Daily Rules, Proposed Rules, and Notices of the Federal Government
All public comments are available from the Board's web site at
Additionally, commenters may send a copy of their comments to the 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.
Federal Reserve Board Clearance Officer--Cynthia Ayouch--Division of Research and Statistics, 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.
The following information collections, which are being handled under this delegated authority, have received initial Board approval and are hereby published for comment. At the end of the comment period, the proposed information collections, along with an analysis of comments and recommendations received, will be submitted to the Board for final approval under OMB delegated authority. Comments are invited on the following:
a. Whether the proposed collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility;
b. The accuracy of the Federal Reserve's estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;
c. Ways to enhance the quality, utility, and clarity of the information to be collected;
d. Ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and
e. Estimates of capital or start up costs and costs of operation, maintenance, and purchase of services to provide information.
Differences between the proposed survey and the 2010 survey are:
1. A more detailed counterparty breakdown for “other financial institutions” for credit default swap reporting would be added to the Outstanding survey to be consistent with the FR 2436. The growth in the credit derivative market has made these data an important component of understanding the structure and activity of the overall over-the-counter derivatives market.
2. The Canadian dollar would be added in tables for foreign exchange and interest rate derivatives on the Outstanding survey to be consistent with the FR 2436 and to align with the BIS global reporting requirements.
3. An additional 18 currency pairs would be added in tables for foreign exchange transactions on the Turnover survey, accompanied by full instrument and counterparty breakdowns. This change would facilitate reporting of currency pairs in carry trade strategies and ensure comprehensive identification of turnover in all participating countries' currencies.
4. A new item “of which non-deliverable” would be added under the total of “outright forwards” for six emerging market currency pairs opposite the U.S. dollar that have significant non-deliverable forward (NDF) volumes, and for the total amount of NDFs included under “outright forwards.” In prior surveys, NDF turnover was captured under “outright forwards.” With some previously non-deliverable currencies now being traded in deliverable forms, this new item will help distinguish between their deliverable and non-deliverable forward turnover. These data will provide insight into turnover in currencies for which there is not a deliverable market offshore due to limitations placed on such activity by local market authorities.
5. The counterparty breakdown would be modified to add more granularity to the “other financial institutions” category for the foreign exchange section of the Turnover survey. Other financial institutions would be split according to their primary business
6. A new item “of which prime brokered” would be added to the foreign exchange section of the Turnover survey to capture deals done via prime brokerage relationships for the reported totals for each instrument and currency pair. This would help assess the extent to which prime brokerage adds to foreign exchange turnover and which instruments and currencies are favored by prime brokerage customers. It will also add some insight to the geographic distribution of prime brokerage activity. Only survey respondents that act as foreign exchange prime brokers will need to report this item.
7. A new item “of which retail driven” would be added to the reported totals for each instrument and currency pair for the foreign exchange section of the Turnover survey. This new item will capture transactions with wholesale financial counterparties that cater to retail investors as well as direct transactions with non-wholesale investors. This would help assess the extent to which retail customers contribute to the turnover between dealers and could provide insight in to the geographic distribution of retail investors and the instrument and currencies preferred by retail investors.
8. The Execution Method schedule on the Turnover survey would be modified to breakdown execution methods for foreign exchange turnover by instrument (spot, forward, swaps, and option) and counterparty (reporting dealers, other financial institutions, and non-financial institutions). The enhanced breakdown of the execution method categories better reflects current market practices and simultaneously disentangles execution methods from counterparty types. Execution would be reported as:
a. Voice-Direct—not intermediated by a third party
b. Voice-Indirect—intermediated by a third party
c. Electronic-Direct—not intermediated by a third party
i. Single bank proprietary trading system (electronic-direct)
ii. Other (electronic-direct) such as: Reuters Conversational Dealing, Bloomberg, etc.
d. Electronic-Indirect—intermediated by a third party electronic platform, i.e., via a matching system
i. Reuters Matching or Electronic Broking Services (EBS)—major electronic trading platforms that are geared towards the interdealer market
ii. Other electronic communication networks (ECNs)—multi-bank dealing systems such as Currenex, FXall, Hotspot, Bloomberg Tradebook, etc.
iii. Other (electronic-indirect)
e. Undistributed—captures the amount of turnover for each instrument and counterparty that fails to be allocated into one of the aforementioned execution method categories.
9. The Turnover survey would add three quantitative questions on “retail driven” transactions asking for estimated percentage shares of transactions with “wholesale” counterparties, “non-wholesale” on-line transactions, and “non-wholesale” voice transactions.
10. The Turnover survey would add three quantitative questions on algorithmic and high frequency trading asking for estimated percentage shares of these types in spot turnover reported with hedge funds and proprietary trading firms for all currency pairs, major currency pairs and non-major currency pairs. This change would allow for estimates of the growth in foreign exchange turnover due to high frequency trading, which has expanded rapidly in recent years. As high frequency trading is a general trading style adoptable by any firm with access to the relevant technology, it is not practical to capture this activity under a single counterparty category.