# Presentation: 146251

## Reporting of Foreign-Residents'

**William Griever**
**Sarit Kessel**
**Debra Kuntz**
**William Carlucci**
**William Hunter**

**     **May 1, 2002

- Holding of U.S. Securities,
- Including Selected Money Market
- Instruments (SHLA)
- Training Seminar

## Surveys of Foreign Portfolio Investment in the United States

**William Griever**

**Surveys of Foreign Portfolio Investment in the United States**

**Notes:**
Discuss S-T and S-Form

## Survey Perspective

- Part of an integrated system
- Used in conjunction with monthly flow data
- Surveys are detailed, accurate, but not timely
- Monthly data very timely, but less accurate
- Used together to create ongoing estimates

**Notes:**
Liability surveys will be used to illustrate

## Survey History

- First survey in 1974
- Measured foreign investment in US securities
- Congressional concern over growing foreign       influence
- Existing data lacked detail

**Notes:**
We tend to be fighting the last war
Funds come after crisis occurs

## Survey History

- Liability surveys continued at 5-year intervals
- Last survey as of March 31, 2000
- This will be the 7th liabilities survey
- Have been large, benchmark surveys with hundreds of reporters
- Also 3 asset surveys starting in 1994

**Notes:**
S-T can ignore pricing issue
No equities

## Survey Uses

- Correct geography
- Monthly reports measure versus location of purchase/sale
- Results in heavy bias towards financial centers such as UK

**Notes:**
Not a PC application

Use ORACLE, write programs

## Survey Uses

- Correct amounts foreign held
- Security-level collection allows for greater data editing
- Last survey decreased estimated level of foreign holdings by $300 billion
- Shows investment by Industry

**Notes:**
Not a PC application

Use ORACLE, write programs

## Data Users

- Financial industry analysts
- International organizations
- USG
- Academic research

**Notes:**
Not a PC application

Use ORACLE, write programs

## Data Uses

- USG - BoP, IIP, country exposure
-      Reduced net debtor position
-      Current account sustainability
- Help to explain $US strength?

**Notes:**
Not a PC application

Use ORACLE, write programs

## Increasingly Important

- Foreign ownership increasing
-  1974 -   4.8%
-  2000 - 10.2%
- Securities flows now much greater than bank lending

**Notes:**
Show S-Form and Survey instruction booklets

## Increasingly Important

- Crisis of 1997-1998 caught most by surprise
- Lack of key data helped mask the problem
- Led to recognition that greater financial transparency was required
- Implies better/faster data needed

**Notes:**
Arab oil embargo
Assets = perceive need (IMF worldwide liabilities vs.. assets)

## Changes Required

- Lack of detailed, timely data on Reserve Assets and External Debt positions identified as major gaps
- Improved Reserve Asset reporting operational
- External Debt reporting starts in 2003

**Notes:**
P * Q = MV

FC & $US next survey

Discuss how we collect info we never used to and result

Security ID
Security Type               xxxxxxxxx
Price                             xxxxxxxxx
Issuer/Custodian
Amount Held
Country
Type Holder
Loan/Repo Amount
Currency
Xrate.
Issuer Name                 xxxxxxxxx
Description                   xxxxxxxxx
Amount still outstanding   xxxxxxxxx
Issuer/Maturity Dates      xxxxxxxxx

Security issuers report only directly-register holdings and Euro bearer issuers

ADRs as we do because some purchased by foreigners (even from the same country)

## Result 

- IMF’s External Debt Reporting System (EDRS)
- Countries will expand collection and accelerate publication of external debt data
- USG strongly supports the system
- Greater transparency required in an integrated world financial system

**Notes:**
May stop "blind" mailing

Some admit to throwing away

Have tried CEO, CFO, CLO, regulatory official, known contact

## EDRS

- Hopefully an Early Warning system
- Requires many changes to the US reporting system
- Annual portfolio liabilities surveys with shorter submission periods part of the changes
- Most surveys will include large reporters only

**Notes:**
Final response rate 100%

Discuss legal action history

Diskettes worst - sure beats paper

Data entry used to be a major task

## EDRS

- Quarterly reporting of external debt with a one quarter lag by sector (gov’t, bank, other) and type debt (bond, loan, etc.) required
- Forward debt repayment schedules strongly encouraged
- Currency composition of debt also encouraged

**Notes:**
Final response rate 100%

Discuss legal action history

Diskettes worst - sure beats paper

Data entry used to be a major task

## EDRS

- US will combine estimates with measurements
- Measurement would require quarterly surveys
- Survey results will be combined with monthly transactions data
- Result = credible estimates

**Notes:**
We fix whatever we can
Canada not foreign
Reports combined w/ differing errors, 4 currencies wrong
Lottery tickets, forex, seal envelopes "contents unknown", S-T, loans, ancient debt issues
Blank tape from Chase
$ value typically halved
"We're a big bank"
International Affairs
Final reports may not resemble initial submission
Many respondents don't have feel for proper amount because we define differently

## IIF Recommendations

- IIF strongly urged changes
- IIF recommended a more rigorous system than will be implemented
-  “...private sector participants in these markets bear a responsibility for full and timely disclosure of information on their activities.”

**Notes:**
P * Q = MV

FC & $US next survey

Discuss how we collect info we never used to and result

Security ID
Security Type               xxxxxxxxx
Price                             xxxxxxxxx
Issuer/Custodian
Amount Held
Country
Type Holder
Loan/Repo Amount
Currency
Xrate.
Issuer Name                 xxxxxxxxx
Description                   xxxxxxxxx
Amount still outstanding   xxxxxxxxx
Issuer/Maturity Dates      xxxxxxxxx

Security issuers report only directly-register holdings and Euro bearer issuers

ADRs as we do because some purchased by foreigners (even from the same country)

## Summary

- Changes will increase the burden on both reporters and compilers
- By combining estimates with measurement we’re attempting to minimize the work load
- Timely, accurate data from reporters is the key

**Notes:**
We fix whatever we can
Canada not foreign
Reports combined w/ differing errors, 4 currencies wrong
Lottery tickets, forex, seal envelopes "contents unknown", S-T, loans, ancient debt issues
Blank tape from Chase
$ value typically halved
"We're a big bank"
International Affairs
Final reports may not resemble initial submission
Many respondents don't have feel for proper amount because we define differently

## Who Must Report?

**Who Must Report?**

## Who Must Report

- <date/time>

**Who Must Report**

**Large U.S.- Resident Custodians**
**Large U.S.- Resident Issuers**

## U.S. Residency

**U.S. Resident **
**Any individual, corporation or other organization located in the United States.**
**This includes: branches, subsidiaries and affiliates of foreign entities located in the United States. **
**Corporations located in the United States**
**Exclude:  International and regional organizations even if they are located in the United States.**

## U.S. Residency

**How to determine residency **
**Tax forms**
**	****W-9 forms are filed by U.S. residents**
**	****W-8 forms are filed by non-U.S. residents**
**If** **not available use the mailing address**

## U.S. Residency

**Examples of U.S. residents**
**Bayerische Landesbank NY Branch**
**BP America Inc**
**Examples of non-U.S. residents**
**Bank of New York Tokyo Branch**
**GMAC Canada**
**International Bank for Reconstruction and Development (IBRD)**

## U.S.- Resident Custodian

**Organizations that manage the safekeeping of**
**U.S. securities for:**
**The account of other entities located outside the United States**

## U.S.- Resident Custodians

**Each U.S. resident custodian should file one consolidated report for:**
**The custody accounts for which safekeeping services are provided**
**Their own securities held directly by foreigners**

## U.S.- Resident Custodians

**U.S.-resident custodians should exclude custody accounts held by their foreign affiliates or subsidiaries.**
**U.S. affiliates or subsidiaries of foreign custodians should exclude custody accounts held by their foreign parents.**

## U.S.-Resident Custodians

**Schedule 2 Reporting:**
- U.S.-resident custodians should report all U.S. securities held in custody for foreign-residents.
- U.S.-resident custodians, that use foreign subcustodians to directly manage their foreign clients’ U.S. securities should report these U.S. securities.
- U.S.-resident custodians should report all U.S. securities that are settled and cleared through foreign securities depositories (e.g., Euroclear)

## U.S.-Resident Issuers

**Organizations whose securities are held directly by foreign residents, with no  U.S. - resident custodian involved.**

## U.S.-Resident Issuers

**Each U.S.-resident issuer should file one consolidated report for:**
**Their custody holdings for foreign-residents**
**Securities issued by the reporters subsidiaries, branches, and affiliates in the United States**

## U.S.-Resident Issuers

**U.S.-resident issuers should exclude  securities issued by foreign affiliates or subsidiaries.**
**U.S. affiliates or subsidiaries of foreign investors should exclude any direct investment with their foreign parent.**

## U.S.-Resident Issuers

**Schedule 2 reporting:**
**Report securities held directly by foreign residents**
**Report securities settled and cleared through a foreign central securities depository (Euroclear)**

## Who Must Report

**A U.S.-resident issuer clears and settles through foreign depository**

**U.S.-resident**
**issuer**

**Foreign **
**Depository**

**Files Schedules 1 and 2**

**Does not report**

## Who Must Report

**A foreign investor employs a foreign custodian**

**U.S.-Resident**
** ****Issuer**

**Foreign **
**Custodian**

**Files Schedules 1 and 2**

**Does not report**

## Who Must Report

**A U.S.-resident custodian holding securities for foreigner **

**Foreigner**

**U.S.-resident**
**custodian**

**Files Schedules 1 and 2**

## Who Must Report

**Flow Chart for Bearer Bonds**

**Foreigner**

**U.S.-resident **
**custodian  **

**U.S. resident**
**Issuer**

**Files Schedules 1 and 2**

**Files Schedules 1 and 2**

**FRBNY will eliminate double reporting.**

- 1

- 2

## What Must Be Reported on the

**What Must Be Reported on the**
**Annual Report of Foreign Holdings of U.S. Securities, Including Selected Money Market Instruments (SHLA)**

**Notes:**
Good Morning.

Introduce Myself.

As the name of the report indicates, we will be collecting information about U.S. securities that you hold for foreign residents.

## U.S. Securities

- Securities _issued_ by U.S. entities, including:
- U.S.-resident organizations
- U.S. subsidiaries of foreign organizations
- U.S. branches of foreign banks
- Exclude securities issued by International and Regional Organizations.
- Although located in the United States, these organizations are considered foreign entities.

**Notes:**
For this report, U.S. securities are those securities ...

The first bullet are all entities that reside in the United States.  Go through each one.

International and Regional organizations are considered foreign entities, even if they are located in the United States.  Therefore, any securities they issue are also considered foreign and should be excluded.

## U.S. Securities

- Information that does not contribute to determining if a U.S. security:
- nationality of parent organization
- nationality of guarantor
- place of issue or trading
- currency of issue

**Notes:**
place of issue  (U.S. Co. issues a particular security entirely in Canada, still U.S. for our report).

currency (Yen denominated)

I will now go through some examples that illustrate how to determine if a security is U.S.

## U.S. SecurityExample 1

- Euro denominated 2-year note issued by a Daimler Chrysler affiliate incorporated in the United States.
- Is this security reportable?

## U.S. SecuritiesExample 1 Answer

- Euro denominated 2-year note issued by a Daimler Chrysler affiliate incorporated in the United States.
- Is this security reportable?
- Yes.  The security was issued by a          U.S.-resident entity.

**Notes:**
Even though parent is foreign, since the issuer is incorporated in the United States, their security is a U.S. security.

## U.S. SecuritiesExample 2

- U.S. dollar-denominated 30-year Yankee note issued by the Inter-American Development Bank.
- Is this security reportable?

## U.S. SecuritiesExample 2 Answer

- U.S. dollar-denominated 30-year Yankee note issued by the Inter-American Development Bank.
- Is this security reportable?
- No.  This security was issued by a Regional Organization.  This entity is classified as foreign, even though it is located in the United States.

## U.S. SecuritiesExample 3

- U.S. dollar-denominated asset-backed security issued by Company B incorporated in the United States and guaranteed by the parent, Company A, incorporated in Hong Kong.
- Is this security reportable?

**Notes:**
Last example for U.S. security.

## Foreign SecuritiesExample 3 Answer

- U.S. dollar-denominated asset-backed security issued by Company B incorporated in the United States and guaranteed by the parent, Company A, incorporated in Hong Kong.
- Is this security reportable?
- Yes.  This security was issued by a U.S.-resident entity.  The location of the guarantor does not factor into the decision of whether the security is U.S. or not.

## Type of Reportable U.S. Securities

- Equity
- Short-Term Debt
- Long-Term Debt
- Asset-Backed Securities

**Notes:**
Now that I have explained what a U.S. security is, it's time to discuss, in detail, which U.S. securities are reportable.

I'll discuss: ...

## Equity

- All instruments representing an ownership interest in U.S.-resident organizations.
- However, ownership interests representing direct investment are not reported.

**Notes:**
Equity are instruments that represent an ownership interest in an organization.

For this report, since we are collecting data only on  U.S. securities, the ownership interest would be in a U.S.-resident organization.

Security investments can be considered either Portfolio Investment or Direct investment.

We’re collecting Portfolio Investment data on this report, not Direct Investment.  Let me explain what we define Direct Investment to be. 

## EquityDirect Investment

- Direct investment is defined as ownership or control of 10% or more of an organization’s voting stock.
- Direct investment positions should be reported to the Commerce Department and excluded from this report.

**Notes:**
Direct Investment is a Balance of Payments concept.  For purposes of this report, Direct Investment is ...

Direct Investment data are collected by the Commerce Department.

We understand that those institutions acting as custodians may not be able to identify if an investment represents 10% or more of an organization's voting stock.  Please do your best.

However, those reporting as the issuer of securities should know if the investment represents direct investment or not and should report accordingly.

## EquityDirect Investment

- If one of the companies is a bank or bank holding company, direct investment is limited to “permanent” debt or equity.
- Positions with foreign affiliates that arise out of normal banking business are not direct investment and should be reported.

**Notes:**
If the issuer of the security is a bank or bank holding company or the beneficial owner of the security is a bank or bank holding company then direct investment is only investments representing permanent debt or equity.

Therefore, normal banking business, such as intercompany certificates of deposit are not direct investment and should be reported.

## Equity

- Reportable equity securities include:
- common stock
- restricted stock
- preferred stock
- shares/units in U.S. mutual funds
- shares/units in unincorporated business enterprises, such as limited partnerships

**Notes:**
I mentioned earlier that where the security was issued is not a factor for determining if a security is reportable or not.  How it is issued, whether registered with the SEC or not, is also not a factor.   Therefore restricted stock is reportable.  

Mutual funds, equity regardless of what the mutual fund invests in because an ownership of the fund.  Where fund incorporated, not what invests in.  Examples of US fund that invests in foreign securities and foreign fund that invests in US securities.

## Equity

- Exclude from equity:
- convertible debt
- nonparticipating preference shares
- depositary receipts where the underlying security is foreign
- Convertible debt and nonparticipating preference shares are reported, but should be classified as debt on this report.

**Notes:**
Convertible debt, could convert in the future and tend to be priced like an equity, but if as of the June report date still a debt security, then report as debt.

Nonparticipating preference shares no share in the profits, dividend only, therefore treated as debt.

Depositary receipts are usually considered foreign securities because they represent ownership in foreign companies.  Therefore, these should be excluded.  However, if the underlying securities are U.S. securities (such as HOLDRs may be) then report.

## Type of Issuer

- United States Department of the Treasury
- Other Federal agencies or federally sponsored enterprises
- Appendix H of the instructions contains a list of these institutions.
- State or local governments, including their subdivisions
- Other

**Notes:**
Before discussing specific types of debt instruments to report, I want to briefly discuss 2 data fields that relate to debt reporting:  Type of Issuer and Term.

As you can see, the Type of Issuer category is pretty straight forward.  I wanted to point out that Appendix H of the instructions contains a list of entities that are considered Federal agencies or federally sponsored enterprises.  If you are unsure of how to classify an issuer, please call.

## Type of Issuer

- Classify as Federal agency those securities guaranteed by the Government National Mortgage Association (GNMA).
- Privately-issued mortgage-backed securities should be classified as Other, even if the underlying collateral is GNMA guaranteed.

**Notes:**
The one type of agency that can be problematic is GNMA because they do not issue the security, they only guarantee the security.  This is where we break the rule I stated up front, if GNMA guarantees the security then classify it as an Agency security.  

In every other case, the issuer type is based on who actually issues the security.

As noted, if GNMA guarantees the collateral underlying the security, but does not guarantee the actual security, then classify based on the issuer of the security, (which probably means to classify as Other) not as Agency.

## Term

- Determine term, (short-term or long-term), based on the original maturity of the security.
- Original maturities of one year or less are short-term.
- Original maturities of greater than one year are long-term.

**Notes:**
Before discuss details of debt securities, first need to discuss term, e.g., short-term and long-term.  Needed for several reasons, one of which is to compute estimated debt service schedules.

For this report, ...

## Term of Callable Debt

- Debt with multiple call options (multiple maturity dates) is long-term if any of the maturity dates is greater than one year from the date of issue.

**Notes:**
Treat entire security as long-term, do not report some as short-term because of earlier call dates and the rest as long-term.

## Term Examples

- A U.S. Treasury bill issued on June 13, 2002 that matures on July 11, 2002 is short-term.
- A 30-year U.S.-issued bond that matures on       July 31, 2002 is long-term.

**Notes:**
duration 1 month

even though about 1 month from report date to maturity date, original term is 30 years, therefore, long-term.  Need both issue and maturity date to properly categorize debt securities.

## Short-Term Debt

- Reportable short-term debt includes the following instruments where the original maturity is one year or less:
- U.S. government securities (e.g., Treasury bills)
- U.S. agency securities
- bankers’ and trade acceptances
- commercial paper
- negotiable certificates of deposit
- STRIPs

**Notes:**
Certain securities listed here could also be long-term debt.

Negotiable CDs, because of secondary market so trades like a debt security and want reported that way.

More detail about STRIPs.

## Short-Term DebtSTRIPs

- Reportable STRIPs are those where the issuer of the STRIP is a U.S.-resident entity.
- Residency of the STRIP is not determined by the issuer of the underlying security.

**Notes:**
Issuer not underlying security.

## Short-Term DebtSTRIPs

- U.S. securities that are the underlying securities for STRIPs, should be reported by the issuer or U.S.-resident custodian if the beneficial owner is foreign.
- STRIPs issued by a foreign-resident entity should not be reported, even if the underlying security is U.S.

**Notes:**
Go through example.

## Short-Term DebtSTRIPs Example

- U.S. Company A owns $100 million of German bonds.  U.S. Company A issues $50 million of STRIPs where these German bonds are the underlying securities.  A foreign company  purchases these STRIPs.
- What should Company A report?

## Short-Term DebtSTRIPs Example Answer

- U.S. Company A owns $100 million of German bonds.  U.S. Company A issues $50 million of STRIPs where these German bonds are the underlying securities.  A foreign company purchases these STRIPs.
- What should Company A report?
- Either Company A or the U.S.-resident custodian (if one is used) reports the $50 million of STRIPs.  The German bonds are not reported.

**Notes:**
because issued by a U.S. company.

## Long-Term Debt

- Reportable long-term debt includes the following instruments where the original maturity is greater than one year:
- bonds
- notes
- debentures
- convertible debt
- nonparticipating preference shares
- negotiable certificates of deposit

**Notes:**
Some of these could be short-term.

## Debt Exclusions

- Exclude from short-term and long-term debt:
- shares/units in U.S. mutual funds, even if the U.S. fund invests in debt.
- Investments in U.S. mutual funds are reported, but should be classified as equity on this report.

**Notes:**
already discussed

## Debt Exclusions

- Exclude from short-term and long-term debt:
- loans
- trade credits
- accounts receivable
- derivatives
- non-negotiable certificates of deposit

**Notes:**
these are non-securities and should not be reported.

Non-Negotiable CDs cannot be sold in a secondary market, therefore, viewed as a deposit and not reportable.

## Embedded Derivatives

- If the embedded derivative is bifurcated from its host contract, then only report the value of the host contact.  Exclude the derivative.
- If the embedded derivative is not bifurcated from the host contract, then the security should be reported without separating the embedded derivative.

**Notes:**
We realize that where derivatives are involved, reporting can be confusing when the derivative is embedded into the host contract.

If can value the derivative separately, then only report the value of the host contract.

If you cannot value the derivative separately then report including the derivative.

## Debt Exclusions

- Exclude from short-term and long-term debt:
- asset-backed securities
- These securities are reported, but should be classified as asset-backed securities on this report.

## Asset-Backed Securities

- Securitized interest in a pool of assets, which give the purchaser a claim against the cash flows generated by the underlying assets.

## Asset-Backed Securities

- Reportable asset-backed securities (ABS) are those where the issuer securitizing the assets is a U.S. entity.
- The underlying asset is not a factor in determining whether the ABS is a U.S. security.

**Notes:**
As with STRIPs, reportable security based on issuer of the ABS not the underlying securities.

so if U.S. credit card receivables are securitized by a Canadian company, it is a foreign security and not reportable.

If U.S. company is securitizing foreign assets, then it is considered a U.S. security and it is reportable.

Since ABS are a type of debt security, Term (short or long) should be identified in line 12.

## Asset-Backed Securities

- Reportable asset-backed securities include:
- collateralized mortgage obligations (CMOs)
- collateralized bond obligations (CBOs)
- collateralized loan obligations (CLOs)
- collateralized debt obligations (CDOs)

## Asset-Backed Securities

- Reportable asset-backed securities include:
- other securities backed by:
- mortgages
- credit card receivables
- automobile loans
- consumer and personal loans
- commercial and industrial loans
- commercial paper
- other assets

**Notes:**
Other examples of ABS are those that securitize pools of mortgages, credit card receivables, or any of the other assets listed.

Issuers can get creative in what they securitize, such as future song royalties.  These would also be reported as ABS. 

## Repurchase AgreementsSecurity Lending Arrangements

- Repos and securities lending arrangements both involve the temporary transfer of a security for cash or another security.  The transaction is reversed on a specified future date.
- Reverse repurchase agreements and securities borrowing arrangements are the reverse.

## Repurchase AgreementsSecurity Lending Arrangements

- The security lender should report the U.S. security as if no repo or security lending arrangement occurred.
- The security borrower should exclude the U.S. security.

**Notes:**
Identify to the best of your knowledge.  Potential area that incurs double reporting and under reporting.

## Accounting Rules

- Securities should be reported using settlement date accounting.
- Report gross long positions.
- Do not net any short positions from long positions.
- Round data to the nearest unit (e.g., dollar).
- Do not report decimals.

**Notes:**
Since collecting data using settlement date accounting, we should not have any short positions reported (they really don’t settle).

Gross positions only and round to the nearest unit like dollar or Euro.

## Valuation of Securities

- Follow the definition of FAS 115.
- Fair (market) value is the amount at which an asset could be bought or sold in a current transaction between willing parties, other than in a forced liquidation or sale.
- For securities that do not regularly trade, estimate the value based on  information available.

**Notes:**
Ideally, we would like you to report the value of the security as of our report date, so as of June 28, 2002.

If that is not available, report the best valuation you have even if it is an estimate.

## Valuation of Securities

- If the fair (market) value is zero, indicate the reason.
- Firm that issued the security is in receivership.
- Stock impaired or security in default.
- Price unknown because security is thinly or never traded.

**Notes:**
If the security has no value than report zero for the market value and indicate why using one of the codes provided.

## Valuation of Securities

- Report the fair (market) value for each security as of the close of business on the last day of June.

**Notes:**
So for this year you would report as of June 28, 2002.

## Foreign Currency Conversion

- Report the following information in the currency of denomination:
- Fair (market) value (line 16a)
- Face value for non-ABS debt (line 19)
- Original face value for ABS debt (line 22)
- Remaining face value for ABS debt (line 23)

**Notes:**
So if denominated in Euro, Yen, etc. DO NOT report the US$ value on these lines.

## Foreign Currency Conversion

- Report the US$ converted market value (line 16) using the spot exchange rate as of the last business day of June.
- FRBNY will calculate the exchange rate used from the US$ and foreign currency market values reported.
- FRBNY will convert the face value, original face value, and remaining face value based on the currency code reported.

**Notes:**
We will be comparing your calculated exchange rate to the exchange rate we are expecting to ensure the market value was converted correctly.

## Foreign Currency Conversion

- If exchange rate quoted in units of foreign currency per US$:
- divide the foreign currency market value (line 16a) by the exchange rate to determine the US$ market value (line 16).

## Foreign Currency Conversion

- If exchange rate quoted in units of US$ per foreign currency:
- multiply the foreign currency market value (line 16a) by the exchange rate to determine the US$ market value (line 16).

**Notes:**
Ask that questions be written down and given to one of the ushers.  We will answer during our Q&A session at the end of the seminar.

Break

## Break

## Review of Schedules

**Review of Schedules**

## Review of Schedules Schedule 1

**Schedule 1:  Respondent Contact Identification and Summary Financial Information**
**Required to be filed by all organizations who received the report**
**Contains basic information about the institution **
**Contains summary financial information   reported on Schedule 2  **

## Review of SchedulesSchedule 1

**Changes from 2000 **
**Identification Number changed from 7 digits to 10 digits**
**Industrial Classification Code was streamlined**
**Financial Information streamlined. No longer broken out between priced and unpriced totals.**

## Review of SchedulesSchedule 1

- Respondent Identification Number
- 10 digit number issued by FRBNY.
- Contact FRBNY staff at 212-720-6300 if you do not know your identification number.

## Review of SchedulesSchedule 1

- Industrial Classification Code
- Bank: Depository Institution (i.e., an institution that takes deposits) or a bank holding company.
- Other Financial Firm: Firm that acts as a financial intermediary, such as a finance company or broker/dealer, which is operated separately from an organization in one of the other categories listed.
- Non-Financial Firm: An organization that conducts commercial, industrial or trade activities.
- Other: Use this code if none of the categories listed describe your firm.

## Review of SchedulesSchedule 1

- Name of Service Provider or Vendor Used
- Service Provider/Vendor:  Is an institution which provides your data or prepared the electronic submission of your report.
- Examples of service providers or vendors are:
- DST Systems
- ADP
- Beta Systems

## Review of SchedulesSchedule 1

- Technical Contact
- Provide the name of the person who can be contacted for technical issues regarding the electronic submission of your report.
- This person should be familiar with the file formats used and how the data is extracted from your databases or applications.

## Review of SchedulesSchedule 2

- Schedule 2:  Details of Securities
- Filed by U.S.-Resident Custodians and Issuers of U.S. Securities owned directly by foreigners.
- Provides details of the U.S. securities
- Total of all Schedule 2s should equal the summary financial information reported on Schedule 1

## Review of SchedulesSchedule 2

**Changes from 2000**
**First time collecting short-term securities.**
**Changed overall layout of the forms**
**New items introduced to collect information on reporting units**
**Introduced Type of Issuer Field**
**Changed security type descriptions and codes**
**Use of ISO standard codes for currency information. Changed from a 5-digit numeric value to a 3-digit alpha character. (Note, country information continues to be 5-digit numeric values.)**
**Introduced new item to explain zero fair market value.**
**Some items are in US dollars and foreign currency units**

## Review of SchedulesSchedule 2

- Sequence Number
- Generally sequence numbers should be sequential (i.e., 1,2,3) for each Schedule 2 record submitted.
- If multiple divisions of an organization are preparing Schedule 2 records and it is a large burden to create sequential sequence numbers for the consolidated report then each reporting unit should have unique sequence numbers.

## Review of Schedules Schedule 2

- Reporting Unit Code and Name
- If data is being collected from multiple databases or reporting systems, report the internal code used in your organization to identify the database or system.
- This will help identify if a particular database or reporting system has generated invalid data.
- Enter a description or name of the reporting unit or division that is reporting the information.

## Review of Schedules Schedule 2

- Type of Issuer
- United States Department of the Treasury
- Other federal agency or federally sponsored enterprise.
- State or local government, including their subdivisions.
- Other

## Review of Schedules Schedule 2

- Type of Issuer
- Choose the Type of Issuer that coincides with the name of issuer.
- If type of issuer cannot be clearly identified,  report as “Other”.

## Review of SchedulesSchedule 2

- Security Type
- Equity Securities are broken out into the following categories:
- Common Stock
- Preferred Stock
- All Mutual Funds (including shares or unit trusts)
- Other: any other type of equity security not listed above

## Review of Schedules Schedule 2

- Security Type
- Debt (excluding ABS) is broken out into seven categories:
- Commercial Paper
- Negotiable CD
- Convertible Security
- Zero-Coupon
- Bond or Note, unstripped
- Bond or Note, stripped
- All Other Debt

## Review of SchedulesSchedule 2

- Security Type
- Asset-Backed Securities have been broken out into their own separate code.

## Review of SchedulesSchedule 2

- Registered/Bearer Indicator
- If a security is a registered instrument, it should be reported with a registered indicator (code 1).
- If a security is a bearer instrument, (i.e., possession of the bond certificate is the only proof of ownership), it should be reported with a bearer indicator (code 2).

## Review of SchedulesSchedule 2

-  Country of Foreign Holder
- Important field.  Identifies the location of the beneficial owner of the security.
- Type of Foreign Holder
- An abbreviate list of Foreign Official Institutions can be found in Appendix D of the instructions.  A complete list can be found on the Treasury website at - www.treas.gov/tic/forms.htm

## William Carlucci

**Key Issues for Reporters**

## Key Issues to Reporters

- Reporting Criteria
- A reporter that is both an issuer and custodian should report in both of these capacities.

## Key Issues to Reporters

- Securities To Be Included
- Report all securities issued by U.S. residents and held by foreign residents.
- Bearer Bonds - All bearer bonds are assumed to be held by foreign residents and should be reported.  Both issuers and custodians of these securities should report (FRBNY will eliminate double counting).
- Custodians must report all foreign-held securities entrusted to central securities depositories (DTC, FRBNY, Euroclear, Cedel, etc.)

## Key Issues to Reporters

- Securities to be Excluded
- All securities issued by foreign residents.
- Depositary Receipts
- Securities issued by U.S. -resident international and regional organizations (e.g., World Bank, Inter-American Development Bank, International Monetary Fund).
- Loans, non-negotiable CDs, and derivatives

## Key Issues to Reporters

- Identify Securities
- Whenever possible, report securities using the CUSIP ID.
- If unavailable, use appropriate ISIN, CINS, Common or other exchange-assigned code.
- Use internal codes only id no other code exists for the security.

## Key Issues to Reporters

- Distinguishing Long-Term Debt from Short-Term Debt
- Original maturities of one year or less are short-term.
- Original maturities of one year or more are long-term.
- Perpetual debt is classified as long-term.

## Key Issues to Reporters

- Common Reporting Errors
- Excessive reporting of “Country Unknown” for securities other than Bearer Bonds.
- Securities reported with a quantity held equal to zero.
- Inaccurate security type codes reported (common stock reported with a zero coupon bond security type code).
- Reporting securities that represent direct investment.

## Key Issues to Reporters

- Common Reporting Errors
- Use of prior codes from previous surveys.
- Failure to report remaining principal outstanding for asset-backed securities.
- Failure to report holdings of Canadian residents.
- Failure to report securities issued by U.S.-resident subsidiaries or branches of foreign companies.

## Technical Topics

**Technical Topics**
- Preparing a Computer File of Your Data

**Notes:**
Who am I
Why am I talking to them
Info can generally be found in appendix I of Instructions (p. 42)
How many of you are Technicians or will be designated as technical contacts?
Technical contacts will be our point of contact for on technical issues.  We’ll contact if we have technical difficulty reading or processing the data.
How many expect to use an outside service bureau such as EDS to prepare your submission?

## Technical Topics:How To File

- Schedule 1
- Schedule 2

- On paper
- Electronically (Diskette or CD) -  Mandatory if submitting more than 200 records.
- On paper - An option only if submitting 200 or less.

## Technical Topics:Acceptable Media

- High Density IBM Compatible Diskette
- CD - Standard 650 MB
- Standard Windows PC ASCII Text Files
- Legibly Labeled With Respondent Name   & ID

## Technical Topics:Unacceptable Media

- No Compressed Files
- No Zip Files
- No IBM Mainframe Tapes/Cartridges - 3480/3490, Round (Reel) Tapes
- No EBCDIC Files

## Technical Topics:File Formats

- Use Either of Two File Formats:
- Positional
- Semi-colon Delimited

## Technical Topics:Positional File Example

## Technical Topics:Positional File Example

**Technical Topics**:Positional File Example

## Technical Topics:Sample Delimited File

**Technical Topics**:Sample Delimited File

## Technical Topics:Sample Delimited File

**Technical Topics****:****Sample Delimited File**

## Technical TopicsTips & Traps

- New Report Form & File Format This Year
- Files Must Be ASCII
- Diskette Or CD Only
- File Names Should:
- Have “.txt” Suffix
- Be No Longer Than 25 Characters
- Not Include Any Spaces
- Use Underscore “**_**” In Lieu Of Spaces

## Technical TopicsTips & Traps  (Cont’d)

**BigBank2002SHLA**

**No Good -  Missing “.txt” Suffix**

**BiggerBanks 2002 SHLA.txt**

**No Good -  Contains Blanks**

**Good**

**Good**

**HugeFirm_2002SHLA.txt**

**BigFirmWithLotsofSHLADataID0000567890.txt**

**SHLA.txt**

**No Good - Too Long        (More than 25 characters****)**

_**Examples**_** -**

## Technical TopicsTips & Traps  (Cont’d)

- Files Must Be Plain Text - Uncompressed
- No “.xls” (Excel) Files
- No Zip Files
- No COBOL Packed Decimal Fields
- All Semi-colon Delimited File Records Must Have 28 Semi-colons
- Include Nulls For Items That Do Not Apply

## Technical TopicsTips & Traps  (Cont’d)

- All Records Must End With A Carriage Control/Line Feed
- Your Respondent ID Number Must Be **Exactly** 10 Digits With Leading Zeros
- Dates Must Be 8 Digits (MMDDYYYY) Months and Days Must Have Leading Zeros Where Appropriate (e.g.*,* January 1, 2002 Entered as  01012002)

## Technical TopicsTips & Traps  (Cont’d)

- Fed Will Check Test Files For Format (Send To:  SHLA.help@ ny.frb.org)
- Be Sure To Provide A Technical Contact

## Technical TopicsContacts

_**Susan Ma**_ - Team Leader
- 			 Automation Support
- 			 (212) 720-1989
_**Bill Hunter**_ - Staff Director
- 			   Automation Support
- 			   (212) 720-8250

## The End