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pdfSupporting Statement for the
Recordkeeping and Disclosure Requirements Associated with the
Capital Adequacy of Board-Related Institutions (Regulation Q)
(FR 4200; OMB No. 7100-0313)
Regulatory Capital Rules:
Regulatory Capital, Revisions to the Supplementary Leverage Ratio Summary
(Docket No. R-1487) (RIN 7100-AD16)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend, with revision,
the Recordkeeping and Disclosure Requirements Associated with the Capital Adequacy of
Board-Related Institutions (Regulation Q) (FR 4200; OMB No. 7100-0313). The Paperwork
Reduction Act (PRA) classifies reporting, recordkeeping, or disclosure requirements of a
regulation as an “information collection.”1
On September 26, 2014, the Office of the Comptroller of the Currency (OCC), the Board,
and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) published a
joint final rule in the Federal Register (79 FR 57725). The final rule revises total leverage
exposure as defined in the 2013 revised capital rule to include the effective notional principal
amount of credit derivatives and other similar instruments through which a banking organization
provides credit protection (sold credit protection); modifies the calculation of total leverage
exposure for derivative and repo-style transactions; and revises the credit conversion factors
applied to certain off-balance sheet exposures. The final rule also changes the frequency with
which certain components of the supplementary leverage ratio are calculated and establishes the
public disclosure requirements of certain items associated with the supplementary leverage ratio.
The final rule applies to all banks, savings associations, bank holding companies, and
savings and loan holding companies (banking organizations) that are subject to the agencies’
advanced approaches risk-based capital rules, as defined in the 2013 revised capital rule
(advanced approaches banking organizations), including advanced approaches banking
organizations that are subject to the enhanced supplementary leverage ratio standards that the
agencies finalized in May 2014 (eSLR standards). Consistent with the 2013 revised capital rule,
advanced approaches banking organizations will be required to disclose their supplementary
leverage ratios beginning January 1, 2015, and will be required to comply with a minimum
supplementary leverage ratio capital requirement of 3 percent and, as applicable, the eSLR
standards beginning January 1, 2018.
The final rule contains requirements subject to the PRA. The disclosure requirements are
found in section 217.173. The disclosure requirements in section 217.172 are accounted for in
section 217.173. This information collection requirement would be consistent with the Basel
Committee on Banking Supervision 2014 revisions to the Basel III leverage ratio.
1
See 44 U.S.C. § 3501 et seq.
The Board’s total annual burden for the FR 4200 is estimated to be 413,986 hours and
would increase by 400 hours to 414,386 hours for the financial institutions it supervises that are
subject to the final rule.
Background and Justification
Section 1831o(c) of the Federal Deposit Insurance Act requires each federal banking
agency to adopt a risk-based capital requirement, which is based on the prompt corrective action
framework in that section. The International Lending Supervision Act of 1984 (ILSA),
(12 U.S.C. § 3907(a)(1)), mandates that each federal banking agency require banks to achieve
and maintain adequate capital by establishing minimum levels of capital or by other methods that
the applicable federal banking agency may deem appropriate. Section 908 of the ILSA,
(12 U.S.C. §47907(b)(47)(C)), also directs the Chairman of the Federal Reserve and the
Secretary of the Treasury to encourage governments, central banks, and regulatory authorities of
other major banking countries to work toward maintaining and, where appropriate, strengthening
the capital bases of banking institutions involved in international lending.
On December 7, 2007, the OCC, the Federal Reserve, the FDIC, and the Office of Thrift
Supervision (OTS) issued the joint final rule (December 2007 final rule) titled Risk-Based
Capital Standards: Advanced Capital Adequacy Framework (rule) implementing a risk-based
regulatory capital framework for institutions in the United States (72 FR 69288). The rule was
based on the June 2004 Basel Committee on Banking Supervision’s document, “International
Convergence of Capital Measurement and Capital Standards: A Revised Framework” (New
Accord).
The December 2007 final rule implemented the New Accord in the United States and
builds on improvements to risk assessment approaches that a number of large banks have
adopted over the last two decades. In particular, the rule required banks to assign risk parameters
to exposures and provides specific risk-based capital formulas that are used to transform these
risk parameters into risk-based capital requirements. The collection of information contained in
the rule was necessary to ensure that the new risk-based regulatory capital framework is
implemented in the United States in a safe and sound manner.
On October 11, 2013, the OCC and the Board adopted a final rule that revised its riskbased and leverage capital requirements for banking organizations.2 The final rule consolidated
three separate notices of proposed rulemaking that the OCC, Board, and FDIC published in the
Federal Register on August 30, 2012, with selected changes.3 The final rule implemented a
revised definition of regulatory capital, a new common equity tier 1 minimum capital
requirement, a higher minimum tier 1 capital requirement, and, for banking organizations subject
to the advanced approaches risk-based capital rules, a supplementary leverage ratio that
2
Banking organizations include national banks, state member banks, Federal savings associations, and top-tier bank
holding companies domiciled in the United States not subject to the Board’s Small Bank Holding Company Policy
Statement (12 C.F.R. part 225, Appendix C), as well as top-tier savings and loan holding companies domiciled in the
United States, except certain savings and loan holding companies that are substantially engaged in insurance
underwriting or commercial activities.
3
See 77 FR 52792, 77 FR 52888, and 77 FR 52978.
2
incorporates a broader set of exposures in the denominator. The final rule incorporated these
new requirements into the agencies’ prompt corrective action framework. In addition, the final
rule established limits on a banking organization’s capital distributions and certain discretionary
bonus payments if the banking organization does not hold a specified amount of common equity
tier 1 capital in addition to the amount necessary to meet its minimum risk-based capital
requirements. Further, the final rule amended the methodologies for determining risk-weighted
assets for all banking organizations, and introduced disclosure requirements that would apply to
top-tier banking organizations domiciled in the United States with $50 billion or more in total
assets. The final rule also adopted changes to the agencies’ regulatory capital requirements that
meet the requirements of section 171 and section 939A of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank Act).4
The final rule also codified the agencies’ regulatory capital rules, which had previously
resided in various appendices to their respective regulations, into a harmonized integrated
regulatory framework. In addition, the Board amended the advanced approaches and market risk
rules to apply to top-tier savings and loan holding companies domiciled in the United States,
except for certain savings and loan holding companies that are substantially engaged in insurance
underwriting or commercial activities. This final rule became effective January 1, 2014, with
mandatory compliance January 1, 2014, for advanced approaches banking organizations that are
not savings and loan holding companies and January 1, 2015, for all other covered banking
organizations.
Description of Information Collection
A bank is required to comply with the December 7, 2007, final rule if it meets either of
two independent threshold criteria: (1) consolidated total assets of $250 billion or more, as
reported on the most recent year-end regulatory reports or (2) consolidated total on-balance sheet
foreign exposure of $10 billion or more at the most recent year-end. To determine total onbalance sheet foreign exposure, a bank would sum its adjusted cross-border claims, local country
claims, and cross-border revaluation gains (calculated in accordance with the Federal Financial
Institutions Examination Council (FFIEC) Country Exposure Report (FFIEC 009) (OMB No.
7100-0035)). Adjusted cross-border claims would equal total cross-border claims less claims
with the head office/guarantor located in another country, plus redistributed guaranteed amounts
to the country of head office/guarantor. A bank is also required to comply if it is a subsidiary of
another financial institution that uses the advanced approaches.
A bank holding company (BHC) is required to comply with the rule if the BHC has: (1)
consolidated total assets (excluding assets held by an insurance underwriting subsidiary) of $250
billion or more, as reported on the most recent year-end regulatory reports; (2) consolidated total
on-balance sheet foreign exposure of $10 billion or more at the most recent year-end; or (3) a
subsidiary depository institution that applies the advanced approaches. In addition, banks and
BHCs may voluntarily decide to adopt the framework. Currently, fourteen top-tier banking
organizations meet these criteria and an additional five BHCs have indicated that they are
voluntarily adopting the framework.
4
See Public Law 111–203, 124 Stat. 1376, 1435–38 (2010).
3
The December 7, 2007, final rule requires respondents to adopt a written implementation
plan, update that plan for any mergers, obtain prior written approvals for the use of certain
approaches, and make certain public disclosures regarding its capital ratios, their components,
and information on implicit support provided to a securitization. These requirements are
described in sections 217.21 through 23, 42, 44, 53, and 71 of the December 7, 2007, final rule.
Written Implementation Plan (Sections 217.21, 22, and 23). Sections 217.21 and 22
require that a respondent adopt a written implementation plan that addresses how it will comply
with the rule’s qualification requirements, including incorporation of a comprehensive and sound
planning and governance process to oversee the implementation efforts. The respondent must
also develop processes for assessing capital adequacy in relation to an organization’s risk profile.
It must have in place internal risk rating and segmentation systems for wholesale and retail risk
exposures, including comprehensive risk parameter quantification processes and processes for
annual reviews and analyses of reference data to determine its relevance. It must document its
process for identifying, measuring, monitoring, controlling, and internally reporting operational
risk; verify the accurate and timely reporting of risk-based capital requirements; and monitor,
validate, and refine its advanced systems. Section 217.23 requires a respondent to update its
implementation plan after any mergers.
Prior Written Approvals (Sections 217.44 and 53). Sections 217.44 and 53 require
prior written approval by supervisors. Section 217.44 describes the internal assessment approach
(IAA). Prior written approval is required for use of the IAA. A respondent must review and
update each internal credit assessment whenever new material is available, but at least annually.
It must validate its internal credit assessment process on an ongoing basis. Section 217.53
outlines the internal models approach (IMA). Prior written approval is required for use of the
IMA.
Disclosures (Sections 217.42 and 71). Section 217.42 requires a respondent to publicly
disclose that it has provided implicit support to a securitization and the regulatory capital impact
to the bank of providing such implicit support. Section 217.71 specifies that each consolidated
bank must publicly disclose its total and tier 1 risk-based capital ratios and their components
quarterly.
The Basel III portion of the October 11, 2013, final rule applies to all insured banks and
savings associations, top-tier BHCs domiciled in the United States with more than $500 million
in assets, and savings and loan holding companies (SLHCs) that are domiciled in the United
States. Provisions of this final rule that apply to these banking organizations include
implementation of a new common equity tier 1 minimum capital requirement, a higher minimum
tier 1 capital requirement, and, for banking organizations subject to the advanced approaches
capital rules, a supplementary leverage ratio that incorporates a broader set of exposures.
Additionally, consistent with Basel III, the Board is now applying limits on a banking
organization’s capital distributions and certain discretionary bonus payments if the banking
organization does not hold a specified “buffer” of common equity tier 1 capital in addition to the
minimum risk-based capital requirements. The revisions set forth in this final rule are consistent
with section 171 of the Dodd-Frank Act, which requires the agencies to establish minimum riskbased and leverage capital requirements. The Board also revised the prompt corrective action
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framework by incorporating the new regulatory capital minimums and updating the definition of
tangible common equity.
In general, the Advanced Approaches and Market Risk portion of the October 11, 2013,
final rule applies to institutions with $250 billion or more in consolidated assets or $10 billion or
more in foreign exposure, and the market risk rule applies to SLHCs with significant trading
activity. In the this portion of the final rule, the Board revised the advanced approaches riskbased capital rules consistent with Basel III and other changes to the Basel Committee’s capital
standards. The Board also revised the advanced approaches risk-based capital rules to be
consistent with section 171 and section 939A of the Dodd-Frank Act. Additionally, in this final
rule, the Board revised the advanced approaches and market risk capital rules that apply to toptier SLHCs domiciled in the United States, if stated thresholds for trading activity are met.
In the Standardized Approach portion of the October 11, 2013, final rule, the Board
revised and harmonized rules for calculating risk-weighted assets to enhance risk sensitivity and
address weaknesses identified over recent years, including by incorporating aspects of the
Basel II standardized framework, and alternatives to credit ratings, consistent with section 939A
of the Dodd-Frank Act. The Board revised methods for determining risk-weighted assets for
residential mortgages, securitization exposures, and counterparty credit risk. The Board also
implemented disclosure requirements that would apply to U.S. banking organizations with
$50 billion or more in total assets.
The October 11, 2013, final rule contains recordkeeping and disclosure requirements
found in sections 217.3, 22, 35, 37, 41, 42, 62, 63 (including tables 1 through 10), 121 through
124, 132, 141, 142, 153, 171, and 173 (including tables 4, 5, 9, and 12).
Minimum Capital Ratios - Recordkeeping
Section 217.3(c) provides for termination and close-out netting across multiple types of
transactions or agreements if the bank obtains a written legal opinion verifying the validity and
enforceability of the agreement under certain circumstances and maintains sufficient written
documentation of this legal review.
Section 217.22(h)(2)(iii)(A) allows the use of a conservative estimate of the amount of a
bank’s investment in the capital of unconsolidated financial institutions held through the index
security with prior approval by the appropriate agency.
Standardized Approach - Recordkeeping
Section 217.35 sets forth requirements for cleared transactions. Section
217.35(b)(3)(i)(A) requires, for a cleared transaction with a qualified central counterparty
(QCCP), that a client bank apply a risk weight of 2 percent, provided that the collateral posted by
the bank to the QCCP is subject to certain arrangements and the client bank has conducted a
sufficient legal review (and maintains sufficient written documentation of the legal review) to
conclude with a well-founded basis that the arrangements, in the event of a legal challenge,
5
would be found to be legal, valid, binding and enforceable under the law of the relevant
jurisdictions.
Section 217.37 addresses requirements for collateralized transactions. Section
217.37(c)(4)(i)(E) requires that a bank have policies and procedures describing how it
determines the period of significant financial stress used to calculate its own internal estimates
for haircuts and be able to provide empirical support for the period used.
Section 217.41 addresses operational requirements for securitization exposures. Section
217.41(b)(3) would allow for synthetic securitizations a bank’s recognition, for risk-based capital
purposes, of a credit risk mitigant to hedge underlying exposures if certain conditions are met,
including the bank’s having obtained a well-reasoned opinion from legal counsel that confirms
the enforceability of the credit risk mitigant in all relevant jurisdictions. Section 217.41(c)(2)(i)
would require that a bank support a demonstration of its comprehensive understanding of a
securitization exposure by conducting and documenting an analysis of the risk characteristics of
each securitization exposure prior to its acquisition, taking into account a number of specified
considerations.
Standardized Approach - Disclosure
Section 217.42 addresses risk-weighted assets for securitization exposures. Section
217.42(e)(2) requires that a bank publicly disclose that is has provided implicit support to the
securitization and the risk-based capital impact to the bank of providing such implicit support.
Section 217.62 sets forth disclosure requirements related to a bank’s capital
requirements. Section 217.62(a) specifies a quarterly frequency for the disclosure of information
in the applicable tables set out in section 63 and, if a significant change occurs, such that the
most recent reported amounts are no longer reflective of the bank’s capital adequacy and risk
profile, section 217.62(a) also would require the bank to disclose as soon as practicable
thereafter, a brief discussion of the change and its likely impact. Section 217.62(a) allows for
annual disclosure of qualitative information that typically does not change each quarter, provided
that any significant changes are disclosed in the interim. Section 217.62(b) requires that a bank
have a formal disclosure policy approved by the board of directors that addresses its approach for
determining the disclosures it makes. The policy is required to address the associated internal
controls and disclosure controls and procedures. Section 217.62(c) requires a bank with total
consolidated assets of $50 billion or more that is not an advanced approaches bank, if it
concludes that specific commercial or financial information required to be disclosed under
section 217.62 is exempt from disclosure by the agency under the Freedom of Information Act
(5 U.S.C. 552), to disclose more general information about the subject matter of the requirement
and the reason the specific items of information have not been disclosed.
Section 217.63 sets forth disclosure requirements for banks with total consolidated assets
of $50 billion or more that are not advanced approaches banks. Section 217.63(a) requires a
bank to make the disclosures in Tables 1 through 10 to section 217.63 and in section 217.63(b)
for each of the last three years beginning on the effective date of the rule. Section 217.63(b)
requires quarterly disclosure of a bank’s common equity tier 1 capital, additional tier 1 capital,
6
tier 2 capital, tier 1 and total capital ratios, including the regulatory capital elements and all the
regulatory adjustments and deductions needed to calculate the numerator of such ratios; total
risk-weighted assets, including the different regulatory adjustments and deductions needed to
calculate total risk-weighted assets; regulatory capital ratios during any transition periods,
including a description of all the regulatory capital elements and all regulatory adjustments and
deductions needed to calculate the numerator and denominator of each capital ratio during any
transition period; and a reconciliation of regulatory capital elements as they relate to its balance
sheet in any audited consolidated financial statements.
Section 217.63 (Tables 1 through 10). Table 1 sets forth scope of application
qualitative and quantitative disclosure requirements; Table 2 sets forth capital structure
qualitative and quantitative disclosure requirements; Table 3 sets forth capital adequacy
qualitative and quantitative disclosure requirements; Table 4 sets forth capital conservation
buffer qualitative and quantitative disclosure requirements; Table 5 sets forth general qualitative
and quantitative disclosure requirements for credit risk; Table 6 sets forth general qualitative and
quantitative disclosure requirements for counterparty credit risk-related exposures; Table 7 sets
forth qualitative and quantitative disclosure requirements for credit risk mitigation; Table 8 sets
forth qualitative and quantitative disclosure requirements for securitizations; Table 9 sets forth
qualitative and quantitative disclosure requirements for equities not subject to Subpart F of the
rule; and Table 10 sets forth qualitative and quantitative disclosure requirements for interest rate
risk for non-trading activities.
Advanced Approach - Recordkeeping
Sections 217.121 and 122 requires that an institution adopt a written implementation
plan that addresses how it will comply with the advanced capital adequacy framework’s
qualification requirements, including incorporation of a comprehensive and sound planning and
governance process to oversee the implementation efforts. The institution must also develop
processes for assessing capital adequacy in relation to an organization’s risk profile. It must
establish and maintain internal risk rating and segmentation systems for wholesale and retail risk
exposures, including comprehensive risk parameter quantification processes and processes for
annual reviews and analyses of reference data to determine their relevance. It must document its
process for identifying, measuring, monitoring, controlling, and internally reporting operational
risk; verify the accurate and timely reporting of risk-based capital requirements; and monitor,
validate, and refine its advanced systems.
Section 217.123 sets forth ongoing qualification requirements that require an institution
to notify its Federal supervisor of changes to advance systems and requires submission of a plan
for returning to compliance with qualification requirements.
Section 217.124 requires an institution to notify its primary Federal supervisor when it
makes a material change to its advanced systems and to develop an implementation plan after
any mergers.
Section 217.132(b)(2)(iii)(A) is counterparty credit risk of repo-style transactions,
eligible margin loans, and over-the-counter (OTC) derivative contracts, own internal estimates
7
for haircuts. With the prior written approval of the agency, an institution may calculate haircuts
(Hs and Hfx) using its own internal estimates of the volatilities of market prices and foreign
exchange rates. To receive Board approval to use its own internal estimates, an institution must
satisfy the minimum quantitative standards outlined in this section.
Section 217.132(b)(3) is counterparty credit risk of repo-style transactions, eligible
margin loans, and OTC derivative contracts, simple value-at-risk (VaR) methodology. With the
prior written approval of the agency, an institution may estimate exposure at default (EAD) for a
netting set using a VaR model that meets certain requirements.
Section 217.132(d)(1) allows the use of the internal models methodology to determine
EAD for counterparty credit risk for derivative contracts with prior written approval. Section
217.132(d)(1)(iii) allows the use of the internal models methodology for derivative contracts,
eligible margin loans, and repo-style transactions subject to a qualifying cross-product netting
agreement with prior written approval.
Section 217.132(d)(2)(iv) is counterparty credit risk of repo-style transactions, eligible
margin loans, and OTC derivative contracts, risk-weighted assets using internal models
methodology (IMM). Under the IMM, an institution uses an internal model to estimate the
expected exposure (EE) for a netting set and then calculates EAD based on that EE. An
institution must calculate two EEs and two EADs (one stressed and one unstressed) for each
netting as outlined in this section.
Section 217.132(d)(3)(vi). To obtain agency approval to calculate the distributions of
exposures upon which the EAD calculation is based, the institution must demonstrate to the
satisfaction of the agency that it has been using for at least one year an internal model that
broadly meets the minimum standards, with which the institution must maintain compliance.
The institution must have procedures to identify, monitor, and control wrong-way risk
throughout the life of an exposure. The procedures must include stress testing and scenario
analysis.
Section 217.132(d)(3)(viii). When estimating model parameters based on a stress period,
the institution must use at least three years of historical data that include a period of stress to the
credit default spreads of the institution’s counterparties. The institution must review the data set
and update the data as necessary, particularly for any material changes in its counterparties. The
institution must demonstrate at least quarterly that the stress period coincides with increased
credit default swap (CDS) or other credit spreads of the institution’s counterparties. The
institution must have procedures to evaluate the effectiveness of its stress calibration that include
a process for using benchmark portfolios that are vulnerable to the same risk factors as the
institution’s portfolio. The agency may require the institution to modify its stress calibration to
better reflect actual historic losses of the portfolio.
Section 217.132(d)(3)(ix). An institution must subject its internal model to an initial
validation and annual model review process. The model review should consider whether the
inputs and risk factors, as well as the model outputs, are appropriate. As part of the model
8
review process, the institution must have a back testing program for its model that includes a
process by which unacceptable model performance will be determined and remedied.
Section 217.132(d)(3)(x). An institution must have policies for the measurement,
management and control of collateral and margin amounts.
Section 217.132(d)(3)(xi). An institution must have a comprehensive stress testing
program that captures all credit exposures to counterparties, and incorporates stress testing of
principal market risk factors and creditworthiness of counterparties.
Section 217.141 is operational criteria for recognizing the transfer of risk. Section
217.141(b)(3) requires a well-reasoned legal opinion confirming the enforceability of the credit
risk mitigant in all relevant jurisdictions. An institution must demonstrate its comprehensive
understanding of a securitization exposure under section 217.141(c)(1), for each securitization
exposure by conducting an analysis of the risk characteristics of a securitization exposure prior to
acquiring the exposure and document such analysis within three business days after acquiring the
exposure. Sections 217.141(c)(2)(i) and (ii) require that institutions, on an on-going basis (no
less frequently than quarterly), evaluate, review, and update as appropriate the analysis required
under this section for each securitization exposure.
Section 217.153 outlines the internal models approach (IMA). A bank must receive prior
written approval from its primary Federal supervisor before it can use IMA.
Advanced Approach - Disclosure
Section 217.142 outlines the capital treatment for securitization exposures. A bank must
disclose publicly that it has provided implicit support to the securitization and the regulatory
capital impact to the bank of providing such implicit support.
Section 217.171 specifies that each consolidated bank must publicly disclose its total and
tier 1 risk-based capital ratios and their components.
Section 217.173 is disclosures by certain advanced approaches banks. An institution that
is an advanced approaches bank must make the disclosures described in Tables 1 through 12.
The institution must make these disclosures publicly available for each of the last three years
(that is, twelve quarters) or such shorter period beginning on January 1, 2014.
Section 217.173 (Table 4) is Capital Conservation and Countercyclical Capital Buffers.
An institution must comply with the qualitative and quantitative public disclosures outlined in
this table.
Section 217.173 (Table 5) is Credit Risk: General Disclosures. An institution must
comply with the qualitative and quantitative public disclosures outlined in this table.
Section 217.173 (Table 9) is Securitization. An institution must comply with the
qualitative and quantitative public disclosures outlined in this table.
9
Section 217.173 (Table 12) is Interest Rate Risk for Non-Trading Activities. An
institution must comply with the qualitative and quantitative public disclosures outlined in this
table.
Proposed Revisions
Supplementary Leverage Ratio Revisions
All banking organizations that are subject to the agencies’ advanced approaches riskbased capital rules (advanced approaches banking organizations), as defined in the 2013 revised
capital rule, are required to disclose their supplementary leverage ratios beginning January 1,
2015. Advanced approaches banking organizations must report their supplementary leverage
ratios on the applicable regulatory reports. Under the final rule, advanced approaches banking
organizations would disclose two parts of a supplementary leverage ratio table beginning
January 1, 2015. The disclosure requirements are consistent with the calculation of the
supplementary leverage ratio in the final rule and with the BCBS 2014 revisions to the Basel III
leverage ratio. The agencies believe that the disclosures would enhance the transparency and
consistency of reporting requirements for the supplementary leverage ratio by all internationally
active organizations.
Advanced Approach - Disclosure
Section 217.173 (Table 13) is Supplementary Leverage Ratio. Section 217.173 states
that advanced approaches banking organizations that have successfully completed parallel run
must make the disclosures described in Tables 1 through 12. Under the final rule, advanced
approaches banking organizations would be required to make the disclosures described in
Table 13 beginning January 1, 2015, regardless of the parallel run status. The agencies do not
anticipate an additional initial setup burden for complying with the disclosure requirements
because advanced approaches banking organizations are already subject to reporting the
supplementary leverage ratio on the applicable regulatory reports.
Time Schedule for Information Collection
This information collection contains recordkeeping and disclosure requirements, as
mentioned above. The recordkeeping requirements are required annually and the disclosure
requirements are required annually and quarterly.
Legal Status
The Board’s Legal Division has determined that section 38(o) of the Federal Deposit
Insurance Act (12 U.S.C. § 1831o(c)), section 908 of the International Lending Supervision Act
of 1983 (12 U.S.C. § 3907(a)(1)), section 9(6) of the Federal Reserve Act (12 U.S.C. § 324), and
section 5(c) of the Bank Holding Company Act (12 U.S.C. § 1844(c)) authorize the Board to
require the information collection. The obligation to respond to this information collection is
mandatory. If a respondent considers the information to be trade secrets and/or privileged such
information could be withheld from the public under the authority of the Freedom of Information
10
Act (5 U.S.C. § 552(b)(4)). Additionally, to the extent that such information may be contained
in an examination report such information maybe also be withheld from the public (5 U.S.C. §
552 (b)(8).
Consultation Outside the Agency
On May 1, 2014, the agencies published a notice of proposed rulemaking in the Federal
Register (79 FR 24596) requesting public comment on the FR 4200. The comment period for
this notice expired on June 13, 2014. The agencies received 5 public comment letters that
addressed PRA.
The agencies received two comments on the disclosure requirements. One comment
letter recommended that the final rule clarify that Part 1, line 2 of the disclosure table include
associated entities reflected on a banking organization’s balance sheet on the basis of
proportionate consolidation. The commenter noted that it sent the same suggestion to the BCBS
to revise the Basel III leverage ratio disclosure requirements. The agencies decided not to revise
the disclosure table in response to this comment because proportionate consolidation generally
does not apply to the U.S. banking organizations subject to the supplementary leverage ratio.
Another comment letter expressed the view that the required disclosures do not appear to
provide a meaningful breakout of off-balance sheet exposures beyond derivative and repo-style
transactions. The comment letter recommended that the agencies consider a more detailed
breakout of off-balance sheet exposures for Part 2, lines 17 and 18. The agencies believe that the
table is sufficiently granular, particularly when viewed in combination with the other regulatory
disclosure requirements, including the Call Report and FR Y-9C. Therefore, under the final rule,
the agencies are finalizing the disclosure requirements as proposed.
The agencies also received three supportive comments regarding the disclosure
requirements. These commenters supported the agencies’ efforts to increase transparency and
consistency in identifying and collecting off-balance sheet activity, aiding both market equity
and regulatory oversight.
On September 26, 2014, the agencies published a final rule in the Federal Register
(79 FR 57725) and is effective on January 1, 2015.
Estimate of Respondent Burden
The total annual burden for the report is estimated to be 413,986 hours and would
increase to 414,386 hours with the proposed revisions, as shown in the burden table below. The
net increase of 400 hours is attributed to a change in the disclosure requirements implemented by
Basel III. These recordkeeping and disclosure requirements represent 3.2 percent of the total
Federal Reserve System paperwork burden.
11
FR 4200
Current
Recordkeeping
Written Implementation Plan
(Sections 217.21, 22, and 23)
Recordkeeping
Prior Written Approvals
(Sections 217.44 and 53)
Disclosures
(Sections 217.42 and 71)
Minimum Capital Ratios
Recordkeeping
Sections 217.3(c) and
22(h)(2)(iii)(A)
Standardized Approach
Recordkeeping – Ongoing
217.35, 37, and 41
Recordkeeping – One-Time
217.35, 37, and 41
Disclosure – Ongoing
217.42, 62, 63, and
Tables 1 through 10
Disclosure – One-Time
217.42, 62, and 63
Advanced Approach
Recordkeeping – Ongoing
217.121, 122, 123, 124,
132(b)(2)(iii)(A), 132(b)(3),
132(d)(1), 132(d)(2)(iv),
132(d)(3)(ix), 132(d)(3)(xi),
and 141
Recordkeeping – One-Time
217.132(b)(2)(iii)(A),
132(d)(2)(iv), 132(d)(3)(vi),
132(d)(3)(viii), 132(d)(3)(ix),
132(d)(3)(x), 132(d)(3)(xi),
141, and 153
Disclosure – Ongoing
217.142, 171, 173, and
Tables 4, 5, 9, and 12
Disclosure – One-Time
217.173 and Tables 4, 5, 9,
and 12
Total
Annual
frequency
Estimated
average hours
per response
37
1
404.77
37
1
37
1
2202
1
16
35,232
2,202
1
20
44,040
2,202
1
122
268,644
47
1
131.25
6,169
47
1
226.25
10,634
37
1
146
5,402
37
1
420
15,540
37
1
35
1,295
37
1
280
10,360
413,986
Number of
respondents
12
40
5.78
Estimated
annual burden
hours
14,976
1,480
214
Proposed
Recordkeeping
Written Implementation Plan
(Sections 217.21, 22, and 23)
Recordkeeping
Prior Written Approvals
(Sections 217.44 and 53)
Disclosures
(Sections 217.42 and 71)
Minimum Capital Ratios
Recordkeeping
Sections 217.3(c) and
22(h)(2)(iii)(A)
Standardized Approach
Recordkeeping – Ongoing
217.35, 37, and 41
Recordkeeping – One-Time
217.35, 37, and 41
Disclosure – Ongoing
217.42, 62, 63, and
Tables 1 through 10
Disclosure – One-Time
217.42, 62, and 63
Advanced Approach
Recordkeeping – Ongoing
217.121, 122, 123, 124,
132(b)(2)(iii)(A), 132(b)(3),
132(d)(1), 132(d)(2)(iv),
132(d)(3)(ix), 132(d)(3)(xi),
and 141
Recordkeeping – One-Time
217.132(b)(2)(iii)(A),
132(d)(2)(iv), 132(d)(3)(vi),
132(d)(3)(viii), 132(d)(3)(ix),
132(d)(3)(x), 132(d)(3)(xi),
141, and 153
Disclosure – Ongoing
217.142, 171, 173, and
Tables 4, 5, 9, and 12
Disclosure – One-Time
217.173 and Tables 4, 5, 9,
and 12
Disclosure
217.173 (Table 13)
Total
Change
37
1
37
1
37
1
2202
1
16
35,232
2,202
1
20
44,040
2,202
1
122
268,644
47
1
131.25
6,169
47
1
226.25
10,634
37
1
146
5,402
37
1
420
15,540
37
1
35
1,295
37
1
280
10,360
20
4
5
400
414,386
400
13
404.77
40
5.78
14,976
1,480
214
The current annual cost to the public of this information collection is estimated to be
$22,003,356 and would increase to $22,024,616 with the proposed revisions.5
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The cost to the Federal Reserve System is negligible.
5
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $17, 45% Financial Managers at
$65, 15% Lawyers at $66, and 10% Chief Executives at $89). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2015, published March 30, 2016 www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.
14
| File Type | application/pdf |
| File Modified | 2016-06-22 |
| File Created | 2016-06-22 |