In September and October 2020, the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) is administering its next mandatory 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.1 BE-180 is one of a series of surveys collected by the BEA (collectively, BE Forms)2 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. BE-180 specifically seeks to compile reliable and up-to-date information on financial services transactions between U.S. financial services providers and foreign persons.

This Dechert OnPoint provides an overview of BE-180 to help U.S. CLO managers and assess whether they are required to file this year’s benchmark survey. In short, the typical U.S. CLO manager of a Cayman CLO vehicle will be considered in scope if the reporting thresholds are met. Notably, in contrast to certain other BEA surveys, BE-180 must be filed by all U.S. Reporters, regardless of whether or not they have been contacted by the BEA. Many likely will find that they are subject to the filing requirement and that completing the survey can require some effort.3

The filing deadlines for BE-180 this year was September 30, 2020 if using paper forms, and October 30, 2020 if using the BEA’s electronic filing system.

Reporting Entities and Reportable Transactions

Financial services providers include, among others, investment advisers and investment vehicles (including mutual funds, private funds, pension funds and real estate investment trusts).4 Reportable transactions generally include transactions in financial services between U.S. financial services providers and non-U.S. persons, such as 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.

BE-180 covers cross-border purchases or sales that occurred or were charged during the reporter’s 2019 fiscal year. Data must be reported according to: the country of origin of the counterparty; and 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. However, other data points (e.g., cross-border payments of brokerage fees) may be more difficult to obtain. 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 and, as further discussed below, the BEA has recognized that information may be less readily accessible in light of the disruptions caused by the COVID 19 coronavirus pandemic.

Reporting Thresholds BE-180 is mandatory. It must be filed by all U.S. financial services providers that have purchased or sold more than $3 million in financial services (e.g., payment of cross-border sub-advisory fees, brokerage expenses) from or to non-U.S. persons in the aggregate during the previous fiscal year. In addition, regardless of amount, the form must be filed by all persons that 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 required to complete only the schedules 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 not required to complete the more burdensome parts of the form, but the BEA requests the entity to complete the relevant parts on a voluntary basis.

Aggregation Rules

As a general matter, the BE-180 follows aggregation rules similar to those of other BE Forms, such as the recent BE-10. BE-180 should be filed on a fully consolidated domestic U.S. basis, which starts with the top-tier U.S. entity in an organization and includes all of its U.S. entities, proceeding down each ownership chain where the voting securities are more than 50% owned by the U.S. entity above it, but excluding foreign branches and all other Foreign Affiliates.

If an entity within the reporter’s consolidated U.S. enterprise serves as the general partner or managing member of a domestic general partnership, domestic limited partnership, or limited liability company (including a private fund, unless managed by multiple managing members), that entity typically must consolidate the limited partnership or limited liability company into its BE-180 filing.

In general, the U.S. entity purchasing or selling financial services is responsible for filing BE-180, unless a U.S. intermediary (e.g., a broker or custodian) is used, in which case the intermediary may have the reporting responsibility. In some instances, an investment adviser may have a reporting responsibility on behalf of funds it manages. 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

If required to file BE-180, a reporter must submit the report by:

  • September 30, 2020, for reporters who submit their paper forms via mail or fax.5
  • October 30, 2020, for reporters who submit their forms through the BEA’s electronic filing system.

The BEA has noted that some reporters may have received a notification letter with incorrect filing deadlines and has reaffirmed that the above filing deadlines are correct for all reporters.6

Reporters may request an extension of the filing deadline, either in writing or through the BEA’s electronic filing system. Such requests must be received by the respective filing deadline for each intended filing method. In particular, citing the disruptions caused by the COVID-19 coronavirus pandemic, the BEA reiterated that U.S. Reporters have an option to request extensions of the applicable filing deadline, and emphasized that U.S. Reporters should request such extensions through the BEA’s electronic filing system, in light of the agency’s limited ability to process extension requests or other correspondence submitted by mail.7 In addition, the BEA has stated that U.S. Reporters may provide estimates where the data required to be provided in the survey is unavailable or difficult to access.8