Frequently Asked Questions Relating to Treasury's Large Position Recordkeeping and Reporting Rules
Note: This updated list of large position rule questions and answers reflects modifications as of October 14, 2011.
Specifically: a new FAQ 3.1.3 has been added that clarifies who must sign the large position report; a new note (Note 3) has been added to FAQ 3.4.2 that clarifies the treatment of failed financings; and several FAQs have been revised to remove references to outdated information. For the readers' convenience, the entire list of questions and answers is reproduced below.
The information provided below is a summary of the most frequently asked questions, together with the answers that Treasury staff has provided in response to those questions. The Qs & As are grouped by category within the various sections of the rules. The Qs & As are not a substitute for the rules and as such should be used in conjunction with the actual regulations. Further, this information does not constitute a formal interpretation of the large position rules.
Any questions regarding the large position rules should be directed to the Government Securities Regulations Staff at 202-504-3632.
Select any section below to see a list of questions in that section and then select any question to see the answer to that question.
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1) SECTION 420.1 - APPLICABILITY
- 1.1) Who is subject to the large position rules?
- 1.2) Are foreign aggregating entities subject to the large position requirements?
2) SECTION 420.2 - DEFINITIONS
- 2.1) Recently-Issued
- 2.2) Reporting Entities, Aggregating Entities, Designated Filing Entities
- 2.2.1) When a reporting entity has the right to appoint a majority of the board of directors for an outside entity, but has not exercised the right, does the outside entity fall within the definition of an affiliate or aggregating entity of the reporting entity?
- 2.2.2) If the general partner of an aggregating entity personally invests in an outside entity, is that outside entity considered part of the aggregating entity for purposes of the rule?
- 2.2.3) If an aggregating entity is the sole general partner of an outside entity, is the outside entity an affiliate of the aggregating entity for purposes of the large position rules?
- 2.2.4) Can a designated filing entity submit separate large position reports for each aggregating entity within its reporting entity, or must it consolidate the report to be filed on behalf of the reporting entity?
- 2.2.5) Can an individual be its own designated filing entity?
- 2.2.6) Can an entity be a designated filing entity for two separate reporting entities?
3) SECTION 420.3 - REPORTING
- 3.1) Reporting Requirements and Turn-Around Time
- 3.1.1)What procedures will Treasury use to issue and disseminate the notice requesting large position reports?
- 3.1.2) When will the large position reports be due?
- 3.1.3) Who must sign the large position report?
- 3.1.4) Where should the large position reports be filed?
- 3.1.5) When Treasury makes a request for large position reporting on a particular security, will $2 billion be the large position threshold?
- 3.1.6) Must large position reports be submitted if the reporting entity's reportable position does not equal or exceed the large position threshold announced in a request for large position reports?
- 3.1.7) Are position amounts on the large position report recorded on a trade date basis or settlement date basis?
- 3.1.8) Can Treasury issue a request for large position information for more than one CUSIP (i.e., security) and/or for more than one reporting date in a single request?
- 3.1.9) What if one or more of a reporting entity's foreign affiliates is closed (due to a holiday) during the reporting time frame?
- 3.1.10) Is a custodian required to report on positions it holds in a safekeeping capacity?
- 3.1.11) Does a custodian have an obligation to inform its customers of the large position recordkeeping and reporting requirements?
- 3.1.12) Will Treasury release the large position information to the public?
- 3.2) Net Trading Position - Futures Contracts
- 3.3) Gross Financing Position
- 3.3.1) Two aggregating entities are part of the same reporting entity and are not recognized as separate bidders in Treasury auctions. If the two aggregating entities conduct intercompany financing transactions with one another involving the same security (i.e., the same CUSIP and par amount), must both of these transactions be included in the gross financing position of the reporting entity's large position report?
- 3.3.2 Two aggregating entities are part of two different reporting entities but are affiliated within a larger organizational structure (they have received recognition as separate bidders or separate reporting entities). If the two aggregating entities conduct intercompany financing transactions with each other involving the same security (same CUSIP and par amount), how must these transactions be treated by the respective reporting entities when aggregating gross financing position information for large position reports?
- 3.3.3) How are forward start reverse repurchase transactions treated for large position reporting purposes? Must they be included in the calculation of the reporting entity's reportable position before the settlement date of the opening leg since the reporting entity has not yet received the security?
- 3.3.4) How are dollar rolls treated for large position reporting purposes?
- 3.4) Net Fails Position
4) SECTION 420.4 - RECORDKEEPING
- 4.1) When does a reporting entity become subject to the large position recordkeeping requirements?
- 4.2) Would a reporting entity that is subject to the large position rules fall out of the recordkeeping requirements if it did not control a position equal to or greater than the minimum large position threshold ($2 billion) for an extended period (e.g., one year)?
- 4.3) If funds, investment companies, or other entities are aggregated within a reporting entity, and such reporting entity is subject to the recordkeeping requirements of the rules, must the funds, investment companies, or other entities follow the recordkeeping rules also?
- 4.4) An entity (such as a hedge fund, pension fund, or insurance company) is not subject to federal securities recordkeeping rules but is required to follow the recordkeeping requirements of the large position rules (section 420.4(c)). Is it permissible for such an entity to have a third party make and maintain its records, including making and maintaining the records at another location?
- 4.5) Regarding the requirement to retain large position records for either 3 or 6 years, depending on the type of record, does the time frame apply from the date Treasury requests a large position report?
5) APPENDIX A TO PART 420 - SEPARATE REPORTING ENTITY
- 5.1) Does an entity qualify as a separate reporting entity without having to request such status if it already has received recognition as a separate bidder for purposes of Treasury auctions?
- 5.2) Conversely, does such an entity qualify as a separate bidder for auction purposes without requesting such status if the entity has already received recognition as a separate reporting entity for purposes of the large position rules?
- 5.3) Where a reporting entity consists of more than one aggregating entity, is each aggregating entity that requests recognition as a separate reporting entity required to send a separate written letter to Treasury?
- 5.4) Can organizational components that are not separate legal entities be carved out as separate reporting entities?
6) APPENDIX B TO PART 420 - SAMPLE LARGE POSITION REPORT
- 6.1) When submitting a large position report, is there a specific form that must be used? What information must be submitted?
- 6.2) Can an individual sign a large position report as the authorized official if he/she does not have one of the specific titles listed in the rules?
- 6.3) Sample Large Position Report
- 6.4) Administrative Information to be Provided in the Report
