Investment Management and Financial Markets Group
November 12, 2008
Reporting Obligations for Traders of Foreign Securities
Background
For many years, the U.S. Department of Treasury, the Federal Reserve and the Department of
Commerce have imposed several reporting obligations on investment managers and broker-dealers
that trade in foreign securities or carry out certain transactions with foreign persons. There are three
separate reports that investment managers and broker-dealers must be aware of: Treasury
International Capital Reports (TIC Reports), Foreign Currency Reports (FC Reports) and Bureau of
Economic Analysis Reports (BEA Reports). This memorandum summarizes the reporting obligations
currently in place for investment managers and broker-dealers, and serves as a reminder of those
obligations.
TIC Reporting System
The TIC reporting system was established in 1934 to track changes in foreign investments and capital
positions held by U.S. investment managers and broker-dealers. The U.S. Department of Treasury
uses this information to: (i) prepare the U.S. Balance of Payments Accounts and the U.S. International
Investment Position; (ii) formulate U.S. international financial and monetary policies; and (iii) enable the
U.S. to comply with standards for providing data on cross-border financial positions, including
adherence to the International Monetary Fund’s Special Data Dissemination Standard.
FC Reports
The FC reporting system was established in 1973 to provide information regarding U.S. dollar
exchange rates. The Federal Reserve System, acting as fiscal agent for the Department of Treasury,
receives and processes the FC reports to assess and monitor foreign exchange developments in the
spot, forward, futures and options markets on an individual and aggregate basis.
BEA Reports
The BEA Reports were established in the 1970s to monitor transactions in services and intangible
assets between U.S. residents and foreign persons. The Bureau of Economic Analysis uses these
reports to obtain information on financial services transactions between U.S. financial services
providers and foreign persons for the purpose of (i) formulating U.S. international economic policy and
(ii) analyzing the impact of that policy and the policies of foreign countries, on such international
transactions.
CHICAGO ● SAN DIEGO● WASHINGTON
Summary of Reporting Obligations
Entity
Investment managers,
broker-dealers
Investment managers
Investment managers,
broker-dealers
Investment managers,
broker-dealers
Investment managers,
broker-dealers
Investment managers,
broker-dealers
Covered Transactions
Short-term securities and currency claims on, or liabilities
to, foreign persons
Financial or commercial liabilities to, or claims on, foreign
persons
Foreign derivative contracts
Long-term U.S. or foreign securities purchased/sold by
U.S. residents from/to foreign persons
Foreign exchange contracts and foreign currency assets
and liabilities
Services and intangible assets provided to foreign persons
by U.S. financial services providers
Report
TIC Reports
TIC Reports
TIC Reports
TIC Reports
FC Reports
BEA Reports
Penalties
Investment managers and broker-dealers that do not file required TIC, FC or BEA reports may be
subject to civil and criminal liability. A person who fails to meet the requirements may incur a civil
penalty between $2,500 and $25,000. A person who willfully fails to meet the requirements may incur
up to a $10,000 fine and faces the possibility of imprisonment up to one year.
For further information, please contact Cheryl Allaire 858-509-7424, Cameron Avery 312-807-4302,
Kevin Bettsteller 312-807-4442, Paul Dykstra 312-781-6029, David Glatz 312-807-4295, Alan Goldberg 312-807-4227,
Mark Greer 312-807-4393, Elizabeth Hudson 312-807-4376, Stevens Kelly 312-807-4240, Molly Moynihan 202-955-7027,
Anna Paglia 312-781-7163, Joanne Phillips 202-955-6824, Paulita Pike 312-781-6027, Eric Purple 202-955-7081, Bruce
Rosenblum 202-955-7087, Donald Weiss 312-807-4303, Gwendolyn Williamson 202-955-7059, or Stacy Winick 202-955-7040
of Bell, Boyd & Lloyd’s Investment Management and Financial Markets Group or visit our Web site at www.bellboyd.com.
This publication has been prepared by the Investment Management and Financial Markets Group of Bell, Boyd & Lloyd LLP
for clients and friends of the firm and is for information only. It is not a substitute for legal advice or individual analysis of a
particular legal matter. Readers should not act without seeking professional legal counsel. Transmission and receipt of this
publication does not create an attorney-client relationship.
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