Overview
Title
Proposed Agency Information Collection Activities; Comment Request
Agencies
ELI5 AI
The government is asking people what they think about a form that banks fill out to show they have enough money if something big happens. They want to keep using this form just like before for the next three years, and they’re wondering if it’s good enough or if it could be better.
Summary AI
The Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation are seeking public comments on their proposal to extend the Market Risk Regulatory Report for Institutions Subject to the Market Risk Capital Rule, known as FFIEC 102, for another three years without changes. This report is crucial for certain financial institutions to assess their market risk and ensure they meet capital requirements. The agencies invite feedback on how to improve the report's effectiveness and whether the associated data collection is necessary. Comments should be submitted by July 1, 2025, and will be shared among the agencies.
Abstract
In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), the OCC, the Board, and the FDIC (the agencies) may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The Federal Financial Institutions Examination Council (FFIEC), of which the agencies are members, has approved the agencies' publication for public comment of a proposal to extend for three years, without revision, the Market Risk Regulatory Report for Institutions Subject to the Market Risk Capital Rule (FFIEC 102), which is currently an approved collection of information for each agency. At the end of the comment period for this notice the FFIEC and the agencies will review any comments received to determine whether to modify the proposal in response to comments. As required by the PRA, the agencies will then publish a second Federal Register notice for a 30-day comment period and submit the final FFIEC 102 to OMB for review and approval.
Keywords AI
Sources
AnalysisAI
The document from the Federal Register outlines a proposal by three major financial regulatory bodies – the Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation. The proposal seeks public comment on the extension of the Market Risk Regulatory Report, known as the FFIEC 102, for another three years without any revisions. This report plays a crucial role for financial institutions in evaluating their market risks and assuring compliance with capital requirements.
General Summary
This proposal is part of the routine process required by law whenever a federal agency intends to collect data. It emphasizes the need for maintaining transparency and public participation through comments. The primary goal is to gather insights on whether the existing data collection processes and methodologies are still adequate for the intended purposes and to invite feedback that could potentially enhance these processes.
Significant Issues and Concerns
One of the central issues noted in the document is the decision to extend the reporting requirements without any revisions. While this approach ensures continuity, it raises concerns about the lack of updates that could reflect evolving market conditions or recent financial developments.
The document also outlines the estimated time burden on institutions required to complete the report. However, it lacks detailed explanations on how these estimates were derived, which could make it difficult for stakeholders to assess the accuracy of these projections.
Another concern is the technical language used throughout the document. While it provides comprehensive details for financial experts, the technical jargon might hinder public understanding, limiting meaningful engagement from lay audiences who might have valuable insights.
Broad Public Impact
The proposal offers a period for public commentary, providing a crucial opportunity for individuals and organizations to influence regulatory practices that affect the financial system. However, the technical nature of the document may limit broader understanding and engagement by the general public, reducing the number of comments submitted.
Impact on Specific Stakeholders
For financial institutions subject to the Market Risk Capital Rule, the extension of the FFIEC 102 represents both an ongoing responsibility and a point of continuity in regulatory reporting. The unchanged nature of the report may benefit these institutions by allowing them to use established processes without needing to adapt to new requirements. However, it also risks overlooking the need for modernization and increased efficiency in data collection, potentially placing an unnecessary burden on these entities.
From a regulatory perspective, maintaining the current report format ensures continued assessment of market risk across institutions, aiding in the stability and oversight of the financial sector. However, regulators might miss the opportunity to incorporate innovative solutions that could streamline and enhance information collection if feedback on the need for updates is not sufficiently considered.
Conclusion
While the document supports the Federal Financial Institutions Examination Council's commitment to transparency and diligence in collecting market risk data, it reveals potential shortcomings in modernization and public engagement. Meaningful updates and simplification of communication could benefit both financial institutions and the public, ensuring that market risk assessments remain relevant and impactful in a rapidly changing financial landscape.
Financial Assessment
The document refers to the Market Risk Capital Rule applicable to certain banking institutions. Specifically, it mentions that this rule generally applies to any banking institution with aggregate trading assets and trading liabilities equal to (a) 10 percent or more of quarter-end total assets or (b) $1 billion or more. This financial threshold is crucial for determining which institutions are subject to the rule and required to file the Market Risk Regulatory Report (FFIEC 102). The distinction is significant because it delineates the institutions that must adhere to specific regulatory reporting requirements due to their trading activities.
Financial Allocation and Context
The document does not discuss any direct spending, appropriations, or financial allocations in the traditional sense. Instead, it focuses on the regulatory burden placed on financial institutions, which can be associated with the costs of compliance. For instance, the estimated burden for respondents—the time and resources required to prepare and submit the FFIEC 102 report—implies a financial impact on the institutions subject to this rule. The Office of Management and Budget (OMB) has specified average time estimates for respondents: 12 hours per quarter across different types of institutions, translating to a total annual burden of 768 hours for the OCC, 1,968 hours for the Board, and 48 hours for the FDIC.
Issues Related to Financial References
One of the issues highlighted in the document is the lack of detail in how these burden estimates were calculated. Understanding how the average time per response was determined could provide insight into the financial implications for the institutions involved. For example, if the time estimates are higher than necessary, this could mean institutions are incurring unnecessary costs. Additionally, automating data collection to reduce this burden is mentioned as a possible focus for minimizing costs. However, the document does not specify whether any such measures have been implemented or considered, which might significantly impact the financial resources required by these institutions to comply.
Potential Impacts on Stakeholders
For the broader banking industry, the financial references in the document provide a baseline for evaluating the impact of regulatory requirements. If the FFIEC 102 report is extended as proposed, without revision, institutions will continue facing these compliance costs without any immediate reduction. The absence of discussion on potential updates or modifications to reduce the burden indicates a pause in addressing potential technological or procedural advances that could lessen financial impacts.
Conclusion
The specified financial thresholds and burden estimates serve as a quantifiable measure of the Market Risk Capital Rule's impact on banking institutions. While expenditure in traditional terms isn't directly addressed, the implicit costs of compliance and the potential for optimization suggest avenues where financial savings could be pursued. The document's call for comments offers a channel through which stakeholders might influence possible reductions in these burdens, although it does not directly address how such feedback might alter future financial or regulatory actions.
Issues
• The document refers to extensions of the Market Risk Regulatory Report (FFIEC 102) without revision, but there is insufficient information to evaluate whether not revising the report might omit important updates.
• The document provides estimated burdens for respondents, but further details on how these estimates were calculated would be beneficial to assess their accuracy.
• The language in the document is quite technical, using specific regulatory and financial terms that might not be easily understood by the general public.
• The document does not specify whether any measures have been implemented or considered to reduce the estimated burden, such as automating data collection or optimizing reporting processes.
• The general description of reports and statistical data availability lacks clarity and could use more simplified explanations for non-expert readers.
• Potential impacts or changes due to the extension of this information collection are not thoroughly discussed, making it difficult to assess the overall effect on the banking industry.
• There is no discussion on how feedback from the comments period might tangibly influence the decision-making process or result in alterations to the proposed course of action.