Notices. SECURITIES AND EXCHANGE COMMISSION
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/register/2000/08/02/00-19447A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
BILLING CODE 7905-01-M SECURITIES AND EXCHANGE COMMISSION [Rule 17f-6; SEC File No. 270-392; OMB Control No. 3235-0447] Proposed Collection; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Filings and Information Services, Washington, D.C. 20549. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (the “Commission” is soliciting comments on the collection of information summarized below.
The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. Rule 17f-6 under the Investment Company Act of 1940 [17 CFR 270.17f-6] permits registered investment companies (“funds”) to maintain assets ( *i.e.,* margin) with futures commission merchants (“FCMs”) in connection with commodity transactions effected on both domestic and foreign exchanges. 1 Prior to the rule's adoption, funds generally were required to maintain these assets in special accounts with a custodian bank. 1 Custody of Investment Company Assets With Futures Commission Merchants and Commodity Clearing Organizations, Investment Company Act Release No. 22389 (Dec. 11, 1996) [61 FR 66207 (Dec. 17, 1996)].
Rule 17f-6 permits funds to maintain their assets with FCMs that are registered under the Commodity Exchange Act (“CEA”) and that are not affiliated with the fund. The rule requires that a written contract containing the following provisions govern the manner in which the FCM maintains a fund's assets: • The FCM must comply with the segregation requirements of section 4d(2) of the CEA [7 U.S.C. 6d(2)] and the rules under that statute [17 CFR Chapter I] or, if applicable, the secured amount requirements of rule 30.7 under the CEA [17 CFR 30.7]; • If the FCM places the fund's margin with another entity for clearing purposes, the FCM must obtain an acknowledgment from the clearing organization that the fund's assets are held on behalf of the FCM's customers in accordance with provisions under the CEA; and • Upon request the FCM must furnish records about the fund's assets to the Commission or its staff.
The rule requires a written contract that contains certain provisions to ensure important safeguards and other benefits relating to the custody of fund assets by FCMs. For example, the requirement that FCMs comply with the segregation or secured amount requirements of the CEA and the rules under that statute is designed to protect fund assets held by FCMs. The contract requirement that an FCM obtain an acknowledgment from an entity that clears fund transactions that the fund's assets are held on behalf of the FCM's customers according to CEA provisions seeks to accommodate the legitimate needs of the participants in the commodity settlement process, consistent with the protection of fund assets.
Finally, FCMs are required to furnish to the Commission or its staff on request information concerning the fund's assets in order to facilitate Commission inspections of funds. The Commission estimates that approximately 3,031 funds could deposit margin with FCMs under rule 17f-6 in connection with their investments in futures contracts and commodity options. The Commission further estimates that each fund uses and deposits margin with 3 different FCMs in connection with its commodity transactions.
Approximately 211 FCMs are eligible to hold fund and margin under the rule. 2 2 Commodity Futures Trading Commission, ANNUAL REPORT (1999). The only collection of information requirements of rule 17f-6 are the rule's contract requirements. The Commission estimates that 3,031 funds will spend an average of 1 hour complying with the contract requirements of the rule ( *e.g.,* signing contracts with additional FCMs), for a total of 3,031 burden hours. The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act, and is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules and forms.
Written comments are invited on:
(a)Whether the collection of information is necessary for the proper performance of the functions of the Commission, including whether the information has practical utility;
(b)the accuracy of the Commission's estimate of the burden of the collection of information;
(c)ways to enhance the quality, utility, and clarity of the information collected; and
(d)ways to minimize the burden of the collection of information or respondents, including through the use of automated collection techniques or other forms of information technology. The Commission will consider comments and suggestions submitted in writing within 60 days after this publication. Please direct your written comments to Michael E. Bartell, Associate Executive Director, Office of Information Technology, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549. Dated: July 24, 2000. Margaret H. McFarland, Deputy Secretary. [FR Doc. 00-19447 Filed 8-11-00; 8:45 am]
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U.S. Code
- Purposes§ 3501
- Dealing by unregistered futures commission merchants or introducing brokers prohibited; duties in handling customer receipts; conflict-of-interest systems and procedures; Chief Compliance Officer; rules to avoid duplicative regulations; swap requirements; portfolio margining accounts§ 6d
1 reference not yet in our index
- 17 CFR 270.17
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