FR2034_20160429_omb

Supporting Statement for the
Senior Credit Officer Opinion Survey on Dealer Financing Terms
(FR 2034; OMB No. 7100-0325)
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 voluntary Senior Credit Officer Opinion Survey on Dealer Financing Terms
(FR 2034; OMB No. 7100-0325). This survey collects qualitative and limited quantitative
information from senior credit officers at responding financial institutions on (1) stringency of
credit terms, (2) credit availability and demand across the entire range of securities financing and
over-the-counter derivatives transactions, and (3) the evolution of market conditions and
conventions applicable to such activities up to six times a year. Although the Federal Reserve
seeks the authority to conduct the survey up to six times a year, the survey is expected to be
conducted only four times a year consistent with the Senior Loan Officer Opinion Survey on
Bank Lending Practices (FR 2018; OMB No. 7100-0058). The survey instrument currently
contains 79 core questions divided into three broad sections, as well as additional questions on
special topics of timely interest.
Given the Federal Reserve’s interest in financial stability, the information this survey
collects is critical to the monitoring of credit markets and capital market activity. Aggregate
survey results are made available to the public on the Federal Reserve’s website.1 In addition,
selected aggregate survey results may be discussed in Governor’s speeches, and may be
published in Federal Reserve Bulletin articles and in the annual Monetary Policy Report to the
Congress.
The reporting panel consists of up to 22 U.S. banking institutions and U.S. branches and
agencies of foreign banks, the majority of which are affiliated with a Primary Government
Securities Dealer; however, other types of respondents, such as other depository institutions,
bank holding companies, or other financial entities, may be surveyed when appropriate.2 The
total annual burden is estimated to be 660 hours.
Background and Justification
The FR 2034 survey is significantly modeled after the long-established Senior Loan
Officer Opinion Survey on Bank Lending Practices (FR 2018), which provides qualitative
information on changes in the supply of, and demand for, bank loans to businesses and
households. The information obtained from the FR 2018, which has been conducted in different
forms since 1964, provides valuable insights on credit market and banking developments and
meaningfully informs the formulation of monetary policy.

1

See www.federalreserve.gov/econresdata/releases/scoos.htm.
A list of the current Primary Dealers in Government Securities is available at
www.newyorkfed.org/markets/pridealers_current.html.
2

This information has been particularly valuable in recent years as it has provided the
Federal Reserve with insight into the effects of the financial crisis on the availability of credit to
households and businesses. The crisis, however, also highlighted that a significant volume of
credit intermediation has moved outside of the traditional banking sector, which is the primary
focus of the FR 2018. In addition, some of the instruments that are commonly used in
conjunction with such intermediation (including for the financing of securities positions and
over-the-counter derivatives) may have functioned as transmission mechanisms for financial
distress during the crisis by connecting together seemingly separate parts of the financial system.
For these reasons, and given not only the monetary policy responsibilities of the Federal Reserve
but also its role in promoting and maintaining the stability of the financial system,3 the Federal
Reserve decided to expand the collection of qualitative information on the availability of credit
and leverage beyond the traditional banking sector to the extension of credit by dealers.4
On March 30, 2010, the Federal Reserve implemented FR 2034 to facilitate the regular
collection and analysis of information representing the informed judgment of market participants
on these additional forms of credit extension. However, unlike the large domestically chartered
commercial banks and branches and agencies of foreign banks that make up the pool of
respondents targeted by the FR 2018, this survey targets respondents of a different and smaller
subset of market participants, representing activities not conducted solely in a bank, but in
several different legal entities, focused on the consolidated entity.
Description of Information Collection
The questions on the Senior Credit Officer Opinion Survey are mainly qualitative in
nature. They are drafted to elicit useful information without imposing undue reporting burden,
for example by not requesting information that is already collected through other means. To
understand certain market conventions and practices, however, the Federal Reserve may
occasionally need to ask specific quantitative questions. When quantitative information is
requested, in response to special questions, respondents may be asked to provide approximate or
rough estimates.
The survey instrument currently contains 79 core questions divided into three broad
sections. The first section focuses on credit terms applicable to counterparties of different types,
spanning a variety of different transactions. The second section contains credit terms applicable
to over-the-counter derivatives counterparties, distinguishing among contracts referencing
different underlying assets. The third section deals with questions eliciting information about the
financing terms provided for certain security positions.
The survey is conducted through a web interface designed and maintained by the
Statistics Function of the Federal Reserve Bank of New York, with follow-up as necessary via
telephone. The primary contact at each responding institution is a senior credit officer who has
3

For example, as a member of the Financial Stability Board formed at the behest of the G-20 Finance Ministers and
Central Bank Governors.
4
The Group of Twenty (G-20) consists of finance ministers and central bank governors from 19 systemically
important industrial and developing countries plus the European Union, who convene regularly to consider key
issues related to global economic stability.

2

perspective on all relevant activities conducted by the institution, irrespective of which business
units or geographic areas these activities are located.
Reporting Panel
The activities that are the focus of the proposed Senior Credit Officer Opinion Survey
may be conducted by large financial institutions through multiple business units. For example, a
significant volume of securities financing may be conducted from a prime brokerage platform,
but this does not preclude other similar activities, perhaps with clients other than hedge funds,
from also occurring on trading desks with mandates that include making markets in the securities
being financed or on centralized securities financing desks. In a similar vein, over-the-counter
derivative transactions may occur on dedicated equity volatility or interest rate derivatives desks
that are primarily engaged in derivatives transactions, but can also flow through businesses like
corporate credit and commodities that trade both derivatives and the related cash instruments.
The panel of up to 22 firms includes the consolidated entities affiliated with each of the
primary dealers. This group can be augmented with a few institutions that, while not primary
dealers, play a significant role in some facets of over-the-counter derivatives or securities
financing activities.
Time Schedule for Information Collection and Publication
The survey is generally conducted by the Statistics Function of the Federal Reserve Bank
of New York. The Statistics Function electronically transmits firm-level survey responses to the
Federal Reserve Board, where the data are tabulated and summarized in a public release, which
is made available on the Federal Reserve’s website.
Legal Status
The Board’s Legal Division has determined that the FR 2034 is authorized by sections
2A and 11(a)(2) of the Federal Reserve Act (12 U.S.C. §§ 225a and 248(a)(2)), section 5(c) of
the Bank Holding Company Act (12 U.S.C. § 1844(c)), and section 7(c)(2) of the International
Banking Act of 1978 (12 U.S.C. § 3105(c)(2)) and is voluntary. The individual financial
institution information provided by each respondent would be accorded confidential treatment
under exemption four of the Freedom of Information Act (5 U.S.C. § 552 (b)(4)).
Consultation Outside the Agency
On February 10, 2016, the Federal Reserve published a notice in the Federal Register
(81 FR 7105) requesting public comment for 60 days on the extension, without revision, of the
FR 2034. The comment period for this notice expired on April 11, 2016. The Federal Reserve
did not receive any comments. On April 25, 2016, the Federal Reserve published a final notice
in the Federal Register (81 FR 24096).

3

Estimate of Respondent Burden
As shown in the table below, the total annual burden for the FR 2034 is estimated to be
660 hours. Actual respondent burden for this survey would likely vary depending on how many
of the authorized surveys are actually carried out and on the specific content of each
questionnaire.5 The total annual burden for the FR 2034 represents less than 1 percent of the
total Federal Reserve System paperwork burden.

FR 2034

Number of
respondents6

Annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

22

6

5

660

The total cost to the public is estimated to be $35,079.7
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 Federal Reserve’s processing costs associated with this survey are nominal.

5

Actual burden underlying the average assumed five hour response time varies considerably not only from survey
to survey, depending on the number and nature of the questions, but also among respondents for any one survey.
6
Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/content/small-business-size-standards.
7
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $17, 45% Financial Managers at
$65, 15% Lawyers at $66, and 10% Chief Executives at $89). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2015, published March 30, 2016 www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

4