FRGFIN_FRGFINW_20100416_omb

Supporting Statement for the
Notice By Financial Institutions of Government Securities Broker or Government
Securities Dealer Activities and the
Notice By Financial Institutions of Termination of Activities as a Government
Securities Broker or Government Securities Dealer
(FR G-FIN, FR G-FINW; OMB No. 7100-0224)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from
the Office of Management and Budget (OMB), proposes to extend for three years, without
revision, the following interagency information collection (OMB No. 7100-0224):



the Notice By Financial Institutions of Government Securities Broker or Government
Securities Dealer Activities (FR G-FIN)
the Notice By Financial Institutions of Termination of Activities as a Government
Securities Broker or Government Securities Dealer (FR G-FINW).

The Government Securities Act of 1986 (the Act) requires financial institutions to notify their
appropriate regulatory agency1 (ARA) of their intent to engage in government securities broker
or dealer activity, to amend information submitted previously, and to record their termination of
such activity.
The Federal Reserve is the ARA for state member banks, foreign banks, uninsured state
branches or state agencies of foreign banks, commercial lending companies owned or controlled
by foreign banks, and Edge corporations.2 The Federal Reserve Board uses the information in its
supervisory capacity to measure compliance with the Act. The total annual burden for both
notices is estimated to be 12 hours.
Background and Justification
The Act established for the first time federal regulation of brokers and dealers of
government securities, including banks and other financial institutions. The Act directed the
Secretary of the Department of the Treasury (Treasury) to adopt regulations concerning
consumer protection as well as the financial, reporting, and recordkeeping responsibilities of
brokers and dealers. In promulgating its regulations, the Treasury was directed to consult with
the Securities and Exchange Commission (SEC), the Federal Reserve, and the other federal
banking regulatory agencies, and to consider the sufficiency of existing laws and regulations of
other agencies.

1

The agencies are the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.
2

At this time, there are no foreign banks, commercial lending companies owned or controlled by foreign banks, or
Edge corporations registered as government securities brokers or dealers.

Beginning on July 25, 1987, all financial institutions that serve as government securities
brokers and government securities dealers were required to notify their ARA of such activities.
The financial institutions notify their ARA on reporting forms prescribed by the Federal Reserve
that they are engaged in, or have ceased to be engaged in, the activity. The ARAs enforce these
Treasury regulations for financial institutions. The Act required previously unregulated nonbank
government securities brokers and dealers to register with the SEC and to join a self-regulatory
organization (SRO). The SEC and SROs enforce these Treasury regulations for nonbanks.
Some institutions are exempt from the notice requirement by the Treasury regulation.
(For example, an institution whose activity is limited to issuing or forwarding U.S. Savings
Bonds.) When an exemption no longer applies, the institution must immediately file a notice.
Description of Information Collection
Pursuant to the Act, the FR G-FIN is the initial notice of government securities broker or
dealer activities and is used to amend obsolete information. The information collected on the
FR G-FIN includes the company name, all business addresses, names and titles of managers of
government securities activities, and whether any person associated with the respondent’s
government securities activities has been involved in disciplinary proceedings related to
securities sales. The FR G-FINW is the notice of termination of government securities broker or
dealer activities and collects the company name, address, and contact person responsible for the
records associated with the financial institution’s activities as a government securities broker or
dealer. Both information collections are event-generated.
An important function of the FR G-FIN is to help financial institutions determine whether
they must file notices pursuant to the Act. The definitions of government securities broker and
government securities dealer in the statute are very broad and if read literally would encompass
most banks and many thrift institutions. The Treasury has the authority to exempt institutions
from this requirement if it is consistent with the intent of the Act. When the Treasury regulations
were first drafted to implement the reporting requirements of the Act, the ARAs worked closely
to narrow the class of financial institution required to file the FR G-FIN (the consensus is
reflected in Part B of the instructions, Who Must File).
In addition to incorporating Treasury’s exemptions from the notice requirement in the
reporting instructions, the Federal Reserve has also prominently summarized these exemptions
on the cover of the FR G-FIN in a box labeled Notice Requirements in order to provide a simpler
and easier means for financial institutions to determine if they are exempt.
The statute requires that the notice contain information concerning the financial
institution and any persons associated with the institution as the Board of Governors deems to be
in the public interest or necessary for the protection of investors. Respondents are required to
report in data item 6 the names of persons directly engaged in the management, direction, or
supervision of their government securities dealer activities (rather than all management
personnel of the financial institution). This parallels similar information that the SEC requires in
the municipal securities dealer registration form (MSD; OMB No. 3235-0083). Data item 7
incorporates a narrower definition of associated person than is contained in the statute (this

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narrower definition has been agreed to by the ARAs). The respondent is required to review
employee data from other information collections3 and inform its ARA if any associated person
has responded Yes to any questions on those reporting forms related to previous disciplinary
actions that would constitute statutory disqualifications against the associated person or any of
the employers for whom the associated person worked.
The FR G-FINW termination notice collects the name and address of the financial
institution, as well as the name and address of the custodian of the institution’s records of its
government securities activities.
Currently, the Federal Reserve is the ARA for 16 nonexempt government securities
brokers or dealers: 11 state member banks and 5 branches and agencies of foreign banks. Most
of these institutions are also registered municipal securities dealers.
Time Schedule for Information Collection
Financial institutions file the FR G-FIN before commencing operations as a government
securities broker or dealer. Amended FR G-FIN notices are due within 30 days of the date on
which information on the previous notice became inaccurate. Financial institutions that cease to
act as a government securities broker or dealer should file the FR G-FINW immediately.
Respondents file two copies of the notice directly with the Federal Reserve. The Federal
Reserve forwards one copy to the SEC. The notices are available to the public upon request to
the Federal Reserve or the SEC. The data are not published.
Legal Status
The Board’s Legal Division has determined that 15 U.S.C. 78c and 78o-5 authorizes the
Board to require these notices. The Board does not consider these data to be confidential.
Consultation Outside the Agency and Discussion of Public Comment
The Federal Reserve Board staff consults on occasion with staff at the Department of the
Treasury concerning these information collection requirements. On February 2, 2010, the
Federal Reserve published a notice in the Federal Register (75 FR 5320) requesting public
comment for 60 days on the extension, without revision, of the FR G-FIN and FR G-FINW. The
comment period for this notice expired on April 5, 2010. The Federal Reserve did not receive
any comments. On April 16, 2010, the Federal Reserve published a final notice in the Federal
Register (75 FR 19973).

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The interagency Uniform Application for Municipal Securities Principal or Municipal Securities Representative
Associated with a Bank Municipal Securities Dealer (MSD-4; OMB No. 7100-0100), Treasury’s Disclosure Form
for Person Associated with a Financial Institution Government Securities Broker or Dealer (G-FIN-4; OMB No.
1535-0089), and the National Association of Securities Dealers', Form U-4, that is not subject to the Paperwork
Reduction Act.

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Estimate of Respondent Burden
As shown in the following table, the total annual burden for both notices is estimated to
be 12 hours. The estimated average response time is one hour for the FR G-FIN and 15 minutes
for the FR G-FINW. Because the frequency of filing these notices is event-generated, it is not
possible to predict exactly how many would be filed in a particular year. The estimated number
of responses was determined using the number of notices received over the past 5 years. The
annual burden of this information collection represents less than 1 percent of the total Federal
Reserve System paperwork burden.

FR G-FIN
FR G-FINW

Estimated
number of
responses

Annual
frequency

Estimated
average hours
per response

10
8

1
1

1 hour
15 minutes

Total

Estimated
annual
burden hours
10
2
12

The annual cost to the public of information collection is estimated to be $1,073.4
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Cost to the Federal Reserve System
Since the notices require no automated processing, the cost to the Federal Reserve
System is negligible.

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Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rate (20% Administrative or Junior Analyst @ $25, 70% Senior Management @
$100, and 10% Legal Counsel @ $144). Hourly rate estimates for each occupational group are averages using data
from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages 2007,
www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the BLS Occupational Classification
System, www.bls.gov/soc/.

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