2023-27055. 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 Reports of Foreign Banking Organizations (FR Y–7N, FR Y–7NS, and FR Y–7Q; OMB No. 7100–0125).

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], (202) 452–3884.

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 (202) 395–6974.

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, With Revision, of the Following Information Collection

Collection title: Reports of Foreign Banking Organizations.

Collection identifier: FR Y–7N, FR Y–7NS, and FR Y–7Q.

OMB control number: 7100–0125.

Effective Date: December 31, 2023, as-of date for FR Y–7Q respondents that are also required to file the FR Y–15 report; December 31, 2024, for all other FR Y–7Q respondents.

General description of collection: The FR Y–7N and FR Y–7NS collect financial information for certain non-functionally regulated U.S. nonbank subsidiaries held by foreign banking organizations (FBOs) other than through a U.S. bank holding company (BHC), financial holding company (FHC), or U.S. bank. For purposes of these reports, an FBO is a foreign bank that operates a branch, agency, or commercial lending company subsidiary in the United States; controls a bank in the United States; or controls an Edge corporation acquired after March 5, 1987.^[1] FBOs file the FR Y–7N quarterly or annually or the FR Y–7NS annually predominantly based on asset size thresholds. The FR Y–7Q collects consolidated regulatory capital information from all FBOs either quarterly or annually.

The Federal Reserve uses the data collected on the FR Y–7N, FR Y–7NS, and FR Y–7Q to assess an FBO's ability to be a continuing source of strength to its U.S. operations and to determine compliance with applicable U.S. laws and regulations.

Frequency: Quarterly, annually.

Respondents: FR Y–7N/NS: Non-functionally regulated U.S. nonbank subsidiaries held by FBOs other than through a BHC, FHC, or U.S. bank; FR Y–7Q: All FBOs.

Total estimated number of respondents: 210.

Total estimated change in burden: 510.

Total estimated annual burden hours: 2,610.^[2]

Current actions: On May 27, 2022, the Board published a notice in the Federal Register (87 FR 32614) requesting public comment for 60 days on the extension, with revision, of the FR Y–7N, FR Y–7NS, and FR Y–7Q. The Board proposed to revise the FR Y–7Q report to: (1) add a line item on Part 1A., Capital and Asset Information for the Top-tier Foreign Banking Organization, to collect the total combined U.S. assets net of intercompany balances and transactions on a quarterly average basis; (2) remove the option of filing on a fiscal year basis and to instead require the respondent to file on a calendar period basis; (3) change the filing deadline from 90 days after quarter-end to 30 days after quarter-end for quarterly filers and from 90 days after quarter-end to 45 days for annual filers; (4) remove line item 8, as-of financial date, in Part 1A and line item 6, as-of financial date, in Part 2, as the elimination of the fiscal year basis reporting makes these items unnecessary; and (5) make other minor clarifications and conforming edits to the form and instructions. The comment period for this notice expired on July 26, 2022.

Detailed Discussion of Public Comments

The Board received a joint comment from two trade associations and a comment from an individual banking organization, as well as additional feedback through industry outreach. The commenters did not support the proposed revisions.

Commenters expressed concern that the proposed line item for top-tier FBOs to report total combined U.S. assets net of intercompany balances and transactions on a quarterly average using daily data would impose significant operational costs on FBOs that do not currently perform the calculation. Specifically, commenters recommended instead to require the line item only for FBOs that file the FR Y–15 and are in Categories II and III (and potentially Category IV) of the enhanced prudential standards applicable to FBOs under Regulation YY. Commenters also recommended a longer implementation period and allowing averaging for the line item to use monthly data when calculating the averages.

In response to the comments received, the Board has decided to implement the new line item 6(b) as an average combined U.S. operations asset calculation using monthly data. The calculation would consist of providing the average of the three month-end balances within the quarter. Annual filers would provide the average of the three month-end balances of the fourth quarter of that filing year. Respondents that currently file the FR Y–15 would have this line item automatically retrieved to the FR Y–7Q from the FR Y–15. The Board believes the modified requirement accommodates required updates to FBO reporting systems.

Commenters also recommended retaining the option for FBOs to file the FR Y–7Q on a fiscal year basis. Commenters stated that FBOs that follow a non-calendar fiscal year base their home country reporting requirements, internal and external financial reporting, and management information systems around the 90-day filing deadline for the FR Y–7Q.

In response to the comments received, the Board will move forward with a modified approach so that only the following three items that capture U.S. assets would be required to be filed on a calendar period basis: Line item 6(a)—Total combined U.S. assets net of intercompany balances and transactions; Line item 6(b)—Total combined U.S. assets net of intercompany balances and transactions, based on a quarterly average; and Line item 7—Total on-branch assets. The remaining line items on the FRY–7Q will continue to be collected with fiscal filing as an option.

The Board has also decided to retain line item 8, as-of financial date, in Part 1A and line item 6, as-of financial date, in Part 2, in order to continue the use of the fiscal filing option, which will only apply to non-U.S. asset line items. FR Y–7Q respondents that are required to file the FR Y–15 would have already submitted total combined U.S. assets net of intercompany balances and transactions, given that the FR Y–15 is due 50 calendar days after March 31, June 30 and September 30, and 65 days after December 31. Individual respondents that believe the information they are required to submit under the FR Y–7Q is nonpublic commercial or financial information, which is both customarily and treated as private by the respondent, may request confidential treatment of such information under exemption 4 of the FOIA.

Finally, commenters expressed concern about shortening the filing deadline for the FR Y–7Q because firms may need more than 30 days to provide capital adequacy information to their home country supervisor before they report it on the FR Y–7Q. Commenters stated that modifying home country reporting frameworks to file the information on an accelerated timetable based on the FR Y–7Q would require significant resources.

In response to the comments received, the Board has modified the proposal to stagger implementation filing deadlines. The modified proposal would be implemented in two phases. Under phase one, effective as of December 31, 2023, all FR Y–7Q filers that file the FR Y–15 would report no later than 70 days after the report date. The remaining filers would have 90 days to file the FR Y–7Q after calendar end. Under phase two, effective as of December 31, 2024, all remaining FR Y–7Q filers would report no later than 70 days after the report date. Moving this implementation date to December 31, 2024, from the originally proposed December 31, 2022, would allow additional time for respondents to implement the necessary system enhancements. Further, fiscal filers with a report date after the calendar quarter-end periods ( e.g. January 31, April 30, July 31 and October 31) inherently have additional time to submit the FR Y–7Q.

Board of Governors of the Federal Reserve System, December 5, 2023.

Michele Taylor Fennell,

Deputy Associate Secretary of the Board.

Footnotes

1. 12 CFR 211.21(o).

2. More detailed information regarding this collection, including more detailed burden estimates, can be found in the OMB Supporting Statement posted at https://www.federalreserve.gov/​apps/​reportingforms/​home/​review. On the page displayed at the link, you can find the OMB Supporting Statement by referencing the collection identifier, FR Y–7N, FR Y–7NS, and FR Y–7Q.