The U.S. Department of Treasury recently amended the requirements for the Treasury International Capital Form B (“Form B”) and under the new requirements, private funds may have Form B reporting obligations. Prior to the changes, Form B was required to be filed by certain depository and banking institutions located in the U.S., bank holdings companies and financial holding companies, and securities brokers and dealers. Under the new requirements, the required filers for Form B also include “all other U.S. financial institutions that are primarily engaged in proprietary investments and/or the provision of financial services to other organizations.” The Federal Reserve Bank of New York, in its revised instructions to Form B, specified that “all other financial institutions” include (among other entities) private equity funds, hedge funds, real estate investment trusts, mutual funds and pension funds (all potential filers are herein referred to as “Form B Filers”).
Filing obligations would most commonly arise for private funds that (1) invest directly in non-U.S. debt instruments, (2) provide credit to non-U.S. entities, (3) directly hold non-U.S. short-term securities, or (4) maintain credit facilities with non-U.S. financial institutions.
Very generally, Form B requires certain U.S. residents to report information regarding their liabilities to, or claims on, non-U.S. residents to the extent certain Thresholds (as defined below) are met. Form B is comprised of separate reports and each report requires different information, including: (1) U.S. dollar denominated “claims” on non-U.S. residents if the U.S. resident exceeds the Threshold, (2) U.S. dollar denominated “liabilities” to non-U.S. residents if the U.S. resident exceeds the Threshold, (3) foreign currency denominated “claims” on non-U.S. residents if the U.S. resident exceeds the Threshold and (4) foreign currency denominated “liabilities” on non-U.S. residents if the U.S. resident exceeds the Threshold.1 The “Threshold” generally means $50 million or more aggregated across all non-U.S. jurisdictions or $25 million or more in respect of any individual country.2 Filings are typically made at the adviser level, and an adviser will consolidate and report on behalf of all U.S. entities it manages.
Reportable “claims” include deposit balances due from banks in any maturity (including non-negotiable CDs), negotiable certificates of deposit of any maturity, broker balances, loans and loan participations of any maturity, resale agreements and similar financing agreements, short-term negotiable and non-negotiable securities (with a maturity of one year or less), money market instruments and accrued interests receivables. Long-term securities (including fund interests and securities with no contractual maturity or a maturity of over one year) are not reportable “claims.”3 Credit commitments, contingent liabilities, derivatives, spot foreign exchange contracts and precious metals are also excluded as reportable “claims.”
Reportable “liabilities” include non-negotiable deposits of any maturity (including non-negotiable CDs), brokerage balances, loans of any maturity, short-term non-negotiable securities (with a maturity of one year or less), repurchase agreements and similar financing agreements and accrued interests payable. Long-term securities (including fund interests and securities with no contractual maturity or a maturity of over one year) are not reportable “liabilities.” Negotiable certificates of deposit, negotiable short-term securities, contingent liabilities, derivatives, spot foreign exchange contracts and precious metals are also excluded as reportable “liabilities.”
Form B includes monthly and quarterly reports. Monthly reports are due no later than fifteen (15) calendar days following the last day of the month and quarterly reports are due no later than twenty (20) calendar days following the last day of each of March, June, September and December. More information on Form B is available here and the corresponding instructions are available here.