[Federal Register Volume 90, Number 62 (Wednesday, April 2, 2025)]
[Rules and Regulations]
[Pages 14412-14414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-05504]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of Financial Research
12 CFR Part 1610
Ongoing Data Collection of Non-Centrally Cleared Bilateral
Transactions in the U.S. Repurchase Agreement Market
AGENCY: Office of Financial Research, Treasury.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Office of Financial Research (the ``Office'') within the
U.S. Department of the Treasury (``Treasury'') is extending the
compliance date for certain financial companies to report to the Office
certain non-centrally cleared bilateral transactions in the U.S.
repurchase agreement (``repo'') market. This data collection requires
daily reporting to the Office by certain brokers, dealers, and other
financial companies with large exposures to non-centrally cleared
bilateral repo (``NCCBR'') transactions.
DATES:
Effective date: The effective date for this rule is April 1, 2025.
Compliance dates: The compliance date for 12 CFR 1610.11(e)(2) is
extended from April 1, 2025 to June 30, 2025, and the compliance date
for 12 CFR 1610.11(e)(4) is extended from 270 to 360 days.
FOR FURTHER INFORMATION CONTACT: Michael Passante, Chief Counsel,
Office of Financial Research, (202) 594-9658,
[email protected]; Sriram Rajan, Associate Director of
Financial Markets, Office of Financial Research, (202) 594-9658,
[email protected]; or Laura Miller Craig, Senior Advisor,
Office of Financial Research, (202) 594-9658,
[email protected].
SUPPLEMENTARY INFORMATION:
I. Discussion
On May 6, 2024, the Office published a final regulation for a data
collection of NCCBR transactions in the U.S. repo market (``Final
Rule''), with an effective date of July 5, 2024 and codified at 12 CFR
1610.11.\1\ That collection requires daily reporting to the Office by
certain brokers, dealers, and other financial companies with large
exposures to NCCBR transactions. The compliance date for certain
securities brokers, securities dealers, government securities brokers,
and government securities dealers occurred on December 2, 2024. These
data are being used by the Office to fulfill its responsibilities under
title I of the Dodd-Frank Wall Street Reform and Consumer Protection
Act, including support of the Financial Stability Oversight Council
(``Council'') and Council member agencies by facilitating financial
stability monitoring and research.
---------------------------------------------------------------------------
\1\ Department of the Treasury. Ongoing Data Collection of Non-
centrally Cleared Bilateral Transactions in the U.S. Repurchase
Agreement Market. Final Rule, 89 FR 37091 (May 6, 2024).
---------------------------------------------------------------------------
As explained in the Final Rule, the purpose of the collection is to
fill a critical gap in regulators' information about the overall repo
market by collecting data on the NCCBR segment, the last segment of the
repo market for which regulators have not had a transaction-level data
source. Without the collection, regulators would have limited insight
into risks in this segment and across segments. The reporting structure
of the Final Rule was carefully developed to ensure that no significant
data gap remained in repo markets once the rule was fully implemented.
In the Final Rule, reporting is required by certain financial
companies (as defined in the Final Rule) that fall within either of two
categories: \2\
---------------------------------------------------------------------------
\2\ 89 FR 37097 (May 6, 2024).
---------------------------------------------------------------------------
Category 1: a securities broker, securities dealer,
government securities broker, or government securities dealer whose
average daily outstanding commitments to borrow cash and extend
guarantees in NCCBR transactions with counterparties over all business
days during the prior calendar quarter is at least $10 billion, and
Category 2: any financial company that is not a securities
broker, securities dealer, government securities broker, or government
securities dealer and that has over $1 billion in assets or assets
under management, whose average daily outstanding commitments to borrow
cash and extend guarantees in NCCBR transactions, including commitments
of all funds for which the company serves as an investment adviser,
with counterparties that are not securities brokers, securities
dealers, government securities brokers, or government securities
dealers over all business days during the prior calendar quarter is at
least $10 billion.
Category 2 is structured to cover other financial companies with
large daily outstanding commitments to entities that are not securities
brokers, securities dealers, government securities brokers, or
government securities dealers to limit duplicative reporting.
In the Final Rule, the Office established staggered compliance
dates for Category 1 and Category 2 covered reporters, with an
additional 120 days for Category 2 reporters compared to Category 1
covered reporters. The Final Rule established a compliance date of 150
days after the effective date of the Final Rule for Category 1 covered
reporters and a compliance date of 270 days after the effective date of
the Final Rule for Category 2 covered reporters. These timelines were
extensions from the proposed 90 days for both Category 1 and Category
2. The Office extended the compliance dates and added the staggered
timeline for Category 2 covered reporters based on comments received in
response to its proposed rule (the ``proposed rule'').\3\
---------------------------------------------------------------------------
\3\ Department of the Treasury. Collection of Noncentrally
Cleared Bilateral Transactions in the U.S. Repurchase Agreement
Market. Proposed rule, 88 FR 1154 (January 9, 2023).
---------------------------------------------------------------------------
Since the Final Rule was adopted, the Office has worked with market
participants, including both Category 1 covered reporters and potential
Category 2 covered reporters, to address operational questions related
to establishing connectivity to the OFR's Data Collection Utility and
otherwise preparing for reporting to the Office's data collection
infrastructure. Many potential Category 2 covered reporters have
connected to the Data Collection Utility and have submitted test
submissions files. As part of these efforts, the OFR has become aware
that some potential Category 2 covered reporters believe that an
extension to the compliance date for Category 2 covered reporters is
warranted. Trade associations that represent certain market
participants that identify themselves as potential Category 2 covered
reporters have described challenges that their members have encountered
in the process of preparing
[[Page 14413]]
for reporting under the Final Rule and have requested extensions to the
compliance date ranging from three months to over a year.
Among the challenges cited by these entities is the automation of
reporting processes for financial companies that are not always
accustomed to transaction-reporting requirements and to the development
of systems that both capture and report trade information. Other
concerns noted by potential Category 2 covered reporters include
challenges with respect to computing reporting thresholds and a
perceived limited number of third-party service providers to submit
data on their behalf.
The Office had acknowledged in its Final Rule that Category 2
reporters may need to establish or adapt their infrastructure to comply
with their reporting obligations. As a result, based on comment
letters, the Office extended the initial compliance date materially
compared to that set forth in its proposed rule (an increase from 90
days to 270 days) and introduced an option but not a requirement to use
a third-party service provider to submit data on behalf of a covered
reporter. Since the publication of the Final Rule, trade associations
approached the Office with the challenges mentioned above.
The compliance date schedule established in the Final Rule sought
to strike a balance between respecting the resources necessary for
financial companies to establish or adapt reporting infrastructure
against the benefit of the Council's monitoring of emerging threats to
the stability of the U.S. financial system. The collection of
information on the NCCBR segment continues to be critical to
understanding potential financial stability risks. Reporting by
Category 1 covered reporters pursuant to the Final Rule has already
started, and the Office has begun analyzing these data to support the
Council.\4\ Category 2 covered reporters are, as explained in more
detail in the Final Rule and above, financial companies with
outstanding commitments of greater than $10 billion in NCCBR
transactions with financial companies other than securities brokers,
securities dealers, government securities brokers, and government
securities dealers. Accordingly, transaction-level data reported by
Category 2 covered reporters represents substantial incremental
coverage of this segment of the repo market, including at least $10
billion in commitments from each Category 2 covered reporter that would
not be included in transaction-level data reported by Category 1
covered reporters. For the reasons discussed in the Final Rule,
including coverage of potential future changes in repo market structure
such as peer-to-peer repo that bypasses Category 1 financial companies,
the benefits of reporting by Category 2 firms remain significant, and
the absence of reporting by these firms would leave a crucial gap in
the ability of the Council and its member agencies to effectively
monitor financial stability risks in this market.
---------------------------------------------------------------------------
\4\ See Council, Readout of Meeting on March 20, 2025, available
at https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/fsoc/council-meetings.
---------------------------------------------------------------------------
The Office has considered the above-noted concerns and also finds
that if potential Category 2 covered reporters have not developed
adequate reporting systems by the compliance date, such an outcome
could affect the quality of any data reported. It believes that a
limited extension of the compliance date for Category 2 covered
reporters is appropriate. Based on communications with trade
associations, which gave qualitative descriptions of the challenges
faced by potential Category 2 covered reporters, and the quantitative
data and information otherwise available to the Office at this time,
the Office does not believe that an extension amounting to the
lengthier periods requested is warranted. In addition, in light of the
relative proximity between publication of this extension and the
Category 2 compliance date originally established, the Office believes
that any extension should apply equally to those financial companies
that qualified as Category 2 covered reporters as of the effective date
of the Final Rule as well as those that qualified or will qualify after
such date.
Accordingly, the Office believes that a 90-day extension of the
Category 2 compliance date for financial companies that qualified as
Category 2 covered reporters as of the effective date of the Final
Rule, as well as those that qualified or will qualify after such date,
is appropriate. The Final Rule's effective date of July 5, 2024 remains
unchanged.
II. Administrative Law Matters
II(a). Paperwork Reduction Act
The information collection contained in the final rule has been
reviewed and approved by the Office of Management and Budget (``OMB'')
under OMB Control No. 1505-0279. In accordance with the requirements of
the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the Office may
not conduct or sponsor, and a covered reporter is not required to
respond to, an information collection unless it displays a currently
valid OMB control number.
II(b). Administrative Procedure Act
The Administrative Procedure Act (``APA'') generally requires an
agency to publish notice of a rulemaking in the Federal Register,
provide an opportunity for public comment, and provide a 30-day delayed
effective date for a final rule.\5\ The requirements do not apply,
however, if the agency ``for good cause finds . . . that notice and
public procedure and impracticable, unnecessary, or contrary to the
public interest.'' \6\ The Office finds that, for good cause and the
reasons cited above, including the further development of systems to
effect the required reporting under the Final Rule, notice and
solicitation of comment regarding the extension of the compliance date
for Category 2 covered reporters in the Final Rule is impracticable,
unnecessary, or contrary to the public interest.
---------------------------------------------------------------------------
\5\ 5 U.S.C. 553(b)(B) and (d).
\6\ See id.
---------------------------------------------------------------------------
II(c). Regulatory Flexibility Act
Because no notice of proposed rulemaking is required for this final
rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.) do not apply.
II(d). Congressional Review Act
This rule is not a major rule pursuant to the Congressional Review
Act (CRA), 5 U.S.C. 801 et seq.
List of Subjects in 12 CFR Part 1610
Banks, Banking, Confidential business information, Securities.
For the reasons stated in the preamble, the Office of Financial
Research amends 12 CFR part 1610 as follows:
PART 1610--REGULATORY DATA COLLECTIONS
0
1. The authority citation for part 1610 continues to read as follows:
Authority: 12 U.S.C. 5343 and 5344.
0
2. Revise Sec. 1610.11(e) to read as follows:
Sec. 1610.11 Non-centrally Cleared Bilateral Repurchase Agreement
Data.
* * * * *
(e) Compliance date. (1) Any financial company that meets the
criteria set forth in paragraph (b)(2)(i) of this section as of July 5,
2024 shall comply with the reporting requirements pursuant to this
section 150 days after July 5, 2024. Any such covered reporter's first
submission shall be submitted on the first business day after such
compliance date.
[[Page 14414]]
(2) Any financial company that meets the criteria set forth in
paragraph (b)(2)(ii) of this section as of July 5, 2024 shall comply
with the reporting requirements pursuant to this section 360 days after
July 5, 2024. Any such covered reporter's first submission shall be
submitted on the first business day after such compliance date.
(3) Any financial company not described in paragraph (e)(1) or (2)
of this section that meets the criteria set forth in paragraph
(b)(2)(i) of this section after July 5, 2024 shall comply with the
reporting requirements pursuant to this section 150 days after the last
day of the calendar quarter in which such financial company becomes a
covered reporter.
(4) Any financial company not described in paragraph (e)(1) or (2)
of this section that meets the criteria set forth in paragraph
(b)(2)(ii) of this section after July 5, 2024 shall comply with the
reporting requirements pursuant to this section 360 days after the last
day of the calendar quarter in which such financial company becomes a
covered reporter.
James D. Martin,
Acting Director.
[FR Doc. 2025-05504 Filed 4-1-25; 8:45 am]
BILLING CODE 4810-AK-P-P