1505-0146--Supporting-Statement-B(11-2012)

Supporting Statement for Paperwork Reduction Act Submission
United States Treasury Department's
Annual Survey of
U.S. Ownership of Foreign Securities
as of the last business day of each December
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 1000 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 last benchmark
survey was conducted as of December 31, 2011.
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 2010 survey collected data from the largest
U.S.-resident custodians and end-investors, based on the data reported in the 2006 Benchmark

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survey. These respondents accounted for over 99 percent of the data reported in the 2006
Benchmark survey. The remaining 1 percent was accounted for in the December 2010 data by
adding the securities reported in the 2006 Benchmark survey by the respondents who were not
part of the 2010 annual survey panel. The data added were adjusted to maintain the years to
maturity that were originally reported for debt instruments. Additional adjustments were also
made on these data to account for yearly changes in valuation, which were based on observed
market conditions.

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 2010 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 data reported in the
2006 Benchmark survey. The remaining 1 percent was accounted for in the December 2010 data
by adding the securities reported in the 2006 Benchmark survey by the respondents who were
not part of the 2010 annual survey panel. 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 2010, the data added for respondents who reported in
2006 but not in 2010 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). Additional adjustments were also made on these data to account for yearly changes in
valuation, which were based on observed 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

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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. The 2012 survey will be the thirteenth survey of U.S. holdings of foreign securities
conducted since 1994, in addition to the seventeen 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.

5. 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.
Vadim Tovshteyn
Carol Bertaut

212-720-8465
202-452-3476

Christopher Gohrband
Dwight Wolkow

202-606-9564
202-622-1276

Federal Reserve Bank of New York
Board of Governors of Federal Reserve
System
Department of Commerce
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.

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