8011-01P
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-541, OMB Control No. 3235-0620]
Proposed Collection; Comment Request; Extension: Rule 22c-2
Upon Written Request, Copies Available From
Securities and Exchange Commission
Office of FOIA Services
100 F Street, NE
Washington, DC 20549-2736
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 22c-2 (17 CFR 270.22c-2) under the Investment Company Act of 1940 (15 U.S.C.
80a) (the “Investment Company Act”) requires the board of directors (including a majority of
independent directors) of most registered open-end investment companies (“funds”) to either
approve a redemption fee of up to two percent or determine that imposition of a redemption fee
is not necessary or appropriate for the fund. Rule 22c-2 also requires a fund to enter into written
agreements with their financial intermediaries (such as broker-dealers and retirement plan
administrators) under which the fund, upon request, can obtain certain shareholder identity and
trading information from the intermediaries. The written agreement must also allow the fund to
direct the intermediary to prohibit further purchases or exchanges by specific shareholders that
the fund has identified as being engaged in transactions that violate the fund’s market timing
policies. These requirements enable funds to obtain the information that they need to monitor

the frequency of short-term trading in omnibus accounts and enforce their market timing
policies.
The rule includes three “collections of information” within the meaning of the Paperwork
Reduction Act of 1995 (“PRA”).1 First, the rule requires boards to either approve a redemption
fee of up to two percent or determine that imposition of a redemption fee is not necessary or
appropriate for the fund. Second, funds must enter into information sharing agreements with all
of their “financial intermediaries”2 and maintain a copy of the written information sharing
agreement with each intermediary in an easily accessible place for six years. Third, pursuant to
the information sharing agreements, funds must have systems that enable them to request
frequent trading information upon demand from their intermediaries, and to enforce any
restrictions on trading required by funds under the rule.
The collections of information created by rule 22c-2 are necessary for funds to effectively
assess redemption fees, enforce their policies in frequent trading, and monitor short-term trading,
including market timing, in omnibus accounts. These collections of information are mandatory
for funds that redeem shares within seven days of purchase. The collections of information also
are necessary to allow Commission staff to fulfill its examination and oversight responsibilities.
Rule 22c-2(a)(1) requires the board of directors of all registered open-end management
investment companies and series thereof (except for money market funds, ETFs, or funds that
affirmatively permit short-term trading of its securities) to approve a redemption fee for the fund,
or instead make a determination that a redemption fee is either not necessary or appropriate for

44 U.S.C. 3501-3520.

The rule defines a Financial Intermediary as: (i) Any broker, dealer, bank, or other person that
holds securities issued by the fund in nominee name; (ii) a unit investment trust or fund that
invests in the fund in reliance on section 12(d)(i)(E) of the Act; and (iii) in the case of a
participant directed employee benefit plan that owns the securities issued by the fund, a
retirement plan’s administrator under section 316(A) of the Employee Retirement Security Act of
1974 (29 U.S.C. 1002(16)(A) or any person that maintains the plans’ participant records;
Financial Intermediary does not include any person that the fund treats as an individual investor
with respect to the fund’s policies established for the purpose of eliminating or reducing any
dilution of the value of the outstanding securities issued by the fund; Rule 22c-2(c)(1).

the fund. Commission staff understands that the boards of all funds currently in operation have
undertaken this process for the funds they currently oversee, and the rule does not require boards
to review this determination periodically once it has been made. Accordingly, we expect that
only boards of newly registered funds or newly created series thereof would undertake this
determination. Commission staff estimates that 3 funds (excluding money market funds and
ETFs) are newly formed each year and would need to make this determination.3
Commission staff estimates that it takes 2 hours of the board’s time as a whole (at a rate
of $4,770 per hour) to approve a redemption fee or make the required determination on behalf of
all series of the fund. In addition, Commission staff estimates that it takes compliance personnel
of the fund 8 hours (at a rate of $84 per hour) to prepare trading, compliance, and other
information regarding the fund’s operations to enable the board to make its determination, and
takes an internal compliance attorney of the fund 3 hours (at a rate of $440 per hour) to review
this information and present its recommendations to the board. Therefore, for each fund board
that undertakes this determination process, Commission staff estimates it expends 13 hours4 at a
cost of $11,532.5 As a result, Commission staff estimates that the total time spent for all funds
on this process is 416 hours at a cost of $369,024.6

This estimate is based on the average number of registrants filing initial Form N-1A or N-3 from
2020 to 2022; this estimate does not carve out money market funds, ETFs, or funds that
affirmatively permit short-term trading of their securities, so this estimate corresponds to the
outer limit of the number of registrants that would have to make this determination.

This calculation is based on the following estimates: 2 hours of board time + 3 hours of internal
compliance attorney time + 8 hours of compliance clerk time = 13 hours.

This calculation is based on the following estimates: ($4,770 board time × 2 hours) + ($84
compliance time × 8 hours) + ($440 attorney time × 3 hours) = $11,532.
The hourly wages used are from SIFMA’s Management & Professional Earnings in the Securities
Industry 2013, modified by Commission staff to account for an 1800 hour work-year and
inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and
overhead; the staff has estimated the average cost of board of director time as $4,770 per hour for
the board as a whole, based on information received from funds and their counsel.

This calculation is based on the following estimates: 13 hours × 32 funds = 416 hours; $11,532×
32 funds = $369,024.

Rule 22c-2(a)(2) requires a fund to enter into information-sharing agreements with each
of its financial intermediaries. Commission staff understands that all currently registered funds
have already entered into such agreements with their intermediaries. Funds enter into new
relationships with intermediaries from time to time, however, which requires them to enter into
new information sharing agreements. Commission staff understands that, in general, funds enter
into information-sharing agreement when they initially establish a relationship with an
intermediary, which is typically executed as an addendum to the distribution agreement. The
Commission staff understands that most shareholder information agreements are entered into by
the fund group (a group of funds with a common investment adviser), and estimates that there
are currently 797 currently active fund groups.7 Commission staff estimates that, on average,
each active fund group enters into relationships with 3 new intermediaries each year.
Commission staff understands that funds generally use a standard information sharing
agreement, drafted by the fund or an outside entity, and modifies that agreement according to the
requirements of each intermediary. Commission staff estimates that negotiating the terms and
entering into an information sharing agreement takes a total of 4 hours of attorney time (at a rate
of $500 per hour) per intermediary. Accordingly, Commission staff estimates that it takes 12
hours at a cost of $6,000 annually for each fund group8 to enter into new information sharing
agreements and, in the aggregate existing market participants incur a total of 9,564 hours at a
cost of $4,782,000.9
In addition, newly created funds advised by new entrants (effectively new fund groups)
must enter into information sharing agreements with all of their financial intermediaries.

ICI, 2024 INVESTMENT COMPANY FACT BOOK at Fig 2.8 (2024)
(https://www.icifactbook.org/pdf/2024-factbook.pdf ).

This estimate is based on the following calculations: 4 hours × 3 new intermediaries = 12 hours;
12 hours × $500 = $6,000).

This estimate is based on the following calculations: (12 hours × 797 fund groups = 9,564 hours);
9,564 hours × $500 = $4,782,000).

Commission staff estimates that there are 38 new fund groups that form each year that will have
to enter into information sharing agreements with each of their intermediaries.10 Commission
staff estimates that fund groups formed by new advisers typically have relationships with
significantly fewer intermediaries than existing fund groups, and estimates that new fund groups
will typically enter into 100 information sharing agreements with their intermediaries when they
begin operations.11 As discussed previously, Commission staff estimates that it takes 4 hours of
attorney time (at a rate of $500 per hour) per intermediary to enter into information sharing
agreements. Therefore, Commission staff estimates that each newly formed fund group will
incur 400 hours of attorney time at a cost of $200,00012 and that all newly formed fund groups
will incur a total of 15,200 hours at a cost of $7,600,000 to enter into information sharing
agreements with their intermediaries.13
Rule 22c-2(a)(3) requires funds to maintain records of all information-sharing agreements
for 6 years in an easily accessible place. Commission staff understands that most shareholder
information agreements are stored at the fund group level and estimates that there are currently
approximately 797 fund groups.14 Commission staff understands that information-sharing
agreements are generally included as addendums to distribution agreements between funds and
their intermediaries, and that these agreements would be stored as required by the rule as a
matter of ordinary business practice. Therefore, Commission staff estimates that maintaining

ICI, 2024 INVESTMENT COMPANY FACT BOOK at Fig 2.8 (2024)
(https://www.icifactbook.org/pdf/2024-factbook.pdf).

Commission staff understands that funds generally use a standard information sharing agreement,
drafted by the fund or an outside entity, and then modifies that agreement according to the
requirements of each intermediary.

This estimate is based on the following calculations: 4 hours × 100 intermediaries = 400 hours;
400 hours × $500 = $200,000.

This estimate is based on the following calculations: (38 fund groups × 400 hours = 15,200 hours)
($500 × 15,200 = 7,600,000).

ICI, 2024 INVESTMENT COMPANY FACT BOOK at Fig 2.8 (2024)
(https://www.icifactbook.org/pdf/2024-factbook.pdf ).

records of information-sharing agreements requires 10 minutes of time spent by a general clerk
(at a rate of $75 per hour) per fund, each year. Accordingly, Commission staff estimates that all
funds will incur 133 hours at a cost of $9,97515 in complying with the recordkeeping requirement
of rule 22c-2(a)(3). Therefore, Commission staff estimates that to comply with the information
sharing agreement requirements of rule 22c-2(a)(2) and (3), it requires a total of 24,897 hours at
a cost of $12,391,975.16
The Commission staff estimates that on average, each fund group requests shareholder
information once a week, and gives instructions regarding the restriction of shareholder trades
every day, for a total of 417 responses related to information sharing systems per fund group
each year, and a total 331,552 responses for all fund groups annually.17 In addition, as described
above, the staff estimates that funds make 32 responses related to board determinations, 2,391
responses related to new intermediaries of existing fund groups, 3,800 responses related to new
fund group information sharing agreements, and 797 responses related to recordkeeping, for a
total of 7,020 responses related to the other requirements of rule 22c-2. Therefore, the
Commission staff estimates that the total number of responses is 338,572 (331,552 + 7,020 =
338,572). The Commission staff estimates that the total hour burden for rule 22c-2 is 25,313
hours at a cost of $12,392,344.18
Responses provided to the Commission will be accorded the same level of confidentiality
accorded to other responses provided to the Commission in the context of its examination and

This estimate is based on the following calculations: (10 minutes × 797 fund groups = 7,970
minutes); (7,970 minutes / 60 = 133 hours); (133 hours × $75 = $9,975).

This estimate is based on the following calculations: (9,564 hours + 15,200 hours + 133 hours =
24,897 hours); ($4,782,000 + $7,600,000 + $9,975 = $12,391,975).

This estimate is based on the following calculations: (52 + 365 = 417); (417 × 797 fund groups =
331,552).

This estimate is based on the following calculations: 416 hours (board determination) + 24,897
hours (information sharing agreements) = 25,313 total hours; $369,024 (board determination) +
$12,391,975 (information sharing agreements) = $12,392,344.

oversight program. Responses provided in the context of the Commission’s examination and
oversight program are generally kept confidential. Complying with the information collections
of rule 22c-2 is mandatory for funds that redeem their shares within 7 days of purchase. 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.
Written comments are invited on: (a) whether the proposed collection of information is
necessary for the proper performance of the functions of the Commission, including whether the
information shall have 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 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 by
[INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL
REGISTER].
An agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information under the PRA unless it displays a currently valid OMB control
number.
Please direct your written comments to: David Bottom, Chief Information Officer,
Securities and Exchange Commission, c/o John Pezzullo, 100 F Street, NE Washington, DC
20549 or send an e-mail to: PRA_Mailbox@sec.gov.
Dated: June 24, 2024.
Vanessa A. Countryman,
Secretary.

[FR Doc. 2024-14223 Filed: 6/27/2024 8:45 am; Publication Date: 6/28/2024]