Supporting Statement Rule 6c-11 (2025)

OM B C ON TROL N UM BER 3 2 3 5 -0 7 6 4

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 6c-11
A. JUSTIFICATION
1. Necessity for the Information Collection
Rule 6c-11 1 under the Investment Company Act of 1940 (the “Act”) permits
exchange-traded funds (“ETFs”) that satisfy certain conditions to operate without
first obtaining an exemptive order from the Commission. The rule was designed to
create a consistent, transparent, and efficient regulatory framework for ETFs and
facilitate greater competition and innovation among ETFs. Rule 6c-11 requires an
ETF to disclose certain information on its website, to maintain certain records, and
to adopt and implement written policies and procedures governing its constructions
of baskets, as well as written policies and procedures that set forth detailed
parameters for the construction and acceptance of custom baskets that are in the best
interests of the ETF and its shareholders. These requirements are “collection of
information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).2
The information collection is integral to the framework of rule 6c-11 and therefore
necessary to help further the rule’s aforementioned goals. The information collection
also assists the Commission’s examination staff in assessing ETFs’ compliance with
the conditions of rule 6c-11.

1

17 CFR 270.6c-11.

2

See 44 U.S.C. 3501 through 3521.

2. Purpose and Use of the Information Collection
The collection of information under rule 6c-11 is integral to the framework of rule
6c-11 and therefore necessary to help further the rule’s goals of creating a consistent,
transparent, and efficient regulatory framework for ETFs, including
leveraged/inverse ETFs, and facilitating greater competition and innovation among
ETFs. The information collection assists the Commission’s examination staff in
assessing ETFs’ compliance with the conditions of rule 6c-11. The respondents to
rule 6c-11 are ETFs registered as open-end management investment companies other
than share-class ETFs and non-transparent ETFs. 3
3. Consideration Given to Information Technology
Rule 6c-11 does not require the reporting of any information or the filing of any
documents with the Commission. The Electronic Signatures in Global and National
Commerce Act 4 and conforming amendments to rules under the Investment
Advisers Act of 1940 permit ETF advisers to maintain records electronically.
4. Duplication
The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it adopts a new rule or

3

The respondents to rule 6c-11 also exclude ETFs organized as UITs.

4

P.L. 106-229, 114 Stat. 464 (June 30, 2000).

2

a change to a rule. The information collection that is required by the amendments to
rule 6c-11 is not duplicated elsewhere.
5. Effect on Small Entities
The information collection requirements of rule 6c-11 do not distinguish between
small entities and other entities. We do not believe that exempting any subset of
ETFs, including small entities, from rule 6c-11 would permit the Commission to
achieve its stated objectives. Similarly, the Commission does not believe that it can
establish simplified or consolidated compliance requirements for small entities under
the rule without compromising its objectives. The conditions necessary to rely on
rule 6c-11 are designed to provide investor protection benefits. These benefits should
apply to investors in smaller funds as well as investors in larger funds.
Finally, the Commission believes that rule 6c-11 appropriately uses a
combination of performance and design standards. Rule 6c-11 provides ETFs that
satisfy the requirements of the rule with exemptions from certain provisions of the
Act necessary for ETFs to operate. Because the provisions of the Act from which
ETFs would be exempt provide important investor and market protections, the
conditions of the rule must be specifically designed to ensure that these investor and
market protections are maintained. However, where the Commission believes that
flexibility is beneficial, it adopted performance-based standards that provide a
regulatory framework, rather than prescriptive requirements, to give funds the
opportunity to adopt policies and procedures tailored to their specific needs without
raising investor or market protection concerns.

3

6. Consequences of Not Conducting Collection
The collection of information under rule 6c-11 is integral to the framework of rule
6c-11 and therefore necessary to help further the rule’s goals of creating a consistent,
transparent, and efficient regulatory framework for such ETFs and facilitating greater
competition and innovation among ETFs. Thus, not requiring this collection of
information would be incompatible with the goals of rule 6c-11.
7. Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
Rule 6c-11 requires ETFs to preserve and maintain copies of all written
authorized participant agreements. Additionally, rule 6c-11 requires ETFs to
maintain records setting forth the following information for each basket exchanged
with an authorized participant: (i) the names and quantities of the positions
composing the basket; (ii) identification of the basket as a “custom basket” and a
record stating that the custom basket complies with the ETF’s custom basket policies
and procedures (if applicable); (iii) cash balancing amounts (if any); and (iv) the
identity of the authorized participant conducting the transaction. ETFs have to
maintain these records for at least five years, the first two years in an easily accessible
place. Although this five-year period exceeds the three-year guideline for most kinds
of records under 5 CFR 1320.5(d)(2), the Commission believes that this is warranted
because the rule contributes to the effectiveness of the Commission’s examination
and inspection program. Because the period between examinations may be as long as
five years, it is important that the Commission have access to records that cover the
entire period between examinations.

4

8. Consultation Outside the Agency
The Commission and the staff of the Division of Investment Management
participate in an ongoing dialogue with representatives of the investment company
industry through public conferences, meetings, and informal exchanges. These
various forums provide the Commission and the staff with a means of ascertaining
and acting upon paperwork burdens confronting the industry. The Commission
requested public comment on the collection of information requirements of rule 6c11 before it submitted this request for extension and approval to the Office of
Management and Budget. The Commission received no comments in response to its
request.
9. Payment or Gift
No payment or gift to respondents was provided.
10. Confidentiality
Responses provided to the Commission in connection with staff examinations or
investigations would be kept confidential subject to the provisions of applicable law.
If information collected pursuant to rule 6c-11 is reviewed by the Commission’s
examination staff, it is accorded the same level of confidentiality accorded to other
responses provided to the Commission in the context of its examination and
oversight program.

5

11. Sensitive Questions
No information of a sensitive nature, including social security numbers, is
required under this collection of information. The information collection does not
collect personally identifiable information (PII). The agency has determined that a
system of records notice (SORN) and privacy impact assessment (PIA) are not
required in connection with the collection of information.
12. Estimate of Hour Burden
The following 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 cost of Commission rules and forms. 5
Rule 6c-11 requires an ETF to disclose certain information on its website, to
maintain certain records, and to adopt and implement written policies and
procedures governing its constructions of baskets, as well as written policies and
procedures that set forth detailed parameters for the construction and acceptance of
custom baskets that are in the best interests of the ETF and its shareholders. These
requirements are collections of information under the PRA.

5

The Commission’s estimates of the relevant wage rates in the tables below are based on
salary information for the securities industry compiled by the Securities Industry and
Financial Markets Association’s Office Salaries in the Securities Industry 2013, updated
for 2024. The estimated wage figures are modified by Commission staff to account for an
1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee
benefits, overhead, and adjusted to account for the effects of inflation. See Securities
Industry and Financial Markets Association, Report on Management & Professional
Earnings in the Securities Industry 2013, updated for 2024.

6

The current respondents to rule 6c-11 are ETFs registered as open-end
management investment companies other than share-class ETFs or non-transparent
ETFs. 6 This collection is not mandatory, but is necessary for those ETFs seeking to
operate without individual exemptive orders. We estimate 3,429 ETFs would be
subject to these requirements. This represents an increase of 1,077 over our 2022
estimate of 2,352 ETFs that were subject to the requirements.
Website Disclosures
Rule 6c-11 requires an ETF to disclose on its website, each business day, the
portfolio holdings that will form the basis for each calculation of NAV per share. The
rule requires that the portfolio holdings information contain specified information,
including description and amount of each position. Additionally, the rule requires an
ETF to disclose on its website: (i) the ETF’s NAV per share, market price, and
premium or discount, each as of the end of the prior business day; (ii) a tabular chart
and line graph showing the ETF’s premiums and discounts for the most recently
completed calendar year and the most recently completed calendar quarters of the
current year (or for the life of the fund if shorter); and (iii) the ETF’s median bid-ask
spread over the last thirty calendar days.
Rule 6c-11(c)(1)(vi) also requires any ETF whose premium or discount was
greater than 2% for more than seven consecutive trading days to post that
information on its website, along with a discussion of the factors that are reasonably
believed to have materially contributed to the premium or discount. Given the
6

ETFs organized as UITs are also excluded as respondents as they cannot rely upon the
rule.

7

threshold for this requirement, we do not believe that many ETFs will be required to
disclose this information on a routine basis. We estimate that most ETFs will be
required to make this disclosure only once in their lifetimes and thus, there will be no
ongoing costs associated with it.

8

TABLE 1 : RULE 6 c- 1 1 WEBS I TE D I S C LO S URE PRA ES TI MATES
Annual hours

Wag e Rate 1

I nternal time
c os ts

$350 (senior systems analyst)

$525

Annual external
c os t burden

1.5 hours

×

1.5 hours

×

$408 (senior programmer)

$612

Review of updated website
disclosures

1.875 hours

×

$381 (compliance manager)

$714

1.875 hours

×

$449 (compliance attorney)

$842

Total annual burden per ETF

6.75 hours

$2,693

$0

Number of ETFs

× 3,429

× 3,429

× 3,429

Total annual burden

23,145.75 hours

$9,234,297

$0

Website updates

Notes:
1. See supra footnote 5.

9

Table 1 above summarizes the PRA estimates associated with the website
disclosure requirements of rule 6c-11. We estimate that the annual total burdens and
time costs for drafting, reviewing and uploading the website disclosures will be
23,145.75 hours, at a total internal time cost of $9,234,297
Recordkeeping
Rule 6c-11 requires ETFs to preserve and maintain copies of all written
authorized participant agreements. Additionally, the rule requires ETFs to maintain
records setting forth the following information for each basket exchanged with an
authorized participant: (i) ticker symbol, CUSIP or other identifier, description of
holding, quantity of each holding, and percentage weight of each holding composing
the basket; (ii) if applicable, identification of the basket as a “custom basket” and a
record stating that the custom basket complies with the ETF’s custom basket policies
and procedures (if applicable); (iii) cash balancing amounts (if any); and (iv) the
identity of the authorized participant conducting the transaction. ETFs have to
maintain these records for at least five years, the first two years in an easily accessible
place.

10

TABLE 2 : RULE 6 c- 1 1 REC O RD KEEPI N G PRA ES TI MATES
Annual hours
Recordkeeping

Wag e rate 1

I nternal time
c os ts

2.5 hours

×

$77 (general clerk)

$192.5

2.5 hours

×

$117 (senior computer operator)

$292.5

Total annual burden per ETF

5 hours

$485

Number of ETFs

× 3,429

× 3,429

Total annual burden

17,145 hours

$1,663,065

N otes :
1. See supra footnote 5.

11

Annual
external
c os t burden

$0

Table 2 above summarizes the PRA estimates associated with the recordkeeping
requirements of rule 6c-11. We estimate that the annual total burdens and time costs
associated with these requirements will be 17,145 hours, at a total internal time cost
of $1,663,065. We do not estimate that there are any ongoing external costs associated
with the recordkeeping requirement.
Policies and Procedures
Rule 6c-11 requires ETFs relying on the rule to adopt and implement written
policies and procedures that govern the construction of baskets and the process that
are used for the acceptance of basket assets. Additionally, to use custom baskets, an
ETF is required to adopt and implement written policies and procedures setting forth
detailed parameters for the construction and acceptance of custom baskets that are in
the best interests of the ETF and its shareholders. These policies and procedures also
may include a periodic review requirement to ensure that the ETF’s custom basket
procedures are being consistently followed. Finally, as discussed above, an ETF
using custom baskets is required to maintain records detailing the composition of
each custom basket.

12

TABLE 3 : RULE 6 c- 1 1 PO LI C I ES AN D PRO C ED URES PRA ES TI MATES
Annual hours

Wag e rate 1

I nternal time
c os ts

Reviewing and updating baskets
policies and procedures

5 hours

×

$405 (senior manager)

$2,025

2.5 hours

×

$573 (ass’t general counsel)

$1,432.5

2.5 hours

×

$652 (chief compliance officer)

Total annual burden per ETF

10 hours

Annual external
c os t burden
$5732

$1,630
$5,087.5

$573

Number of ETFs

× 3,429

× 3,429

x 3,429

Total annual burden

34,290 hours

$17,445,037.5

$1,964,817

N otes :
1. See supra footnote 5.
2. This estimated burden is based on the estimated wage rate of $573, for 1 hour of outside legal services. The Commission’s estimate of the relevant
wage rates for external time costs, such as outside legal services, takes into account staff experience, a variety of sources including general information
websites, and adjustments for inflation.

13

Table 3 above summarizes the PRA estimates associated with the policies and
procedures requirements of rule 6c-11. We estimate that the annual total burdens and
time costs associated with these requirements will be 34,290 hours, at a total internal
time cost of $17,445,037.5. We estimate that there will be an ongoing external cost
associated with the policies and procedures requirement of $1,964,817.

TABLE 4 : RULE 6 c- 1 1 TO TAL PRA ES TI MATES
Internal
hour burden

Internal
burden time cost

External
cost burden

Updating website disclosure

23,145.75 hours

$9,234,29738

$0

Recordkeeping

17,145 hours

$1,663,065

$0

Updating policies and procedures

34,290 hours

$17,445,037.5

$1,964,817

Total annual burden

74,580.75 hours

$28,342,399.5.2

$1,964,817

As summarized in Table 4 above, we estimate that the total hour burdens and
time costs associated with rule 6c-11, including the burden associated with reviewing
and updating website disclosures, recordkeeping, and reviewing and updating
policies and procedures, will result in an average aggregate annual internal burden of
74,580.75 hours and an average aggregate internal time cost of $19,117,464.2.

13. Cost to Respondents
As shown in Table 4 above, we estimate that there will be an ongoing external
cost of $1,964,817 associated with the policies and procedures requirement. We
estimate that the costs related to rule 6c-11’s website disclosures and recordkeeping
requirements are fully captured as internal hour burdens in Item 12.

14

Table 5 below summarizes the revisions to the estimated annual responses,
burden hours, and burden-hour costs for rule 6c-11.

TABLE 5 : C H AN G E I N RULE 6 c- 1 1 PRA ES TI MATES
Annual N umber of Res pons es
Previously approved:
1,907
Requested:
2,352
Change:
445
Annual T ime Burden ( Hrs . )
Previously approved:
74,580.75 hours
Requested:
51,156 hours
Change:
+23,424.75 hours
Annual C os t Burden ( $ )
Previously approved:
$1,248,912
Requested:
$1,964,817
Change:
+$715,905

14. Costs to Federal Government
The SEC estimates this OMB Control Number’s Annual Cost to the Federal
Government is $0. This OMB Control Number contains only recordkeeping and/or
third-party disclosure requirements. Therefore, the SEC would receive, if at all,
information collected under these requirements during discretionary post-collection
activities.
15. Changes in Burden
The total annual hour burden of 74,580.75 hours represents an inccrease of
23,424.75 hours over the previous burden hour estimate of 51,156 hours. In addition,
the annual external cost burden of $1,964,817 represents a decrease of $715,905 over
the previously approved annual external cost burden of $1,248,912. The changes in
burdens are due to an increase in the number of ETFs covered by rule 6c-11.
15

16. Information Collection Planned for Statistical Purposes
Not applicable.
17. Approval to Omit OMB Expiration Date
The Commission is not seeking approval to not display the expiration date for
OMB approval.
18. Exceptions to Certification for Paperwork Reduction Act Submissions
The Commission is not seeking an exception to the certification statement.

B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL
METHODS
The collection of information does not employ statistical methods.

16