In the fall of 2015, the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) will administer its next Benchmark Survey of Financial Services Transactions between U.S. Financial Services Providers and Foreign Persons on Form BE-180 (BE-180). The mandatory survey is conducted once every five years and measures international trade in financial services. The BE-180 is one of a series of surveys collected by the BEA (collectively, BE Forms)1 that gather data on cross-border activities of a wide range of U.S. financial services providers, including asset managers, banks, broker-dealers and insurers. The BE Forms are designed to measure international trade and collect data that contribute to macroeconomic studies like the calculation of balance of payments.

Although the filing deadline for the BE-180 was initially set as October 1, 2015, the BEA granted a blanket extension – until at least November 1, 2015 – and indicated that additional extensions may be granted to filers who need more time to complete the report.

This Dechert OnPoint provides an overview of the BE-180 to help asset managers and other financial services providers assess whether they are required to file this year’s benchmark form. Many will likely find that they are subject to the filing requirement and that completing the survey can require some effort.

Reporting Entities and Reportable Transactions

Financial services providers include investment advisers and asset management vehicles (including mutual funds, private funds, pension funds and real estate investment trusts). Financial transactions are transactions involving the creation, liquidation, or trade in financial assets – management and advisory services, brokerage services, underwriting, custodial services, credit-related services, securities lending, and electronic funds transfer services. Concretely, these transactions cover a variety of cross-border payments, including advisory or sub-advisory fees, brokerage expenses, custodial fees and securities lending fees.

The BE-180 covers cross-border purchases or sales that occurred or were charged during the reporter’s 2014 fiscal year. Data must be reported according to the country of origin of the counterparty and according to the relationship between the reporter and the counterparty (e.g., affiliated or unaffiliated). Depending on the reporter’s existing accounting practices, much of the required data may be readily available in the existing sources used to prepare the reporter’s income statements. Other data points, however, may be more difficult to obtain (e.g., cross-border payments of brokerage fees) – it is our understanding that the BEA expects reporters to make a good faith effort to obtain data but acknowledges that, in some circumstances, it may be appropriate to provide estimated data.

Reporting Thresholds

The BE-180 must be filed by all U.S. financial services providers who have purchased or sold more than $3 million in financial services from or to non-U.S. persons during the previous fiscal year (e.g., sub-advisory fees paid across border, brokerage expenses). And, regardless of amount, the form must be filed by all persons who are notified to do so by the BEA. The $3 million thresholds for purchases and sales are independent, and are reported on separate schedules to the BE-180. Thus, for example, a reporter that exceeds the threshold for sales of financial services but falls below the threshold for purchases is only required to complete the schedule relating to sales. In addition, if an entity contacted by the BEA has less than $3 million in financial services sales or purchases with foreign persons, that entity is exempted from completing the more burdensome parts of the form.

Aggregation Rules

As a general matter, the BE-180 follows the same aggregation rules as other BE Forms, such as the recent BE-10. The BE-180 should be filed by an organization’s “consolidated U.S. enterprise” – defined as the reporting financial services provider, together with any U.S. company that directly or indirectly owns more than 50 percent of the reporter as well as any U.S. company owned, directly or indirectly, more than 50 percent by the reporter. If an entity within the reporter’s consolidated U.S. enterprise serves as the general partner or managing member of a domestic limited partnership or limited liability company (including a private fund), that entity must consolidate the limited partnership or limited liability company into its BE-180 filing. It is our understanding that the BEA takes the view that U.S. mutual funds typically should not be consolidated with their investment advisers.

In general, the U.S. entity purchasing or selling financial services is responsible for filing the BE-180, unless a U.S. intermediary (such as a broker or custodian) is used, in which case the intermediary may have the reporting responsibility. In some instances, it may be unclear whether or not an intermediary is providing data on the reporter’s behalf, and reporters may wish to reach out to their intermediaries to determine what information is being reported.

Filing Deadlines

On August 21, 2015, the BEA, acknowledging the burden imposed by various filing deadlines, issued automatic extensions, which establish different deadlines according to: (i) whether the reporter had filed the BE-180 in the past, and (ii) whether the reporter was contacted by the BEA. The new deadlines are as follows:

  1. November 1, 2015 for new BE-180 reporters that were not contacted by the BEA.
  2. November 1, 2015 for BE-180 reporters that were contacted by the BEA and assigned an identification number below 140012490 (which the BEA has indicated corresponds to reporters that filed the BE-180 in the past or currently file the quarterly BE-185 survey2).
  3. December 1, 2015 for reporters that were contacted by the BEA and assigned an identification number above 140012490 (which the BEA has indicated corresponds to reporters that have not filed the BE-180 in the past and do not currently file the BE-185).  

First-time filers that have not been contacted by the BEA (category 1 above) may request an extension of up to 60 days, but must follow instructions prescribed by the BEA (including providing certain identifying information electronically to the BEA by November 1, 20153). BE-180 reporters contacted and assigned an identification number by the BEA (categories 2 and 3) that require additional time may request an extension of up to 30 days by contacting the BEA.

Conclusion

U.S. asset managers and other persons involved in the financial services industry should assess whether they or their clients (e.g., investment funds) are required to file the upcoming BE-180. Asset managers should also consider how the BE-180 and other BE Forms relate to one another, as well as how the BE forms interact with those of other related reporting regimes, such as the U.S. Department of the Treasury’s Treasury International Capital (TIC) reporting system.4 Taking a holistic approach to gathering and reporting data on these forms can help to mitigate the reporting burden over time.