[Federal Register Volume 82, Number 7 (Wednesday, January 11, 2017)]
[Notices]
[Pages 3315-3319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00361]


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FEDERAL DEPOSIT INSURANCE CORPORATION


Agency Information Collection Activities: Proposed Collection 
Renewals; Comment Request (3064-0006, & -0184)

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice and request for comment.

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SUMMARY: The FDIC, as part of its continuing effort to reduce paperwork 
and respondent burden, invites the general public and other Federal 
agencies to take this opportunity to comment on the renewal of existing 
information collections, as required by the Paperwork Reduction Act of 
1995 (44 U.S.C. chapter 35). Currently, the FDIC is soliciting comment 
on renewal of the information collections described below.

DATES: Comments must be submitted on or before March 13, 2017.

ADDRESSES: Interested parties are invited to submit written comments to 
the FDIC by any of the following methods:
     http://www.FDIC.gov/regulations/laws/federal/notices.html.
     Email: [email protected]. Include the name and number of 
the collection in the subject line of the message.
     Mail: Jennifer Jones (202-898-6768), Counsel, MB-3105, 
Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, 
DC 20429.
     Hand Delivery: Comments may be hand-delivered to the guard 
station at the rear of the 17th Street Building (located on F Street), 
on business days between 7:00 a.m. and 5:00 p.m.

All comments should refer to the relevant OMB control number. A copy of 
the comments may also be submitted to the OMB desk officer for the 
FDIC: Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Washington, DC 
20503.

FOR FURTHER INFORMATION CONTACT: Jennifer Jones, at the FDIC address 
above.

SUPPLEMENTARY INFORMATION:  Proposal to renew the following currently 
approved collections of information:
    1. Title: Interagency Biographical and Financial Report.
    OMB Number: 3064-0006.
    Form Number: Interagency Biographical and Financial Report.
    Affected Public: Insured State Nonmember Banks and State Savings 
Associations.

[[Page 3316]]



                                                                     Burden Estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Estimated        Estimated      Estimated time                            Total annual
                                          Type of burden         number of        number of       per response    Frequency of response     estimated
                                                                respondents       responses         (hours)                               burden (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Interagency Biographical and          Reporting.............             574                1                4   On Occasion...........           2,296
 Financial Report.
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    General Description of Collection: The Report is submitted to the 
FDIC by: (1) Each individual director, officer or individual or group 
of shareholders acting in concert that will own or control 10% or more, 
of a proposed or operating depository institution applying for FDIC 
deposit insurance; (2) a person proposing to acquire control of an 
insured state nonmember bank or state savings association (FDIC-
supervised institution); (3) each proposed new director or proposed new 
chief executive officer of an FDIC-supervised institution which has 
undergone a change in control within the preceding twelve months; and 
(4) each proposed new director or senior executive officer of an FDIC-
supervised institution that is not in compliance with the applicable 
capital requirements or is otherwise in a troubled condition. The 
information is used by the FDIC to make an evaluation of the general 
character and financial condition of individuals who will be involved 
in the management or control of financial institutions, as required by 
statute. In order to lessen the burden on applicants, the FDIC 
cooperates with the other federal banking agencies to the maximum 
extent possible in processing the various applications. Notably, the 
Interagency Biographical and Financial Report will be amended to remove 
all references to the Office of Thrift Supervision as it appears on the 
form as well as changing the term ``thrift'' to ``savings 
association.'' These changes are technical and non-substantive in 
nature.
    2. Title: Prohibitions and Restrictions on Proprietary Trading and 
Certain Interests In and Relationships With, Hedge Funds and Private 
Equity Funds.
    OMB Number: 3064-0184.
    Form Number: None.
    Affected Public: Insured state nonmember banks not under a holding 
company; state savings associations and state savings banks not under a 
holding company; subsidiaries of state nonmember banks, state savings 
associations, and state savings banks not under a holding company; and 
foreign banks having an insured branch and their branches and agencies.

                                                 Burden Estimate
----------------------------------------------------------------------------------------------------------------
                                                                                                   Total annual
                                                     Estimated       Estimated     Frequency of      estimated
                                 Type of burden      number of       hours per       response         burden
                                                    respondents      response                         (hours)
----------------------------------------------------------------------------------------------------------------
IMPLEMENTATION:
    Sec.   351.12(e)..........  Reporting.......               1              50               1              50
                                                 ---------------------------------------------------------------
        Total Reporting.......  ................  ..............  ..............  ..............              50
    Sec.   351.3(d)(3)........  Recordkeeping...               1               3               1               3
    Sec.   351.4(b)(3)(i)(A)..  Recordkeeping...               1               2               4               8
    Sec.   351.11(a)(2).......  Recordkeeping...               1              10               1              10
    Sec.   351.20(b)..........  Recordkeeping...               1             795               1             795
    Sec.   351.20(e)..........  Recordkeeping...               1             200               1             200
    Sec.   351.20(f)(1).......  Recordkeeping...               1               8               1               8
    Sec.   351.20(f)(2).......  Recordkeeping...               1             100               1             100
                                                 ---------------------------------------------------------------
        Total Recordkeeping...  ................  ..............  ..............  ..............           1,124
    Sec.   351.11(a)(8)(i)....  Disclosure......               1             0.1              26               3
                                                 ---------------------------------------------------------------
        Total Disclosure......  ................  ..............  ..............  ..............               3
                                                 ---------------------------------------------------------------
        TOTAL IMPLEMENTATION..  ................  ..............  ..............  ..............           1,177
ONGOING:
    Sec.   351.12(e)..........  Reporting.......              23              20              10           4,600
                                                 ---------------------------------------------------------------
        Total Reporting.......  ................  ..............  ..............  ..............           4,600
    Sec.   351.3(d)(3)........  Recordkeeping...              23               1               1              23
    Sec.   351.4(b)(3)(i)(A)..  Recordkeeping...              23               2               4             184
    Sec.   351.11(a)(2).......  Recordkeeping...              23              10               1             230
    Sec.   351.20(b)..........  Recordkeeping...               4             265               1           1,060
    Sec.   351.20(e)..........  Recordkeeping...               4             200               1             800
    Sec.   351.20(f)(1).......  Recordkeeping...             774               8               1           6,192
    Sec.   351.20(f)(2).......  Recordkeeping...              23              40               1             920
                                                 ---------------------------------------------------------------
        Total Recordkeeping...  ................  ..............  ..............  ..............           9,409
    Sec.   351.11(a)(8)(i)....  Disclosure......              23             0.1              26              60
                                                 ---------------------------------------------------------------
        Total Disclosure......  ................  ..............  ..............  ..............              60
                               ---------------------------------------------------------------------------------

[[Page 3317]]

 
        TOTAL ONGOING.........  ................  ..............  ..............  ..............          14,069
                               ---------------------------------------------------------------------------------
        Total Estimated Burden  ................  ..............  ..............  ..............          15,246
----------------------------------------------------------------------------------------------------------------

    General Description of Collection: Section 619 of the Dodd-Frank 
Act added a new section 13 to the Bank Holding Company (``BHC'') Act 
(to be codified at 12 U.S.C. 1851) that generally prohibits any banking 
entity from engaging in proprietary trading or from investing in, 
sponsoring, or having certain relationships with a hedge fund or 
private equity fund (``covered fund''), subject to certain exemptions. 
New section 13 of the BHC Act also provides for certain nonbank 
financial companies that engage in such activities or have such 
investments or relationships to be subject to additional capital 
requirements, quantitative limits, or other restrictions. The 
respondent/recordkeepers are for-profit financial institutions, 
including small businesses. A covered entity must retain these records 
for a period that is no less than 5 years in a form that allows it to 
promptly produce such records to the FDIC on request.
    The reporting requirements are found in Sec. Sec.  351.12(e) and 
351.20(d); the recordkeeping requirements are found in Sec. Sec.  
351.3(d)(3), 351.4(b)(3)(i)(A), 351.5(c), 351.11(a)(2), and 351.20(b)-
(f); and the disclosure requirements are found in Sec.  
351.11(a)(8)(i). The recordkeeping burden for Sec. Sec.  
351.4(a)(2)(iii), 351.4(b)(2)(iii), 351.5(b)(1), 351.5(b)(2)(i), 
351.5(b)(2)(iv), 351.13(a)(2)(i), and 351.13(a)(2)(ii)(A) is accounted 
for in Sec.  351.20(b); the recordkeeping burden for Appendix B is 
accounted for in Sec.  351.20(c); the reporting and recordkeeping 
burden for Appendix A is accounted for in Sec.  351.20(d); and the 
recordkeeping burden for Sec. Sec.  351.10(c)(12)(i) and 
351.10(c)(12)(iii) is accounted for in Sec.  351.20(e). The information 
collection requirements affecting FDIC-supervised institutions are 
described more fully below.

Reporting Requirements

    Section 351.12(e) states that, upon application by a banking 
entity, the Board may extend the period of time to meet the 
requirements on ownership limitations in this section for up to 2 
additional years, if the Board finds that an extension would be 
consistent with safety and soundness and not detrimental to the public 
interest. An application for extension must (1) be submitted to the 
Board at least 90 days prior to expiration, (2) provide the reasons for 
application including information that addresses the factors in 
paragraph (e)(2) of Sec.  351.12, and (3) explain the banking entity's 
plan for reducing the permitted investment in a covered fund through 
redemption, sale, dilution or other methods.

Recordkeeping Requirements

    Section 351.3(d)(3) specifies that proprietary trading does not 
include any purchase or sale of a security by a banking entity for the 
purpose of liquidity management in accordance with a documented 
liquidity management plan of the banking entity that (1) specifically 
contemplates and authorizes the particular securities to be used for 
liquidity management purposes, the amount, types, and risks of these 
securities that are consistent with liquidity management, and the 
liquidity circumstances in which the particular securities may or must 
be used; (2) requires that any purchase or sale of securities 
contemplated and authorized by the plan be principally for the purpose 
of managing the liquidity of the banking entity, and not for the 
purpose of short-term resale, benefitting from actual or expected 
short-term price movements, realizing short-term arbitrage profits, or 
hedging a position taken for such short-term purposes; (3) requires 
that any securities purchased or sold for liquidity management purposes 
be highly liquid and limited to securities the market, credit and other 
risks of which the banking entity does not reasonably expect to give 
rise to appreciable profits or losses as a result of short-term price 
movements; (4) limits any securities purchased or sold for liquidity 
management purposes, together with any other instruments purchased or 
sold for such purposes, to an amount that is consistent with the 
banking entity's near-term funding needs, including deviations from 
normal operations of the banking entity or any affiliate thereof, as 
estimated and documented pursuant to methods specified in the plan; (5) 
includes written policies and procedures, internal controls, analysis 
and independent testing to ensure that the purchase and sale of 
securities that are not permitted under Sec.  351.6(a) or (b) of this 
part are for the purpose of liquidity management and in accordance with 
the liquidity management plan described in this paragraph; and (6) is 
consistent with the appropriate agency's supervisory requirements, 
guidance and expectations regarding liquidity management.
    Section 351.4(b)(3)(i)(A) provides that a trading desk or other 
organizational unit of another entity with more than $50 billion in 
trading assets and liabilities is not a client, customer, or 
counterparty unless the trading desk documents how and why a particular 
trading desk or other organizational unit of the entity should be 
treated as a client, customer, or counterparty of the trading desk for 
purposes of Sec.  351.4(b). This modification responds to comments 
received on the proposal regarding the definition of client, customer, 
or counterparty for purposes of the market making exemption.
    Section 351.11(a)(2) requires that covered funds generally must be 
organized and offered only in connection with the provision of bona 
fide trust, fiduciary, investment advisory, or commodity trading 
advisory services and only to persons that are customers of such 
services of the banking entity, pursuant to a written plan or similar 
documentation outlining how the banking entity intends to provide 
advisory or other similar services to its customers through organizing 
and offering the covered fund.
    Section 351.20(b) specifies the contents of the compliance program 
for a banking entity with total consolidated assets of $10 billion or 
more. It includes: (1) Written policies and procedures reasonably 
designed to document, describe, monitor and limit trading activities, 
including setting and monitoring required limits set out in Sec.  351.4 
and Sec.  351.5 and activities and investments with respect to a 
covered fund (including those permitted under

[[Page 3318]]

Sec. Sec.  351.3 through 351.6 or Sec. Sec.  351.11 through 351.14) to 
ensure that all activities and investments conducted by the banking 
entity that are subject to section 13 of the BHC Act and this part 
comply with section 13 of the BHC Act and applicable regulations; (2) a 
system of internal controls reasonably designed to monitor compliance 
with section 13 of the BHC Act and this part and to prevent the 
occurrence of activities or investments that are prohibited by section 
13 of the BHC Act and applicable regulations; (3) a management 
framework that clearly delineates responsibility and accountability for 
compliance with section 13 of the BHC Act and this part and includes 
appropriate management review of trading limits, strategies, hedging 
activities, investments, incentive compensation and other matters 
identified in this part or by management as requiring attention; (4) 
independent testing and audit of the effectiveness of the compliance 
program conducted periodically by qualified personnel of the banking 
entity or by a qualified outside party; (5) training for trading 
personnel and managers, as well as other appropriate personnel, to 
effectively implement and enforce the compliance program; and (6) 
records sufficient to demonstrate compliance with section 13 of the BHC 
Act and applicable regulations, which a banking entity must promptly 
provide to the [Agency] upon request and retain for a period of no less 
than 5 years or such longer period as required by [Agency].
    Section 351.20(e) specifies additional documentation required for 
covered funds. Any banking entity that has more than $10 billion in 
total consolidated assets as reported on December 31 of the previous 
two calendar years shall maintain records that include: (1) 
Documentation of the exclusions or exemptions other than sections 
3(c)(1) and 3(c)(7) of the Investment Company Act of 1940 relied on by 
each fund sponsored by the banking entity (including all subsidiaries 
and affiliates) in determining that such fund is not a covered fund; 
(2) for each fund sponsored by the banking entity (including all 
subsidiaries and affiliates) for which the banking entity relies on one 
or more of the exclusions from the definition of covered fund provided 
by Sec. Sec.  351.10(c)(1), 351.10(c)(5), 351.10(c)(8), 351.10(c)(9), 
or 351.10(c)(10) of subpart C, documentation supporting the banking 
entity's determination that the fund is not a covered fund pursuant to 
one or more of those exclusions; (3) for each seeding vehicle described 
in Sec. Sec.  351.10(c)(12)(i) or 351.10(c)(12)(iii) of subpart C that 
will become a registered investment company or SEC-regulated business 
development company, a written plan documenting the banking entity's 
determination that the seeding vehicle will become a registered 
investment company or SEC-regulated business development company; the 
period of time during which the vehicle will operate as a seeding 
vehicle; and the banking entity's plan to market the vehicle to third-
party investors and convert it into a registered investment company or 
SEC-regulated business development company within the time period 
specified in Sec.  351.12(a)(2)(i)(B) of subpart C; and (4) for any 
banking entity that is, or is controlled directly or indirectly by a 
banking entity that is, located in or organized under the laws of the 
United States or of any State, if the aggregate amount of ownership 
interests in foreign public funds that are described in Sec.  
351.10(c)(1) of subpart C owned by such banking entity (including 
ownership interests owned by any affiliate that is controlled directly 
or indirectly by a banking entity that is located in or organized under 
the laws of the United States or of any State) exceeds $50 million at 
the end of two or more consecutive calendar quarters, beginning with 
the next succeeding calendar quarter, documentation of the value of the 
ownership interests owned by the banking entity (and such affiliates) 
in each foreign public fund and each jurisdiction in which any such 
foreign public fund is organized, calculated as of the end of each 
calendar quarter, which documentation must continue until the banking 
entity's aggregate amount of ownership interests in foreign public 
funds is below $50 million for two consecutive calendar quarters.
    Section 351.20(f)(1) applies to banking entities with no covered 
activities. A banking entity that does not engage in activities or 
investments pursuant to subpart B or subpart C (other than trading 
activities permitted pursuant to Sec.  351.6(a) of subpart B) may 
satisfy the requirements of this section by establishing the required 
compliance program prior to becoming engaged in such activities or 
making such investments (other than trading activities permitted 
pursuant to Sec.  351.6(a) of subpart B).
    Section 351.20(f)(2) applies to banking entities with modest 
activities. A banking entity with total consolidated assets of $10 
billion or less as reported on December 31 of the previous two calendar 
years that engages in activities or investments pursuant to subpart B 
or subpart C of this part (other than trading activities permitted 
under section 351.6(a)) may satisfy the requirements of this section by 
including in its existing compliance policies and procedures 
appropriate references to the requirements of section 13 and this part 
and adjustments as appropriate given the activities, size, scope and 
complexity of the banking entity.

Disclosure Requirements

    Section 351.11(a)(8)(i) requires that a banking entity must clearly 
and conspicuously disclose, in writing, to any prospective and actual 
investor in the covered fund (such as through disclosure in the covered 
fund's offering documents) (1) that ``any losses in [such covered fund] 
will be borne solely by investors in [the covered fund] and not by [the 
banking entity]; therefore, [the banking entity's] losses in [such 
covered fund] will be limited to losses attributable to the ownership 
interests in the covered fund held by [the banking entity] in its 
capacity as investor in the [covered fund] or as beneficiary of a 
restricted profit interest held by [the banking entity]''; (2) that 
such investor should read the fund offering documents before investing 
in the covered fund; (3) that the ``ownership interests in the covered 
fund are not insured by the FDIC, and are not deposits, obligations of, 
or endorsed or guaranteed in any way, by any banking entity'' (unless 
that happens to be the case); and (4) the role of the banking entity 
and its affiliates and employees in sponsoring or providing any 
services to the covered fund.

Request for Comment

    Comments are invited on: (a) Whether the collections of information 
are necessary for the proper performance of the FDIC's functions, 
including whether the information has practical utility; (b) the 
accuracy of the estimates of the burden of the information collections, 
including the validity of the methodology and assumptions used; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (d) ways to minimize the burden of the collections of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology. All 
comments will become a matter of public record.

    Dated at Washington, DC, this 5th day of January 2017.


[[Page 3319]]


Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. 2017-00361 Filed 1-10-17; 8:45 am]
 BILLING CODE 6714-01-P