Form G-405

DEPARTMENT OF THE TREASURY

Office of the Under Secretary for Domestic Finance

17 CFR Parts 400, 403, 405 and 449

Form G-405

AGENCY: Office of the Under Secretary for Domestic Finance, Treasury.

ACTION: Adoption of form amendments.

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SUMMARY: The Department of the Treasury (``Department'' or

``Treasury'') is adopting amendments to Form G-405 (Report on Finances

and Operations of Government Securities Brokers and Dealers, or the

``FOGS Report''), which is the form that registered government

securities brokers and dealers are required to file pursuant to

Secs. 405.2 and 449.5 of the regulations issued under the Government

Securities Act of 1986 (the ``Government Securities Act'' or ``GSA'').

The amendments revise Schedule I of the FOGS Report filed with the

Securities and Exchange Commission (``SEC'') to require registered

government securities brokers and dealers to disclose their

affiliations, if any, with U.S. banks. The Department is adopting the

amendments unchanged from their proposed form.

EFFECTIVE DATE: June 12, 1995.

FOR FURTHER INFORMATION CONTACT: Ken Papaj (Director) or Lee Grandy

(Government Securities Specialist) at 202-219-3632. (TDD for hearing

impaired: 202-219-3988.)

SUPPLEMENTARY INFORMATION:

Background and Analysis

The Department adopted Form G-405 in the implementing regulations

for the GSA issued on July 24, 1987 (52 FR 27910). Sections 405.2 and

449.51 of the GSA regulations require that registered government

securities brokers and dealers use the form to make the required

monthly, quarterly and annual financial reports to the SEC or to their

self-regulatory organization in accordance with a plan approved by the

SEC. Pursuant to the regulations, registered government securities

brokers and dealers are required to file financial reports which

include information on their assets, liabilities, liquid capital, total

haircuts, and ratio of liquid capital to total haircuts as determined

in accordance with Sec. 402.2, among other items, on Form G-405.

\1\17 CFR 405.2 and 17 CFR 449.5, respectively.

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To supplement either Part II or IIA of the FOGS Report, registered

government securities brokers and dealers are also required to file

Schedule I at the end of each calendar year. The purpose of this

schedule is to obtain information about the economic and financial

characteristics of the reporting government securities broker or

dealer.

The Department published the amendments to Form G-405 in proposed

form on January 30, 1995,2 and the comment period closed on March

1, 1995. Treasury received no comments and these final changes to the

form are identical to the proposed changes.

\2\60 FR 5602 (January 30, 1995).

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The amendments to Form G-405 add a new item 15 to request

information about an affiliation with, or control by, a U.S. bank.

Current items 15 through 18 become items 16 through 19, respectively.

The new inquiry requires a yes or no response, and if the response

[[Page 18734]]

is yes, the respondent must provide the name of the parent or affiliate

and the type of institution. The ``General Instructions'' to Schedule I

also are amended to refer to the definition of ``bank'' in Sec. 3(a)(6)

of the Securities Exchange Act of 1934 (``Exchange Act'').3

\3\15 U.S.C. 78c(a)(6). Under this section, the term ``bank'' is

defined as: (a) a banking institution organized under the laws of

the United States; (b) a member bank of the Federal Reserve System;

(c) any other banking institution doing business under the laws of

any state or the United States, a substantial portion of which

consists of receiving deposits or exercising fiduciary powers

similar to those permitted to national banks under the authority of

the Comptroller of the Currency, and which is supervised and

examined by state or federal authority having supervision over

banks; and (d) a receiver, conservator, or other liquidating agent

of any institution or firm included in the above paragraphs.

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Form G-405 is required to be submitted by registered government

securities brokers and dealers to the SEC or to a self-regulatory

organization according to an SEC approved plan. Financial institutions

that have filed notice as government securities brokers and dealers are

not required to file Form G-405.

The disclosure of this additional information would correspond to

similar changes made by the SEC to Form X-17A-5, also known as the

``FOCUS'' Report, in November 1992.4 The Treasury shares the SEC's

belief that having knowledge of the economic and financial

characteristics of brokers and dealers, including organizational

affiliations with U.S. banks, is useful for regulatory purposes. This

form change will also achieve consistency with the SEC approach and

will assure consistent treatment for all government securities brokers

and dealers.

\4\Securities Exchange Act Release No. 31398 (November 4, 1992),

57 FR 53261 (November 9, 1992).

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The amendments to Form G-405 become effective June 12, 1995. The

Department has consulted with the National Association of Securities

Dealers (``NASD'') regarding the implementation of the form changes.

The Department understands that the NASD will distribute the amended

Form G-405 to its members that are registered government securities

brokers and dealers. Copies of the Form G-405 may also be obtained by

contacting the NASD.

List of Subjects in 17 CFR Part 449

Banks, banking, Brokers, Government securities, Reporting and

recordkeeping requirements.

For the reasons set out in the Preamble, 17 CFR Chapter IV is

amended as follows:

PART 449--FORMS, SECTION 15C OF THE SECURITIES EXCHANGE ACT OF 1934

1. The authority citation for Part 449 continues to read as

follows:

Authority: 15 U.S.C. 78o-5(a), (b)(1)(B), (b)(4).

2. Schedule I of Form G-405 is amended to add new instruction

15(a), (b) and (c) to the General Instructions, to redesignate

Questions 15-18 as Questions 16-19, and add new Question 15 to read as

follows:

Note: The text of Form G-405 does not appear in the Code of

Federal Regulations.

Form G-405, Report on Finances and Operations of Government

Securities Brokers and Dealers, Schedule I:

* * * * *

General Instructions

* * * * *

15(a), (b) & (c)--Report whether respondent directly or indirectly

controls, is controlled by, or is under common control with, a U.S.

bank. If the answer is ``yes,'' provide the name of the affiliated bank

and/or bank holding company, and describe the type of institution. The

term ``bank'' is defined in Sec. 3(a)(6) of the Securities Exchange Act

of 1934.

* * * * *

15. (a) Respondent directly or indirectly controls, is controlled

by, or is under common control with, a U.S. bank.

(Enter applicable code: 1=Yes 2=No) ________

(b) Name of parent or affiliate ____________

(c) Type of institution ____________

* * * * *

Secs. 400.6 and 405.3 [Amended]

3. For each section indicated in the list above, remove the Office

of Management and Budget control number from the parenthetical

statement at the end of each section, and add in its place ``1535-

0089''.

Sec. 403.4 [Amended]

4. Add at the end of Sec. 403.4 the following parenthetical:

Sec. 403.4 Customer protection--reserves and custody of securities.

(Approved by the Office of Management and Budget under control number

1535-0089)

Dated: April 3, 1995.

Frank N. Newman,

Deputy Secretary.

[FR Doc. 95-9057 Filed 4-12-95; 8:45 am]

BILLING CODE 4810-39-W