International Services Surveys: BE-80, Benchmark Survey of Financial Services Transactions Between U.S. Financial Services Providers and Unaffiliated Foreign Persons

DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 801

[Docket No. 99061159-9159-01]

RIN 0691-AA35

International Services Surveys: BE-80, Benchmark Survey of

Financial Services Transactions Between U.S. Financial Services

Providers and Unaffiliated Foreign Persons

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This notice sets forth proposed rules to revise 15 CFR part

801.11 to present the reporting requirements for the BE-80, Benchmark

Survey of Financial Services Transactions Between U.S. Financial

Services Providers and Unaffiliated Foreign Persons.

The Department of Commerce, as part of its continuing effort to

reduce paperwork and respondent burden, invites the general public and

other Federal agencies to comment on proposed and/or continuing

information collections, as required by the Paperwork Reduction Act of

1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)).

BEA proposes to raise the exemption level for the 1999 survey to $3

million in covered sales or purchases transactions, from $1 million on

the previous (1994) survey. Raising the exemption level will reduce

respondent burden, particularly for small companies. BEA also proposes

to combine private placement services with underwriting services,

combine foreign exchange brokerage services with other brokerage

services, and create a separate category for electronic funds

transfers. Finally, BEA has restated the definition of ``financial

services provider'' using the nomenclature of the new North American

Industry Classification System that has replaced the U.S. Standard

Industrial Classification System.

The changes in the types of services to be reported separately

reflect BEA's experience in collecting data on financial services

transactions over the past 5 years. Data collected for both private

placement and foreign brokerage services have been very small and do

not justify the continuation of separate reporting. Electronic funds

transfer services, in contrast, appear to account for a large fraction

of both total receipts and total payments for ``other financial

services,'' in which electronic funds transfers were previously

included.

DATES: Comments on these proposed rules will receive consideration if

submitted in writing on or before September 7, 1999.

ADDRESSES: Mail comments to the Office of the Chief, International

Investment Division (BE-50), Bureau of Economic Analysis, U.S.

Department of Commerce, Washington, DC 20230, or hand deliver comments

to room M-100, 1441 L Street, N.W., Washington, DC 2005. Comments will

be available for public inspection in room 7005, 1441 L Street, N.W.,

between 8:30 a.m. and 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: R. David Belli, Chief, International

Investment Division (BE-50), Bureau of Economic Analysis, U.S.

Department of Commerce, Washington, DC 20230; phone (202) 606-9800.

SUPPLEMENTARY INFORMATION: These proposed rules amend 15 CFR part 801

to set forth revised reporting requirements for the BE-80, Benchmark

Survey of Financial Services Transactions Between Financial Services

Providers and Unaffiliated Foreign Persons. The Bureau of Economic

Analysis (BEA), U.S. Department of Commerce, will conduct the survey

under the International Investment and Trade in Services Survey Act (22

U.S.C. 3101-3108), and under section 5408 of the Omnibus Trade and

Competitiveness Act of 1988 (15 U.S.C. 4908). Section 4(a) of the Act

(22 U.S.C. 3103(a)) provides that ``The President shall, to the extent

he deems necessary and feasible * * * (1) conduct a regular data

collection program to secure current information--related to

international investment and trade in services * * *; and (5) publish

for the use of the general public and United States Government agencies

periodic, regular, and comprehensive statistical information collected

pursuant to this subsection * * *'' In Section 3 of Executive Order

11961, the President delegated authority granted under the Act as

concerns international trade in services to the Secretary of Commerce,

who has redelegated it to BEA.

The BE-80 survey is mandatory and is conducted once every 5 years

by the Bureau of Economic Analysis (BEA), U.S. Department of Commerce,

under the International Investment and Trade in Services Survey Act (22

U.S.C. 3101-3108) hereinafter ``the Act'', and under Section 5408 of

the Omnibus Trade and Competitiveness Act of 1988 (15 U.S.C. 4908). The

proposed benchmark survey will be conducted for 1999. BEA will send the

survey to potential respondents in January of the year 2000; responses

will be due by March 31, 2000. The last benchmark survey was conducted

for 1994. The benchmark survey will obtain universe data on trade in

financial services, by type and by country, between U.S. financial

services providers and unaffiliated foreign persons. Data from the BE-

80 survey (and the follow-on annual survey, the BE-82) are needed to

monitor trade in financial services, analyze its impact on the U.S. and

foreign economies, compile and improve the U.S. economic accounts,

support U.S. commercial policy on financial services, conduct trade

promotion, improve the ability of U.S. businesses to identify and

evaluate market opportunities, and for other Government uses.

The major purposes of the survey are to monitor trade in financial

services, analyze its impact on the U.S. and foreign economies, compile

and improve the U.S. economic accounts, support U.S. commercial policy

on financial services, conduct trade promotion, and improve the ability

of U.S. businesses to identify and evaluate market opportunities.

As proposed, BEA will conduct the BE-80 survey once every 5 years.

The last survey was conducted for 1994. The survey is intended to cover

the universe of financial services transactions

[[Page 37050]]

between U.S. financial services providers and unaffiliated foreign

persons. Reporting is required from U.S. financial services providers

who have sales to or purchases from affiliated foreign persons in all

covered financial services combined in excess of $3 million during the

reporting year. Financial services providers meeting this criteria must

supply data on the amount of their sales or purchases for each covered

type of service, disaggregated by country. U.S. financial services

providers that have covered transactions of less than $3 million during

the reporting year are asked to provide voluntary estimates of their

total sales or purchases of each type of financial service.

The information from the benchmark survey is updated in

nonbenchmark years by an annual follow on survey, the BE-82. Currently,

the annual survey covers only those U.S. financial services providers

that have covered transaction in excess of $5 million during the

reporting year.

Executive Order 12612

These proposed rules do not contain policies with Federalism

implications sufficient to warrant preparation of a Federalism

assessment under E.O. 12612.

Executive Order 12866

These proposed rules have been determined to be not significant for

purposes of E.O. 12866.

Paperwork Reduction Act

These proposed rules contain a collection of information

requirement subject to the Paperwork Reduction Act (PRA) and have been

submitted to the Office of Management and Budget for review under the

PRA.

Notwithstanding any other provisions of the law, no person is

required to respond to, nor shall any person be subject to a penalty

for failure to comply with, a collection-of-information subject to the

requirements of the Paperwork Reduction Act unless that collection

displays a currently valid Office of Management and Budget Control

Number.

The survey, as proposed, is expected to result in the filing of

reports, containing mandatory or voluntary data, from about 500

respondents. The average burden for completing the BE-80--both the

mandatory and voluntary sections--is estimated to be 7 hours. Thus, the

total respondent burden of the survey is estimated at 3,500 hours (500

respondents times 7 hours average burden). The actual burden will vary

from reporter to reporter, depending upon the number and variety of

their financial services transactions and the ease of assembling the

data. Thus, it may range from 4 hours for a reporter that has a small

number and variety of transactions and easily accessible data, or that

reports only in the voluntary section of the form, to 150 hours for a

very large reporter that engages in a large number and variety of

financial services transactions and has difficulty in locating and

assembling the required data. This estimate includes time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

Comments are requested concerning: (a) Whether the proposed

collection of information is necessary for the proper performance of

the functions of the agency, including whether the information will

have practical utility; (b) the accuracy of the burden estimate; (c)

ways to enhance the quality, utility, and clarity of the information

collected; and (d) ways to minimize the burden of the collection of

information on the respondents, including the use of automated

collection techniques or other forms of information technology.

Comments should be addressed to: Director, Bureau of Economic Analysis

(BE-1), U.S. Department of Commerce, Washington, DC 20230, and to the

Office of Management and Budget, O.I.R.A., Paperwork Reduction Project

0608-0062, Washington, DC 20503 (Attention PRA Desk Officer for BEA).

Regulatory Flexibility Act

The Chief Counsel for Regulation, Department of Commerce, has

certified to the Chief Counsel for Advocacy, Small Business

Administration, under provisions of the Regulatory Flexibility Act (5

U.S.C. 605(b)), that this proposed rulemaking, if adopted, will not

have a significant economic impact on a substantial number of small

entities. The information collection excludes most small businesses

from mandatory reporting. Companies that engage in international

financial services transactions tend to be quite large. In addition,

the reporting threshold for this survey is set at a level that will

exempt most small businesses from reporting. The BE-80 benchmark survey

will be required only from U.S. persons with sales to, or purchases

from, unaffiliated foreign persons in excess of $3,000,000 during the

reporting year, in all covered financial services transactions

combined; the exemption level for the previous benchmark survey,

covering 1994, was $1,000,000. Thus, the exemption level will exclude

most small businesses form mandatory coverage. Of those small

businesses that must report, most will tend to have specialized

operations and activities, so they will likely report only one type of

transaction; therefore, the burden on them should be small.

List of Subjects in 15 CFR Part 806

Balance of Payments, Economic statistics, Foreign trade, Penalties,

Reporting and recordkeeping requirements.

J. Steven Landefeld,

Director, Bureau of Economic Analysis.

For the reasons set forth in the preamble, BEA proposes to amend 15

CFR Part 801, as follows:

PART 801--SURVEY OF INTERNATIONAL TRADE IN SERVICES BETWEEN U.S.

AND FOREIGN PERSONS

1. The authority citation for 15 CFR Part 801 continues to read as

follows:

Authority: 5 U.S.C. 301, 15 U.S.C. 4908, 22 U.S.C. 3101-3108;

E.O. 11961, 3 CFR, 1977 Comp., p. 86 as amended by E.O. 12013, 3

CFR, 1977 Comp., p. 147, E.O. 12318, 3 CFR, 1981 Comp., p. 173, and

E.O. 12518, 3 CFR, 1985 Comp., p. 348.

2. Section 801.11 is revised to read as follows:

Sec. 801.11 Rules and regulations for the BE-80, Benchmark Survey of

Financial Services Transactions Between U.S. Financial Services

Providers and Unaffiliated Foreign Persons.

A BE-80, Benchmark Survey of financial Services Transactions

Between U.S. Financial Services Providers and Unaffiliated Foreign

Persons, will be conducted covering 1999 and every fifth year

thereafter. All legal authorities, provisions, definitions, and

requirements contained in Secs. 801.1 through 801.9 are applicable to

this survey. Additional rules and regulations for the BE-80 survey are

given in paragraphs (a) through (d) of this section. More detailed

instructions are given on the report forms and instructions.

(a) Who must report--(1) Mandatory reporting. Reports are required

from each U.S. person who is a financial services provider or

intermediary, or whose consolidated U.S. enterprise includes a

separately organized subsidiary, or part, that is a financial services

provider or intermediary, and who had transactions (either sales or

purchases) directly with unaffiliated foreign persons in all financial

services combined in excess of $3,000,000 during its fiscal year

covered by the survey. The $3,000,000 threshold

[[Page 37051]]

should be applied to financial services transactions with unaffiliated

foreign persons by all parts of the consolidated U.S. enterprise

combined that are financial services providers or intermediaries.

Because the $3,000,000 threshold applies separately to sales and

purchases, the mandatory reporting requirement may apply only to sales,

only to purchases, or to both.

(i) The determination of whether a U.S. financial services provider

or intermediary is subject to this mandatory reporting requirement may

be based on the judgement of knowledgeable persons in a company who can

identify reportable transactions on a recall basis, with a reasonable

degree of certainty, without conducting a detailed manual records

search.

(ii) Reporters who file pursuant to this mandatory reporting

requirement must provide data on total sales and/or purchases of each

of the covered types of financial services transactions and must

disaggregate the totals by country.

(2) Voluntary reporting. If during the fiscal year covered, sales

of purchases of financial services by a firm that is a financial

services provider or intermediary, or by a firm's subsidiaries, or

parts, combined that are financial services providers or

intermediaries, are $3,000,000 or less, the U.S. person is requested to

provide an estimate of the total for each type of service. Provision of

this information is voluntary. Because the $3,000,000 threshold applies

separately to sales and purchases, this voluntary reporting option may

apply only to sales, only to purchases, or to both.

(b) BE-80 definition of financial services provider. Except for

Monetary Authorities (i.e., Central Banks), the definition of financial

services provider used for this survey is identical in coverage to

Sector 52--Finance and Insurance--of the North American Industry

Classification System, United States, 1997. For example, companies and/

or subsidiaries and other separable parts of companies in the following

industries are defined as financial services providers: Depository

credit intermediation and related activities (including commercial

banking, holding companies, savings institutions, check cashing, and

debit card issuing); nondepository credit intermediation (including

credit card issuing, sales financing, and consumer lending);

securities, commodity contracts, and other financial investments and

related activities (including security and commodity futures brokers,

dealers, exchanges, traders, underwriters, investment bankers, and

providers of securities custody services); insurance carriers and

related activities (including agents, brokers, and services providers);

investment advisors and managers and funds, trusts, and other financial

vehicles (including mutual funds, pension funds, real estate investment

trusts, investors, stock quotation services, etc.).

(c) Covered types of services. The BE-80 survey covers the

following types of financial services transactions (purchases and/or

sales) between U.S. financial services providers and unaffiliated

foreign persons: Brokerage, including foreign exchange brokerage

services; underwriting and private placement services; financial

management services; credit-related services, except credit card

services; credit card services; financial advisory and custody

services; securities lending services; electronic funds transfer

services; and other financial services,

(d) What to file. (1) The BE-80 survey consists of Forms BE-80(A)

and BE-80(B). Before completing a form BE-80(B), a consolidated U.S.

enterprise (including the top U.S. parent and all of its subsidiaries

and parts combined) must complete Form BE-80(A) to determine its

reporting status. If the enterprise is subject to the mandatory

reporting requirement, or if it is exempt from the mandatory reporting

requirement but chooses to report data voluntarily, it should either

(i) File a separate Form BE-80(B) for each separately organized

financial services subsidiary or part of a consolidated U.S.

enterprise; or

(ii) File a single BE-80(B) representing the sum of all covered

transactions by all financial services subsidiaries or parts of the

enterprise combined.

(2) Reporters who receive the BE-80 survey from BEA but are not

subject to the mandatory reporting requirements and choose not to

report data voluntarily must complete and return to BEA the Exemption

Claim.

[FR Doc. 99-17391 Filed 7-8-99; 8:45 am]

BILLING CODE 3510-06-M