2010-6949. Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB

SUMMARY:

Background. Notice is hereby given of the final approval of proposed information collections by the Board of Governors of the Federal Reserve System (Board) under OMB delegated authority, as per 5 CFR 1320.16 (OMB Regulations on Controlling Paperwork Burdens on the Public). 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 instruments are placed into OMB's public docket files. The Federal Reserve 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.

FOR FURTHER INFORMATION CONTACT:

Federal Reserve Board Clearance Officer —Michelle Shore, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, DC 20551 (202-452-3829)

OMB Desk Officer—Shagufta Ahmed, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503.

Final approval under OMB delegated authority of the implementation of the following survey:

Report title: Senior Credit Officer Opinion Survey on Dealer Financing Terms.

Agency form number: FR 2034.

OMB control number: 7100- to be assigned.

Frequency: Up to six times a year.

Reporters: U.S. banking institutions and U.S. branches and agencies of foreign banks.

Estimated annual reporting hours: 450 hours.

Estimated average hours per response: 3 hours.

Number of respondents: 25.

General description of report: This information collection will be voluntary (12 U.S.C. 225a, 248(a)(2), 1844(c), and 3105(c)(2)) and will be given confidential treatment (5 U.S.C. 552(b)(4)).

Abstract: This voluntary survey will be conducted with a senior credit officer at each respondent financial institution up to six times a year. The reporting panel consists of up to 25 U.S. banking institutions and U.S. branches and agencies of foreign banks, the majority of which are affiliated with a Primary Government Securities Dealer.^[1] The purpose of the survey is to provide qualitative and limited quantitative information on (1) stringency of credit terms, (2) credit availability and demand across the entire range of securities financing and over-the-counter derivatives transactions, and (3) the evolution of market conditions and conventions applicable to such activities. The FR 2034 survey is significantly modeled after the long-established Senior Loan Officer Opinion Survey (FR 2018; OMB No. 7100-0058), which provides qualitative information on changes in the supply of, and demand for, bank loans to businesses and households. A portion of the questions in each administration of the FR 2034 survey will typically cover special topics of timely interest; however, the survey form also includes 47 core questions.

Although the Federal Reserve seeks the authority to conduct the survey up to six times a year, the survey is expected to be conducted only four times a year consistent with the FR 2018. Consistent with the FR 2018, other types of respondents, such as other depository institutions, bank holding companies, or other financial entities, may be surveyed if appropriate.

The respondents' answers are intended to provide information critical to the Federal Reserve's monitoring of credit markets and capital market activity. As is currently the case with FR 2018, aggregate results from this survey are expected to be made available to the public on the Federal Reserve Board website. Selected aggregate information from the surveys may also be published annually in Federal Reserve Bulletin articles and in the Monetary Policy Report to the Congress.

Current Actions: On December 15, 2009, the Federal Reserve published a notice in the Federal Register (74 FR 66359) requesting public comment for 60 days on implementation of the FR 2034 survey. The comment period for this notice expired on February 16, 2010. The Federal Reserve received one comment letter on this proposal.

Summary of Comments

The comment letter was based on a series of informal discussions in early January 2010 between Federal Reserve staff and several dealer firms which are potential respondents to the new survey. These discussions helped the Federal Reserve to assess the clarity, utility, and burden of the FR 2034 survey, and led to changes to the content of the survey and formulation of particular questions as described below:

Increased focus on the maturity of trades was suggested, as this is an important dimension on which the stringency of credit terms is routinely adjusted, as was the inclusion of questions relating to certain other instruments such as stock loan and total return swaps. Market participants suggested additional attention should be accorded to the volume of disputes with clients and the degree to which clients seek through negotiation to elicit more favorable terms.

Feedback from these discussions also led to the elimination or consolidation of questions regarding the credit terms applicable to other dealers, or to the funding of Treasury securities, as these terms do not vary markedly across the normal credit cycle.

Adoption of a more granular classification of “clients by type” was recommended in order to draw a clearer distinction between hedge funds and other types of institutional investors, such as insurance companies and pension funds. Finally, in several instances alternate language was suggested, including (1) using the term vendor financing to describe a situation where a dealer provides more favorable terms for funding securities in which it has played an underwriting role and (2) eliminating words in one possible response (to a survey question) that might be construed as reflecting adversely on a dealer's own access to funding.

Board of Governors of the Federal Reserve System, March 24, 2010.

Jennifer J. Johnson,

Secretary of the Board.

Footnotes

1.  A list of the current Primary Dealers in Government Securities is available at http://www.newyorkfed.org/​markets/​pridealers_​current.html.