31144 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 

1Covered SLHCs are those which are not 

substantially engaged in insurance or commercial 

activities. See 12 CFR 217.2. 2See 12 CFR 217.402. 

3 12 U.S.C. 5365. 

4A firm that is identified as a GSIB is required 

to hold additional capital to increase its resiliency 

in light of the greater threat it poses to the financial 

stability of the United States. The Board’s rule on 

the GSIB surcharge establishes the criteria for 

identifying a GSIB and the methods that those firms 

use to calculate a risk-based capital surcharge, 

which is calibrated to each firm’s overall systemic 

risk. See 81 FR 90952 (December 16, 2016). 

5A number of the items in the FR Y–15 are 

retrieved from the FR Y–9C, and certain items may 

be retrieved from the FFIEC 101 and FFIEC 009. 

Confidential treatment will also extend to any 

automatically-calculated items on the FR Y–15 that 

have been derived from confidential data items and 

that, if released, would reveal the underlying 

confidential data. 

Complainant specifically alleges that 

Respondents’ actions violated the 

Shipping Act as they: 

a. ‘‘. . . failed to establish, observe 

and enforce just and reasonable 

regulations and practices related to or 

connected with receiving, handling, 

storing and delivering [Complainant’s] 

consigned cargo, in violation of 46 

U.S.C. 41102(c)’’; 

b. ‘‘. . . imposed and attempted to 

collect improper fees and charges not 

contained in a service agreement 

between the parties or published tariff, 

in violation of 46 U.S.C. 41104(2)’’; 

c. ‘‘. . . retaliated against 

[Complainant] by resorting to unfair and 

unjustly discriminatory methods by 

withholding release of 87 containers 

after Falcone disputed the inaccurate 

fees and charges on Respondents’ 

invoices, in violation of 46 U.S.C. 

41104(3)’’; 

d. ‘‘. . . engaged in unfair practices 

with respect to rates or charges under its 

tariff by invoicing [Complainant] for 

inaccurate and double-charged fees, in 

violation of 46 U.S.C. 41104(4)’’; and 

e. ‘‘. . . unreasonably refused to deal 

or negotiate in good faith with 

[Complainant] in resolving the disputed 

invoices, and instead unlawfully 

withheld the 87 containers, in violation 

of 46 U.S.C. 41104(10).’’ 

Complainant seeks reparations in the 

amount of $798,300 and other relief. 

The full text of the complaint can be 

found in the Commission’s Electronic 

Reading Room at www.fmc.gov/18-04/. 

This proceeding has been assigned to 

the Office of Administrative Law Judges. 

The initial decision of the presiding 

officer in this proceeding shall be issued 

by June 27, 2019, and the final decision 

of the Commission shall be issued by 

December 10, 2019. 

Rachel E. Dickon, 

Secretary. 

[FR Doc. 2018–14220 Filed 7–2–18; 8:45 am] 

BILLING CODE 6731–AA–P 

FEDERAL RESERVE SYSTEM 

Agency Information Collection 

Activities: Announcement of Board 

Approval Under Delegated Authority 

and Submission to OMB 

AGENCY: Board of Governors of the 

Federal Reserve System. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (Board) is 

adopting a proposal to extend for three 

years, with revision, the mandatory 

Banking Organization Systemic Risk 

Report (FR Y–15; OMB No. 7100–0352). 

The revisions are effective as of the June 

30, 2018, report date. 

FOR FURTHER INFORMATION CONTACT: 

Federal Reserve Board Clearance 

Officer—Nuha Elmaghrabi—Office of 

the Chief Data Officer, Board of 

Governors of the Federal Reserve 

System, Washington, DC 20551, (202) 

452–3829. Telecommunications Device 

for the Deaf (TDD) users may contact 

(202) 263–4869, Board of Governors of 

the Federal Reserve System, 

Washington, DC 20551. 

OMB Desk Officer—Shagufta 

Ahmed—Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, New 

Executive Office Building, Room 10235, 

725 17th Street NW, Washington, DC 

20503 or by fax to (202) 395–6974. 

SUPPLEMENTARY INFORMATION: On June 

15, 1984, the Office of Management and 

Budget (OMB) delegated to the Board 

authority under the Paperwork 

Reduction Act (PRA) to approve and 

assign OMB control numbers to 

collection of information requests and 

requirements conducted or sponsored 

by the Board. Board-approved 

collections of information are 

incorporated into the official OMB 

inventory of currently approved 

collections of information. Copies of the 

Paperwork Reduction Act Submission, 

supporting statements and approved 

collection of information instrument(s) 

are placed into OMB’s public docket 

files. The Board may not conduct or 

sponsor, and the respondent is not 

required to respond to, an information 

collection that has been extended, 

revised, or implemented on or after 

October 1, 1995, unless it displays a 

currently valid OMB control number. 

Final Approval Under OMB Delegated 

Authority of the Extension for Three 

Years, With Revision, of the Following 

Information Collection 

Report title: Banking Organization 

Systemic Risk Report. 

Agency form number: FR Y–15. 

OMB control number: 7100–0352. 

Effective date: June 30, 2018. 

Frequency: Quarterly. 

Respondents: U.S. bank holding 

companies (BHCs), covered savings and 

loan holding companies (SLHCs), and 

U.S. intermediate holding companies 

(IHCs) of foreign banking organizations 

with $50 billion or more of total 

consolidated assets, and any BHC 

designated as a global systemically 

important bank holding company (GSIB) 

that does not otherwise meet the 

consolidated assets threshold for BHCs. 

Estimated number of respondents: 41. 

Estimated average hours per response: 

401 hours. 

Estimated annual burden hours: 

65,764 hours. 

General description of report: The FR 

Y–15 quarterly report collects systemic 

risk data from U.S. bank holding 

companies (BHCs), covered savings and 

loan holding companies (SLHCs),1 and 

U.S. intermediate holding companies 

(IHCs) with total consolidated assets of 

$50 billion or more, and any BHC 

identified as a global systemically 

important banking organization (GSIB) 

based on its method 1 score calculated 

as of December 31 of the previous 

calendar year.2 The Board uses the FR 

Y–15 data to monitor, on an ongoing 

basis, the systemic risk profile of 

institutions that are subject to enhanced 

prudential standards under section 165 

of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (DoddFrank Act).3 In addition, the FR Y–15 is 

used to (1) facilitate the implementation 

of the GSIB surcharge rule,4 (2) identify 

other institutions that may present 

significant systemic risk, and (3) analyze 

the systemic risk implications of 

proposed mergers and acquisitions. 

Legal authorization and 

confidentiality: The mandatory FR Y–15 

is authorized by sections 163 and 165 of 

the Dodd-Frank Act (12 U.S.C. 5463 and 

5365), the International Banking Act (12 

U.S.C. 3106 and 3108), the Bank 

Holding Company Act (12 U.S.C. 1844), 

and the Home Owners’ Loan Act (12 

U.S.C. 1467a). 

Most of the data collected on the FR 

Y–15 is made public unless a specific 

request for confidentiality is submitted 

by the reporting entity, either on the FR 

Y–15 or on the form from which the 

data item is obtained.5 Such information 

will be accorded confidential treatment 

under Exemption 4 of the Freedom of 

Information Act (FOIA) (5 U.S.C. 

552(b)(4)) if the submitter substantiates 

its assertion that disclosure would likely 

cause substantial competitive harm. In 

addition, items 1 through 4 of Schedule 

G of the FR Y–15, which contain 

granular information regarding the 


sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 31145 

6The liquidity coverage ratio (LCR) disclosure 

requirement for companies subject to the transition 

period under 12 CFR 249.50(a) (i.e., institutions 

with $700 billion or more in total consolidated 

assets or $10 trillion or more in assets under 

custody) was implemented on April 1, 2017. 

Therefore, all Schedule G data for these firms is 

already available to the public. The LCR disclosure 

requirement for companies subject to the transition 

period under 12 CFR 249.50(b) (i.e., institutions 

with $250 billion or more in total consolidated 

assets or $10 billion or more in total on-balance 

sheet foreign exposure) was implemented on April 

1, 2018. Therefore, all Schedule G data for these 

firms will be made available to the public starting 

with the June 30, 2018, as-of date. The LCR 

disclosure requirement for companies subject to 12 

CFR 249, Subpart G will be implemented on 

October 1, 2018. As this will mark the full 

implementation of the LCR disclosure standard, 

items 1 through 4 of Schedule G for all other firms 

will be made available to the public starting with 

the December 31, 2018, as-of date. 

reporting entity’s short-term funding, 

will be accorded confidential treatment 

under exemption 4 for observation dates 

that occur prior to the liquidity coverage 

ratio disclosure standard being 

implemented.6 To the extent 

confidential data collected under the FR 

Y–15 will be used for supervisory 

purposes, it may be exempt from 

disclosure under Exemption 8 of FOIA 

(5 U.S.C. 552(b)(8)). 

Current actions: On August 24, 2017, 

the Board published a notice in the 

Federal Register (82 FR 40154) 

requesting public comment for 60 days 

on the extension, with revision, of the 

FR Y–15. The Board proposed to amend 

the FR Y–15 to include Mexican pesos 

in total payments activity rather than as 

a memorandum item; add securities 

brokers to the definition of financial 

institutions; expressly include 

derivative transactions where a clearing 

member bank guarantees performance of 

a client to a central counterparty; and 

specify how certain cleared derivatives 

transactions are reported. The proposal 

was amended October 18, 2017, to 

extend the proposed implementation 

date from December 31, 2017, to March 

31, 2018, and to extend the public 

comment period for the proposal for an 

additional 30 days (82 FR 49608). The 

comment period for the proposal 

expired on November 23, 2017. 

The Board received seven comments 

on the proposal. One commenter 

expressed general support of the 

proposal. Six comments focused on the 

Board’s proposal to include in Schedule 

D, item 1 the notional amount of overthe-counter (OTC) derivative 

transactions where a clearing member 

bank guarantees the performance of a 

client to a central counterparty (CCP). 

The comments are discussed below. The 

comments did not address the other 

proposed changes in detail and either 

supported or did not object to the other 

proposed changes. 

Detailed Discussion of Public 

Comments 

Comments Related to the Complexity 

Indicator 

Commenters noted that derivatives 

are cleared using two models: The 

principal model, where the banking 

organization facilitates the clearing of 

derivatives by taking opposing positions 

with the client and the CCP; and the 

agency model, where a clearing member 

banking organization, acting as an agent, 

guarantees the performance of the client 

to a CCP. The current reporting 

instructions for derivative contracts 

cleared through a CCP in Schedule D, 

item 1 state that, when the reporting 

banking organization acts as a financial 

intermediary under the principal model, 

the notional amounts for each 

contract—that is, the transaction with 

the client and the transaction with the 

CCP—should be reported. In cases 

where a clearing member banking 

organization acts as an agent, the 

current instructions state that the bank 

should report the notional amount when 

the bank guarantees the performance of 

a CCP to a client. As clearing member 

banking organizations rarely guarantee 

the performance of a CCP to a client, the 

amount of derivatives reported under 

the agency model is low. 

The proposal would have revised the 

instructions to require reporting of 

derivative transactions where a clearing 

member bank guarantees the 

performance of a client to a CCP under 

the agency model, thereby increasing 

parity between the two clearing models. 

One commenter observed that shifts 

in global clearing activity since 2012 

have led to widespread adoption of the 

agency model of clearing in lieu of the 

principal model, obviating the need to 

mitigate the differences in reporting 

between the models. Commenters also 

argued that the risk associated with 

client-cleared transactions would have 

been overstated under the proposal and 

that the risks associated with these 

transactions are already appropriately 

captured in total exposure (Schedule A, 

item 1(h)), intra-financial system assets 

(Schedule B, items 5(a) and 5(b)), and 

intra-financial system liabilities 

(Schedule B, items 11(a) and 11(b)). 

These commenters stated that banking 

organizations engaged in client clearing 

businesses focus only on the credit risk 

of their clients and the imposition of 

applicable credit limits. Commenters 

argued that this significantly reduces 

the complexity of the activity and, 

therefore, the client leg of these 

transactions should not be included in 

the complexity indicator. 

After considering the comments, the 

Board has decided not to adopt the 

proposed reporting of derivative 

transactions where a clearing member 

bank guarantees the performance of a 

client to a CCP in Schedule D, item 1. 

Although derivatives are often complex, 

the Board does not believe it is 

appropriate at this time to treat the 

client leg of a cleared transaction in the 

agency model as more complex than a 

simple credit exposure, and therefore 

does not believe it is currently necessary 

to include these exposures in the 

complexity indicator. Further, part of 

the motivation for including the client 

leg of the agency model was to make 

sure that, for a regulatory framework 

that encompasses multiple models of 

clearing, no one model receives 

significantly more or less representation 

with respect to the GSIB indicators. The 

proposal was intended in part to ensure 

that the agency model would be 

adequately included in the GSIB 

indicators compared to the principal 

model. However, the expansion in the 

availability and overall use of the 

agency model somewhat mitigates 

concerns about the relative treatment of 

client-cleared transactions between 

respondents, and the Board is thus not 

currently concerned that excluding the 

client leg from the GSIB indicators will 

result in a significant disparity among 

reporters. Because the two clearing 

models remain, however, the Board may 

need to address inequitable treatment of 

client-cleared transactions in the future 

if the principal model again becomes 

more common. 

Comments Related to the 

Interconnectedness Indicators 

Consistent with the proposed change 

to Schedule D, item 1 discussed above, 

the Board also proposed to revise the 

instructions to Schedule B, items 5(a) 

and 11(a) for reporting derivative 

contracts cleared under the agency 

model. The current instructions state 

that the bank should report the net 

positive or net negative fair value when 

the bank guarantees the performance of 

a CCP to a client. As noted, this rarely 

occurs, resulting in almost no reporting 

of derivatives under the agency model 

in these two items on Schedule B. 

Several commenters stated that 

requiring cleared derivative transactions 

to be reported where the bank 

guarantees the performance of a 

financial institution client could 

discourage derivative clearing activities, 

contrary to public policy goals, because 

client clearing of derivatives may reduce 

systemic risk. Additionally, these 


sradovich on DSK3GMQ082PROD with NOTICES
31146 Federal Register / Vol. 83, No. 128 / Tuesday, July 3, 2018 / Notices 

7The international GSIB assessment reporting 

instructions for year-end 2017 are available at 

www.bis.org/bcbs/gsib/reporting_instructions.htm. 

8Even if the argument regarding the APA were 

not moot, the Board would not have violated the 

APA if it decided to implement the proposed 

revisions to Schedule B, items 5(a) and 11(a), and 

Schedule D, item 1. The proposed revisions to the 

FR Y–15 constitute an interpretive rule or general 

statement of policy, and therefore may be adopted 

without the publication of a general notice of 

proposed rulemaking in the Federal Register. Even 

if such publication were necessary to adopt the 

proposed revisions, this requirement was satisfied 

because the proposal was published for comment in 

the Federal Register for a 60-day comment period. 

After receiving initial feedback on the proposal, the 

comment period was extended for 30 days to solicit 

additional feedback. Moreover, redlined forms, 

instructions, and an OMB supporting statement 

were made available on the Board’s public website. 

The materials afforded commenters the opportunity 

to provide specific feedback regarding the exact 

changes being proposed. Indeed, commenters 

provided significant feedback based on the 

proposal. 

9Any changes to these reporting forms would 

have to be proposed in a future Federal Register 

notice with a 60-day comment period, as required 

by the Paperwork Reduction Act (PRA). 

commenters argued that the proposed 

changes could result in the GSIB 

surcharge of several firms increasing, 

which, in turn, could lead these firms to 

increase clearing costs for derivative 

end-users. 

After considering the comments, the 

Board is not adopting its proposal with 

respect to reporting derivatives under 

the agency model on Schedule B in 

order to allow additional time to 

consider how to cover such activity in 

the context of interconnectedness. The 

Board will continue to consider whether 

agency clearing should be incorporated 

into the interconnectedness measures or 

elsewhere. 

Other Comments Received 

No comments were received regarding 

the inclusion of Mexican pesos in total 

payments activity or the addition of 

securities brokers to the definition of 

financial institution. Accordingly, the 

Board is adopting revisions to the FR Y– 

15 reporting form and instructions to 

include Mexican pesos in total 

payments activity on Schedule C and 

remove it from the Memorandum items, 

and to add securities brokers to the 

definition of financial institutions in the 

instructions for Schedule B. These 

changes are effective for the June 30, 

2018, reporting date. 

Several commenters stated that the 

proposed changes to the reporting of 

OTC derivatives in Schedule D would 

make the FR Y–15 inconsistent with the 

Basel Committee GSIB assessment 

reporting instructions.7 In addition, 

certain commenters stated that the 

proposed revisions to Schedule B, items 

5(a) and 11(a), and Schedule D, item 1, 

were inconsistent with the 

Administrative Procedure Act (APA). 

The Board is not adopting these 

proposed changes, making these 

arguments moot.8

One commenter noted that the 

definition of ‘‘financial institution’’ in 

the FR Y–15 is different from other 

regulatory reports and recommended 

aligning the varying definitions. In 

response, the Board acknowledges that 

its regulations and reporting sometimes 

use differing definitions for similar 

concepts and that this may require firms 

to track differences among the 

definitions. Firms should review the 

definition of ‘‘financial institution’’ in 

the instructions of the form on which 

they are reporting and should not look 

to similar definitions in other forms as 

dispositive for appropriate reporting on 

the FR Y–15. 

A commenter also asked for 

clarification about whether securities 

financing transactions follow the 

regulatory capital rule definition of 

repo-style transactions. As described in 

the General Instructions of Schedule A, 

several items involve securities 

financing transactions (i.e., repo-style 

transactions), which are transactions 

such as repurchase agreements, reverse 

repurchase agreements, and securities 

lending and borrowing, where the value 

of the transactions depends on the 

market valuations and the transactions 

are often subject to margin agreements. 

For purposes of reporting on the FR Y– 

15, the intent is that securities financing 

transactions are synonymous with repostyle transactions under the regulatory 

capital rule. In a future update of the FR 

Y–15, the Board will work to replace the 

term ‘‘securities financing transactions’’ 

with ‘‘repo-style transactions’’ to better 

align the FR Y–15 language with the 

regulatory capital rule. 

In addition, a commenter asked for 

clarification regarding potential 

inconsistencies between similar items 

that are reported on different reporting 

forms. In particular, the commenter 

noted that the instructions for the FR Y– 

15, FFIEC 101 (Regulatory Capital 

Reporting for Institutions Subject to the 

Advanced Capital Adequacy 

Framework), and FR Y–14Q (Capital 

Assessments and Stress Testing) do not 

consistently allow for a reduction in fair 

value of sold credit protection. The 

Board will conduct a coordinated effort 

with the other banking agencies on 

changes to the FFIEC 101 and the FR Y– 

14 to ensure that the instructions 

appropriately clarify how any 

adjustments for sold credit protection 

should be reported.9

Further, a commenter asked for 

clarification regarding the reporting of 

holdings of equity investments in 

unconsolidated investment funds 

sponsored or administered by the 

respondent. Specifically, the commenter 

wanted to know whether such 

investments would be reported as equity 

securities in Schedule B, item 3(e). Per 

the general instructions for Schedule B, 

item 3, firms must include ‘‘securities 

issued by equity-accounted associates 

(i.e., associated companies and affiliates 

accounted for under the equity method 

of accounting) and special purpose 

entities (SPEs) that are not part of the 

consolidated entity for regulatory 

purposes.’’ Therefore, such equity 

investments would be included in item 

3(e). 

A commenter also requested 

clarification on how collateral may 

reduce the exposure reported in the FR 

Y–15, Schedule B, items 5(a) and 11(a). 

For item 5(a), in cases where a 

qualifying master netting agreement is 

in place, a reporting bank may reduce 

its value of derivative assets by 

subtracting the net collateral position 

from the underlying obligation. In 

circumstances where the net collateral 

exceeds the payment obligation, the 

bank should report a fair value of zero 

for the netting set. Similarly, for item 

11(a), in cases where a qualifying master 

netting agreement is in place, a 

reporting bank may reduce its value of 

derivative liabilities exposure by 

subtracting the net collateral position 

from the underlying obligation. In 

circumstances where the net collateral 

exceeds the payment obligation owed to 

the counterparty, the bank should report 

a fair value of zero for the netting set. 

Board of Governors of the Federal Reserve 

System, June 28, 2018. 

Michele Taylor Fennell, 

Assistant Secretary of the Board. 

[FR Doc. 2018–14304 Filed 7–2–18; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

Proposed Agency Information 

Collection Activities; Comment 

Request 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Notice, request for comment. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (Board) invites 

comment on a proposal to extend for 

three years, without revision, the 

Interagency Guidance on Managing 

Compliance and Reputation Risks for 


sradovich on DSK3GMQ082PROD with NOTICES