/or acquire the
services of consultants or filing agents.\457\ Consequently, we assumed
that the hour and cost burdens of the proposed requirements to tag
certain Form N-2 disclosure items would be similar to the hour and cost
burdens of risk/return summary XBRL requirements.
---------------------------------------------------------------------------

    \457\ Id.
---------------------------------------------------------------------------

    We have also made several adjustments to our burden estimates to
reflect certain aspects of the proposed amendments that are distinct
from the previous burden estimates of Inline XBRL requirements. We
increased our estimate of the initial burden hours and costs of the
proposed amendments to reflect one-time compliance costs. Because BDCs
and registered CEFs have not previously been subject to Inline XBRL
requirements, we assumed that these funds would experience additional
burdens related to one-time costs associated with becoming familiarized
with Inline XBRL reporting. These costs would include, for example, the
acquisition of new software or the services of consultants, and the
training of staff. We also assumed that these one-time costs would
decline in the second and third year of compliance with the proposed
amendments, under the premise that these funds should become more
efficient at preparing submissions using Inline XBRL format as the
process becomes more routine. We assumed that the one-time cost would
result in a 50% incremental increase in the internal burdens and
external costs of the financial information and risk/return summary
XBRL requirements during the first year,\458\ and would subsequently
decline in the second and third years by 75% from the immediately-
preceding year.\459\ Accordingly, we estimate the

burdens for the proposed amendment to require BDCs to submit financial
the information in Inline XBRL format would be 65.81 hours of internal
time \460\ and cost $7,525.78 for outside services,\461\ and we
estimate the burdens for the proposed amendments to require affected
funds to tag certain information that is required to be included in an
affected fund's prospectus using Inline XBRL format would be 12.8 hours
in internal time \462\ and cost $1,096.88 for outside services.\463\
---------------------------------------------------------------------------

    \458\ Thus, for the proposed financial information XBRL
requirement, we estimate that in the first year the one-time cost
would be an additional 27 hours (54 x 0.5) and $3,087.5 in external
costs ($6,175 x 0.5). For the proposed prospectus information XBRL
requirements, we estimate the initial increase in burdens would be
5.25 hours (10.5 x 0.5) and $450 in external costs ($900 x 0.5).
    \459\ Thus, we estimate that for the second year the one-time
hour burden and cost of the proposed financial information XBRL
requirement would be 6.75 hours (27 hours-(27 x 0.75 = 20.25 hours))
and $771.87 ($3,087.5-($3,087.5 x 0.75 = $2,315.63)). For the third
year, we estimate that these hour burdens and costs would be 1.69
hours (6.75 hours-(6.75 x 0.75 = 5.06 hours)) and $192.97 ($771.87-
($771.87 x 0.75 = $578.90)). Average yearly change in the initial
one-time cost of the proposed financial information XBRL requirement
would be (27 + 6.75 +1.69)/3 = 11.81 hours of internal in-house
time, and ($3,087.5 + $771.87 + $192.97)/3 = $1,350.78 in external
costs.
    For the second year, we estimate the one-time hour burden and
cost of the proposed prospectus information XBRL requirements would
be 1.31 hours (5.25 hours-(5.25 hours x 0.75 = approximately 3.94
hours)) and $112.50 ($450-($450 x 0.75 = $337.5)). For the third
year, we estimate that these hour burdens and costs would be 0.33
hours (1.31 hours-(1.31 hours x 0.75 = 0.98 hours)) and $28.12 in
external costs ($112.50-($112.50 x 0.75 = $84.38))). Average yearly
change in the initial one-time cost of proposed prospectus
information XBRL requirements would be (5.25 +1.31 +0.33)/3 = 2.3
hours of internal in-house time, and ($450 + $112.50 + $28.12)/3 =
$196.87 in external costs.
    \460\ This estimate was calculated as follows: 54 + 11.81 =
65.81 hours.
    \461\ This estimate was calculated as follows: $6,175 + 1,350.78
= $7,525.78.
    \462\ This estimate was calculated as follows: 10.5 + 2.3 = 12.8
hours.
    \463\ This estimate was calculated as follows: $900 + 196.87 =
$1,096.87.
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    We assumed that affected funds would submit a similar number of
responses as the number of submitted responses that we currently
estimate that contain mutual fund risk/return data in Inline XBRL.
Currently, the mutual fund risk/return summary interactive data is
required to be submitted with the Form N-1A (or a post-effective
amendment thereto), a post-effective amendment under rule 485(b) of the
Securities Act, or any form of prospectus filed under rule 497(c) or
497(e) of the Securities Act. The Commission previously estimated that
each mutual fund or ETF would submit one response containing Inline
XBRL interactive data as an exhibit to a registration statement or a
post-effective amendment thereto, and that 36% of these funds would
submit an additional response containing Inline XBRL interactive data
as an exhibit to a filing pursuant to rule 485(b) or rule 497. Under
the proposed amendments, affected funds would be required to submit in
Inline XBRL the specified Form N-2 disclosure items with their initial
registration statement (or a post-effective amendment thereto), as well
as any form of prospectus filed pursuant to rule 424(b) that reflects a
substantive change to the specified Form N-2 disclosure items. In the
case of a seasoned fund that files a short-form registration statement
that incorporates by reference the specified Form N-2 disclosure items
from an Exchange Act report, the interactive data would be required to
be submitted with that Exchange Act report. We estimate that affected
funds would similarly submit one response containing the Inline XBRL
interactive data as an exhibit to a registration statement on Form N-2,
a post-effective amendment thereto, or to an Exchange Act report, and
that 36% of the affected funds would submit an additional response
containing Inline XBRL interactive data as an exhibit to a filing
pursuant to rule 424.
    We do not believe the cover page tagging proposal would result in
significant additional burdens for affected funds. We have estimated
that requiring operating companies to tag the cover pages of Forms 10-
K, 10-Q, 8-K, 20-F, and 40-F using Inline XBRL would result in an
incremental increase in the collection burdens by one hour.\464\
Accordingly, we similarly estimate that the proposed amendment to
require affected funds to tag Form N-2 cover page items would impose an
increased paperwork burden of one hour.\465\
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    \464\ See FAST Act Modernization Adopting Release, supra
footnote 177.
    \465\ We do not expect that this requirement would increase the
cost for outside services because the cost of tagging the cover page
by affected funds would be subsumed in the cost the submission of
the Form N-2 disclosure items in Inline XBRL.
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    Based on these assumptions, we estimate the proposed amendments to
require the submission of financial statement information in XBRL
format would result in an aggregate yearly burden of approximately
30,503 hours of in-house personnel time \466\ and $3,488,199 in the
cost of services of outside professionals.\467\ We estimate that for
all affected funds the proposed amendments to require the submission of
specified Form N-2 disclosure items in Inline XBRL would result in an
aggregate yearly burden of approximately 14,048 hours of in-house
personnel time \468\ and $885,174 in the cost of services of outside
professionals.\469\ We estimate that the proposed amendment to require
the tagging of Form N-2 cover page items would result in an aggregate
yearly burden of approximately 807 hours of in-house personnel
time.\470\
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    \466\ For BDCs we calculated our internal hour estimate as
follows: 103 BDCs x 65.81 hours x 4.5 responses per year =
approximately 30,502.94 burden hours per year. For convenience, the
estimated burden has been rounded to the nearest whole number.
    \467\ 103 BDCs subject to the requirements x 4.5 responses per
year x $7,525.78 = $3,488,199.03.
    \468\ We calculated this estimate as follows: 807 affected funds
x 12.8 hours x 1.36 responses per year = 14,048.26 burden hours per
year. For convenience, the estimated burden has been rounded to the
nearest whole number.
    \469\ 807 affected funds x $1,096.87 = $885,174.09.
    \470\ 807 affected funds x 1 hour = 807 hours.
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3. Proposed New Annual Reporting Requirements Under Rule 30e-1 and
Exchange Act Periodic Reporting Requirements for BDCs
    Several of the offering reforms that we are proposing, such as the
amendments that would allow certain affected funds to use an automatic
shelf registration statement or to forward incorporate by reference
Exchange Act reports, may raise the importance of an affected fund's
Exchange Act reports to investors.\471\ In light of this, we are
proposing new disclosure requirements for affected funds' annual
reports. Specifically, we are proposing to amend:
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    \471\ See supra Part II.H.2.
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     Form N-2 to require affected funds using the proposed
short-form registration statement to disclose in their annual reports a
fee and expense table, share price data, a senior securities table, and
unresolved staff comments regarding the fund's periodic or current
reports or registration statement; \472\
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    \472\ See supra Part II.H.2.a; see also proposed Instruction
4.h(ii) to Item 24 of Form N-2 (fee and expense table); Proposed
Instruction 4.h(iii) to Item 24 of Form N-2 (share price data);
Proposed Instruction 4.h(i) to Item 24 of Form N-2 (senior
securities table). In connection with this proposal, we are also
proposing to eliminate the requirement that affected funds disclose
the average commission rate paid in their financial highlights
disclosure.
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     Form N-2 to require registered CEFs to provide MDFP in
their annual reports; \473\ and
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    \473\ See supra Part II.H.2.b; see also proposed Instruction 4.g
to Item 24 of Form N-2.
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     Form N-2 to require BDCs to include financial highlights
in their annual reports on Form 10-K; \474\ and
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    \474\ See supra Part II.H.2.c; see also proposed revisions to
Instruction 1 to Item 4 of Form N-2. As discussed above, BDCs also
would be required to include financial highlights in their
registration statements on Form N-2. See supra Part V.B.1.
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     Rule 8b-16 to require registered CEFs to describe certain
changes in enough detail to allow investors to understand each change
and how it may affect the fund.\475\
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    \475\ See supra Part II.H.5; see also proposed rule 8b-16(e).
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    The collection of information burdens under the proposed amendments
correspond to information collections

under rule 30e-1 for registered CEFs and Form 10-K for BDCs. Rule 30e-1
generally requires registered investment companies to transmit to their
shareholders, at least semi-annually, reports containing the
information that is required to be included in such reports by the
fund's registration statement form under the Investment Company Act.
BDCs, like operating companies, are required to file annual reports on
Form 10-K pursuant to section 13 or 15(d) of the Exchange Act. We
currently estimate that it takes approximately 88 hours and costs
$31,061 per registered investment company to comply with the collection
of information associated with rule 30e-1.\476\ For Form 10-K, we
currently estimate that it takes each operating company approximately
1,747 hours and costs approximately $233,044 to comply with the
collection of information associated with Form 10-K.\477\
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    \476\ These estimates are based on the last time the rule's
information collections were approved, pursuant to a submission for
a PRA extension in 2016. The estimated aggregate annual hour and
cost burden of rule 30e-1 is approximately 1,043,592 hours and
$368,352,399.
    \477\ These estimates are based on the last time the form's
information collections were approved, pursuant to a submission for
a PRA extension in 2018. The estimated aggregate annual hour and
cost burden of Form 10-K is approximately 14,217,344 hours and
$1,896,280,869.
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    We estimate that the proposed amendments to require affected funds
filing a short-form registration statement to disclose fee and expense
table, share price data, a senior securities table, and unresolved
staff comments would incrementally increase the compliance burden on
these funds. However, because current disclosure requirements of Form
N-2 already require affected funds to disclose the fee and expense
table, share price data, and a senior securities table--and because
disclosure of unresolved staff comments would simply be a restatement
of comments provided to these funds by the staff--we believe these
disclosures should not impose significant new burdens. Accordingly, we
estimate that the proposed amendments would incrementally increase the
paperwork burden associated with rule 30e-1 and Form 10-K by 3 hours
per affected fund that would be eligible to use the short-form
registration statement.
    Regarding the proposed amendments to require registered CEFs
disclose in their annual reports MDFP and any material changes in their
investment objectives or policies that have not been approved by
shareholders, we believe these additional disclosures would increase
the paperwork burden associated with rule 30e-1 for registered CEFs.
For example, MDFP requires, among other things, narrative disclosure
about the factors that materially affected a fund's performance during
its most recently completed fiscal year, as well as the impact on the
fund and its shareholders of policies and practices that the fund may
use to maintain a certain level of distributions. We estimate that the
proposed amendment to require MDFP would incrementally increase the
paperwork burden associated with rule 30e-1 by 16 hours and that the
proposed amendment to require disclosure of any material changes in
investment objectives or policies that were not approved by
shareholders would incrementally increase the paperwork burden
associated with rule 30e-1 by 4 hours.
    Regarding the proposed amendments to require BDCs to disclose
financial highlights information in their registration statements and
annual reports, we estimate that this proposed amendment would
incrementally increase in the paperwork burden associated with Form 10-
K. As we noted above in our PRA analysis of this proposed amendment on
Form N-2, BDCs currently provide this information. Accordingly, we
estimate the proposed amendment would incrementally increase the
paperwork burden associated with Form 10-K by 1.5 hours.
    For purposes of the PRA, we estimate the proposed amendments would
result in 284 hours of additional total incremental burden under Form
10-K \478\ and 15,451 hours of total incremental burden under rule 30e-
1.\479\
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    \478\ For BDCs we calculated the total incremental burden as
follows: (43 BDCs eligible to use the short-form registration
statement x 3 hours = 129 hours) + (103 BDCs x 1.5 hours = 154.5
hours) = 283.5 burden hours. For convenience, the estimated burden
has been rounded to the nearest whole number.
    \479\ For registered CEFs we calculated the total incremental
burden as follows: (457 registered CEFs eligible to use the short-
form registration statement x 3 hours = 1,371 hours) + (704
registered CEFs required to disclose MDFP and material changes in
investment policies x 20 hours = 14,080 hours) = 15,451 burden
hours.
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    In connection with our estimate of the total incremental burden of
the proposed amendments, we have allocated a portion of those burdens
as costs. Based on consultations with operating companies, law firms,