Frequently Asked Questions Relating to Treasury's Large Position Recordkeeping and Reporting Rules - 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?
1.1) Who is subject to the large position rules?
With the exception of foreign official organizations and the Federal Reserve Banks, Treasury's large position recordkeeping and reporting rules apply to all entities, foreign and domestic, that may control a reportable position in a recently-issued Treasury security. This includes but is not limited to: government securities brokers and dealers; registered investment companies; registered investment advisers; custodians, including depository institutions, that exercise investment discretion; hedge funds; pension funds; insurance companies; foreign banks; and foreign affiliates of U.S. entities.
Treasury places great importance on, and takes very seriously, compliance with its rules, especially those that are intended to strengthen the integrity of the Treasury securities market by combating manipulation and fraud. It is important for all market participants to recognize that the rules create a requirement for affected entities to maintain records and report information on large positions. In considering the issue of obtaining large position information from foreign entities, the Treasury expects that U.S. regulators will work with foreign securities and banking regulators through Memorandums Of Understanding and other means when, and if, such actions become necessary.
1.2) Are foreign aggregating entities subject to the large position requirements?
Yes, with very limited exceptions (see question 1.1), foreign investors are subject to the requirements. It is impractical to exempt foreign investors from the large position rules since the potential exists for these entities to amass large positions in Treasury securities. Further, the granting of such an exemption could cause U.S.- based entities to move their securities holdings overseas to foreign firms.