[Federal Register Volume 77, Number 231 (Friday, November 30, 2012)]
[Page 71462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28946]



Proposed Collection; Comment Request

Upon Written Request Copies Available From: Securities and Exchange 
Commission, Office of Investor Education and Advocacy, Washington, DC 

Extension: Rule 17a-12/Form X-17A-5IIB. OMB Control No. 3235-0498, 
SEC File No. 270-442.

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.) (``PRA''), the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the existing 
collection of information provided for in Rule 17a-12 (17 CFR 240.17a-
12) and Part IIB of Form X-17A-5 (17 CFR 249.617) under the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.) (``Exchange Act''). The 
Commission plans to submit this existing collection of information to 
the Office of Management and Budget (``OMB'') for extension and 
    Rule 17a-12 is the reporting rule tailored specifically for over-
the-counter (``OTC'') derivatives dealers registered with the 
Commission, and Part IIB of Form X-17A-5, the Financial and Operational 
Combined Uniform Single (``FOCUS'') Report, is the basic document for 
reporting the financial and operational condition of OTC derivatives 
dealers. Rule 17a-12 requires registered OTC derivatives dealers to 
file Part IIB of the FOCUS Report quarterly. Rule 17a-12 also requires 
that OTC derivatives dealers file audited financial statements 
    There are currently four registered OTC derivatives dealers. The 
staff expects that one additional firm will register as an OTC 
derivatives dealer within the next three years. The staff estimates 
that the average amount of time necessary to prepare and file the 
quarterly reports required by the rule is eighty hours per OTC 
derivatives dealer \1\ and that the average amount of time to prepare 
and file the annual audit report is 100 hours per OTC derivatives 
dealer per year, for a total reporting burden of 180 hours per OTC 
derivatives dealer annually. Thus the staff estimates that the total 
industry-wide reporting burden to comply with the requirements of Rule 
17a-12 is 900 hours per year (180 x 5). Further, the Commission 
estimates that the total internal compliance cost associated with this 
requirement is approximately $250,000 per year.\2\ The Commission 
previously estimated that there were no external annualized costs 
associated with Rule 17a-12. However, the cost associated with an 
independent accountant's examination of the financial statements OTC 
derivatives dealers file with the Commission should have been included 
in prior submissions. For purposes of the reporting burden for Rule 
17a-5 under the Exchange Act (17 CFR 240.17a-5), the Commission 
estimated that the average annual reporting cost per broker-dealer for 
an independent public accountant to examine the financial statements 
was approximately $46,300 per broker-dealer. Based on this estimate, 
the total industry-wide annual reporting cost would be approximately 
$231,500 ($46,300 x 5).

    \1\ Based upon an average of 4 responses per year and an average 
of 20 hours spent preparing each response.
    \2\ Based on staff experience, an OTC derivatives dealer likely 
would have a Compliance Manager gather the necessary information and 
prepare and file the quarterly reports and annual audit report and 
supporting schedules. According to the Securities Industry and 
Financial Markets Association Report on Management and Professional 
Earnings in the Securities Industry dated October 2011, which 
provides base salary and bonus information for middle-management and 
professional positions within the securities industry, the hourly 
cost of a compliance manager, which the Commission staff has 
modified to account for an 1800-hour work year and multiplied by 
5.35 to account for bonuses, firm size, employee benefits, and 
overhead, is approximately $279/hour. $279 times 900 hours = 

    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the proposed collection of information; (c) ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and (d) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology. 
Consideration will be given to comments and suggestions submitted in 
writing within 60 days of this publication.
    The Commission may not conduct or sponsor a collection of 
information unless it displays a currently valid OMB control number. No 
person shall be subject to any penalty for failing to comply with a 
collection of information subject to the PRA that does not display a 
valid OMB control number.
    Please direct your written comments to: Thomas Bayer, Director/
Chief Information Officer, Securities and Exchange Commission, c/o Remi 
Pavlik-Simon, 6432 General Green Way, Alexandria, Virginia 22312, or 
send an email to: [email protected].

     Dated: November 26, 2012.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-28946 Filed 11-29-12; 8:45 am]