Federal Register 60-Day Notice

Federal Register / Vol. 90, No. 19 / Thursday, January 30, 2025 / Notices
state securities authorities and the
SROs. Subject to the provisions of the
Freedom of Information Act, 5 U.S.C.
522 (‘‘FOIA’’), and the Commission’s
rules thereunder (17 CFR
200.80(b)(4)(iii)), the Commission does
not generally publish or make available
information contained in any reports,
summaries, analyses, letters, or
memoranda arising out of, in
anticipation of, or in connection with an
examination or inspection of the books
and records of any person or any other
investigation.
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.
The public may view and comment
on this information collection request
at: https://www.reginfo.gov/public/do/
PRAViewICR?ref_nbr=202411-3235-003
or send an email comment to
MBX.OMB.OIRA.SEC_desk_officer@
omb.eop.gov within 30 days of the day
after publication of this notice by March
3, 2025.
Dated: January 27, 2025.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025–01965 Filed 1–29–25; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–188, OMB Control No.
3235–0212]

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Proposed Collection; Comment
Request; Extension: Rule 12b–1
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 (‘‘OMB’’) for
extension and approval.
Section 12(b) of the Investment
Company Act of 1940 (the ‘‘Act’’) 1
prohibits a registered open-end
investment company (‘‘fund’’), other
than a fund complying with Section
10(d) of the Act,2 from acting as a
1 15

U.S.C. 80a–1 et seq.
2 15 U.S.C. 80a–10(d).

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distributor of securities that it has
issued, except through an underwriter,
in contravention of Commission rules.3
Rule 12b–1 under the Act permits a
fund to bear expenses associated with
the distribution of its shares, provided
that the fund complies with certain
requirements.4
Rule 12b–1 requires, among other
things, that the fund adopt a written
plan describing all material aspects of
the proposed financing of distribution
(‘‘rule 12b–1 plan’’).5 The rule 12b–1
plan must be in writing and approved
by the fund’s board of directors, and
separately by the ‘‘independent’’
directors (as described in the rule).6 If
the rule 12b–1 plan is being adopted
after public offering of the fund’s voting
securities, it must also be approved
initially by a vote of at least a majority
of the fund’s outstanding voting
securities.7 Similarly, any material
amendments to the rule 12b–1 plan
must be approved by the fund’s
directors, including the independent
directors, and any material increase in
the amount to be spent under the rule
12b–1 plan must be approved by the
fund’s shareholders.8 In considering the
implementation or continuance of a rule
12b–1 plan, the fund’s board must
request and evaluate information
reasonably necessary to make an
informed decision.9 The board also
must conclude, in the exercise of
reasonable business judgment and in
light of the directors’ fiduciary duties,
that there is a reasonable likelihood that
the rule 12b–1 plan will benefit the fund
and its shareholders.10
The rule 12b–1 plan and, in certain
instances, any related agreements must
incorporate certain specified provisions,
including that: (i) the plan or agreement
will continue in effect for more than one
year only if the board, including the
independent directors, approve the
continuance at least annually; 11 (ii) the
fund’s board will review quarterly
reports of the amounts spent under the
plan; 12 and (iii) the plan may be
terminated at any time by a majority
vote of the independent directors or
outstanding voting securities.13 Rule
12b–1 also requires the fund to preserve
for six years copies of the rule 12b–1
plan and any related agreements and
3 15

U.S.C. 80a–12(b).
CFR 270.12b–1.
5 17 CFR 270.12b–1(b).
6 17 CFR 270.12b–1(b)(2).
7 17 CFR 270.12b–1(b)(1).
8 17 CFR 270.12b–1(b)(4).
9 17 CFR 270.12b–1(d).
10 17 CFR 270.12b–1(e).
11 17 CFR 270.12b–1(b)(3)(i).
12 17 CFR 270.12b–1(b)(3)(ii).
13 17 CFR 270.12b–1(b)(3)(iii).
4 17

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reports, as well as minutes of board
meetings that describe the factors
considered and the basis for
implementing or continuing the rule
12b–1 plan.14
Rule 12b–1 also prohibits funds from
paying for distribution of fund shares
with brokerage commissions on their
portfolio transactions.15 The rule
requires funds that use broker-dealers
that sell their shares to also execute
their portfolio securities transactions, to
implement policies and procedures
reasonably designed to prevent: (i) the
persons responsible for selecting brokerdealers to effect transactions in fund
portfolio securities from taking into
account broker-dealers’ promotional or
sales efforts when making those
decisions; and (ii) a fund, its adviser, or
its principal underwriter, from entering
into any agreement under which the
fund directs brokerage transactions or
revenue generated by those transactions
to a broker-dealer to pay for distribution
of the fund’s (or any other fund’s)
shares.16
The board and shareholder approval
requirements of the rule are designed to
ensure that fund shareholders and
directors receive adequate information
to evaluate and approve a rule 12b–1
plan and, thus, are necessary for
investor protection. The provisions that
require the board to be provided with
quarterly reports and termination
authority are designed to ensure that the
rule 12b–1 plan continues to benefit the
fund and its shareholders. The
recordkeeping requirements of the rule
are necessary to enable Commission
staff to oversee compliance with the
rule. The requirement that funds or their
advisers implement, and fund boards
approve, policies and procedures in
order to prevent persons charged with
allocating fund brokerage from taking
distribution efforts into account is
designed to ensure that funds’ selection
of brokers to effect portfolio securities
transactions is not influenced by
considerations about the sale of fund
shares.
Commission staff estimates that there
are approximately 5,246 funds (for
purposes of this estimate, registered
open-end investment companies or
series thereof) that have at least one
share class subject to a rule 12b–1 plan
and approximately 250 fund families
with common boards of directors that
have at least one fund with a 12b–1
plan. The Commission further estimates
that the annual hour burden for
complying with the rule is 425 hours for
14 17

CFR 270.12b–1(f).
CFR 270.12b–1(h)(1).
16 17 CFR 270.12b–1(h)(2)(ii).
15 17

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Federal Register / Vol. 90, No. 19 / Thursday, January 30, 2025 / Notices

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each fund family with a portfolio that
has a rule 12b–1 plan. We therefore
estimate that the total hourly burden per
year for all funds to comply with
current information collection
requirements under rule 12b–1 is
106,250 hours. Commission staff
estimates that approximately three
funds per year prepare a proxy in
connection with the adoption or
material amendment of a rule 12b–1
plan. The staff further estimates that the
cost of each fund’s proxy is $30,000.
Thus, the total annual cost burden of
rule 12b–1 to the fund industry is
$90,000.
Estimates of average burden hours
and costs are made solely for purposes
of the Paperwork Reduction Act and are
not derived from a comprehensive or
even representative survey or study of
the costs of Commission rules and
forms. The collections of information
required by rule 12b–1 are necessary to
obtain the benefits of the rule. Notices
to the Commission will not be kept
confidential.
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 March 31, 2025.
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: Austin Gerig, Director/Chief Data
Officer, Securities and Exchange
Commission, c/o Tanya Ruttenberg, 100
F Street NE, Washington, DC 20549 or
send an email to: PRA_Mailbox@
sec.gov.
Dated: January 24, 2025.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025–01934 Filed 1–29–25; 8:45 am]
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–102277; File No. SR–
NYSEAMER–2024–63]

Self-Regulatory Organizations; NYSE
American, LLC; Suspension of and
Order Instituting Proceedings To
Determine Whether To Approve or
Disapprove a Proposed Rule Change
To Waive the Options Regulatory Fee
(ORF) for December 2024
January 24, 2025.

I. Introduction
On November 25, 2024, NYSE
American, LLC (the ‘‘Exchange’’ or
‘‘NYSE American’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’), pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change (File No. SR–NYSEAMER–2024–
63) to amend its Options Fee Schedule
(‘‘Fee Schedule’’) regarding the Options
Regulatory Fee (‘‘ORF’’).3 The proposed
rule change was immediately effective
upon filing with the Commission
pursuant to Section 19(b)(3)(A) of the
Act.4 The proposed rule change was
published for comment in the Federal
Register on December 16, 2024.5 The
Commission has not received any
comments on the proposal. Pursuant to
Section 19(b)(3)(C) of the Act,6 the
Commission is hereby: (1) temporarily
suspending File No. SR–NYSEAMER–
2024–63; and (2) instituting proceedings
to determine whether to approve or
disapprove File No. SR–NYSEAMER–
2024–63.
II. Description of the Proposed Rule
Change
The Exchange proposed to amend the
Fee Schedule to temporarily waive the
ORF for the period December 1, 2024
through December 31, 2024 and resume
assessment of the ORF at the same rate
of $0.0038 per share on January 1,
2025.7 Noting that it adjusts the amount
1 15

U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 101866
(Dec. 10, 2024), 89 FR 101674 (Dec. 16, 2024)
(‘‘Notice’’).
4 15 U.S.C. 78s(b)(3)(A). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
5 See Notice, supra note 3.
6 15 U.S.C. 78s(b)(3)(C).
7 See Notice, supra note 3, at 101674. The
Exchange also proposed a ministerial change to
delete outdated language relating to a prior ORF
waiver and superseded ORF rate. Id. The Exchange

of ORF amount periodically to ensure
that the revenue from its ORF does not
exceed its regulatory costs, the
Exchange proposed to waive assessment
of the ORF from December 1 through
December 31, 2024 ‘‘in order to help
ensure that the amount collected from
the ORF, in combination with other
regulatory fees and fines, does not
exceed the Exchange’s total regulatory
costs.’’ 8 According to the Exchange, the
proposed waiver was based on its
‘‘analysis of recent options volumes and
regulatory costs’’ and its belief that ‘‘if
the ORF is not adjusted, the ORF
revenue to the Exchange year over year
could exceed a material portion of the
Exchange’s ORF Costs.’’ 9 The Exchange
proposed to resume assessment of the
ORF at the same rate on January 1, 2025,
‘‘based on the Exchange’s estimated
projections for its regulatory costs,
balanced with the observed increases in
options volumes.’’ 10 The exchange
previously waived its ORF for selected
months in 2022 and 2023.11
III. Suspension of the Proposed Rule
Change
Pursuant to Section 19(b)(3)(C) of the
Act,12 at any time within 60 days of the
date of filing of an immediately effective
proposed rule change pursuant to
Section 19(b)(1) of the Act,13 the
Commission summarily may
temporarily suspend the change in the
rules of a self-regulatory organization
(‘‘SRO’’) if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in furtherance of the purposes of the
Act. As discussed below, the
Commission believes a temporary
suspension of the proposed rule change
is necessary and appropriate to allow for
additional analysis of the proposed rule
change’s consistency with the Act and
the rules thereunder.
When exchanges file their proposed
rule changes with the Commission,
including fee filings like the Exchange’s
present proposal, they are required to
provide a statement supporting the

2 17

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assesses the ORF on American Trading Permit
(‘‘ATP’’) Holders for options transactions that are
cleared by those firms through the Options Clearing
Corporation (‘‘OCC’’) in the Customer range,
regardless of the exchange on which the transaction
occurs. See id. at 101675.
8 See id. at 101675.
9 Id.
10 Id. at 101676.
11 See Securities Exchange Act Release Nos.
96373 (Nov. 22, 2022), 87 FR 73376 (Nov. 29, 2022)
(SR–NYSEAMER–2022–52) and 98678 (Oct. 3,
2023), 88 FR 69973 (Oct. 10, 2023) (SR–
NYSEAMER–2023–48).
12 15 U.S.C. 78s(b)(3)(C).
13 15 U.S.C. 78s(b)(1).

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