1530-0064_2021 Supporting Statement (Extension of Treasury's GSA Reg Info Collection)

U.S. Department of the Treasury
Administering the
Government Securities Act Regulations
(17 CFR Chapter IV)
Supporting Statement to Request OMB Approval
Extension of a Currently Approved Collection of Information
Submitted: June 16, 2021
Approval of Collection of Information
OMB Control Number: 1530-0064
JUSTIFICATION
1.

Explain the circumstances that make this collection of information necessary.
Identify any legal or administrative requirements that necessitate the collection.

Title I of the Government Securities Act of 1986 (Pub. L. 99-571) ("the GSA") added Section
15C to the Securities Exchange Act of 1934, requiring that the Secretary of the Treasury
promulgate regulations concerning, among other things, financial responsibility of government
securities brokers and dealers and safeguarding of customer securities and balances. The
Government Securities Act Amendments of 1993 (Pub L. 103-202) (“the GSAA”) permanently
reauthorized Treasury's rulemaking authority. The GSA states that the rules must require every
government securities broker and dealer to make reports, including annual audited financial
statements, and submit them to supervisory agencies. According to the GSA, the Secretary is
also required to promulgate recordkeeping requirements specifying records to be made and kept
and the periods of time for which they must be maintained (Attachment A). The purpose of the
regulations and the associated recordkeeping and reporting requirements continues to be the
enhancement of investor protection in the government securities market, combined with the
maintenance of a fair, efficient, and liquid market.
Title II of the GSA requires the Secretary to promulgate regulations concerning holdings by
depository institutions of government securities for customers, as custodian, fiduciary, or
otherwise (Attachment B). These regulations are designed to protect investor holdings of
government securities at locations other than with brokers and dealers, thereby assuring the
safety and security of investments in Treasury and other government securities.
Final regulations implementing the GSA were published in the Federal Register on July 24,
1987. Amendments to the regulations involving the collections of information have been
published from time to time since the final regulations were implemented. The information
collections expire on October 31, 2021. The regulations, as amended, are codified at 17 CFR
Chapter IV.
Two amendments to the regulations are briefly described here because of their specific focus,
risk assessment and large position reporting.

The Market Reform Act of 1990 (Reform Act) authorized the Securities and Exchange
Commission (SEC) and the Treasury to promulgate risk assessment rules for diversified and
municipal securities brokers and dealers and for specialized government securities brokers and
dealers, respectively (Attachment C). Treasury's amendment to the GSA regulations, which
incorporates the SEC risk assessment rules with only minor modifications, was published on
April 26, 1995, and applies only to specialized government securities brokers and dealers
(registered government securities brokers and dealers). Treasury’s risk assessment rules require
registered government securities brokers and dealers to maintain and file information concerning
certain of their affiliates with the SEC. The purpose of the rules is to strengthen investor
confidence and the integrity of the market.
Section 104 of the GSAA authorized Treasury to adopt rules requiring specified persons holding,
maintaining, or controlling large positions in to-be-issued or recently issued Treasury securities,
to file reports and maintain records regarding such positions (Attachment D). Treasury’s large
position rules, which were published on September 12, 1996, established recordkeeping and
reporting requirements for entities that control large positions in certain Treasury securities.
On December 18, 2002, Treasury issued final rule amendments to the large position rules. These
amendments modified the formula for the large position calculation and required affected firms
to identify their positions in a more detailed manner. And, on December 10, 2014, Treasury
published a final rule amending its large position reporting rules to improve the information
reported so that Treasury can better understand supply and demand dynamics in certain Treasury
securities. The rule became effective on March 10, 2015.
A copy of the relevant portions of the GSA, the GSAA, and the respective regulations
authorizing or mandating the collection of information is attached (Attachments A through D).
2.

Indicate how, by whom, and for what purpose the information is to be used.

The information collected has and will be used by the regulatory agencies with enforcement
jurisdiction over government securities brokers and dealers and depository institutions, namely
the SEC, the Board of Governors of the Federal Reserve System (Board), the Office of the
Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the
National Credit Union Administration, as well as self-regulatory organizations supervised by the
SEC. The information is essential for carrying out the objectives of the GSA -- dealer financial
responsibility and investor (customer) protection. A failure to collect, or an interruption in
collecting, the information would result in an inability to implement the GSA through
enforcement of its implementing regulations. This would frustrate the intent of Congress and
could result in problems in the government securities market.
The information collected related to Treasury’s risk assessment rules has and will be used by the
SEC to specifically monitor the financial risk posed to specialized government securities brokers
and dealers -- and to the securities markets as a whole -- as a result of certain financial and
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securities activities conducted by affiliates within holding company structures. The SEC will use
the information collected for surveillance, enforcement, and other regulatory purposes.
Without the information, the SEC would not be able to monitor the impact of potentially
damaging activities of affiliates on the specialized government securities brokers and dealers and
the securities markets.
The information collected related to Treasury’s large position rules has and will be used by the
SEC and Treasury to better understand the possible reasons for any apparent significant price
distortions and the possible causes of market shortages in certain Treasury securities. This
information also helps Treasury and other regulators to better understand supply and demand
dynamics in certain Treasury securities. Such information allows Treasury to monitor the impact
of concentrations of positions in the Treasury securities market. It is anticipated that the
information will be collected infrequently and will be used by the SEC for surveillance,
enforcement and other regulatory purposes. Due to the high large position reporting threshold(s)
(i.e., a minimum of 10% of the outstanding amount of the specified Treasury security, typically
in excess of $4 billion) which will be announced in a call for reports, it is expected few entities
will likely file large position reports. Since the large position rules became fully effective on
March 31, 1997, Treasury has announced seventeen calls for large position reports (June 9, 1997;
June 8, 1998; July 12, 1999; September 13, 2000; June 4, 2001; July 8, 2003; August 23, 2004;
September 14, 2005; July 5, 2006; November 27, 2007; November 7, 2008; December 9, 2010;
February 27, 2012; March 15, 2013; June 1, 2016; April 9, 2018; and June 3, 2019).
3.

Describe whether, and to what extent, the collection of information involves the use of
automated, electronic, mechanical, or other technological collection techniques or
other forms of information technology? Also describe any consideration of using
information technology to reduce burden.

The regulations do not prevent or discourage the development of electronic records and reports
and the use of computers to generate the required records and reports. Most specialized
government securities brokers and dealers employ automated systems for computing their
financial responsibility requirements.
Treasury’s large position rules specifically allow the reporting entities to develop and generate
their own reports provided the reports contain all of the required information. This allows firms
the opportunity to integrate the report into their existing systems. Many larger government
securities market participants employ automated systems for aggregating and computing their
securities positions.
Treasury is currently exploring alternate options for the submission of large position reports. In
October 2018, Treasury issued non-substantive technical amendments to its large position rules.
The technical amendments gave Treasury the added flexibility to consider alternate means of
submission which may further reduce the burden on reporting entities. 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
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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.’’
On October 27, 1997, the Treasury issued two interpretive letters that permit specialized
government securities brokers and dealers and financial institutions to use electronic media to
deliver hold-in-custody repurchase agreement confirmations and to store records under the GSA
regulations. The letter to specialized government brokers and dealers also permits certain other
customer account information and certain financial reports to be sent electronically. The letter to
financial institutions also allows depository institutions that are custodians of government
securities to use electronic media to transmit confirmations/safekeeping receipts and to store
records under the GSA rules.
Regarding the provision of electronic agency services, various Internet notification mail lists are
available at TreasuryDirect.gov. There are approximately 3,300 subscribers to the Government
Securities Act regulation mail list and approximately 1,700 to the Large Position Reports list.
Anyone signing up on these lists will receive an e-mail notifying them that Treasury has issued a
proposed or final rule amendment, interpretation, or call for large position reports.
In addition, Treasury has made certain forms electronically available on its website. The “Report
on Finances and Operations of Government Securities Broker-Dealers” (Parts I, II, IIA, III, and
Schedule 1), the “Disclosure Form for Person Associated with a Financial Institution
Government Securities Broker or Dealer” and the “Uniform Termination Notice for Person
Associated with a Financial Institution Government Securities Broker or Dealer” forms can all
be accessed and downloaded electronically for ease of use.
4.

Describe efforts to identity duplication. Show specifically why any similar information
already available cannot be used or modified for the purposes described in Item 2
above.

In implementing the regulations, Treasury reduced duplication in several ways. First, registered
broker-dealers are exempt from filing any of the forms or keeping almost any of the records to
avoid duplication with their responsibilities under other sections of the Securities Exchange Act
of 1934. The obligations of financial institutions and their government securities employees are
similarly limited to prevent regulatory overlap. Second, the required records are, for the most
part, those of good business practice, and in the case of registered government securities brokers
and dealers, conform to SEC requirements, with which many of these firms were previously
familiar. Third, the forms have been modified and are, in essence, limited versions of existing
SEC and bank regulatory forms, with which virtually all the registered and noticed entities are
familiar.
Also, to reduce regulatory duplication, various sections of the regulations require compliance
with SEC regulations with only minor modifications. In addition, several of the forms used are
modifications or simplifications of the existing SEC forms. The recordkeeping and reporting
requirements and forms are designed so that entities already filing similar information are
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exempt from having to re-file the same information. The requirements are applicable to entities
not otherwise reporting.
Treasury’s risk assessment rules provide for an exemption from all of their requirements if the
specialized government securities broker or dealer has an affiliated registered broker or dealer
that is subject to, and in compliance with, the SEC's risk assessment rules, provided that all of
the material associated persons of the specialized government securities broker or dealer are also
material associated persons of the registered broker or dealer. Specialized government securities
brokers and dealers are not otherwise required to provide the information required by the risk
assessment rules. The SEC, therefore, would have no assurance of receiving the information, or
comparable information, in the absence of Treasury’s rules.
Also, certain associated persons of specialized government securities brokers or dealers that are
within the scope of Treasury’s risk assessment rules are under the regulatory supervision of the
Commodity Futures Trading Commission, a Federal banking agency, a State Insurance
Commissioner, or other regulators. The rules permit specialized government securities brokers
or dealers to utilize, wherever possible, information required by other regulatory agencies in
discharging their risk assessment recordkeeping and reporting obligations. For example, the
rules permit associated persons of specialized government securities brokers or dealers that are
supervised by a Federal banking agency to submit, without reformatting, copies of reports
already made for the use of such banking agency. Similar provisions are provided for insurance
companies that are associated with specialized government securities brokers or dealers.
In developing Treasury’s large position rules, Treasury examined existing securities-related
recordkeeping rules of the SEC, Treasury, and the bank regulatory agencies. Treasury concluded
that reportable positions could be constructed relatively easily from these required records.
Therefore, Treasury’s large position rules do not provide for any new substantive recordkeeping
rules for aggregating entities that are subject to existing federal recordkeeping requirements, and
that are not designated filing entities.
On September 15, 2006, Treasury issued a technical amendment to the GSA regulations to state
explicitly that Treasury deems over-the-counter (“OTC”) derivatives dealers to be in compliance
with the GSA regulations if they comply with the applicable SEC OTC derivatives dealer rules
and other SEC applicable rules.
5.

If the collection of information impacts small businesses or other small entities,
describe any methods used to minimize burden.

Treasury does not believe the information collections have had or will have a significant impact
on a substantial number of small entities. At the time of implementation, the Department
minimized the burden hours by including a series of exemptions in the regulations and the use of
SEC-based forms Treasury believes that this minimized the burden on small entities.

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Specifically, the large position reporting threshold will under no circumstances be less than 10
percent of the amount outstanding of the specified Treasury security (typically, more than $4
billion). The recordkeeping requirements are not applicable until an entity’s position in a
recently-issued Treasury security equals or exceeds $2 billion. The Department does not believe
small entities control positions of such magnitude and thus, the rules are not applicable to small
entities.
Further, regarding Treasury’s risk assessment rules, Treasury estimates that all of the small
entities that are specialized government securities brokers and dealers qualify for at least one of
the recordkeeping and reporting exemptions in the regulations. For example, the rules provide
for an exemption for specialized government securities brokers and dealers that do not carry
customer accounts and maintain capital of less than $20 million. There is also an exemption for
firms that maintain capital of less than $250,000 (regardless of whether they carry customer
accounts).
6.

Describe the consequence to Federal program or policy activities if the collection is
not conducted or is conducted less frequently, as well as any technical or legal
obstacles to reducing burden.

The required recordkeeping records are essential to responsible business operations by
government securities brokers and dealers. Failure to maintain these records on a regular basis
would most likely cause operational difficulties. Since the financial positions of government
securities dealers can change quickly, monthly filing of financial reports is essential for
identification of problems, enforcement, and investor protection. Regular reporting helps to
avoid having to shut down or completely liquidate a dealer by early identification of potential
problems. Less frequent, or no reporting is required for firms less at risk, such as, introducing
brokers and financial institutions holding securities for customers.
Treasury’s risk assessment rules parallel the SEC’s risk assessment rules and enable the quarterly
collection of timely and complete financial information concerning the activities of affiliates of
specialized government securities brokers and dealers whose activities are reasonably likely to
have a material impact on the broker or dealer for surveillance and other regulatory purposes.
Timely and accurate information is an essential element of the rules. Less frequent collection of
the required information would reduce the regulators' ability to assess the risks to the brokers and
dealers, customers and the securities markets caused by affiliates of the broker or dealer.
Treasury’s large position rules require reporting only on an infrequent basis (typically, once a
year), primarily in response to pricing anomalies or market shortages in a specific Treasury
security. When requested by Treasury, timely and accurate information, to be reported by
holders of large positions, is essential. Large position reports are intended to provide regulators
with information on concentrations of control for market surveillance purposes and for
enforcement of the securities laws. The reported information will help the Treasury securities
market remain liquid and efficient and facilitate government borrowing at the lowest possible
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cost to taxpayers. If the collection of information is not conducted, Treasury may not be able to
take appropriate action in response to possible attempts to manipulate the government securities
market.
7.

Explain any special circumstances. Is this collection of information conducted in a
manner consistent with the guidelines of 5 CFR 1320.6?

The need for monthly reporting is described in response to Question 6. In some cases, record
retention may be required for up to six years to enable any enforcement action to cover the full
period under the applicable statute of limitations.
As previously described, regarding Treasury’s large position rules, Treasury expects that an
announcement which will require holders of large positions to file the appropriate report will be
an infrequent event. This would only be in response to an unusual market occurrence or
condition. Although it is possible that such an unusual market condition could occur more than
once in a three-month period, it is expected that requests for large position reports will occur far
less frequently. Treasury typically requests large position reports annually to ensure that market
participants remain knowledgeable of the rules, specifically as to how to calculate and report a
reportable position. Respondents will submit a report for each date that large position
information is requested in an announcement by Treasury. It is possible that Treasury may need
to occasionally conduct follow-up inquiries on some of the reported information.
When Treasury announces a call for large position reports, reports are typically received before
12:00 noon, Eastern Time, on the fourth business day following issuance of the Treasury press
release. Since the call for reports is precipitated by an unusual market event or security pricing
anomaly, this relatively short response time is necessary to enable Treasury to make better and
more timely decisions regarding possible government actions that may be needed in response to
market events to ensure the safety, liquidity, and efficiency of the Treasury market.
Large position information is by its very nature proprietary trade information of those firms that
deal in government securities and as such will be treated as confidential by the SEC and Treasury
and handled accordingly in a secure fashion. The GSAA specifically provides that the
Department shall not be compelled to disclose publicly any information required to be kept or
reported for large position reporting. In particular, such information is exempt from disclosure
under the Freedom of Information Act at 5 U.S.C. 552(b)(3)(B). Some of the information
received by the SEC related to the risk assessment rules is also proprietary and is treated by the
SEC as confidential and it is handled in a secure fashion.
8.

Describe efforts to notify the general public about this collection of information.

On April 15, 2021, Treasury published in the Federal Register (86 FR 19950) a notice and
request for comments concerning the extension of information collection under the regulations
that were issued pursuant to the GSA (Attachment E). The 60-day comment period closed on
June 14, 2021. No comments were received in response to the notice’s request.
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Treasury consults on a regular basis with other regulatory agencies that collect similar
information and have jurisdiction over government securities brokers and dealers and over
depository institutions, namely, the SEC, Board, OCC, and FDIC. The Department also consults
with the relevant self-regulatory organizations, such as the Financial Industry Regulatory
Authority (FINRA), government securities brokers and dealers of all types and sizes, trade
associations, professional associations, and individual professionals serving government
securities brokers and dealers. In addition, the Department has and will continue to solicit
comments whenever it proposes changes to the recordkeeping and reporting requirements as part
of proposed amendments to the regulations, which provide an opportunity for affected parties to
comment on the information collection. As part of the development of the large position rules,
the Department published an Advance Notice of Proposed Rulemaking (ANPR) on January 24,
1995, in order to involve market participants and interested parties at the earliest phase of the
rulemaking process. As previously discussed, on December 10, 2014, Treasury published a final
rule amending its large position reporting rules to improve the information reported so that
Treasury can better understand supply and demand dynamics in certain Treasury securities. The
rule became effective on March 10, 2015.
The Department has responded to inquiries, oral and written, concerning the regulations and
continues to do so on an on-going basis.
9.

Explain any decision to provide any payment or gift to respondents, other than
contractors or grantees.

No payments or gifts have been or will be provided to respondents.
10.

Describe any assurance of confidentiality provided to respondents and the basis for
the assurance in statute, regulation, or agency policy.

With the exception of the submission of financial statements, no assurances of confidentiality
beyond those outlined in the Freedom of Information Act and implemented in the Department’s
regulations at 31 CFR Part 1 are promised. Section 405.2 of the regulations adopts SEC Rule
17a-5 (17 CFR 240.17a-5(e)(3)), which assures the confidentiality of financial statements when
filed separately.
The reports required under Treasury’s risk assessment rules are made to the specialized
government securities brokers' or dealers' appropriate regulatory agency, the SEC. The
information required is specifically afforded confidentiality, notwithstanding any other provision
of law.
The GSAA specifically provides that the Department shall not be compelled to disclose publicly
any information required to be kept or reported for large position reporting and, in particular,
such information is exempt from disclosure under the Freedom of Information Act at 5 U.S.C.
552(b)(3)(B).
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11.

Provide additional justification for any questions of a sensitive nature.

In implementing GSA regulations, Treasury requires associated persons to submit a Form G–
FIN–4 (Disclosure Form for Person Associated with a Financial Institution Government
Securities Broker or Dealer). This form, which includes personally identifiable information,
provides the relevant appropriate regulatory agencies with certain information concerning name,
employment, and residence.
The Form G-FIN-4 is filed directly with the appropriate regulatory agency (SEC, Board, OCC,
and FDIC). The appropriate regulatory agencies regard the information provided by each
respondent on this form as confidential. Because the Form G-FIN-4 is submitted directly to the
appropriate regulatory agency, Treasury does not handle any personally identifiable information
associated with the form.
No questions of a sensitive nature, (e.g., such as sexual behavior and attitudes, religious beliefs,
and other matters that are commonly considered private) have or will be asked.
12.

Provide estimates of the hour burden of the collection of information.

The regulations contain several separate reporting and recordkeeping requirements, each of
which is likely to be applicable to a different number of respondents. Based upon current counts
and estimates of the number of respondents, plus SEC estimates of time and cost of filing, where
available, for similar information and parallel forms, the burden is estimated as shown in Table 1
(Attachment F).
Based upon current information, there is one registered government securities broker and dealer
subject to the full set of regulations and it is not subject to Treasury’s risk assessment rules.
There are approximately 1,048 registered broker-dealers who are required to comply with
portions of the regulations relating to their government securities business. These broker-dealers
report to, and are monitored by, the SEC therefore their hours are not counted in Treasury’s
totals. In addition, approximately 38 financial institutions are required to comply with portions
of Subchapter A. There are approximately 907 depository institutions required to comply with
Subchapter B.
The burden hours and costs for some sections in Table 1 are generally based on, and consistent
with, SEC parallel paperwork submissions and Treasury’s previous estimates. As shown in
Table 1, we estimate that the total annual burden hours and cost to all respondents will be
215,111 hours and $7,059,760 respectively. The total annual burden hours to all respondents
decreased 9,481 hours from 224,592 burden hours in 2018 to the estimated 215,111 in 2021. The
total annual costs to all respondents decreased $223,750 from $7,283,510 in 2018 to the
estimated $7,059,760 in 2021.

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13. Provide an estimate for the total annual cost burden to respondents or recordkeepers
resulting from this collection of information.
The identified costs associated with burden hours are addressed in Questions 12 and 14.
Estimates of associated costs are shown in Table 1.
Treasury estimates that there are no capital, start-up, or ongoing operation and maintenance costs
associated with this information collection.
14.

Provide estimate of annualized costs to the Federal government.

Based upon Treasury’s estimates and data provided by the SEC in connection with its parallel
paperwork submissions, the total annualized cost to the federal government is estimated to be
$126,095. The total annualized cost to the federal government increased $5,475 from $120,620
in 2018 to an estimated $126,095 in 2021. This increase in cost is attributable to inflation since
2018. Cost estimates are shown in Table 1.
15.

Explain any reasons for any program changes or adjustments reported in Items 13
or 14 of OMB Form 83-I.

The 9,481 annual burden hours decrease from 2018 is primarily due to the reduction in the
number of government securities brokers and government securities dealers from two firms to
one firm and fewer affected depository institutions since 2018.
16.

For collections of information whose results will be published, outline plans for
tabulation and publication.

This is not applicable because there are no plans to publish this information.
17.

If seeking approval to not display the expiration date for OMB approval of the
information collection, explain the reasons that display would be inappropriate.

It is not necessary to display an expiration date for regulations. The public interest will be better
served by not displaying an expiration date on the series of forms used in this collection. The
time period during which the current edition of the form will continue to be usable cannot be
predicted and could easily span several cycles of review and OMB clearance renewal.
Displaying the expiration date would make it necessary to update the electronic form and website
where it is accessed after each renewal. Additionally, not displaying the expiration date on the
form will avoid confusion among members of the public who may have identical forms with
different expiration dates in their possession. By not displaying the expiration date, supplies of
the form could continue to be used regardless of when the OMB approval has expired. This
would reduce costs incurred through additional printing and desktop publishing.

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18.

Explain each exception to the certification statement.

There are no exceptions to the certification statement.
19.

Does this collection employ statistical methods?

The regulations do not employ statistical methods.

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