83 FR 31144 - Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB
FEDERAL RESERVE SYSTEM Federal Register Volume 83, Issue 128 (July 3, 2018)
Federal Register Volume 83, Issue 128 (July 3, 2018)
| Page Range | 31144-31146 | |
| FR Document | 2018-14304 |
[Federal Register Volume 83, Number 128 (Tuesday, July 3, 2018)] [Notices] [Pages 31144-31146] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-14304] ======================================================================= ----------------------------------------------------------------------- FEDERAL RESERVE SYSTEM Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB AGENCY: Board of Governors of the Federal Reserve System. SUMMARY: The Board of Governors of the Federal Reserve System (Board) is adopting a proposal to extend for three years, with revision, the mandatory Banking Organization Systemic Risk Report (FR Y-15; OMB No. 7100-0352). The revisions are effective as of the June 30, 2018, report date. FOR FURTHER INFORMATION CONTACT: Federal Reserve Board Clearance Officer--Nuha Elmaghrabi--Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, Washington, DC 20551, (202) 452-3829. Telecommunications Device for the Deaf (TDD) users may contact (202) 263-4869, Board of Governors of the Federal Reserve System, Washington, DC 20551. OMB Desk Officer--Shagufta Ahmed--Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW, Washington, DC 20503 or by fax to (202) 395-6974. SUPPLEMENTARY INFORMATION: On June 15, 1984, the Office of Management and Budget (OMB) delegated to the Board authority under the Paperwork Reduction Act (PRA) to approve and assign OMB control numbers to collection of information requests and requirements conducted or sponsored by the Board. Board-approved collections of information are incorporated into the official OMB inventory of currently approved collections of information. Copies of the Paperwork Reduction Act Submission, supporting statements and approved collection of information instrument(s) are placed into OMB's public docket files. The Board may not conduct or sponsor, and the respondent is not required to respond to, an information collection that has been extended, revised, or implemented on or after October 1, 1995, unless it displays a currently valid OMB control number. Final Approval Under OMB Delegated Authority of the Extension for Three Years, With Revision, of the Following Information Collection Report title: Banking Organization Systemic Risk Report. Agency form number: FR Y-15. OMB control number: 7100-0352. Effective date: June 30, 2018. Frequency: Quarterly. Respondents: U.S. bank holding companies (BHCs), covered savings and loan holding companies (SLHCs), and U.S. intermediate holding companies (IHCs) of foreign banking organizations with $50 billion or more of total consolidated assets, and any BHC designated as a global systemically important bank holding company (GSIB) that does not otherwise meet the consolidated assets threshold for BHCs. Estimated number of respondents: 41. Estimated average hours per response: 401 hours. Estimated annual burden hours: 65,764 hours. General description of report: The FR Y-15 quarterly report collects systemic risk data from U.S. bank holding companies (BHCs), covered savings and loan holding companies (SLHCs),\1\ and U.S. intermediate holding companies (IHCs) with total consolidated assets of $50 billion or more, and any BHC identified as a global systemically important banking organization (GSIB) based on its method 1 score calculated as of December 31 of the previous calendar year.\2\ The Board uses the FR Y-15 data to monitor, on an ongoing basis, the systemic risk profile of institutions that are subject to enhanced prudential standards under section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).\3\ In addition, the FR Y-15 is used to (1) facilitate the implementation of the GSIB surcharge rule,\4\ (2) identify other institutions that may present significant systemic risk, and (3) analyze the systemic risk implications of proposed mergers and acquisitions. --------------------------------------------------------------------------- \1\ Covered SLHCs are those which are not substantially engaged in insurance or commercial activities. See 12 CFR 217.2. \2\ See 12 CFR 217.402. \3\ 12 U.S.C. 5365. \4\ A firm that is identified as a GSIB is required to hold additional capital to increase its resiliency in light of the greater threat it poses to the financial stability of the United States. The Board's rule on the GSIB surcharge establishes the criteria for identifying a GSIB and the methods that those firms use to calculate a risk-based capital surcharge, which is calibrated to each firm's overall systemic risk. See 81 FR 90952 (December 16, 2016). --------------------------------------------------------------------------- Legal authorization and confidentiality: The mandatory FR Y-15 is authorized by sections 163 and 165 of the Dodd-Frank Act (12 U.S.C. 5463 and 5365), the International Banking Act (12 U.S.C. 3106 and 3108), the Bank Holding Company Act (12 U.S.C. 1844), and the Home Owners' Loan Act (12 U.S.C. 1467a). Most of the data collected on the FR Y-15 is made public unless a specific request for confidentiality is submitted by the reporting entity, either on the FR Y-15 or on the form from which the data item is obtained.\5\ Such information will be accorded confidential treatment under Exemption 4 of the Freedom of Information Act (FOIA) (5 U.S.C. 552(b)(4)) if the submitter substantiates its assertion that disclosure would likely cause substantial competitive harm. In addition, items 1 through 4 of Schedule G of the FR Y-15, which contain granular information regarding the [[Page 31145]] reporting entity's short-term funding, will be accorded confidential treatment under exemption 4 for observation dates that occur prior to the liquidity coverage ratio disclosure standard being implemented.\6\ To the extent confidential data collected under the FR Y-15 will be used for supervisory purposes, it may be exempt from disclosure under Exemption 8 of FOIA (5 U.S.C. 552(b)(8)). --------------------------------------------------------------------------- \5\ A number of the items in the FR Y-15 are retrieved from the FR Y-9C, and certain items may be retrieved from the FFIEC 101 and FFIEC 009. Confidential treatment will also extend to any automatically-calculated items on the FR Y-15 that have been derived from confidential data items and that, if released, would reveal the underlying confidential data. \6\ The liquidity coverage ratio (LCR) disclosure requirement for companies subject to the transition period under 12 CFR 249.50(a) (i.e., institutions with $700 billion or more in total consolidated assets or $10 trillion or more in assets under custody) was implemented on April 1, 2017. Therefore, all Schedule G data for these firms is already available to the public. The LCR disclosure requirement for companies subject to the transition period under 12 CFR 249.50(b) (i.e., institutions with $250 billion or more in total consolidated assets or $10 billion or more in total on-balance sheet foreign exposure) was implemented on April 1, 2018. Therefore, all Schedule G data for these firms will be made available to the public starting with the June 30, 2018, as-of date. The LCR disclosure requirement for companies subject to 12 CFR 249, Subpart G will be implemented on October 1, 2018. As this will mark the full implementation of the LCR disclosure standard, items 1 through 4 of Schedule G for all other firms will be made available to the public starting with the December 31, 2018, as-of date. --------------------------------------------------------------------------- Current actions: On August 24, 2017, the Board published a notice in the Federal Register (82 FR 40154) requesting public comment for 60 days on the extension, with revision, of the FR Y-15. The Board proposed to amend the FR Y-15 to include Mexican pesos in total payments activity rather than as a memorandum item; add securities brokers to the definition of financial institutions; expressly include derivative transactions where a clearing member bank guarantees performance of a client to a central counterparty; and specify how certain cleared derivatives transactions are reported. The proposal was amended October 18, 2017, to extend the proposed implementation date from December 31, 2017, to March 31, 2018, and to extend the public comment period for the proposal for an additional 30 days (82 FR 49608). The comment period for the proposal expired on November 23, 2017. The Board received seven comments on the proposal. One commenter expressed general support of the proposal. Six comments focused on the Board's proposal to include in Schedule D, item 1 the notional amount of over-the-counter (OTC) derivative transactions where a clearing member bank guarantees the performance of a client to a central counterparty (CCP). The comments are discussed below. The comments did not address the other proposed changes in detail and either supported or did not object to the other proposed changes. Detailed Discussion of Public Comments Comments Related to the Complexity Indicator Commenters noted that derivatives are cleared using two models: The principal model, where the banking organization facilitates the clearing of derivatives by taking opposing positions with the client and the CCP; and the agency model, where a clearing member banking organization, acting as an agent, guarantees the performance of the client to a CCP. The current reporting instructions for derivative contracts cleared through a CCP in Schedule D, item 1 state that, when the reporting banking organization acts as a financial intermediary under the principal model, the notional amounts for each contract--that is, the transaction with the client and the transaction with the CCP-- should be reported. In cases where a clearing member banking organization acts as an agent, the current instructions state that the bank should report the notional amount when the bank guarantees the performance of a CCP to a client. As clearing member banking organizations rarely guarantee the performance of a CCP to a client, the amount of derivatives reported under the agency model is low. The proposal would have revised the instructions to require reporting of derivative transactions where a clearing member bank guarantees the performance of a client to a CCP under the agency model, thereby increasing parity between the two clearing models. One commenter observed that shifts in global clearing activity since 2012 have led to widespread adoption of the agency model of clearing in lieu of the principal model, obviating the need to mitigate the differences in reporting between the models. Commenters also argued that the risk associated with client-cleared transactions would have been overstated under the proposal and that the risks associated with these transactions are already appropriately captured in total exposure (Schedule A, item 1(h)), intra-financial system assets (Schedule B, items 5(a) and 5(b)), and intra-financial system liabilities (Schedule B, items 11(a) and 11(b)). These commenters stated that banking organizations engaged in client clearing businesses focus only on the credit risk of their clients and the imposition of applicable credit limits. Commenters argued that this significantly reduces the complexity of the activity and, therefore, the client leg of these transactions should not be included in the complexity indicator. After considering the comments, the Board has decided not to adopt the proposed reporting of derivative transactions where a clearing member bank guarantees the performance of a client to a CCP in Schedule D, item 1. Although derivatives are often complex, the Board does not believe it is appropriate at this time to treat the client leg of a cleared transaction in the agency model as more complex than a simple credit exposure, and therefore does not believe it is currently necessary to include these exposures in the complexity indicator. Further, part of the motivation for including the client leg of the agency model was to make sure that, for a regulatory framework that encompasses multiple models of clearing, no one model receives significantly more or less representation with respect to the GSIB indicators. The proposal was intended in part to ensure that the agency model would be adequately included in the GSIB indicators compared to the principal model. However, the expansion in the availability and overall use of the agency model somewhat mitigates concerns about the relative treatment of client-cleared transactions between respondents, and the Board is thus not currently concerned that excluding the client leg from the GSIB indicators will result in a significant disparity among reporters. Because the two clearing models remain, however, the Board may need to address inequitable treatment of client-cleared transactions in the future if the principal model again becomes more common. Comments Related to the Interconnectedness Indicators Consistent with the proposed change to Schedule D, item 1 discussed above, the Board also proposed to revise the instructions to Schedule B, items 5(a) and 11(a) for reporting derivative contracts cleared under the agency model. The current instructions state that the bank should report the net positive or net negative fair value when the bank guarantees the performance of a CCP to a client. As noted, this rarely occurs, resulting in almost no reporting of derivatives under the agency model in these two items on Schedule B. Several commenters stated that requiring cleared derivative transactions to be reported where the bank guarantees the performance of a financial institution client could discourage derivative clearing activities, contrary to public policy goals, because client clearing of derivatives may reduce systemic risk. Additionally, these [[Page 31146]] commenters argued that the proposed changes could result in the GSIB surcharge of several firms increasing, which, in turn, could lead these firms to increase clearing costs for derivative end-users. After considering the comments, the Board is not adopting its proposal with respect to reporting derivatives under the agency model on Schedule B in order to allow additional time to consider how to cover such activity in the context of interconnectedness. The Board will continue to consider whether agency clearing should be incorporated into the interconnectedness measures or elsewhere. Other Comments Received No comments were received regarding the inclusion of Mexican pesos in total payments activity or the addition of securities brokers to the definition of financial institution. Accordingly, the Board is adopting revisions to the FR Y-15 reporting form and instructions to include Mexican pesos in total payments activity on Schedule C and remove it from the Memorandum items, and to add securities brokers to the definition of financial institutions in the instructions for Schedule B. These changes are effective for the June 30, 2018, reporting date. Several commenters stated that the proposed changes to the reporting of OTC derivatives in Schedule D would make the FR Y-15 inconsistent with the Basel Committee GSIB assessment reporting instructions.\7\ In addition, certain commenters stated that the proposed revisions to Schedule B, items 5(a) and 11(a), and Schedule D, item 1, were inconsistent with the Administrative Procedure Act (APA). The Board is not adopting these proposed changes, making these arguments moot.\8\ --------------------------------------------------------------------------- \7\ The international GSIB assessment reporting instructions for year-end 2017 are available at www.bis.org/bcbs/gsib/reporting_instructions.htm. \8\ Even if the argument regarding the APA were not moot, the Board would not have violated the APA if it decided to implement the proposed revisions to Schedule B, items 5(a) and 11(a), and Schedule D, item 1. The proposed revisions to the FR Y-15 constitute an interpretive rule or general statement of policy, and therefore may be adopted without the publication of a general notice of proposed rulemaking in the Federal Register. Even if such publication were necessary to adopt the proposed revisions, this requirement was satisfied because the proposal was published for comment in the Federal Register for a 60-day comment period. After receiving initial feedback on the proposal, the comment period was extended for 30 days to solicit additional feedback. Moreover, redlined forms, instructions, and an OMB supporting statement were made available on the Board's public website. The materials afforded commenters the opportunity to provide specific feedback regarding the exact changes being proposed. Indeed, commenters provided significant feedback based on the proposal. --------------------------------------------------------------------------- One commenter noted that the definition of ``financial institution'' in the FR Y-15 is different from other regulatory reports and recommended aligning the varying definitions. In response, the Board acknowledges that its regulations and reporting sometimes use differing definitions for similar concepts and that this may require firms to track differences among the definitions. Firms should review the definition of ``financial institution'' in the instructions of the form on which they are reporting and should not look to similar definitions in other forms as dispositive for appropriate reporting on the FR Y-15. A commenter also asked for clarification about whether securities financing transactions follow the regulatory capital rule definition of repo-style transactions. As described in the General Instructions of Schedule A, several items involve securities financing transactions (i.e., repo-style transactions), which are transactions such as repurchase agreements, reverse repurchase agreements, and securities lending and borrowing, where the value of the transactions depends on the market valuations and the transactions are often subject to margin agreements. For purposes of reporting on the FR Y-15, the intent is that securities financing transactions are synonymous with repo-style transactions under the regulatory capital rule. In a future update of the FR Y-15, the Board will work to replace the term ``securities financing transactions'' with ``repo-style transactions'' to better align the FR Y-15 language with the regulatory capital rule. In addition, a commenter asked for clarification regarding potential inconsistencies between similar items that are reported on different reporting forms. In particular, the commenter noted that the instructions for the FR Y-15, FFIEC 101 (Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework), and FR Y-14Q (Capital Assessments and Stress Testing) do not consistently allow for a reduction in fair value of sold credit protection. The Board will conduct a coordinated effort with the other banking agencies on changes to the FFIEC 101 and the FR Y-14 to ensure that the instructions appropriately clarify how any adjustments for sold credit protection should be reported.\9\ --------------------------------------------------------------------------- \9\ Any changes to these reporting forms would have to be proposed in a future Federal Register notice with a 60-day comment period, as required by the Paperwork Reduction Act (PRA). --------------------------------------------------------------------------- Further, a commenter asked for clarification regarding the reporting of holdings of equity investments in unconsolidated investment funds sponsored or administered by the respondent. Specifically, the commenter wanted to know whether such investments would be reported as equity securities in Schedule B, item 3(e). Per the general instructions for Schedule B, item 3, firms must include ``securities issued by equity-accounted associates (i.e., associated companies and affiliates accounted for under the equity method of accounting) and special purpose entities (SPEs) that are not part of the consolidated entity for regulatory purposes.'' Therefore, such equity investments would be included in item 3(e). A commenter also requested clarification on how collateral may reduce the exposure reported in the FR Y-15, Schedule B, items 5(a) and 11(a). For item 5(a), in cases where a qualifying master netting agreement is in place, a reporting bank may reduce its value of derivative assets by subtracting the net collateral position from the underlying obligation. In circumstances where the net collateral exceeds the payment obligation, the bank should report a fair value of zero for the netting set. Similarly, for item 11(a), in cases where a qualifying master netting agreement is in place, a reporting bank may reduce its value of derivative liabilities exposure by subtracting the net collateral position from the underlying obligation. In circumstances where the net collateral exceeds the payment obligation owed to the counterparty, the bank should report a fair value of zero for the netting set. Board of Governors of the Federal Reserve System, June 28, 2018. Michele Taylor Fennell, Assistant Secretary of the Board. [FR Doc. 2018-14304 Filed 7-2-18; 8:45 am] BILLING CODE 6210-01-P
![31144 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices
Complainant specifically alleges that FOR FURTHER INFORMATION CONTACT: General description of report: The FR
Respondents’ actions violated the Federal Reserve Board Clearance Y–15 quarterly report collects systemic
Shipping Act as they: Officer—Nuha Elmaghrabi—Office of risk data from U.S. bank holding
a. ‘‘. . . failed to establish, observe the Chief Data Officer, Board of companies (BHCs), covered savings and
and enforce just and reasonable Governors of the Federal Reserve loan holding companies (SLHCs),1 and
regulations and practices related to or System, Washington, DC 20551, (202) U.S. intermediate holding companies
connected with receiving, handling, 452–3829. Telecommunications Device (IHCs) with total consolidated assets of
storing and delivering [Complainant’s] for the Deaf (TDD) users may contact $50 billion or more, and any BHC
consigned cargo, in violation of 46 (202) 263–4869, Board of Governors of identified as a global systemically
U.S.C. 41102(c)’’; the Federal Reserve System, important banking organization (GSIB)
b. ‘‘. . . imposed and attempted to Washington, DC 20551. based on its method 1 score calculated
collect improper fees and charges not OMB Desk Officer—Shagufta as of December 31 of the previous
contained in a service agreement Ahmed—Office of Information and calendar year.2 The Board uses the FR
between the parties or published tariff, Regulatory Affairs, Office of Y–15 data to monitor, on an ongoing
in violation of 46 U.S.C. 41104(2)’’; Management and Budget, New basis, the systemic risk profile of
c. ‘‘. . . retaliated against Executive Office Building, Room 10235, institutions that are subject to enhanced
[Complainant] by resorting to unfair and 725 17th Street NW, Washington, DC prudential standards under section 165
unjustly discriminatory methods by 20503 or by fax to (202) 395–6974. of the Dodd-Frank Wall Street Reform
withholding release of 87 containers SUPPLEMENTARY INFORMATION: On June and Consumer Protection Act (Dodd-
after Falcone disputed the inaccurate 15, 1984, the Office of Management and Frank Act).3 In addition, the FR Y–15 is
fees and charges on Respondents’ Budget (OMB) delegated to the Board used to (1) facilitate the implementation
invoices, in violation of 46 U.S.C. authority under the Paperwork of the GSIB surcharge rule,4 (2) identify
41104(3)’’; Reduction Act (PRA) to approve and other institutions that may present
d. ‘‘. . . engaged in unfair practices significant systemic risk, and (3) analyze
assign OMB control numbers to
with respect to rates or charges under its the systemic risk implications of
collection of information requests and
tariff by invoicing [Complainant] for proposed mergers and acquisitions.
requirements conducted or sponsored
inaccurate and double-charged fees, in Legal authorization and
by the Board. Board-approved
violation of 46 U.S.C. 41104(4)’’; and confidentiality: The mandatory FR Y–15
e. ‘‘. . . unreasonably refused to deal collections of information are
incorporated into the official OMB is authorized by sections 163 and 165 of
or negotiate in good faith with the Dodd-Frank Act (12 U.S.C. 5463 and
[Complainant] in resolving the disputed inventory of currently approved
collections of information. Copies of the 5365), the International Banking Act (12
invoices, and instead unlawfully U.S.C. 3106 and 3108), the Bank
withheld the 87 containers, in violation Paperwork Reduction Act Submission,
supporting statements and approved Holding Company Act (12 U.S.C. 1844),
of 46 U.S.C. 41104(10).’’ and the Home Owners’ Loan Act (12
Complainant seeks reparations in the collection of information instrument(s)
are placed into OMB’s public docket U.S.C. 1467a).
amount of $798,300 and other relief. Most of the data collected on the FR
The full text of the complaint can be files. The Board may not conduct or
Y–15 is made public unless a specific
found in the Commission’s Electronic sponsor, and the respondent is not
request for confidentiality is submitted
Reading Room at www.fmc.gov/18-04/. required to respond to, an information
by the reporting entity, either on the FR
This proceeding has been assigned to collection that has been extended,
Y–15 or on the form from which the
the Office of Administrative Law Judges. revised, or implemented on or after
data item is obtained.5 Such information
The initial decision of the presiding October 1, 1995, unless it displays a
will be accorded confidential treatment
officer in this proceeding shall be issued currently valid OMB control number.
under Exemption 4 of the Freedom of
by June 27, 2019, and the final decision Final Approval Under OMB Delegated Information Act (FOIA) (5 U.S.C.
of the Commission shall be issued by Authority of the Extension for Three 552(b)(4)) if the submitter substantiates
December 10, 2019. Years, With Revision, of the Following its assertion that disclosure would likely
Rachel E. Dickon, Information Collection cause substantial competitive harm. In
Secretary. Report title: Banking Organization addition, items 1 through 4 of Schedule
[FR Doc. 2018–14220 Filed 7–2–18; 8:45 am] Systemic Risk Report. G of the FR Y–15, which contain
BILLING CODE 6731–AA–P Agency form number: FR Y–15. granular information regarding the
OMB control number: 7100–0352.
1 Covered SLHCs are those which are not
Effective date: June 30, 2018.
substantially engaged in insurance or commercial
FEDERAL RESERVE SYSTEM Frequency: Quarterly. activities. See 12 CFR 217.2.
Respondents: U.S. bank holding 2 See 12 CFR 217.402.
Agency Information Collection companies (BHCs), covered savings and 3 12 U.S.C. 5365.
Activities: Announcement of Board loan holding companies (SLHCs), and 4 A firm that is identified as a GSIB is required
Approval Under Delegated Authority U.S. intermediate holding companies to hold additional capital to increase its resiliency
(IHCs) of foreign banking organizations in light of the greater threat it poses to the financial
and Submission to OMB stability of the United States. The Board’s rule on
with $50 billion or more of total the GSIB surcharge establishes the criteria for
AGENCY: Board of Governors of the consolidated assets, and any BHC identifying a GSIB and the methods that those firms
Federal Reserve System. designated as a global systemically use to calculate a risk-based capital surcharge,
which is calibrated to each firm’s overall systemic
sradovich on DSK3GMQ082PROD with NOTICES
SUMMARY: The Board of Governors of the important bank holding company (GSIB) risk. See 81 FR 90952 (December 16, 2016).
Federal Reserve System (Board) is that does not otherwise meet the 5 A number of the items in the FR Y–15 are
adopting a proposal to extend for three consolidated assets threshold for BHCs. retrieved from the FR Y–9C, and certain items may
years, with revision, the mandatory Estimated number of respondents: 41. be retrieved from the FFIEC 101 and FFIEC 009.
Banking Organization Systemic Risk Estimated average hours per response: Confidential treatment will also extend to any
automatically-calculated items on the FR Y–15 that
Report (FR Y–15; OMB No. 7100–0352). 401 hours. have been derived from confidential data items and
The revisions are effective as of the June Estimated annual burden hours: that, if released, would reveal the underlying
30, 2018, report date. 65,764 hours. confidential data.
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![31146 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices
commenters argued that the proposed One commenter noted that the Further, a commenter asked for
changes could result in the GSIB definition of ‘‘financial institution’’ in clarification regarding the reporting of
surcharge of several firms increasing, the FR Y–15 is different from other holdings of equity investments in
which, in turn, could lead these firms to regulatory reports and recommended unconsolidated investment funds
increase clearing costs for derivative aligning the varying definitions. In sponsored or administered by the
end-users. response, the Board acknowledges that respondent. Specifically, the commenter
After considering the comments, the its regulations and reporting sometimes wanted to know whether such
Board is not adopting its proposal with use differing definitions for similar investments would be reported as equity
respect to reporting derivatives under concepts and that this may require firms securities in Schedule B, item 3(e). Per
the agency model on Schedule B in to track differences among the the general instructions for Schedule B,
order to allow additional time to definitions. Firms should review the item 3, firms must include ‘‘securities
consider how to cover such activity in definition of ‘‘financial institution’’ in issued by equity-accounted associates
the context of interconnectedness. The the instructions of the form on which (i.e., associated companies and affiliates
Board will continue to consider whether they are reporting and should not look accounted for under the equity method
agency clearing should be incorporated to similar definitions in other forms as of accounting) and special purpose
into the interconnectedness measures or dispositive for appropriate reporting on entities (SPEs) that are not part of the
elsewhere. the FR Y–15. consolidated entity for regulatory
A commenter also asked for purposes.’’ Therefore, such equity
Other Comments Received
clarification about whether securities investments would be included in item
No comments were received regarding financing transactions follow the 3(e).
the inclusion of Mexican pesos in total regulatory capital rule definition of A commenter also requested
payments activity or the addition of repo-style transactions. As described in clarification on how collateral may
securities brokers to the definition of the General Instructions of Schedule A, reduce the exposure reported in the FR
financial institution. Accordingly, the several items involve securities Y–15, Schedule B, items 5(a) and 11(a).
Board is adopting revisions to the FR Y– financing transactions (i.e., repo-style For item 5(a), in cases where a
15 reporting form and instructions to transactions), which are transactions qualifying master netting agreement is
include Mexican pesos in total such as repurchase agreements, reverse in place, a reporting bank may reduce
payments activity on Schedule C and repurchase agreements, and securities its value of derivative assets by
remove it from the Memorandum items, lending and borrowing, where the value subtracting the net collateral position
and to add securities brokers to the of the transactions depends on the from the underlying obligation. In
definition of financial institutions in the market valuations and the transactions circumstances where the net collateral
instructions for Schedule B. These are often subject to margin agreements. exceeds the payment obligation, the
changes are effective for the June 30, For purposes of reporting on the FR Y– bank should report a fair value of zero
2018, reporting date. 15, the intent is that securities financing for the netting set. Similarly, for item
Several commenters stated that the transactions are synonymous with repo- 11(a), in cases where a qualifying master
proposed changes to the reporting of style transactions under the regulatory netting agreement is in place, a
OTC derivatives in Schedule D would capital rule. In a future update of the FR reporting bank may reduce its value of
make the FR Y–15 inconsistent with the Y–15, the Board will work to replace the derivative liabilities exposure by
Basel Committee GSIB assessment term ‘‘securities financing transactions’’ subtracting the net collateral position
reporting instructions.7 In addition, with ‘‘repo-style transactions’’ to better from the underlying obligation. In
certain commenters stated that the align the FR Y–15 language with the circumstances where the net collateral
proposed revisions to Schedule B, items regulatory capital rule. exceeds the payment obligation owed to
5(a) and 11(a), and Schedule D, item 1, In addition, a commenter asked for the counterparty, the bank should report
were inconsistent with the clarification regarding potential a fair value of zero for the netting set.
Administrative Procedure Act (APA). inconsistencies between similar items
The Board is not adopting these Board of Governors of the Federal Reserve
that are reported on different reporting System, June 28, 2018.
proposed changes, making these forms. In particular, the commenter
arguments moot.8 Michele Taylor Fennell,
noted that the instructions for the FR Y–
Assistant Secretary of the Board.
15, FFIEC 101 (Regulatory Capital
7 The international GSIB assessment reporting [FR Doc. 2018–14304 Filed 7–2–18; 8:45 am]
Reporting for Institutions Subject to the
instructions for year-end 2017 are available at BILLING CODE 6210–01–P
www.bis.org/bcbs/gsib/reporting_instructions.htm. Advanced Capital Adequacy
8 Even if the argument regarding the APA were Framework), and FR Y–14Q (Capital
not moot, the Board would not have violated the Assessments and Stress Testing) do not
APA if it decided to implement the proposed FEDERAL RESERVE SYSTEM
consistently allow for a reduction in fair
revisions to Schedule B, items 5(a) and 11(a), and
Schedule D, item 1. The proposed revisions to the
value of sold credit protection. The Proposed Agency Information
FR Y–15 constitute an interpretive rule or general Board will conduct a coordinated effort Collection Activities; Comment
statement of policy, and therefore may be adopted with the other banking agencies on Request
without the publication of a general notice of changes to the FFIEC 101 and the FR Y–
proposed rulemaking in the Federal Register. Even
if such publication were necessary to adopt the
14 to ensure that the instructions AGENCY: Board of Governors of the
proposed revisions, this requirement was satisfied appropriately clarify how any Federal Reserve System.
because the proposal was published for comment in adjustments for sold credit protection
sradovich on DSK3GMQ082PROD with NOTICES
ACTION: Notice, request for comment.
the Federal Register for a 60-day comment period. should be reported.9
After receiving initial feedback on the proposal, the
comment period was extended for 30 days to solicit SUMMARY: The Board of Governors of the
additional feedback. Moreover, redlined forms, provided significant feedback based on the Federal Reserve System (Board) invites
instructions, and an OMB supporting statement proposal. comment on a proposal to extend for
were made available on the Board’s public website. 9 Any changes to these reporting forms would
The materials afforded commenters the opportunity have to be proposed in a future Federal Register
three years, without revision, the
to provide specific feedback regarding the exact notice with a 60-day comment period, as required Interagency Guidance on Managing
changes being proposed. Indeed, commenters by the Paperwork Reduction Act (PRA). Compliance and Reputation Risks for
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Document Created: 2018-07-02 23:56:24
Document Modified: 2018-07-02 23:56:24
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | On August 24, 2017, the Board published a notice in the Federal Register (82 FR 40154) requesting public comment for 60 days on the extension, with revision, of the FR Y-15. The Board proposed to amend the FR Y-15 to include Mexican pesos in total payments activity rather than as a memorandum item; add securities brokers to the definition of financial institutions; expressly include derivative transactions where a clearing member bank guarantees performance of a client to a central counterparty; and specify how certain cleared derivatives transactions are reported. The proposal was amended October 18, 2017, to extend the proposed implementation date from December 31, 2017, to March 31, 2018, and to extend the public comment period for the proposal for an additional 30 days (82 FR 49608). The comment period for the proposal expired on November 23, 2017. | |
| Dates | June 30, 2018. | |
| Contact | Federal Reserve Board Clearance Officer--Nuha Elmaghrabi--Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, Washington, DC 20551, (202) 452-3829. Telecommunications Device for the Deaf (TDD) users may contact (202) 263-4869, Board of Governors of the Federal Reserve System, Washington, DC 20551. | |
| FR Citation | 83 FR 31144 |
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