2022-25495. 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, without revision, the Notice by Financial Institutions of Government Securities Broker or Government Securities Dealer Activities and Notice by Financial Institutions of Termination of Activities as a Government Securities Broker or Government Securities Dealer (Form G-FIN and Form G-FINW; OMB No. 7100-0224).

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, [e-mail], [phone].

Office of Management and Budget (OMB) Desk Officer for the Federal Reserve Board, 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 [phone].

SUPPLEMENTARY INFORMATION:

On June 15, 1984, OMB delegated to the Board authority under the Paperwork Reduction Act (PRA) to approve and assign OMB control numbers to collections of information conducted or sponsored by the Board. Board-approved collections of information are incorporated into the official OMB inventory of currently approved collections of information. The OMB inventory, as well as copies of the PRA Submission, supporting statements, and approved collection of information instrument(s) are available at https://www.reginfo.gov/​public/​do/​PRAMain. These documents are also available on the Federal Reserve Board's public website at https://www.federalreserve.gov/​apps/​reportforms/​review.aspx or may be requested from the agency clearance officer, whose name appears above.

Final Approval Under OMB Delegated Authority of the Extension for Three Years, Without Revision, of the Following Information Collections

Collection title: Notice by Financial Institutions of Government Securities Broker or Government Securities Dealer Activities and Notice by Financial Institutions of Termination of Activities as a Government Securities Broker or Government Securities Dealer.

Collection identifiers: Form G-FIN and Form G-FINW.

OMB control number: 7100-0224.

Frequency: Event-generated.

Respondents: State member banks, foreign banks, uninsured state branches or state agencies of foreign banks, commercial lending companies owned or controlled by foreign banks, and Edge Act corporations (collectively, Board-regulated financial institutions) that are required to register as government security brokers or government security dealers and those entities that have terminated such activities.

Estimated number of respondents:

Reporting

Form G-FIN: 39; Form G-FINW: 1

Recordkeeping

Form G-FIN: 39; Form G-FINW: 1

Estimated average hours per response:

Reporting

Form G-FIN: 1; Form G-FINW: 0.25

Recordkeeping

Form G-FIN: 0.25; Form G-FINW: 0.25

Estimated annual burden hours:

Reporting

Form G-FIN: 39; Form G-FINW: 10

Recordkeeping

Form G-FIN: 0; Form G-FINW: 0 ^[1]

General description of collection: The Securities Exchange Act of 1934, as amended (the Act), requires financial institutions to notify their appropriate regulatory agency (ARA) prior to using the mails or any means or instrumentality of interstate commerce to engage in government securities broker or dealer activities, and to notify their ARA upon terminating such activities. The Board is the ARA for Board-regulated financial institutions. A Board-regulated financial institution must use Form G-FIN to register as a government securities broker or dealer or to amend a previously submitted Form G-FIN and must use Form G-FINW to notify the Board of its termination of such activities.

Legal authorization and confidentiality: Form G-FIN and Form G-FINW are authorized under section 15C of the Act,^[2] which requires a financial institution that is a broker or dealer of government securities to submit a written notice advising its ARA that it is a government securities broker or a government securities dealer or that it has ceased to act as such. The Act also directs the Board, in consultation with the other ARAs (the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC)),^[3] as well as with the Securities and Exchange Commission (SEC), to prescribe the form of and the information collected in these notices.^[4] Further support for the creation and collection of these notices by the Board is found in Department of Treasury (Treasury) regulations, authorized by section 15 of the Act, which state that the Form G-FIN and Form G-FINW are promulgated by the Board and that such forms are to be used by non-exempt ^[5] financial institutions to notify their ARA of their status as government securities brokers or dealers or the termination of such status.^[6]

Section 15C of the Act also instructs the Secretary of the Treasury to promulgate recordkeeping requirements regarding the forms and records to be retained by government securities brokers and dealers and to specify the time period for which such records shall be preserved. Accordingly, the recordkeeping requirement associated with these forms is contained in 17 CFR 404.4, which requires state member banks and uninsured state branches or state agencies of foreign banks, as well as other institutions, to retain these forms for three years after the financial institution notifies its ARA that it has ceased to function as a government securities broker or dealer. Although Treasury's recordkeeping requirement does not explicitly apply to foreign banks, to Edge corporations, or to commercial lending companies that are owned or controlled by foreign banks, the Board has the authority to “issue such rules and regulations with respect to transactions in government securities as may be necessary to prevent fraudulent and manipulative acts and practices and to promote just and equitable principles of trade.” ^[7] Imposing a recordkeeping requirement on foreign banks, Edge corporations, and commercial lending companies owned or controlled by foreign banks is necessary for the public interest and protection of investors in order to ensure that the proper notification has been provided when these institutions are transacting in government securities. In addition, the Board is authorized to impose recordkeeping requirements on foreign banks,^[8] Edge corporations,^[9] and on commercial lending companies that are owned or controlled by foreign banks.^[10] The obligation to file the Form G-FIN and Form G-FINW with the Board, and the obligation for the government securities broker or dealer to retain a copy of the Form G-FIN and Form G-FINW, is mandatory for those financial institutions for which the Board serves as the ARA, unless the financial institution is exempt from the reporting requirement under Treasury's regulations. The filing of these forms and the records retention period is event-generated.

Under the Act, each ARA is instructed to make these forms available to the SEC, and the SEC is instructed to make the notices available to the public.^[11] Thus, the information collected on Form G-FIN and Form G-FINW is ordinarily not treated as confidential.^[12] However, given that Item 6 of Form G-FIN instructs the filer to attach copies of the confidential Form G-FIN-4, or if applicable, to attach copies of any previously filed confidential Form MSD-4 or confidential Form U-4, such attachments may be treated as confidential by the Board under exemptions 4 and/or 6 of the Freedom of Information Act.^[13]

Current actions: On July 6, 2022, the Board published a notice in the Federal Register (87 FR 40239) requesting public comment for 60 days on the extension, without revision, of the Form G-FIN and Form G-FINW. The comment period for this notice expired on September 6, 2022. The Board did not receive any comments.

Board of Governors of the Federal Reserve System, November 17, 2022.

Michele Taylor Fennell,

Deputy Associate Secretary of the Board.

Footnotes

1.  Due to the mechanics of the RISC/OIRA Consolidated Information System (ROCIS), fractional amounts below 0.5 are rounded to 0.

2.  15 U.S.C. 78o-5(a)(l)(B).

3.  These forms are also collected by the FDIC and the OCC, respectively, for government securities brokers and dealers under their supervision. A copy of the form filed with each ARA is also made available by the ARA to the SEC under the Act. 15 U.S.C. 78o-5(a)(1)(B)(iii).

4.  15 U.S.C. 78o-5(a)(l)(B)(ii).

5.  The Act permits the Secretary of the Treasury to exempt certain government securities brokers or dealers, 15 U.S.C. 78o-5(a)(5), and the Secretary of the Treasury has promulgated regulations exempting certain types of firms. See 17 CFR part 401.

6.  See 17 CFR 400.1(d), 449.1, and 449.2; see also 17 CFR 400.5(b) (requiring that any amendments or corrections to the notice of status of government securities broker or dealer be filed by the financial institution on Form G-FIN within 30 days).

7.  15 U.S.C. 78o-5(b)(3)(A). See 15 U.S.C. 78o-5(a)(1)(B).

8.  12 U.S.C. 3107 and 3108.

9.  12 U.S.C. 625.

10.  12 U.S.C. 3106, as applied through 12 U.S.C. 1844(c).

11.  15 U.S.C. 78o-5(a)(l)(B)(iii).

12.  The Board's Regulation H provides that any person filing any statement, report, or document under the Act may submit written objection to the public disclosure of the information when such information is filed in accordance with the procedures provided in 12 CFR 208.36(d). In addition, if a respondent believes that information disclosed on these forms constitutes nonpublic commercial or financial information, which is both customarily and actually treated as private by the respondent, the respondent may request confidential treatment pursuant to exemption 4 of the Freedom of Information Act (FOIA) pursuant to the Board's Rules Regarding the Availability of Information, 12 CFR 261.15.

13.  Generally, information provided on Form MSD-4 and Form MSD-5 will be kept confidential from the public under exemption 6 of the FOIA, which protects information in “personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” 5 U.S.C. 552(b)(6). In addition, other information on Form MSD-4 and Form MSD-5, such as the name of the municipal securities dealer that filed the form, may be withheld under exemption 4 of the FOIA, if it constitutes nonpublic commercial or financial information, which is both customarily and actually treated as private by the respondent ( e.g., if a municipal securities dealer recently hired or terminated a number of municipal securities employees, disclosing these forms could reveal competitively sensitive commercial information about that dealer). 5 U.S.C. 552(b)(4). We note that FINRA's Form U-4 collects the social security number and other personally identifiable information about an individual, which may be withheld under the Privacy Act, 5 U.S.C. 552b. In addition, Treasury's Form G-FIN-4 states “[t]he Department of the Treasury and the appropriate regulatory agencies regard the information provided by each respondent on this form as confidential.”