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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Notices respect of assets or liabilities for that foreign branch resides at the U.S. branch or agency. A separate FFIEC 002S must be completed for each managed or controlled non-U.S. branch. The FFIEC
002S must be filed quarterly along with the U.S. branch or agencys FFIEC 002.
These information collections are mandatory 12 U.S.C. 3105c2, 1817a1 and 3, and 3102b. Except for select sensitive items, the FFIEC 002
is not given confidential treatment; the FFIEC 002S is given confidential treatment 5 U.S.C. 552b4 and 8.
The data from both reports are used for 1 monitoring deposit and credit transactions of U.S. residents; 2
monitoring the impact of policy changes; 3 analyzing structural issues concerning foreign bank activity in U.S.
markets; 4 understanding flows of banking funds and indebtedness of developing countries in connection with data collected by the International Monetary Fund and the Bank for International Settlements that are used in economic analysis; and 5 assisting in the supervision of U.S. offices of foreign banks. The Federal Reserve System collects and processes these reports on behalf of all three agencies.
II. Current Actions A. Background
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1. Net Stable Funding Ratio Rulemaking On October 20, 2020, the agencies announced the adoption of a final rule implementing the NSFR relevant for certain large U.S. banking institutions with $100 billion or more in total consolidated assets.1 The final rule assigned a 90 percent Available Stable Funding ASF factor to affiliate sweep deposits provided by a retail customer or counterparty. Also, a 95 percent ASF
factor was assigned to affiliate sweep deposits provided by a retail customer or counterparty where the entire amount of the sweep deposit is covered by deposit insurance and where an institution subject to the NSFR final rule has demonstrated to the satisfaction of its appropriate Federal banking agency that withdrawal of the deposit is highly unlikely to occur during a liquidity stress event. Other sweep deposits i.e., non-affiliate sweep deposits provided by a retail customer or counterparty and certain sweep deposits provided by wholesale, non-financial customers were assigned a 50 percent ASF factor, irrespective of the level of deposit insurance. Additionally, in the 1 See the NSFR final rule attached to OCC News Release 2020138, Board Press Release, and FDIC
Press Release 1162020, all of which are dated October 20, 2020.

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Supplementary Information section to the NSFR final rule, the agencies indicated they will continue to review the treatment of sweep deposits under the Liquidity Coverage Ratio LCR and NSFR rules.2 As part of this effort, the agencies are proposing to collect new data items in the Call Reports that would help evaluate funding stability of sweep deposits over time to determine their appropriate treatment under applicable liquidity regulations.
This proposal to capture new Call Report data items for sweep deposits would provide the agencies with several benefits for its understanding of liquidity risks relevant to institutions of all sizes. First, the agencies would be able to better observe funding dynamics, between insured and partially insured sweep deposits, thereby providing data on the funding stability of partially insured sweep deposits. Second, by having institutions with $100 billion or more in total assets report sweep deposits for different types of counterparties, any material differences in the stability of different types of counterparties that transact in sweep deposits would be more transparent for monitoring over time to determine their appropriate treatment under liquidity regulations.
Further, as noted in the NSFR final rule, sweep deposits received from affiliates have different stability characteristics than sweep deposits received from non-affiliates based on the varying priority and reliability of each affiliate and non-affiliate sweep deposits. The proposed new data items would provide the agencies with observations about the varying liquidity and other risk characteristics of these different types of sweep deposits.
2. Brokered Deposits Rulemaking On December 15, 2020, the FDIC
issued the brokered deposits final rule.3
This rule accomplished several objectives, including establishing a new framework for analyzing certain provisions of the deposit broker definition,4 including facilitating and primary purpose. 5 The brokered deposits final rule also reaffirmed the intent stated in the interagency NSFR
final rule to update the Call Report to collect information related to sweep 2 12 CFR part 50 OCC; 12 CFR part 249 Board;
12 CFR part 329 FDIC referred to as the liquidity regulations.
3 86 FR 6742 Jan. 22, 2021.
4 See Section 29g of the Federal Deposit Insurance Act FDI Act 12 U.S.C. 1831fg.
5 The final rule also amended the FDICs methodology for calculating the national rate, the national rate cap, and the local market rate cap for the interest rate restrictions under Section 29 that apply to less than well-capitalized institutions.

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deposits.6 The FDIC plans to monitor this data and could consider in the future whether modifications to deposit insurance assessment pricing are warranted, consistent with the statutory requirement that the assessments be risk-based.
Relevant for brokered deposits, Section 29 of the FDI Act provides that an agent or nominee meets the primary purpose exception to the deposit broker definition when the primary purpose of the agent or nominee is not the placement of funds with depository institutions. In the brokered deposits final rule, the FDIC adopted revised criteria for the primary purpose exception based on the relationship between the agent or nominee and its customers. Specifically, the primary purpose exception applies when the primary purpose of the agents or nominees business relationship with its customers is not the placement of funds with depository institutions. The following business relationships were identified in the brokered deposits final rule as designated exceptions from the deposit broker definition and are business relationships in which, with respect to a particular business line:
1 Less than 25 percent of the total assets that the agent or nominee has under administration for its customers is placed at depository institutions 25
percent test;
2 100 percent of depositors funds that the agent or nominee places, or assists in placing, at depository institutions are placed into transactional accounts that do not pay any fees, interest, or other remuneration to the depositor;
3 a property management firm places, or assists in placing, customer funds into deposit accounts for the primary purpose of providing property management services;
4 the agent or nominee places, or assists in placing, customer funds into deposit accounts for the primary purpose of providing cross-border clearing services to its customers;
5 the agent or nominee places, or assists in placing, customer funds into deposit accounts for the primary purpose of providing mortgage servicing;
6 a title company places, or assists in placing, customer funds into deposit accounts for the primary purpose of facilitating real estate transactions;
7 a qualified intermediary places, or assists in placing, customer funds into deposit accounts for the primary purpose of facilitating exchanges of 6 86

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FR 6742 Jan. 22, 2021.

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