[Federal Register Volume 83, Number 202 (Thursday, October 18, 2018)]
[Rules and Regulations]
[Pages 52767-52768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22732]
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DEPARTMENT OF THE TREASURY
17 CFR Part 420
Government Securities Act Regulations: Large Position Reporting
Rules
AGENCY: Office of the Assistant Secretary for Financial Markets,
Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (Treasury) is issuing a final
rule to amend its Large Position Reporting rules (LPR Rules). These
technical amendments make no substantive changes to the rules but are
designed to provide Treasury with additional flexibility to specify in
its notice requesting large position reports where and how reports are
to be filed. Accordingly, Treasury will provide notice by issuing a
public announcement and subsequently publishing the notice in the
Federal Register. Treasury believes these amendments may also minimize
the costs and burden on reporting entities.
DATES: The amendments are effective November 17, 2018.
ADDRESSES: This final rule is available at http://www.treasurydirect.gov and http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Lori Santamorena, Kurt Eidemiller,
Kevin Hawkins, or John Garrison, Department of the Treasury, Bureau of
the Fiscal Service, Government Securities Regulations Staff, (202) 504-
3632 or email us at [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
A. Treasury's Large Position Reporting Rules
The LPR Rules \1\ are issued under the Government Securities Act
(GSA),\2\ as amended, for the purposes of monitoring the impact of
large positions in Treasury securities in the Treasury securities
market and otherwise assisting the Securities and Exchange Commission
(SEC) in enforcing the GSA.\3\ The LPR Rules provide an on-demand
reporting system \4\ that requires reports to be filed by entities that
control 10 percent or more in a particular Treasury security (or
securities) as of a particular date. The reports provide information on
large positions in Treasury securities held by market participants and
additional insight into the supply and demand dynamics in certain
Treasury securities.\5\ This information allows
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Treasury to monitor the impact of concentrations of positions.\6\ Since
the rules became effective in 1997, Treasury has conducted 16 large
position report calls.
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\1\ 78 FR 73414 December 10, 2014.
\2\ Public Law 103-202, 107 Stat. 2344 (1993) [15 U.S.C. 78o-
5(f)].
\3\ Treasury does not believe that large positions in Treasury
securities are inherently problematic and there is no presumption of
manipulative or illegal intent merely because a reporting entity's
position is large enough to be subject to Treasury's LPR Rules.
\4\ An ``on-demand'' reporting system, rather than a regular,
ongoing system of reporting, provides Treasury with the information
necessary to understand supply and demand dynamics in the Treasury
securities market, while minimizing the potential impact on the
market's efficiency and liquidity and the cost to taxpayers of
funding the federal debt. It also minimizes the cost and burden to
those reporting entities affected by the LPR Rules.
\5\ The GSA specifically provides that Treasury shall not be
compelled to disclose publicly any information required to be kept
or reported for large position reporting. In particular, the GSA
exempts such information from disclosure under the Freedom of
Information Act. See 15 U.S.C. 78o-5(f)(6).
\6\ Under current rules, this information is also made available
to the Federal Reserve Bank of New York (FRBNY), as Treasury's
agent, and the SEC. See 15 U.S.C. 78o-5(f)(1).
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B. Who Is Subject to the LPR Rules
Treasury's LPR Rules apply to all foreign and domestic persons and
entities that control a reportable position in a Treasury security,
including but not limited to: Government securities brokers and
dealers; registered investment companies; registered investment
advisers; custodians, including depository institutions that exercise
investment discretion; hedge funds; pension funds; insurance companies;
and foreign affiliates of U.S. entities. Central banks (including U.S.
Federal Reserve Banks for their own account), foreign governments, and
international monetary authorities may voluntarily submit large
position reports when they meet or exceed a reporting threshold.
C. The Existing Large Position Report Submission Process
Under the current LPR Rules, reports are required to be filed by
facsimile (fax) or delivered by hardcopy to FRBNY. A report is
considered filed when received by FRBNY. Reporting entities typically
have three and one-half business days to submit reports, and most
reports are filed by fax with FRBNY. Following previous calls for large
position reports, many reporting entities have commented that it is
difficult to find functional fax machines and would prefer an alternate
means of submission. In response to this feedback, Treasury is
currently exploring alternate options for the submission of reports.
II. Technical Amendments to the LPR Rules
These technical amendments make no substantive changes to the LPR
Rules. They are designed to provide Treasury with the flexibility to
specify in its notice requesting large position reports where and how
reports are to be filed. These amendments will also provide Treasury
with the added flexibility to consider alternate means of submission,
which may further reduce the burden on reporting entities. Treasury
will provide notice of a request for reports, and how the reports are
to be delivered, by issuing a public announcement and subsequently
publishing the notice in the Federal Register.
Specifically, the technical amendments replace references to
``press release'' with ``public announcement;'' provide the option for
Treasury to specify in its public announcement that reports can be
submitted to Treasury directly; and provide the option for Treasury to
specify in its public announcement how reports are to be submitted by
removing references to ``facsimile'' and ``delivered hard copy.''
III. Special Analyses
Executive Orders 13563 and 12866 direct agencies to assess costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). Executive Order 13563
emphasizes the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility.
This rule is not a significant regulatory action for purposes of
Executive Order 12866.
This final rule is procedural in nature under 5 U.S.C. 553(b)(A)
and therefore prior notice and comment procedures are not required. In
addition, because the final rule makes no substantive change to the
existing rules and imposes no additional requirements, we find under 5
U.S.C. 553(b)(B) that there is good cause that notice and public
procedures are unnecessary, and that the rule can be issued in final
form.
Because no notice of proposed rulemaking is required, the
provisions of the Regulatory Flexiblity Act (5 U.S.C. 601 et seq.) do
not apply. These amendments reflect Treasury's continuing interest in
meeting its informational needs while minimizing the cost and burden on
those entities affected by the regulations.
List of Subjects in 17 CFR Part 420
Banks, Banking, Brokers, Government securities, Reporting and
recordkeeping requirements.
For the reasons stated in the preamble, 17 CFR part 420 is amended
as follows:
PART 420--LARGE POSITION REPORTING
0
1. The authority citation for part 420 continues to read as follows;
Authority: 15 U.S.C. 78o-5(f).
0
2. Amend Sec. 420.3 by revising the second sentence of paragraph (a)
and revising paragrphs (h), (i), and (j) to read as follows:
Sec. 420.3 Reporting.
(a) * * * Treasury will provide notice of the large position
thresholds by issuing a public announcement and subsequently publishing
the notice in the Federal Register. * * *
* * * * *
(h) The report must be filed before noon Eastern Time on the fourth
business day following issuance of a public announcement.
(i) A report to be filed pursuant to paragraph (c) of this section
will be considered filed when received by Treasury or the Federal
Reserve Bank of New York according to the instructions provided in the
public announcement.
(j) A reporting entity that has filed a report pursuant to
paragraph (c) of this section shall, at the request of Treasury, or the
Federal Reserve Bank of New York at the direction of Treasury, timely
provide any supplemental information pertaining to such report.
* * * * *
Brian Smith,
Deputy Assistant Secretary for Federal Finance.
[FR Doc. 2018-22732 Filed 10-17-18; 8:45 am]
BILLING CODE 4810-AS-P