FormGFIN_FormGFINW_20160801_omb

Supporting Statement for the
Notice by Financial Institutions of Government Securities Broker or Government
Securities Dealer Activities (Form G-FIN; OMB No. 7100-0224) and the
Notice by Financial Institutions of Termination of Activities as a Government Securities
Broker or Government Securities Dealer (Form G-FINW; OMB No. 7100-0224)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
without revision, the following mandatory interagency information collections (OMB No. 71000224):
 Notice by Financial Institutions of Government Securities Broker or Government
Securities Dealer Activities (Form G-FIN) and
 Notice by Financial Institutions of Termination of Activities as a Government Securities
Broker or Government Securities Dealer (Form G-FINW).
The Securities Exchange Act of 1934, as amended (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 uses the information in its
supervisory capacity to measure compliance with the Act. The total annual burden for both
notices is estimated to be 5 hours.
Background and Justification
The Act establishes federal regulation of brokers and dealers of government securities,
(including banks and other financial institutions) authorizing the Secretary of the Department of
the Treasury (Treasury) to adopt regulations concerning the protection of customer securities and
the financial responsibility, reporting, and recordkeeping of brokers and dealers in government
securities. 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 to consider the adequacy of existing laws and regulations. The Act also
required previously unregulated nonbank government securities brokers and dealers to register
with the SEC and to join a self-regulatory organization (SRO).
Today, all financial institutions that serve as government securities brokers and
government securities dealers are required to notify their ARA when they plan to engage in or
1

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

cease to engage in government securities broker or dealer activity. This notification is provided
through reporting forms prescribed by the Federal Reserve for use by all of the ARAs and the
Commission. The ARAs are responsible for enforcing these Treasury regulations for financial
institutions. The SEC and SROs enforce Treasury regulations for nonbanks.
Some institutions are exempt from the notice requirement under the Treasury regulations
(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 Form G-FIN is used to provide initial notice of government
securities broker or dealer activities or to amend information previously provided. The Form GFIN collects such information as the company name, all business addresses, names and titles of
managers of government securities activities, and the names of any persons involved in
disciplinary proceedings related to the sale of securities. The Form G-FINW is the notice of
termination of government securities broker or dealer activities and collects such information as
the company name, address, and contact person responsible for the records associated with the
government securities broker or dealer activities. Both information collections are eventgenerated.
An important function of the Form 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 Form G-FIN
(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 prominently summarized these exemptions on the
cover sheet of the Form G-FIN 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 such information concerning the financial
institution and any persons associated with the institution as the Board deems to be in the public
interest or necessary for the protection of investors (15 U.S.C. § 78o-5(a)(1)(B)(ii)).
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 (Form MSD; OMB No.
3235-0083). Data item 7 incorporates a narrower definition of associated person than is
contained in the statute (this narrower definition has been agreed to by the ARAs). The

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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 Form 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 23 nonexempt government securities
brokers or dealers: 16 state member banks, and seven 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 Form G-FIN before commencing operations as a
government securities broker or dealer. Amended Form 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 Form 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 the Securities and Exchange Act of 1934
authorizes the Board to require these notices. The notices are authorized under 15 U.S.C. § 78o5(a)(l)(B)(i), which requires a financial institution that is a broker or dealer of government
securities to submit written notice advising its ARA that it is a government securities broker or a
government securities dealer (Form G-FIN notice), or that it has ceased to act as such (Form GFINW notice). Section 15C of the Act directs the Board, in consultation with the other ARAs
(including the SEC), to prescribe the form and the information collected on these notices for a
financial institution that is a government securities broker or dealer (15 U.S.C. § 78o5(a)(l)(B)(ii). Further support for the creation and collection of these notices by the Board is
found in Treasury regulations, authorized by 15 U.S.C. § 78o-5(b)(l), instructing that any
amendments or corrections to a financial institution’s status as a government securities broker or
dealer also be filed with the ARA on the Form G-FIN notice (17 C.F.R. § 400.5(b)).
Under the Act, the Treasury is authorized to exempt any government securities broker or
dealer, or class thereof, from the notice requirement of section 78o-5(a)(1)(B) (15 U.S.C. § 78o5(a)(5)). Thus, the obligation to file the notices with the Board is mandatory for those financial
3

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

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institutions for which the Board serves as the ARA, unless exempted from the notice filing
requirement under the Treasury’s regulations (17 CFR Part 401). When an exemption no longer
applies, the institution must immediately file a notice. The filing of these notices is event
generated. The notices are made available to the public (15 U.S.C. § 78o-5(a)(l)(B)(iii)), so no
confidentiality issue arises.
Consultation Outside the Agency
The Board consults on occasion with the Treasury concerning these information
collection requirements. On February 29, 2016, the Board published a notice in the Federal
Register (81 FR 10248) requesting public comment for 60 days on the extension, without
revision, of the Form G-FIN and Form G-FINW. The comment period for this notice expired on
April 29, 2016. The Board did not receive any comments. On May 26, 2016, the Board
published a final notice in the Federal Register (81 FR 33533).
Estimate of Respondent Burden
As shown in the following table, the total annual burden for both notices is estimated to
be five hours. The estimated average response time is one hour for the Form G-FIN and 15
minutes for the Form 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 in the past. These
reporting requirements represent less than 1 percent of the total Federal Reserve System
paperwork burden.

Form G-FIN
Form G-FINW

Number of
respondents4

Annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

4
2

1
1

1.00
0.25

4
1
5

Total
The total annual cost to the public of information collection is estimated to be $266.5
Sensitive Questions

This collection of information contains no questions of a sensitive nature, as defined by
4

Of the 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/contracting/getting-started-contractor/make-sureyou-meet-sba-size-standards/table-small-business-size-standards.
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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 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/.

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OMB guidelines.
Estimate of 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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