Ongoing Data Collection of Non-Centrally Cleared Bilateral Transactions in the U.S. Repurchase Agreement Market

<RULE> DEPARTMENT OF THE TREASURY <SUBAGY>Office of Financial Research</SUBAGY> <CFR>12 CFR Part 1610</CFR> <SUBJECT>Ongoing Data Collection of Non-Centrally Cleared Bilateral Transactions in the U.S. Repurchase Agreement Market</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of Financial Research, Treasury. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Office of Financial Research (the “Office”) within the U.S. Department of the Treasury (“Treasury”) is extending the compliance date for certain financial companies to report to the Office certain non-centrally cleared bilateral transactions in the U.S. repurchase agreement (“repo”) market. This data collection requires daily reporting to the Office by certain brokers, dealers, and other financial companies with large exposures to non-centrally cleared bilateral repo (“NCCBR”) transactions. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective date:</E> The effective date for this rule is April 1, 2025. <E T="03">Compliance dates:</E> The compliance date for 12 CFR 1610.11(e)(2) is extended from April 1, 2025 to June 30, 2025, and the compliance date for 12 CFR 1610.11(e)(4) is extended from 270 to 360 days. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Michael Passante, Chief Counsel, Office of Financial Research, (202) 594-9658, <E T="03">michael.passante@ofr.treasury.gov;</E> Sriram Rajan, Associate Director of Financial Markets, Office of Financial Research, (202) 594-9658, <E T="03">sriram.rajan@ofr.treasury.gov;</E> or Laura Miller Craig, Senior Advisor, Office of Financial Research, (202) 594-9658, <E T="03">laura.craig@ofr.treasury.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Discussion</HD> On May 6, 2024, the Office published a final regulation for a data collection of NCCBR transactions in the U.S. repo market (“Final Rule”), with an effective date of July 5, 2024 and codified at 12 CFR 1610.11. <SU>1</SU> <FTREF/> That collection requires daily reporting to the Office by certain brokers, dealers, and other financial companies with large exposures to NCCBR transactions. The compliance date for certain securities brokers, securities dealers, government securities brokers, and government securities dealers occurred on December 2, 2024. These data are being used by the Office to fulfill its responsibilities under title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act, including support of the Financial Stability Oversight Council (“Council”) and Council member agencies by facilitating financial stability monitoring and research. <FTNT> <SU>1</SU>  Department of the Treasury. <E T="03">Ongoing Data Collection of Non-centrally Cleared Bilateral Transactions in the U.S. Repurchase Agreement Market.</E> Final Rule, 89 FR 37091 (May 6, 2024). </FTNT> As explained in the Final Rule, the purpose of the collection is to fill a critical gap in regulators' information about the overall repo market by collecting data on the NCCBR segment, the last segment of the repo market for which regulators have not had a transaction-level data source. Without the collection, regulators would have limited insight into risks in this segment and across segments. The reporting structure of the Final Rule was carefully developed to ensure that no significant data gap remained in repo markets once the rule was fully implemented. In the Final Rule, reporting is required by certain financial companies (as defined in the Final Rule) that fall within either of two categories:  <SU>2</SU> <FTREF/> <FTNT> <SU>2</SU>  89 FR 37097 (May 6, 2024). </FTNT> • <E T="03">Category 1:</E> a securities broker, securities dealer, government securities broker, or government securities dealer whose average daily outstanding commitments to borrow cash and extend guarantees in NCCBR transactions with counterparties over all business days during the prior calendar quarter is at least $10 billion, and • <E T="03">Category 2:</E> any financial company that is not a securities broker, securities dealer, government securities broker, or government securities dealer and that has over $1 billion in assets or assets under management, whose average daily outstanding commitments to borrow cash and extend guarantees in NCCBR transactions, including commitments of all funds for which the company serves as an investment adviser, with counterparties that are not securities brokers, securities dealers, government securities brokers, or government securities dealers over all business days during the prior calendar quarter is at least $10 billion. Category 2 is structured to cover other financial companies with large daily outstanding commitments to entities that are not securities brokers, securities dealers, government securities brokers, or government securities dealers to limit duplicative reporting. In the Final Rule, the Office established staggered compliance dates for Category 1 and Category 2 covered reporters, with an additional 120 days for Category 2 reporters compared to Category 1 covered reporters. The Final Rule established a compliance date of 150 days after the effective date of the Final Rule for Category 1 covered reporters and a compliance date of 270 days after the effective date of the Final Rule for Category 2 covered reporters. These timelines were extensions from the proposed 90 days for both Category 1 and Category 2. The Office extended the compliance dates and added the staggered timeline for Category 2 covered reporters based on comments received in response to its proposed rule (the “proposed rule”). <SU>3</SU> <FTREF/> <FTNT> <SU>3</SU>  Department of the Treasury. Collection of Noncentrally Cleared Bilateral Transactions in the U.S. Repurchase Agreement Market. Proposed rule, 88 FR 1154 (January 9, 2023). </FTNT> Since the Final Rule was adopted, the Office has worked with market participants, including both Category 1 covered reporters and potential Category 2 covered reporters, to address operational questions related to establishing connectivity to the OFR's Data Collection Utility and otherwise preparing for reporting to the Office's data collection infrastructure. Many potential Category 2 covered reporters have connected to the Data Collection Utility and have submitted test submissions files. As part of these efforts, the OFR has become aware that some potential Category 2 covered reporters believe that an extension to the compliance date for Category 2 covered reporters is warranted. Trade associations that represent certain market participants that identify themselves as potential Category 2 covered reporters have described challenges that their members have encountered in the process of preparing for reporting under the Final Rule and have requested extensions to the compliance date ranging from three months to over a year. Among the challenges cited by these entities is the automation of reporting processes for financial companies that are not always accustomed to transaction-reporting requirements and to the development of systems that both capture and report trade information. Other concerns noted by potential Category 2 covered reporters include challenges with respect to computing reporting thresholds and a perceived limited number of third-party service providers to submit data on their behalf. The Office had acknowledged in its Final Rule that Category 2 reporters may need to establish or adapt their infrastructure to comply with their reporting obligations. As a result, based on comment letters, the Office extended the initial compliance date materially compared to that set forth in its proposed rule (an increase from 90 days to 270 days) and introduced an option but not a requirement to use a third-party service provider to submit data on behalf of a covered reporter. Since the publication of the Final Rule, trade associations approached the Office with the challenges mentioned above. The compliance date schedule established in the Final Rule sought to strike a balance between respecting the resources necessary for financial companies to establish or adapt reporting infrastructure against the benefit of the Council's monitoring of emerging threats to the stability of the U.S. financial system. The collection of information on the NCCBR segment continues to be critical to understanding potential financial stability risks. Reporting by Category 1 covered reporters pursuant to the Final Rule has already started, and the Office has begun analyzing these data to support the Council. <SU>4</SU> <FTREF/> Category 2 covered reporters are, as explained in more detail in the Final Rule and above, financial companies with outstanding commitments of greater than $10 billion in NCCBR transactions with financial companies other than securities brokers, securities dealers, government securities brokers, and government securities dealers. Accordingly, transaction-level data reported by Category 2 covered reporters represents substantial incremental coverage of this segment of the repo market, including at least $10 billion in commitments from each Category 2 covered reporter that would not be included in transaction-level data reported by Category 1 covered reporters. For the reasons discussed in the Final Rule, including coverage of potential future changes in repo market structure such as peer-to-peer repo that bypasses Category 1 financial companies, the benefits of reporting by Category 2 firms remain significant, and the absence of reporting by these firms would leave a crucial gap in the ability of the Council and its member agencies to effectively monitor financial stability risks in this market. <FTNT> <SU>4</SU>  See Council, Readout of Meeting on March 20, 2025, available ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 16k characters. 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