FR4021_20230926_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, directly or through a
subsidiary, engage in data processing activities if, among other requirements, the company or
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 multipleentity basis, rather than on a company-by-company basis. The FR 4021 information collection
consists of this filing for prior approval.
The estimated total annual burden for the FR 4021 is 2 hours. There is no formal
reporting form for this information collection.
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), databases, advice, and access to
such services, facilities and data if the data processed, stored, or furnished are financial, banking
or economic and the hardware provided in connection therewith is offered only in conjunction
with software designed and marketed for the processing, storage and transmission of financial,
banking, or economic data, and where the general purpose hardware does not constitute more
than 30 percent of the cost of any packaged offering.3 Additionally, a BHC or nonbank
subsidiary engaged in data processing, data storage, and data transmission may conduct other
data processing, data storage, and data transmission activities 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

1

See 12 CFR 225.28(b)(14).
12 U.S.C. § 1843(c)(8).
3
12 CFR 225.28(b)(14)(i).
4
12 CFR 225.28(b)(14)(ii).
2

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 recognized that there may be
situations where a BHC has bona fide operational reasons for conducting its financial and related
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 request is not available from other sources. If this
information were not collected, the Board would not be able to consider requests for BHCs to
administer the 49 percent revenue limit on a business-line or multiple-entity basis.
Description of Information Collection
The FR 4021 consists of the request that BHCs may file to seek 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 in letter form directed to the Board’s
General Counsel. 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. The request should be signed by the individual making the application or by the
individual’s duly authorized agent, should state the facts involved, the action requested, and the
requester's interest in the matter, and should indicate the reasons why the request should be
granted. To date, the Board has not received such a request from a BHC.
Respondent Panel
The FR 4021 panel comprises BHCs.
Frequency and Time Schedule
The FR 4021 is an event-driven information collection. BHCs must request and obtain
permission from the Board before administering the 49 percent revenue limit on a business-line
or multiple-entity basis.
Public Availability of Data
No data collected by this information collection are published.

5

68 FR 68493 (December 9, 2003). Previously, the limit had been 30 percent.
Id. at 68497.
7
Id.
6

2

Legal Status
The Board is authorized to collect the information associated with the notification process
from BHCs pursuant to sections 4(c)(8) and 4(k) of the Bank Holding Company Act of 1956, as
amended (12 U.S.C. §§ 1843(c)(8) and (k)). The authority to collect such information is
implied by these statutory provisions, which authorize BHCs to engage in the data
processing activity. The Board also has the authority to require reports from bank holding
companies (12 U.S.C. § 1844(c)). The submission of the request associated with the FR 4021 is
required to obtain a benefit.
To the extent a BHC submits nonpublic commercial or financial information, which is
both customarily and actually treated as private by the BHC, in connection with the FR 4021, the
BHC may request confidential treatment for such information pursuant to exemption 4 of the
Freedom of Information Act (FOIA) (5 U.S.C. § 552(b)(4)).
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On January 27, 2023, the Board published an initial notice in the Federal Register (88 FR
5343) requesting public comment for 60 days on the extension, without revision, of the FR 4021.
The comment period for this notice expired on March 28, 2023. The Board did not receive any
comments. The Board adopted the extension, without revision, of the FR 4021 as originally
proposed. On June 7, 2023, the Board published a final notice in the Federal Register (88 FR
37252).
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 request requirement pursuant to the
Paperwork Reduction Act, the Board estimates that 1 respondent per year will take 2 hours to
submit a request. These reporting requirements represent less than 1 percent of the Board’s total
paperwork burden.

FR 4021
Current

Estimated Estimated
Estimated
number of
annual
average hours
respondents8 frequency per response
1
1
2

8

Estimated
annual burden
hours
2

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $850 million in total assets). Size standards effective March 17, 2023. See
https://www.sba.gov/document/support-table-size-standards.

3

The estimated total annual cost to the public for the FR 4021 is $133.9
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 estimated cost to the Federal Reserve System for collecting and processing this
information collection is negligible.

9

Total cost to the responding public is estimated using the following formula: total burden hours, multiplied by the
cost of staffing, where the cost of staffing is calculated as a percent of time for each occupational group multiplied
by the group’s hourly rate and then summed (30% Office & Administrative Support at $22, 45% Financial
Managers at $80, 15% Lawyers at $79, and 10% Chief Executives at $118). Hourly rates for each occupational
group are the (rounded) mean hourly wages from the Bureau of Labor Statistics (BLS), Occupational Employment
and Wages, May 2022, published April 25, 2023, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations
are defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

4