1505-0146 Part B (9-09)

Section B - Collections of Information Employing Statistical Methods

1. Describe (including a numerical estimate) the potential reporting universe and any sampling or other respondent selection methods to be used.

This survey measures U.S. ownership of foreign securities for portfolio investment purposes. In the years when a benchmark survey is conducted (form SHC), these data are provided by three different classes of reporters.

(a) U.S.-resident custodians who provide safekeeping services for their own firm as well as for others. These organizations will provide the vast majority of the data collected on the survey, using Schedule 2.

(b) U.S.-resident end-investors who either keep foreign securities in custody at their own site or who arrange for safekeeping abroad. In either case, no U.S.-resident custodian is employed to safekeep these foreign securities. These organizations will provide their data using Schedule 2.

(c) U.S.-resident custodians and end-investors who arrange for safekeeping of foreign securities at U.S.-resident custodians. These organizations will provide their data using Schedule 3.

In the intervening years when annual surveys are conducted (Form SHCA), these data are provided by the same three classes of respondents.

The potential reporting universe would consist of every U.S. resident individual and institution, since any individual or institution can purchase foreign securities. As a practical matter, such holdings tend to be highly concentrated, with most holdings entrusted to large U.S. custodians who report on Schedule 2. U.S.-resident end-investors entrusting their holdings of foreign securities directly to foreign custodians tend to be large insurance companies, pension funds, and mutual funds. The full benchmark surveys collect data from approximately 1200 custodians and end-investors, which we believe includes all institutions believed likely to be significant sources of information on U.S. ownership of foreign securities. These firms will be identified based on past survey filings, industry surveys, the financial press, other TIC system reports, regulatory reports, information from the SEC, and data from commercial vendors.

The response rate will be 100 percent, as responses are required by law. The response rate on the previous survey was 100 percent.

Regarding the annual survey (SHCA), the December 2007 survey collected data from the largest U.S.-resident custodians and end-investors, based on the data reported in the 2006 Benchmark survey. These respondents accounted for over 99 percent of the reported 2006 Benchmark data and will continue to report annually through the December 2010 survey. The remaining 1 percent was accounted for in the December 2007 data by adding the securities reported in the 2006 Benchmark survey by the respondents who were not part of the annual panel to the securities reported annually. The data added were adjusted to maintain the years to maturity that were originally reported for debt instruments.

2. Describe the procedures for the collection of information including: (a) Statistical methodology for stratification and sample selection, (b) Estimation procedure, (c) Degree of accuracy needed for the purpose described in the justification, (e) Unusual problems requiring specialized sampling procedures, and (g) Any use of periodic (less frequent than annual) data collection cycles to reduce burden.

(a) Regarding the annual survey (SHCA), the December 2007 survey collected data from the largest U.S.-resident custodians and endinvestors, based on the data reported in the 2006 Benchmark survey. These respondents accounted for over 99 percent of the reported 2006 Benchmark data and will continue to report annually through the December 2010 survey. The remaining 1 percent was accounted for in the December 2007 data by adding the securities reported in the 2006 Benchmark survey by the respondents who were not part of the annual panel to the securities reported annually. The data added were adjusted to maintain the years to maturity that were originally reported for debt instruments.

(b) For the survey as of end-December 2007, the data added for respondents who reported in 2006 but not in 2007 were adjusted to maintain the years to maturity that were originally reported for debt instruments. To adjust the years to maturity in the SHCA for year X, we include in SHCA(X) the amounts reported in SHC(2006) by the missing respondents, except that the maturity date, YM, is changed to be equal to the maturity date reported in SHC(2006) plus (X-2006). For the future, we are also reviewing a method to adjust the amounts in order to take into consideration changes in market conditions

(c) There is no pre-determined or externally set level of accuracy needed from this survey. What is sought is the best accuracy possible without undue reporter burden or government cost. We believe that a reasonably high degree of accuracy will be achieved by using the above technique.

The results of the full benchmark surveys will be used to check on the accuracy of the annual surveys and to meet the requirements of the International Investment and Trade in Services Act.

3. Describe methods to maximize response rates and to deal with issues of non-response.

This survey is required by law and failure to report is punishable by fine and/or imprisonment. Non-reporters are reminded of their reporting responsibility and required to report. If necessary, a letter is sent from the Treasury Department’s Office of the General Counsel to the chief legal officer of the institution in question reminding the institution of its reporting responsibility and the applicable penalties for non-compliance. In one case, a letter was sent to an institution stating that the failure to provide necessary information within a stated time period would result in the Treasury Department recommending to the Justice Department that legal proceedings be instituted. However, in the 31 year history of these surveys this is the only instance where such measures were required, and this case occurred about 20 years ago.

4. Describe any tests of procedures or methods to be undertaken.

The procedures in use will be similar to those used on past surveys that have proven to be quite successful. This will be the seventh survey of U.S. holdings of foreign securities conducted since 1994, in addition to ten previous surveys of foreign holdings of U.S. securities since 1974. On past surveys we have also sampled reporters who would have been excluded using typical screening techniques and found that very little additional data was obtained, confirming the adopted approach.

4. Provide the name and telephone number of individuals consulted on statistical aspects of the design and the name of the agency unit, contractor(s), grantee(s) or other person(s) who will actually collect and/or analyze the information for the agency.

The statistical methods to be employed were reviewed by representatives of the Department of the Treasury, the Department of Commerce (Bureau of Economic Analysis), the Board of Governors of the Federal Reserve System, and the Federal Reserve Bank of New York.

Kenneth Aberbach 212-720-8234 Federal Reserve Bank of New York

Carol Bertaut 202-452-3476 Board of Governors of Federal Reserve System

Christopher Gohrband 202-606-9564 Department of Commerce

Dwight Wolkow 202-622-1276 Department of the Treasury

The actual data collection will be conducted by the Statistics Function of the Federal Reserve Bank of New York, in conjunction with the Federal Reserve Board of Governors, International Finance Division.