FR4021_20200911_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 authority
delegated by the Office of Management and Budget (OMB), has extended for three years,
without revision, the Notification of Nonfinancial Data Processing Activities (FR 4021; OMB
No. 7100-0306). Generally, a bank holding company (BHC) may, through a subsidiary, engage
in data processing activities if the subsidiary earns not more than 49 percent of its data
processing revenue from nonfinancial data processing activities.1 However, the Board has stated
that a BHC may file with the Board a request for permission to administer this 49 percent
revenue limit on a business-line or multiple-entity basis, rather than on a company-by-company
basis. The FR 4021 information collection consists of this filing for prior notice.
The estimated total annual burden for the FR 4021 is 2 hours. There is no formal
reporting form for this information collection (the FR 4021 designation is for internal purposes
only).
Background and Justification
The Bank Holding Company Act of 1956 (BHC Act), as amended by the Gramm-LeachBliley Act (GLB Act), permits 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.2 One such
activity is data processing. Specifically, pursuant to the Board’s Regulation Y - Bank Holding
Companies and Change in Bank Control (12 CFR Part 225), BHCs may provide data processing
and data transmission services, facilities (including data processing and data transmission
hardware, software, documentation, or operating personnel), data bases, advice and access to
such services, facilities and data to any customer if the data processed or furnished are financial,
banking or economic in nature.3 Additionally, a BHC or nonbank subsidiary engaged in
processing financial data may provide data processing services for nonfinancial data so long as
the annual revenues derived by the company or subsidiary from its nonfinancial data processing
activities does not exceed 49 percent of the total annual revenue derived by the company or
subsidiary from providing data processing services.4
The 49 percent revenue limit for nonfinancial data processing was established by final
rule in 2003.5 In the preamble to this rulemaking, the Board, recognizing that there may be
situations where a BHC has bona fide operational reasons for conducting its financial and related
1

See 12 CFR 225.28(b)(14).
12 U.S.C. § 1843(c)(8).
3
12 CFR 225.28(b)(14).
4
12 CFR 225.28(b)(14)(ii).
5
68 FR 68493 (December 9, 2003). Previously, the limit had been 30 percent.
2

nonfinancial data processing activities through separately incorporated subsidiaries. The
preamble also stated that BHCs may request permission to administer the 49 percent revenue
limit on a business-line or multiple-entity basis, rather than on a company-by-company basis.6 In
acting on such a request, the Board would consider any such request in light of all the facts and
circumstances, including the inter-relationships between the data processing activities conducted
by the BHC’s separate subsidiaries, the BHC’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.7 This information provided in the notice is not available from other
sources.
Description of Information Collection
The FR 4021 consists of the notice that BHCs may file to request permission to
administer the Regulation Y revenue limit on nonfinancial data processing activities on a
business-line or multiple-entity basis. A BHC may submit such a request to the Board’s General
Counsel in letter form. The request 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 limit, and the reasons why the BHC believes that the proposed methodology is
appropriate. To date, the Board has never received such a request from a BHC.
Respondent Panel
The FR 4021 panel comprises BHCs.
Time Schedule for Information Collection
The FR 4021 is an event driven information collection. BHCs must request and obtain
permission from the General Counsel before administering the 49 percent revenue limit on a
business-line or multiple-entity basis.
Public Availability of Data
No data collected by the Board pursuant to this information collection is made available
to the public.
Legal Status
The Board is authorized to collect the information associated with the notification
process from BHCs pursuant to the BHC Act (12 U.S.C. § 1843(c)(8) and (k)). The
submission of the notification (request) associated with the FR 4021 is required to obtain a
benefit.
To the extent a BHC submits nonpublic commercial or financial information in
connection with the FR 4021, which is both customarily and actually treated as private by the
6
7

Id. at 68497.
Id.

2

BHC, the BHC may request confidential treatment pursuant to exemption 4 of the Freedom of
Information Act (FOIA) (5 U.S.C. § 552(b)(4)). The entity should separately designate such
information as “confidential commercial information” or “confidential financial information, as
appropriate, and the Board will treat such designated information as confidential to the extent
permitted by law, including the FOIA (5 U.S.C. § 552).
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On February 4, 2020, the Board published an initial notice in the Federal Register
(85 FR 6181) requesting public comment for 60 days on the extension, without revision, of the
FR 4021. The comment period for this notice expired on April 6, 2020. The Board did not
receive any comments. On August 21, 2020, the Board published a final notice in the Federal
Register (85 FR 51714).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR 4021 is 2
hours. For the purpose of maintaining and clearing the notice requirement pursuant to the
Paperwork Reduction Act, the Board estimates that 1 respondent per year will take 2 hours each
to submit a request. These reporting requirements represent less than 1 percent of the Board’s
total paperwork burden.

FR 4021
Current

Estimated
Estimated
Annual
number of
average hours
frequency
respondents8
per response
1

1

2

Estimated
annual burden
hours
2

The estimated total annual cost to the public for this information collection is $116.9
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
8

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $600 million in total assets), https://www.sba.gov/document/support--table-size-standards.
9
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 $20, 45% Financial Managers at
$71, 15% Lawyers at $70, 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 2019, published March 31, 2020, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

3

Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing this
information collection is negligible.

4