FR4021_20170919_omb

Supporting Statement for the
Notification of Nonfinancial Data Processing Activities
(FR 4021; OMB No. 7100-0306)
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 for three years,
without revision, the Notification of Nonfinancial Data Processing Activities (FR 4021; OMB
No. 7100-0306), which relates to the permissible data processing, storage, and transmission
activities (collectively, data processing activities) of bank holding companies (BHC) under the
Board’s Regulation Y- Bank Holding Companies and Change in Bank Control. Regulation Y
limits a BHC’s annual revenues from nonfinancial data processing activities to 49 percent of its
total annual revenue derived from all of its data processing activities.1 A BHC may request the
Board’s approval to administer this 49 percent revenue limit on nonfinancial data processing
activities on a business-line or multiple-company basis, rather than on a company-by-company
basis.2 Such requests are designated as the FR 4021.
It is estimated that two respondents per year will submit notifications associated with this
type of data processing activity. The total annual burden for FR 4021 is estimated to be four
hours. A request may be filed in letter form; there is no reporting form for this information
collection.
Background and Justification
The BHC Act (12 U.S.C. 1841 et seq.), as amended by the Gramm-Leach-Bliley Act
(GLB Act), permits all BHCs to engage in any nonbanking activity that the Board had
determined by order or regulation prior to November 12, 1999, to be so closely related to
banking as to be a proper incident thereto under section 4(c)(8) of the BHC Act. BHCs must
conduct these activities subject to the terms and conditions contained in the Board’s regulation or
order authorizing the activity, unless the Board modifies those terms or conditions.
Prior to enactment of the GLB Act, the Board had determined by regulation that a BHC
may conduct financial data processing activities as an activity that is closely related to banking.
In addition, the Board had determined that, as an incident to these activities, a BHC could
conduct nonfinancial data processing activities so long as the revenues derived from such
nonfinancial data processing activities did not constitute more than 30 percent of the revenues
derived by the BHC from its data processing activities.
In 2003, the Board adopted a final rule that raised, from 30 percent to 49 percent, the
percentage of data processing revenue a BHC engaged in data processing activities may derive
from nonfinancial data processing activities. The Board adopted this change because it allowed
BHCs to make more efficient use of their data processing expertise and equipment while
1

See12 CFR 225.28(b)(14). As a general matter, nonfinancial data processing activities refer to data processing
activities involving data that is not financial, banking, or economic in nature.
2
See 68 FR 68493, 68497 (December 9, 2003).

ensuring that a majority of the business of each processing subsidiary would be financial data
processing. As part of this final rulemaking, the Board also announced that it had delegated
authority to the Board’s General Counsel to grant requests by BHCs to administer requests that
the 49 percent revenue limit be administered on a business-line or multiple-entity basis (rather
than on a company-by-company basis as would otherwise be required under the rule).
Description of Information Collection
BHCs submit the FR 4021 notification to request permission to administer the 49 percent
revenue limit on nonfinancial data processing activities on a business-line or multiple-entity
basis. These notifications, which may be submitted in letter form, should describe the structure
of the requesting BHC’s data processing operations, the methodology the BHC proposes to use
to administer the 49 percent revenue test and the reasons why the BHC believes that the
proposed methodology is appropriate. The Board will consider any request in light of all the facts
and circumstances, including the interrelationships between the data processing activities
conducted by the BHC’s separate subsidiaries, the holding company’s business or operational
reasons for conducting its data processing activities in different subsidiaries, and the level of the
BHC’s ownership interest in the individual subsidiaries.
Time Schedule for Information Collection
This information collection contains one notice requirement, which a BHC must file with
the Board’s General Counsel before the BHC seeks to administer the 49 percent revenue limit on
a business-line or multiple-entity basis. This notice requirement is mandatory, but only if the
BHC seeks the additional flexibility to administer the 49 percent test in this manner, and is
triggered by a specific event.
Legal Status
The Board’s Legal Division has determined that 12 U.S.C. 1843(c)(8), (j) and (k)
authorize the Board to collect this information. The FR 4021 is required to obtain a benefit. A
BHC may request confidential treatment of the information contained in the notice pursuant to
exemption 4 of the Freedom of Information Act (5 U.S.C. 552(b)(4)). The exemption
determination will be made on a case-by-case basis.
Consultation Outside the Agency
On May 31, 2017, the Board published an initial notice in the Federal Register (82 FR
24970) requesting public comment for 60 days to extend, without revision, the FR 4021. The
comment period expired on July 31, 2017. The Board did not receive any comments. On
September 5, 2017, the Board published a final notice in the Federal Register (82 FR 41951) and
the information collection will be extended as proposed.

2

Estimate of Respondent Burden
The annual respondent burden is estimated to be four hours. To date, the Board has not
received any request by a BHC to administer the 49 percent revenue limit on a business-line or
multiple-entity basis. In order to provide a burden estimate to OMB, the Board estimates that two
respondents per year will take two hours to complete and submit a request to the Board.3 This
reporting requirement represents less than 1 percent of total Federal Reserve System paperwork
burden.

FR 4021
Notification of nonfinancial
data processing activities

Estimated
Annual
average hours
frequency
per response

Number of
respondents4
2

1

Estimated
annual burden
hours

2

4

The estimated current annual cost to the public of collecting this information is $220.5
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 Federal Reserve System's costs for processing this information are minimal.

3

Reports with fewer than 10 respondents per year are not subject to the Paperwork Reduction Act (PRA); however,
because the reporting requirements pertain to all BHCs, the proposal is processed following PRA procedures.
4
Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/contracting/getting-started-contractor/make-sureyou-meet-sba-size-standards/table-small-business-size-standards.
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 $18, 45% Financial Managers at
$67, 15% Lawyers at $67, and 10% Chief Executives at $93). 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 2016, published March 31, 2017, www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

3