Publications

Revised TIC B Forms May Impact Certain Investment Managers and Private Investment Funds

As a result of recent amendments to the Treasury International Capital (“TIC”) B Forms, certain U.S. investment managers and private investment funds may have to report information about their cross-border claims and liabilities as early as January 15, 2014. The TIC B Forms previously only required banks, broker-dealers and other “U.S.-resident financial institutions” to report on such claims and liabilities. However, the U.S. Department of the Treasury (the “Treasury”) recently amended the definition of a “U.S.-resident financial institution” in the “Who Must Report” section of the TIC B Form instructions to include, among others, private equity funds, hedge funds and investment advisors and managers.

The Treasury now requires U.S. investment managers and private investment funds to report information via the TIC B Forms about their claims on, or liabilities to, certain non-U.S. residents if the relevant thresholds are met. Below is a summary of some of the TIC B Form monthly and quarterly filing requirements:

Monthly Filings

  • Form BC – U.S. dollar (“USD”) “claims” (as defined herein) on “non-U.S. residents”[1] exceeding (i) $50 million with respect to all non-U.S. jurisdictions or (ii) $25 million with respect to a particular non-U.S. jurisdiction;
  • Form BL-1 – USD “liabilities” (as defined herein) to non-U.S. residents exceeding (i) $50 million with respect to all non-U.S. jurisdictions or (ii) $25 million with respect to a particular non-U.S. jurisdiction; and
  • Form BL-2 – Customers’[2] USD “liabilities” to non-U.S. residents exceeding (i) $50 million with respect to all non-U.S. jurisdictions or (ii) $25 million with respect to a particular non-U.S. jurisdiction.

Quarterly Filings

  • Form BQ-1 – Customers’ USD “claims” on non-U.S. residents exceeding (i) $50 million with respect to all non-U.S. jurisdictions or (ii) $25 million with respect to a particular non-U.S. jurisdiction;
  • Form BQ-2 Part 1 – Foreign currency “claims” on non-U.S. residents exceeding (i) $50 million with respect to all non-U.S. jurisdictions or (ii) $25 million with respect to a particular non-U.S. jurisdiction; and
  • Form BQ-2 Part 2 – Foreign currency “liabilities” to non-U.S. residents exceeding $50 million with respect to all non-U.S. jurisdictions.

For purposes of the TIC B Forms, “claims” (i.e., assets) generally include the following:

  • deposit balances due from banks in any maturity (including non-negotiable certificates of deposit (“CDs”));
  • negotiable certificates of deposit of any maturity;
  • brokerage balances;
  • customers’ overdrawn accounts;
  • loans and loan participations of any maturity;
  • resale agreements and similar financing agreements;
  • short-term negotiable and non-negotiable securities (original maturity of one year or less);
  • money market instruments (original maturity of one year or less);
  • reinsurance recoverables; and
  • accrued interest receivables.

These “claims” should be reported on a gross basis. A “claim” for an investment manager would include a U.S. manager’s claims on its non-U.S. investment funds for accrued management fees.

Excluded from the “claims” definition, among others, are:

  • long-term securities (no contractual maturity or an original maturity of over one year);
  • credit commitments and contingent liabilities;
  • derivatives (i.e., forwards, futures, options, swaps and warrants) and spot foreign exchange contracts;
  • precious metals and currencies in transit to or from the U.S. or held outside the U.S. for the account of the filer; and
  • securities borrowing agreements in which one security is borrowed in return for another.

For purposes of the TIC B Forms, “liabilities” generally include the following:

  • non-negotiable deposits of any maturity (including non-negotiable CDs);
  • brokerage balances;
  • customers’ overdrawn accounts;
  • loans of any maturity;
  • short-term non-negotiable securities (original maturity of one year or less);
  • repurchase agreements and similar financing agreements;
  • insurance technical reserves; and
  • accrued interest payable.

These “liabilities” should also be reported on a gross basis. A “liability” for an investment manager would include fees owed by a U.S. manager to a non-U.S. subadviser.

Excluded from the “liabilities” definition, among others, are:

  • long-term securities (no contractual maturity or an original maturity of over one year);
  • negotiable CDs and negotiable short-term securities (but note that these may need to be reported on by the U.S. custodian or issuer on a separate TIC form);
  • contingent liabilities;
  • derivatives (i.e., forwards, futures, options, swaps and warrants) and spot foreign exchange contracts;
  • precious metals and currencies held in the filer’s vaults for non-U.S. residents, in transit to or from the U.S., or held outside the U.S. for the account of the filer;
  • non-U.S. residents’ deposits or brokerage balances swept into money market or other mutual funds;
  • loans from a non-U.S. resident serviced by a U.S. resident; and
  • securities lending agreements in which one security is lent in return for another.

Filing Deadlines

These revisions are effective for those TIC B Forms filed after December 31, 2013. The monthly forms must be filed within fifteen (15) calendar days following the last day of the preceding month in which the relevant threshold is met. The first applicable monthly filing under the revised rules is due on January 15, 2014. The quarterly forms must be filed within twenty (20) calendar days following the last day of the preceding quarter in which the relevant threshold is met. The first applicable quarterly filing under the revised rules is due on January 20, 2014.

Please note that even if the filer is not subject to the revised TIC B Form filing requirements, it still may be subject to the reporting requirements of other TIC forms. For example, the TIC S Forms require reporting of certain U.S. or foreign long-term securities purchased from or sold to non-U.S. residents.


[1] “Non-US residents” are defined as any “individual, corporation, or other organization located outside the U.S.” See Instructions for the Treasury International Capital Form B Reports (“TIC B Instructions”).

[2] For purposes of the TIC B Forms, a “customer” would include a manager’s investment funds and its managed accounts.


For more information on the topic discussed, contact:


BulletPoint® is a newsletter of Tannenbaum Helpern Syracuse & Hirschtritt LLP’s Investment Management practice. It is an alert covering recent regulatory and tax developments impacting the financial services industry. To subscribe for the newsletter, send email to marketing@thsh.com.

01.10.2014  |  PUBLICATION: BulletPoint  |  TOPICS: Investment Management

Print
This Page