FR 2021-01245

The document in question is a notice from the Securities and Exchange Commission (SEC), inviting comments from the public regarding the ongoing information collection under Rule 12f-1 of the Securities Exchange Act of 1934. This rule dictates that exchanges must provide pertinent information to the SEC when they apply to reinstate unlisted trading privileges (UTP) for a security that had previously had its UTP suspended. The SEC estimates that filing such an application takes around one hour, costing $221, equivalent to the rate for one hour of professional paralegal work. This translates to an annual compliance cost of about $5,304 for all expected respondents.

Summary and Context

The notice forms part of a regular practice by federal agencies to seek public input as required by the Paperwork Reduction Act of 1995. The rule in focus ensures that the SEC has comprehensive information about securities seeking reinstatement for trading privileges that were suspended. The SEC's role in overseeing securities markets is critical in maintaining transparency and protecting investors. Thus, Rule 12f-1 plays an essential role in facilitating informed decision-making for the SEC when reinstating these trading privileges.

Significant Issues or Concerns

A noticeable concern with the document is the brevity regarding the estimate that an application requires just one hour to complete. This estimation could underestimate the time needed, given the complexity of compliance documents that require detailed and accurate information. Furthermore, while it indicates the hourly cost for a paralegal's work, further breakdown or justification of this estimate is lacking. Another issue pertains to the invitation for comments, which lacks specifics on who should respond or how they can participate effectively. Additionally, there is no clarity on where and how the collected data is made available to the public, which could hinder transparency.

Public and Stakeholder Impact

For the general public, this document is part of a broader regulatory framework aimed at ensuring fair and orderly securities markets, which is crucial for investor protection and market integrity. Public participation in providing comments could influence future amendments to the rule, potentially leading to more efficient regulatory practices.

Specific stakeholders, such as national securities exchanges, may be directly impacted by these regulations. For these entities, the compliance burden, stated as relatively minimal, suggests a manageable impact. However, the cumulative costs and time commitment, even if modest for individual applications, could add up, especially for exchanges frequently seeking to reinstate securities. The efficient processing of these applications is vital to their operations and liquidity provisions.

Conclusion

Overall, while the document outlines critical information related to an ongoing regulatory compliance process, it lacks detail and clarity in several areas, which might impact the effective engagement of respondents in the comment process. For stakeholders, understanding these compliance requirements, alongside the broader regulatory goals, is essential for their ongoing participation and adaptation in the securities industry. The SEC should strive to enhance clarity and detail in its publications to facilitate a richer dialogue with all interested parties.

The document pertains to the Securities and Exchange Commission's (SEC) proposed extension of information collection under Rule 12f-1, which outlines the process for reinstating unlisted trading privileges for certain securities. This process involves financial implications for the exchanges seeking to reinstate these privileges.

The financial analysis of the document involves two key monetary figures:

1. Individual Compliance Cost: Each national securities exchange, when submitting an application to reinstate unlisted trading privileges, incurs an internal compliance cost estimated at $221.00. This cost represents the expense associated with one hour of a paralegal's professional work needed to complete the application.

2. Total Annual Compliance Cost: Considering that there are potentially 24 applications submitted annually under this rule, the cumulative annual cost of compliance for all exchanges is approximately $5,304. This sum is derived from multiplying the cost of $221.00 per application by the 24 expected applications each year.

Financial Analysis in Context

The financial references in this document are important for understanding the burden of compliance with Rule 12f-1 on national securities exchanges. However, there are several issues related to these financial figures that warrant attention:

• Underestimated Application Process Time: The document assumes that the application process takes only one hour. This assumption might be overly optimistic, implying a potential underestimation of the true cost of compliance. The lack of detailed explanation for this one-hour estimate can be problematic and suggests a need for clarification.

• Simplicity in Cost Calculation: The total compliance cost calculation depends solely on the hourly cost of a paralegal's work, without considering any additional expenses or variances in labor costs among different exchanges. There's a lack of transparency about other possible costs and how these might affect the overall financial burden.

The document also provides an opportunity for the public and stakeholders to comment on the proposed collection and its financial implications. However, it does not clearly specify who is eligible to offer feedback, which might limit the range of insights on the legitimacy and accuracy of these financial references.

Moreover, there is no explicit clarity on how this financial information can be accessed by the public, despite its designation as public information. This oversight may hinder transparency and the ability for informed public critique. Finally, the document does not elaborate on processes to ensure the collected financial data's quality and accuracy, leaving a gap in understanding how these figures were derived and verified.

In summary, the document attempts to quantify the compliance cost associated with reinstating unlisted trading privileges under Rule 12f-1. However, there are significant opportunities for improvement in clarifying these financial references and addressing potential issues regarding the accuracy and transparency of these costs.