Overview
Title
Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB
Agencies
ELI5 AI
The people in charge of big money banks decided to keep some important rules the same for three more years. These rules help the banks remember to write down what they do with the money, tell people about it, and make sure they're following important money laws.
Summary AI
The Board of Governors of the Federal Reserve System has decided to extend for three more years, without any changes, the recordkeeping, disclosure, and reporting rules related to securities transactions under Regulation H. These rules apply to state member banks (SMBs) and are designed to ensure they keep proper records, provide necessary transaction confirmations to customers, and establish policies for securities trading. The rules are carried out under sections 208.34(c), (d), and (g) of the regulation and are required by the Securities Exchange Act of 1934. The extension was announced without any public comments received on a notice issued in October 2020.
Abstract
The Board of Governors of the Federal Reserve System (Board) is adopting a proposal to extend for three years, without revision, the Recordkeeping, Disclosure, and Reporting Requirements Associated with Securities Transactions Pursuant to Sections 208.34(c), (d), and (g) of Regulation H (FR H-3; OMB No. 7100-0196).
Keywords AI
Sources
AnalysisAI
The discussed document from the Board of Governors of the Federal Reserve System provides an update on the extension of existing recordkeeping, disclosure, and reporting requirements for securities transactions under Regulation H. These requirements, governed by sections 208.34(c), (d), and (g), are part of efforts to regulate state member banks (SMBs) and ensure they maintain accurate transaction records, provide transparent confirmations to clients, and establish regulatory-compliant securities trading policies.
Key Details
The document highlights that the Federal Reserve System has decided to extend these requirements for another three years, sticking to the stipulations set under the Securities Exchange Act of 1934. Despite receiving no public comments during the notice period in late 2020, the extension has been formalized without any revisions. The focus here is on maintaining a systematic approach to securities transactions to uphold both transparency and accuracy.
Significant Issues and Concerns
One noteworthy issue is the lack of discussion regarding the potential costs associated with this extension. The document does not provide a clear financial impact assessment for SMBs, which could have facilitated a more informed evaluation of the decision. Furthermore, the technical language and detailed data around respondent estimates might be challenging for those unfamiliar with such regulatory frameworks, potentially causing confusion or skepticism.
There is also a lack of context for the specific U.S. Codes and FOIA exemptions cited, which may bewilder individuals not well-versed in legal language. Moreover, the document does not delve into a cost-benefit analysis of the current format of these requirements or explore the necessity of maintaining them unchanged, leaving room for questioning the decision's rationale.
Public and Stakeholder Impact
Impact on the General Public:
The impact on the broader public may not be directly evident. However, indirectly, these requirements aim to enhance the transparency and reliability of financial institutions, which could foster trust in the financial system. It is important for consumers to know that banks follow stringent processes for the transactions involving securities.
Impact on State Member Banks:
For SMBs, the extension of these requirements signifies a continued obligation to comply with detailed recordkeeping and reporting standards. While this maintains regulatory consistency, it may also involve significant time and resources to ensure adherence. Without a clear financial analysis included in the document, banks may find it challenging to assess the cost implications accurately.
Potential Benefits and Drawbacks:
Maintaining the existing requirements ensures continuity and could prevent disruption in regulatory practices. However, a more transparent evaluation of the financial and operational impact on SMBs would be beneficial. The lack of a detailed benefits-costs analysis raises questions about whether these requirements are optimized to balance efficiency with regulation.
In conclusion, while the document fulfills its regulatory extension purpose, it leaves several aspects unclearly addressed, which may influence stakeholders' understanding and evaluation of the impact of these requirements. This could highlight an area for the Federal Reserve to improve in its future communications and deliberations.
Issues
• The document does not specify any potential costs associated with the extension of the recordkeeping, disclosure, and reporting requirements. The financial implications for the involved parties, including state member banks, are not clear, which could be important for evaluating the proposal's impact.
• The language describing the responsibilities and requirements of the state member banks (SMBs), especially regarding recordkeeping, disclosure, and reporting requirements, is complex and may be difficult to understand for individuals not familiar with regulatory language or financial regulations.
• The section on estimated number of respondents and estimated average hours per response provides detailed figures without any context or explanation of how these estimates were derived, which may lead to confusion or skepticism about their accuracy.
• The legal authorization and confidentiality section contains references to specific U.S. Codes and exemptions under the Freedom of Information Act, which might be unclear to readers not familiar with these legal frameworks without additional explanatory context.
• There is no discussion on the potential benefits versus costs of maintaining the current reporting and recordkeeping requirements, nor is there any analysis of the necessity of these requirements in their current form.