Four Funds Keep Filing Asset-Custody Paperwork Three Times a Year
Published Date: 10/28/2026
Notice
Summary
The SEC is extending the paperwork rules for funds that keep their assets with national securities exchange members. These funds must have a written contract approved by their board and get their assets checked by an independent accountant three times a year. About four funds spend roughly 14 hours total each year following these rules, with no new costs or changes coming.
Analyzed Economic Effects
4 provisions identified: 0 benefits, 4 costs, 0 mixed.
Three annual independent asset exams required
Funds relying on Rule 17f-1 must have an independent public accountant examine the fund's assets held by the exchange member at least three times during the fund's fiscal year, and the accountant's certificate of each examination must be transmitted to the Commission. The rule is mandatory for funds that place assets in such custody.
Estimated external cost: ~$13,098 per fund annually
The Commission staff estimates outside legal costs of $1,548 and independent accountant costs of $11,550 per fund per year, for a total external cost of approximately $13,098 per fund annually. With about 4 funds relying on the rule, the estimated total annualized external cost burden is $52,392.
Board-approved custody contracts required
If a registered management investment company (a fund) places assets with a national securities exchange member, the fund must have a written custody contract that is ratified initially and approved annually by a majority of the fund's board of directors. The written contract must contain specified provisions and must be transmitted to the Securities and Exchange Commission.
Estimated annual staff time per fund: 3.5 hours
Commission staff estimate each fund spends an average of 3.5 internal hours per year complying with Rule 17f-1 (0.5 hours for the board to review/ratify the custodial contract and 3 hours for the controller to assist auditors). Approximately 4 funds rely on the rule, for a total internal burden of about 14 hours annually.
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