Reports of Liabilities to, and Claims on, Foreign Residents

INSTRUCTIONS FOR PREPARING

THE TREASURY INTERNATIONAL CAPITAL (TIC) “C” REPORTS

Reports of Liabilities to, and Claims on, ForeignResidents

Reports for U.S. Residents Other ThanDepository Institutions and Securities Brokers and Dealers

TIC C REPORTS

CQ-1 Report of Financial Liabilities to, and Financial Claims on,Foreign Residents

CQ-2 Report of Commercial Liabilities to, and Commercial Claims on,Unaffiliated Foreign Residents

Revised November 6, 2002Applies to reports with as-of dates after February, 2003

Table of Contents ii

TABLE OF CONTENTS

Page

I. General Instructions ................................................................................................. 1

A. Organization of the Instruction Book...................................................................... 1

B. Purpose of the TIC forms .................................................................................... 1• Purpose of the TIC C Forms• Relationship to Other Statistical Reports

C. Administrative Issues............................................................................................ 3• Authority• Penalties• Confidentiality• Reporting Burden• Requests for Revised Data

D. Who Must Report ................................................................................................. 4• Reportable Entities• Consolidation/Combination Rules• Forms to be used to Report Cross-Border Positions• Exemption Levels

E. Accounting Issues ................................................................................................ 7• General• Charge-offs

F. Reporting the Location of Foreign Counterparties.................................................... 8• Countries and Other Areas• Examples• Exceptions

G. Submission of Reports .......................................................................................... 9• Where to Report• Due Dates• Alternative Methods of Reporting• Signature Requirements• Reporter ID Number• Record Keeping Requirement

II. TIC Form CQ-1 - Report of Financial Liabilities to, and Financial Claims on,Foreign Residents....................................................................................................... 11

A. What To Report .................................................................................................. 11

• Reportable Liabilities and Claims• Lease Payments• Specific Exclusions• Positions vis-à-vis Foreign-Resident Affiliates (Section A, B, and C)

B. Column Instructions ............................................................................................. 13

Table of Contents iii

C. Memorandum Row Instructions (Section B) ............................................................ 14

D. Memorandum Row Instructions (Section C) ............................................................ 14• Type of Instrument• Assets Written Off This Quarter• Foreign Currency Memorandum Rows• Remaining Maturities Memorandum Rows

III. TIC Form CQ-2 - Report of Commercial Liabilities to, and Commercial Claims on, Unaffiliated Foreign Residents..................................................................................... 18

A. What To Report ................................................................................................... 18

i Reportable Liabilities and Claimsi Specific Exclusionsi Insurance/Reinsurance Business

B. Column Instructions ............................................................................................ 19

C. Memorandum Row Instructions ............................................................................. 21

i Assets Written Off This Quarteri Foreign Currency Memorandum Rowsi Remaining Maturities Memorandum Rows

IV. Glossary .................................................................................................................... 23

V. Appendices................................................................................................................ 30

A. Flowcharts which show reporting requirements....................................................... 30

B. Geographical Classification List .............................................................................. 34

C. Foreign Official Institutions List.............................................................................. 49

General Instructions 1

I. General Instructions

A. Organization of the Instruction Book

This instruction book covers the Treasury International Capital (TIC) C report forms(Forms CQ-1 and CQ-2). It is divided into the following sections:

(1) Section I (General Instructions) - The general instructions describe the purpose ofthe TIC C forms and a variety of administrative issues, including the authorityunder which the data are collected and confidentiality conditions. The generalinstructions also describe the treatment of issues common to both of the TIC Cforms, including who should report, exemption levels, accounting issues, and thedetermination of the location of the foreign counterparty. Finally, information onthe submission of reports is provided.

(2) Sections II-III (Specific Form Instructions) - In these sections, the specificreporting requirements for each TIC C form are given. The specific instructionsinclude what to report and instructions relating to the columns and memorandumrows of each form. To avoid excessive repetition, the instructions and definitionsbuild upon the information in the general instructions, the glossary, and theappendices.

(3) Section IV (Glossary) - The glossary presents definitions, discussions of accountingissues, and other topics that require more extensive treatment than is practical toinclude in the body of the instructions.

(4) Section V (Appendices) - The following appendices are provided:

(a) Flowcharts which show the reporting requirements.

(b) Geographical Classification list. A list of country and organizational codes forpurposes of reporting on the TIC forms.

(c) Foreign Official Institutions list. A list of certain foreign institutions classifiedas “official” for reporting on the TIC forms.

The forms and instructions are available on the Internet at the U.S. Treasury'sweb site http://www.ustreas.gov/tic/forms.html.

B. Purpose of the TIC Forms

Purpose of the TIC C Forms

The purpose of the TIC C forms is to gather timely and reliable information on the levelsof, and changes in, U.S. international portfolio capital positions. This information isneeded for the preparation of the U.S. Balance of Payments Accounts and the U.S.International Investment Position, and for the formulation of U.S. international financialand monetary policies. The data are also needed to enable the United States to complywith standards for providing data on cross-border financial positions, including

http://www.ustreas.gov/tic/forms.html


adherence to the International Monetary Fund’s Special Data Dissemination Standard.Aggregate data are published in the Treasury Bulletin and the Federal Reserve Bulletin.

The TIC C Forms, the data collected, and frequency of each form are as follows:

FORM DATA COLLECTED FROM U.S. RESIDENTSOTHER THAN DEPOSITORY INSTITUTIONS ANDSECURITIES BROKERS AND DEALERS

FREQUENCY

CQ-1 Financial Liabilities to, and Financial Claims on,Foreign Residents

Quarterly

CQ-2 Commercial Liabilities to, and Commercial Claims on,Unaffiliated Foreign Residents

Quarterly

Relationship to Other Statistical Reports

(1) The TIC B forms are filed by all U.S. resident banks and other depositoryinstitutions, securities brokers and dealers, and Bank Holding Companies/FinancialHolding Companies (BHCs/FHCs). (However, the positions of insuranceunderwriting subsidiaries of BHCs/FHCs are excluded from the TIC B forms andincluded in the TIC C forms.) On the TIC B forms these entities report their short-term securities and non-securities positions with foreign residents, includingforeign affiliates. Also reported on the TIC B forms are certain positions of thecustomers of TIC B reporters; TIC C reporters who are customers of theseinstitutions should not report these positions to avoid double counting. (For furtherinformation see Sections II.A and III.A.)

(2) The TIC S form is filed by all entities that purchase (or sell) long-term securitiesdirectly from (or to) foreigners. This form is designed to obtain data on foreigners’purchases and sales of all long-term securities (including equities and shares ofmutual funds). Data are collected in aggregate form to facilitate timely reporting.

(3) To improve the accuracy of the TIC system and collect information on positions insecurities, detailed security-by-security data are collected on a less frequent basis.Two data collection systems are used:

(a) Foreign Holdings of U.S. Securities Including Selected Money MarketInstruments (Form SHL) - Approximately every five years, all significant U.S.resident custodians of short-term debt, long-term debt, and equity securitiesare required to provide detailed security-by-security information on foreignholdings of U.S. securities. Also required to report are significant U.S. issuersof bearer bonds and U.S. issuers of securities that are held by foreigners butnot through U.S. custodians. In the years between these benchmark surveys,the largest reporters are required to submit this security-by-securityinformation annually (Form SHLA).

(b) U.S. Ownership of Foreign Securities, Including Selected Money MarketInstruments (Form SHC) - Every three to five years, all significant U.S.resident custodians of foreign securities and U.S. resident investors holdingforeign securities without using U.S. resident custodians are required to reportdetailed security-by-security information on their holdings of foreign securities.


(Annual reporting by the largest reporters is planned to begin at year-end2003.)

(4) The Treasury Foreign Currency (TFC) forms are designed to obtain data on theassets, liabilities, and forward positions of large U.S.-resident institutions (bothbanking and non-banking) in specified foreign currencies.

(5) Direct Investment – Data on cross-border transactions and positions betweenaffiliated U.S. and foreign companies ("multinational companies") and on the overalloperations of multinational companies are collected by the Bureau of EconomicAnalysis, U.S. Department of Commerce. To be affiliated, a U.S. company must ownor control 10 percent or more of the voting securities of an incorporated foreignbusiness (or an equivalent interest in an unincorporated foreign business), or aforeign company must own or control 10 percent or more of the voting securities ofan incorporated U.S. business (or an equivalent interest in an unincorporated U.S.business).

C. Administrative Issues

Authority

These reports are required by law (22 U.S.C. 286f; 22 U.S.C. 3103; E.O.10033, asamended; 31 C.F.R. 128.1(a)).

These forms have been reviewed and approved by OMB under the following controlnumber: 1505-0024.

Penalties

Failure to report can result in a civil penalty of not less than $2,500 and not more than$25,000. Willful failure to report can result in criminal prosecution and, upon conviction, afine of not more than $10,000; and if an individual, imprisonment for not more than oneyear, or both. Any officer, director, employee, or agent of any corporation who knowinglyparticipates in such violation may, upon conviction, be punished by a like fine,imprisonment, or both (22 U.S.C. 3105 (a) and (b); 31 C.F.R. 128.4 (a) and (b)).

Confidentiality

Data reported on these forms will be held in confidence by the Department of theTreasury, the Board of Governors of the Federal Reserve System, and the Federal ReserveBank of New York, acting as fiscal agent of the Treasury. The data reported by individualrespondents will not be published or otherwise publicly disclosed; information may begiven to other Federal agencies, insofar as authorized by applicable law (44 U.S.C. 3501 etseq.; 22 U.S.C. 3101 et seq.). Aggregate data derived from reports on these forms maybe published or otherwise disclosed only in a manner that does not specifically identifyany individual respondent.


Reporting Burden

The Treasury Department has estimated the average burden associated with thecollection of information on each TIC C form per respondent, but these will vary acrossreporting institutions: (a) for TIC CQ-1 an overall average burden of 4.5 hours; and (b)for TIC CQ-2 an overall average burden of 4 hours. These estimates include the time itwill take to read the instructions, gather the necessary facts and fill out the forms.Comments concerning the accuracy of these burden estimates and suggestions forreducing reporting burden should be directed to the IA Office of Program Services, U.S.Treasury Department, Washington, D.C. 20220, Attention: International PortfolioInvestment Data Systems; or the Office of Management and Budget, PaperworkReduction Project, Washington, D.C. 20503. (Please reference OMB control number1505-0024.)

Requests for Revised Data

Federal Reserve Bank of New York staff review data submitted on the TIC C forms. As aresult of their review and editing procedures, Reserve Bank staff may ask respondentsto explain unusual changes or submit revisions, as necessary. Since these data areextremely time-sensitive, respondents should respond as quickly as possible to theserequests.

D. Who Must Report

Reportable Entities

All entities that are U.S. residents and are not owned 50 percent or more by anotherU.S.-resident entity must report, unless their reportable liabilities to, or claims on,foreign residents are less than the exemption level for that report Part (See below), orthey are a type of entity (depository institutions, securities brokers and dealers, andbank holding companies/financial holding companies (BHCs/FHCs)) required to file TIC Bforms. (Copies of the TIC B reporting instructions and forms are available athttp://www.ustreas.gov/tic/forms.html.) The only exception is that BHCs/FHCswith insurance underwriting subsidiaries must also file TIC C forms, but only for theirinsurance underwriting company subsidiaries.

The types of entities which must file the TIC CQ-1 and TIC CQ-2 reports include:

• Commercial and industrial firms

• Financial companies other than depository institutions, securities brokers anddealers, and BHCs/FHCs. (However, BHCs/FHCs with insurance underwritingsubsidiaries should file reports for their insurance underwriting subsidiaries.)

• Insurance companies

• Exporters, importers, trading companies, and foreign sales companies

• Other financial intermediaries (An “other financial intermediary” is a financialintermediary (See glossary) other than a depository institution, a securities



broker or dealer, or BHC/FHC. The term includes all leasing companies, financecompanies, funding companies, and commodity trading firms.)

• Mutual funds, pension funds, unit investment trusts, and other pools ofcommingled assets

• Subsidiaries of foreign organizations (excluding subsidiaries which aredepository institutions or securities brokers and dealers which file TIC Breports).

• Non-bank holding companies

• Non-profit organizations, charitable organizations, and foundations

• Proprietorships, partnerships, and limited liability companies

• State and local governments

• Futures commission merchants

Consolidation/Combination Rules

All U.S.-resident companies that are not 50 percent or more owned by another U.S.-resident company should file a combined TIC CQ-1 and a combined TIC CQ-2 report forthemselves and all of their U.S.-resident subsidiaries that are: (a) 50 percent or moreowned; and (b) are not depository institutions or securities brokers or dealers (for whichTIC B reports are filed). Trusts and Special Purpose Entities (SPEs) for which thereporter is the trustee or primary beneficiary should be included. However, subsidiariesand other affiliates that are less than 50 percent held should file separate TIC C forms, ifthey exceed the exemption level. Note: If two institutions both own 50% of an entity,the entity should be consolidated consistent with the institution’s published financialstatements.

A fund manager/administrator (such as managers of mutual funds and pension funds)should combine all of the reportable positions of the U.S.-resident funds which itmanages on a single TIC CQ-1 report. U.S.-resident funds are pooled, separate andgeneral, investment accounts of one or more of the following institutional and privateinvestors:

• private and public pension funds• mutual funds, country funds, exchange traded funds, unit investment trusts,

collective-investment trusts, and any other similarly pooled, commingledinvestment funds

• insurance companies• foundations• institutions of higher learning• government-sponsored enterprises and other independently acting government

agencies• financial and non-financial corporations• investment advisors in the business of managing accounts for others• trusts and estates


Forms to be Used to Report Cross-Border Positions

Reporters are sometimes confused as to what types of organizations and what part ofan organization should file the different types of Treasury International Capital (TIC)reports. The types of reporters and the corresponding TIC reports that should be filedare summarized in the table below.

Type of ReporterTIC B

ReportsTIC C

Reports

Depository institutions located in the U.S. (includinglimited purpose banks that are subsidiaries ofBHCs/FHCs and of all other companies)

X

Securities brokers and dealers (including those which aresubsidiaries of BHCs/FHCs and of all other companies)

X

U.S.-resident BHCs/FHCs for themselves and for all U.S.-resident subsidiaries other than depository institutions,securities brokers and dealers, and insuranceunderwriting companies

X

BHCs/FHCs for their U.S.-resident insuranceunderwriting companies

X

U.S. holding companies other than BHCs/FHCs (forthemselves and for all of their U.S.-resident subsidiariesother than depository institutions and securities brokersand dealers)

X

All other U.S.-resident entities that are not more than 50percent owned by another U.S.-resident entity.

X


Exemption Levels

Exemption levels are applied to the gross reportable liabilities and the gross reportableclaims of the reporting entity combined for all components of the entity using theconsolidation/combination rules described above.

The TIC CQ-1 and TIC CQ-2 forms have separate exemption levels for liabilities (Part 1)and for claims (Part 2). Reporters need complete only the part on each form for whichthey meet or exceed the exemption level. A reporter is exempt from filing a TIC CQ-1Part if the sum of its Section A reportable positions for all geographic areas (row 9999-6)plus its Section B row (8058-6) is less than $50 million for that part. A reporter is exemptfrom filing a TIC CQ-2 Part if its total reportable positions for all geographic areas (row9999-6) are less than $25 million for that part.

However, once the exemption level for a part is met or exceeded, the reporter shouldcontinue to submit data for that Part for the remainder of the calendar year.

The exemption levels for each Part are shown below:

Form, Part Description Exemption Level (Report ifgreater than or equal tothe following level)

CQ 1, Part 1 Reportable Financial Liabilitiesto Foreigners (Sections A andB)

$50 million

CQ 1, Part 2 Reportable Financial Claims onForeigners (Sections A and B)

$50 million

CQ 2, Part 1 Reportable CommercialLiabilities to UnaffiliatedForeigners

$25 million

CQ 2, Part 2 Reportable Commercial Claimson Unaffiliated Foreigners

$25 million

E. Accounting Issues

General

All amounts should be reported gross, using settlement date accounting. Amounts shouldbe reported in millions of U.S. dollars at the face value of the instrument. Do not enterdecimals or negative values in any cell of a form. (Claims with negative balances shouldbe reported as liabilities; liabilities with negative balances should be reported as claims.)

Data reported on all TIC C forms should be the balances outstanding at the “close ofbusiness” as of the last business day of each quarter. The time designated as the close ofbusiness should be reasonable and applied consistently.

For foreign currency-denominated positions reported on the TIC CQ-1 and TIC CQ-2,report the U.S. dollar equivalent of the foreign currency amounts, converted by using theclosing spot exchange rate on the as-of date of the report.


Charge-offs

Respondents should deduct from claims any charge-offs or specific reserves where therehas been an identified loss. Charge-offs or specific reserves for reportable claims takenpartially or entirely during the reporting period should be totaled and reported in the rowtitled “Assets Written Off This Quarter” (row 8200-9) only in the quarter they areestablished.

F. Reporting the Location of Foreign Counterparties

Countries and Other Areas

Positions with foreigners should be reported opposite the country or geographical area inwhich the direct counterparty is a resident. Do not report positions based on the currencyof denomination of the instrument, the country of a parent institution (the “nationality” ofthe counterparty), the country of issuance of the instrument, or the country of aguarantor (i.e., ultimate risk). Please note – branches of U.S. residents located outsidethe U.S. are foreign residents. U.S. branches of foreign banks are U.S. residents.

Note: For purposes of the TIC C reports, the following are not considered foreigncountries: American Samoa, Baker Island, Guam, Howland Island, Jarvis Island, JohnstonAtoll, Kingman Reef, Midway Islands, Navassa Island, Northern Mariana Islands, PalmyraAtoll, Puerto Rico, U.S. Virgin Islands, and Wake Island.

Examples

(1) A respondent has a reportable liability denominated in yen to a British companylocated in Italy. A Spanish bank guarantees the liability. The liability should bereported opposite the location in which the direct counterparty resides (Italy), notthe location of the guarantor (Spain) or the nationality of the counterparty (UnitedKingdom).

(2) A respondent has a reportable claim on a Cayman Islands branch of a U.S. bank.The claim should be reported opposite the location in which the direct counterpartyresides (Cayman Islands), not the location of that bank’s head office (United States).

Exceptions

(1) Positions with the branches or agencies of Foreign Official Institutions should bereported opposite the country that owns the Foreign Official Institution. (A list ofForeign Official Institutions is contained in Appendix C).

(2) Positions with the Bank for International Settlements (BIS) should be reportedopposite "Other Europe."

(3) Positions with the Red Cross and the Institute of International Finance should bereported as International.


(4) Positions with international and multi-national regional organizations, whetherlocated in the United States or elsewhere, should be reported opposite theclassification "International”, if worldwide, or opposite the classification "European,""Latin American,” “Caribbean,” "Asian," "African," or "Middle Eastern" regionalorganizations, as appropriate. Examples of some of these organizations, which arelocated in the United States, are:

Organization Reporting ClassificationThe World Bank InternationalInternational Bank for Reconstruction andDevelopment (IBRD)

International

International Development Association (IDA) InternationalInternational Finance Corporation (IFC) InternationalInternational Monetary Fund (IMF) InternationalInter-American Development Bank (IADB) Latin AmericanOrganization of Central American States (OCAS) Latin AmericanUnited Nations InternationalWorld Health Organization International

G. Submission of Reports

Where to Report

TIC CQ-1 and CQ-2 reports should be filed with the Federal Reserve Bank of New York.Paper reports should be mailed or faxed to:

International Reports DivisionFederal Reserve Bank of New York33 Liberty Street - 4th floorNew York, New York 10045Fax # (212) 720-1964

Due Dates

The TIC CQ reports are reported as of the last business day of March, June, Septemberand December. TIC CQ-1 reports should be submitted no later than 30 calendar daysfollowing the report as-of date. TIC CQ-2 reports should be submitted no later than 45calendar days following the report as-of date.

Alternative Methods of Reporting

Data may be submitted through the Worldwide Web. Internet Electronic SubmissionSystem (IESUB) is fast, easy to use, and secure. Respondents can submit reportsquickly and easily using on-line data entry or via spreadsheet file transfer. Spreadsheetfile transfer allows reporters to use machine-generated data. IESUB provides aconfirmation of data receipt at the Federal Reserve Bank of New York and checks thevalidity of respondents’ submission. IESUB saves time and delivery costs, avoidspossible mail delays, and eliminates paper and fax transmissions. For more informationon IESUB, log on to http://www.reportingandreserves.org/iesub.html or call theFederal Reserve Bank of New York contact for TIC reporting.

http://www.reportingandreservers.org/iesub/iesub.html


Data may also be reported on computer printouts in the same format as the printedforms. The Federal Reserve Bank of New York must approve proposed computerprintouts in advance of the first submission.

Signature Requirements

The cover page of the TIC C forms (which can be printed by the respondents from theTIC website at http://www.ustreas.gov/tic/forms.html) must be signed by a dulyauthorized officer of the institution. For electronic filers, the signature page should beretained by the reporter.

Reporter ID Number

Each reporting entity has been assigned an "RSSD-ID" number by the Federal ReserveSystem. To ensure proper processing, this ID must be entered in the space provided oneach page of the form. If you do not know your RSSD ID number, please call theFederal Reserve Bank of New York.

Record Keeping Requirement

Reports must be retained for 3 years from the date of submission.


CQ-1 Instructions 11

II. TIC Form CQ-1 – Report of Financial Liabilities to, and FinancialClaims on, Foreign Residents

A. What to Report

Reportable Liabilities and ClaimsReport all (U.S. dollar- and foreign currency-denominated) financial liabilities to, andfinancial claims on, foreign residents, except for those positions described below in thesubsection “Specific Exclusions”. Also, see the subsection “Positions vis-à-vis Foreign-Resident Affiliates” for more information on the reporting of these positions.

Financial liabilities and financial claims are all liabilities or assets that impose the obligationto pay or provide the right to receive cash or another financial asset, except thosebetween a purchaser and a seller of goods or services in the normal course of business.(Liabilities and claims between a purchaser and a seller of goods or services in the normalcourse of business (other than those arising from leases) are called “commercial” liabilitiesand claims and are reportable on the TIC CQ-2.) Reportable financial liabilities andclaims include:

Reportable Liabilities (Part 1) Reportable Claims (Part 2)

Loans (See glossary) of any maturity (unless the loanhas a U.S. depository institution or securities broker ordealer servicing the loan or serving as an administrativeagent).

Loans (See glossary) and loan participations of any maturity(including loans made to finance trade other than thosebetween the seller and purchaser of the traded good orservice).

Repurchase and similar financing agreements of anymaturity unless held for your account by a U.S.-resident depository institution or other U.S. custodian.These should be reported gross (i.e. no FIN 41 netting).

Resale and similar financing agreements of anymaturity unless held for your account by a U.S-residentdepository institution or other U.S. custodian. These shouldbe reported gross (i.e. no FIN 41 netting).

Overdrawn deposit account balances. 1. Deposit balances (other than certificates of deposit) heldat foreign-resident banks of any maturity.

2. Negotiable and non-negotiable certificates of depositissued by foreign-resident banks of any maturity unlessheld for your account by a U.S.-resident depositoryinstitution or other U.S. custodian.

Short-term (an original maturity of one year or less)securities issued in foreign markets.

1. Money markets instruments (e.g., commercial paper) withan original maturity of one year or less that you holddirectly or are held at a foreign custodian, or directly witha foreign central depository.

2. Other short-term (an original maturity of one year or less) securities held for investment or for trading

purposes that you hold directly or are held in custody at aforeign custodian or directly with a foreign centraldepository.

Lease payments due (See below). Lease payments receivable (See below).Brokerage balances, including margin deposit liabilitieson foreign residents (See glossary for furtherinformation).

Brokerage balances including margin deposit claims onforeign residents (See glossary for further information).


Lease Payments

All cross-border positions arising from leases should be reported on the TIC CQ-1 form.

For a financing lease (See glossary), the outstanding value of the lease at the end of theperiod covered by the report should be reported as a financial liability (of the lessee to theforeign lessor), or financial claim (of the lessor on the foreign lessee).

For an operating lease, only accrued payments due to foreign lessors and accruedpayments due from foreign lessees should be reported as financial liabilities and claims,respectively.

Specific Exclusions

(1) Long-term securities (no contractual maturity or an original maturity of over oneyear), including equities and any long-term notes, bonds, and debentures.(Purchases and sales transactions with foreigners of long-term securities should bereported on the TIC S form.)

(2) Negotiable short-term securities (an original maturity of one year or less) issued bythe reporter in the U.S. or held by a U.S.-resident custodian. (Amounts acquired byforeign holders who purchase these securities will be reported by the U.S. custodianon their TIC B forms.)

(3) Contingent liabilities or credit commitments (e.g., unused loan commitments).

(4) Derivatives, including futures, forward exchange contracts, options, swaps, andwarrants.

(5) Spot foreign exchange contracts.

(6) Securities borrowing or lending agreements in which one security is lent in return foranother. (Repurchase-type agreements are reportable only if the reporter hasprovided or received cash in return for a security.)

(7) Commercial liabilities and claims. (Commercial liabilities and claims are those whicharise between sellers and customers from the purchase and sale of goods (includingnew and used capital goods) and services in the normal course of business). Theseshould be reported on the TIC CQ-2 form. (See Section III. A “What to Report” forfurther information.)

(8) Reserves of insurance underwriting companies.

(9) Deposits and brokerage balances held at a U.S. entity and “swept” by the U.S. entityinto a foreign-resident entity. (See glossary - Sweep Agreements.)

(10) Loans a foreign resident made to you that are serviced by a U.S. resident.


Positions vis-à-vis Foreign-Resident Affiliates (Sections A, B, and C)

A foreign-resident affiliate is: any foreign-resident entity for which the reporter owns,directly or indirectly, 10 percent or more of its voting equity (or the equivalent); or anyforeign-resident “parent” company which owns 10 percent or more of the reporter’s votingequity (or the equivalent); or any foreign-resident company which is a subsidiary (50% ormore owned) of a foreign parent company of the reporter.

In Section A, positions vis-à-vis foreign-resident affiliates should not be reported.

In Section B, only the following positions vis-à-vis foreign-resident affiliates should bereported:

• BHCs/FHCs reporting the positions of their insurance underwriting subsidiariesshould include all positions vis-à-vis foreign-resident affiliates.

• Reporters who are or who are reporting for “other financial intermediaries” shouldreport all positions vis-à-vis all affiliated foreign-resident financial intermediaries(including depository institutions, securities brokers and dealers, BHCs/FHCs). Afinancial intermediary is an organization or part thereof (e.g., subsidiary or otheroperating unit) whose major activity is to raise or otherwise obtain funds toprovide to another entity. (An insurance company is not a financial intermediary).An “other financial intermediary” is a financial intermediary other than a depositoryinstitution, a securities broker or dealer, or a BHC/FHC.

No other companies should report any data in Section B.

In Section C, other financial intermediaries (See glossary) should report the indicatedinformation for all positions reported in Sections A and B. All other reporters should reportthe indicated information only for positions reported in Section A.

B. Column Instructions

Short-term Negotiable Securities (Column 1)

Report the total of all short-term negotiable securities (original maturity of one yearor less; see glossary for the definition of securities) issued directly in a foreignmarket and for which a U.S.- resident depository institution or U.S.-residentcustodian is not used. (Short-term non-negotiable securities held by foreignresidents should be reported in column 2.)

Other Liabilities to Foreigners (Column 2)

Report all reportable financial liabilities as defined in Section II.A above, includingbrokerage balances (See glossary for definition), other than short-term negotiablesecurities reported in column 1.


Non-negotiable Foreign Deposits (Column 3)

Report all deposits held at foreign banks, including demand, time, and savingsdeposits (including Eurodollar deposits and non-negotiable CDs, but excludingnegotiable CDs). Also include any brokerage balances placed with foreign residents.Do not include funds “swept” into a foreign bank or a securities brokerage accountfrom an account at a U.S. entity.

Negotiable CDs & All Short-term Negotiable Securities (Column 4)

Report all negotiable certificates of deposit of any maturity and all negotiablesecurities (including money market instruments) with an original maturity of oneyear or less issued by foreign residents. Do not include negotiable securities ornegotiable certificates of deposit held for your account by a U.S.-resident custodian.

Other Claims on Foreigners (Column 5)

Report all reportable claims (as defined in Section II.A above) other than non-negotiable foreign deposits reported in column 3 and negotiable CDs and negotiableshort-term securities reported in column 4. Include loans to foreign residents(including resale agreements) and short-term non-negotiable securities of foreignresidents, unless held in for your account by a U.S.-resident custodian.

C. Memorandum Row Instructions (Section B)

Section B contains a single row titled “Positions with Foreign Affiliates” (row 8058-6).Most reporters will leave this row blank. However, the following types of reportersshould report the positions indicated below:

• Insurance underwriting subsidiaries of BHCs/FHCs should include all positions vis-à-vis foreign-resident affiliates.

• Reporters who are or who are reporting for “other financial intermediaries” shouldreport all positions vis-à-vis all affiliated foreign-resident financial intermediaries(including depository institutions, securities brokers and dealers, BHCs/FHCs). Afinancial intermediary is an organization or part thereof (e.g., subsidiary or otheroperating unit) whose major activity is to raise or otherwise obtain funds toprovide to another entity. (An insurance company is not a financial intermediary).An “other financial intermediary” is a financial intermediary other than a depositoryinstitution, a securities broker or dealer, or a BHC/FHC.

D. Memorandum Row Institutions (Section C)

In Section C, companies reporting positions as other financial intermediaries (Seeglossary) should report the information in Section C for all of the positions reported in


Sections A and B. All other reporters should report the requested additional informationonly for the positions reported in Section A.

Type of Instrument

Not all instruments will be reported separately in the memorandum rows. Therefore, foreach column the entries in the instrument rows will sum to no more, and probably less,than the values reported in Sections A and B.

Borrowings/Loans Memorandum Row (8061-4)

Report in columns 2 and 5 loans (See glossary for definition) with foreign residentsexcluding repurchase agreements, resale agreements, and similar financingagreements.

Negotiable CDs Memorandum Row (8110-8)

Report in column 4 all negotiable certificates of deposit issued by foreign residents.

Repurchase/Resale Agreements Memorandum Row (8400-7)

Report in column 2 funds borrowed from foreign residents under repurchaseagreements and similar financing arrangements. Report in column 5 funds loanedto foreign residents under resale agreements and similar financing arrangements.These amounts should be reported gross (i.e., no FIN 41 netting).

Assets Written Off This Quarter

Charge-offs or specific reserves for reportable claims taken partially or entirely duringthe reporting period should be totaled and reported in the row titled “Assets Written OffThis Quarter” (row 8200-9) only in the quarter they are established. (See GeneralInstructions Section I.E for detailed information on charge-offs.)

Foreign Currency Memorandum Rows

For each column, report the amounts of positions (converted into U.S. dollars using theclosing spot exchange rate on the as-of date of the report) that are denominated inCanadian Dollars (8500-1), Euros (8500-2), British Pound Sterling (8500-3), JapaneseYen (8500-4), and All Other Foreign Currencies (8500-6).

Remaining Maturities Memorandum Rows

This part of Section C is required to be completed only by reporters with Section Creportable liabilities of $1 billion or more. (Section C reportable liabilities include allSection A liabilities plus the liabilities reported by other financial intermediaries in SectionB.)

In columns 1 and 2, report liabilities by remaining maturity. Remaining maturity is theamount of time remaining from the report date until the earlier of the final contractualmaturity date or the call date, if the claimant can freely call the liabilities at an earlier


date. (All foreign currency-denominated liabilities should be converted to U.S. dollarsusing the spot exchange rate on the as-of date.)

Demand Deposits (8010-1)In each column, report any non-interest bearing liabilities to foreign residents(both U.S. dollar- and foreign currency-denominated) that are payable on demand.

Arrears (8020-9)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) that are past due. A liability is past due when principal orinterest due is unpaid for 30 days or more.

Non-Interest Paying Items without a Fixed Maturity Including ReposUnder Continuing Contract (8030-6)In each column, report non-interest-bearing liabilities to foreign residents (bothU.S. dollar- and foreign currency-denominated) that have no stated maturity orthat rollover under continuing contract. (Items originally sold at a discount areconsidered interest bearing, even if they do not have a stated interest payment.Therefore, no liabilities sold at a discount should be reported in this row.)

Other Items without a Fixed Maturity Including Repos Under AContinuing Contract (8040-3)In each column, report interest-bearing liabilities to foreign residents (both U.S.dollar- and foreign currency-denominated) that have no stated maturity or areunder continuing contract. (Items originally sold at a discount are consideredinterest bearing, even if they do not have a stated interest payment.)

Other, 90 Days or Less (8051-9)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) with a remaining maturity of no more than 90 days.

Over 90 Days to 180 Days (8052-7)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) with a remaining maturity of over 90 days but no morethan 180 days.


Over 270 Days to 1 Year (8054-3)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) with a remaining maturity of over 270 days but no morethan 1 year. (“Year” may be defined based upon 360 days, 365 days or 1 calendaryear, based upon the reporter’s business practices.)


Over 1 Year to 2 Years (8055-1)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) with a remaining maturity of over 1 year but no more than2 years. (“Year” may be defined based upon 360 days, 365 days or 1 calendaryear, based upon the reporter’s business practices.)

Over 2 Years (8057-8)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency denominated) with a remaining maturity of over 2 years. (“Year” may bedefined based upon 360 days, 365 days or 1 calendar year, based upon thereporter’s business practices.)


III. TIC Form CQ-2 – Report of Commercial Liabilities to, and Commercial Claims on, Unaffiliated Foreign Residents

A. What to Report

Reportable Liabilities and Claims

Report all (U.S. dollar- and foreign currency-denominated) commercial liabilities to, andclaims on, unaffiliated foreign residents. Commercial liabilities and claims are thosewhich arise from the purchase and sale of goods (including new and used capital goods)and services. Reportable commercial liabilities and claims include:

(1) Accounts payable and receivable arising from the import or export of goods andservices, including new and used goods.

(2) Advance payments received for future deliveries of goods and services.

(3) Claims on inventory held outside the United States.

(4) Credits due to or from a foreign resident resulting from returned goods or fromcancelled service contracts.

(5) Accrued liabilities and claims for royalties or similar fees.

(6) Fees due or payable, such as docking fees and airplane landing fees.

(7) Unearned insurance premiums and insurance claims payable, receivable, andincurred but not reported (IBNR). (See section below on reporting ofinsurance/reinsurance business.)

A foreign resident affiliate is: any foreign-resident entity for which the reporter owns 10percent or more of its voting equity (or the equivalent); or any foreign-resident “parent”company which owns 10 percent or more of the reporter’s voting equity (or theequivalent); or any foreign-resident company which is a subsidiary (50% or more owned)of a foreign parent company of the reporter. All other foreign-resident entities are“unaffiliated foreign residents.”

Specific Exclusions

(1) Contingent liabilities or claims.

(2) Liabilities and claims held for collection by U.S. banks or brokers/dealers, such asaccounts, notes, and drafts payable.

(3) Spot foreign exchange contracts.

(4) Derivatives, including futures, forward exchange contracts, options, swaps, andwarrants.


(5) Financial liabilities and claims. (See Section II.A. “What to Report” on the TIC CQ-1for further information.)

(6) Claims on foreign residents arising from advices issued by banks in the United Statesof their intent to make payment under deferred payment letters of credit issued byforeign banks in favor of U.S. exporters.

(7) Financial and operating leases. (See Section II.A “What to Report” on the TIC CQ-1for further information.)

Insurance/Reinsurance Business

Insurance and reinsurance companies should report unearned premiums and unpaidclaims (including claims incurred but not yet reported) as follows:

Liabilities/Claims ReportingClaims payable Trade payables (column 1)Claims receivable Trade receivables (column 3)Unearned premiums received Advance receipts (column 2)Unearned premiums paid Advance payments (column 4)

Only positions vis-à-vis unaffiliated reinsurers should be reported. Reporting should beby the company that deals directly with the foreign counterparty. Thus, if a U.S.insurance broker or other intermediary is responsible for obtaining/placing the contractwith the foreign counterparty, the reporting should be by the U.S. intermediary, not theU.S. underwriter/reinsurer.

B. Column Instructions

TRADE PAYABLES (Column 1)

Report gross liabilities due to unaffiliated foreign residents arising from:

(1) Deferred payment for goods imported into the United States, whether intransit or located in foreign countries, and for services.

(2) Acceptances made directly for your account by unaffiliated foreign residents.

(3) The return of goods or cancellation of services.

(4) Overpayments for goods or services.

(5) Accrued liabilities for royalties and similar fees.

(6) Premiums due from and payable to insurance companies located in foreigncountries.


ADVANCE RECEIPTS AND OTHER LIABILITIES (Column 2)

Report gross liabilities to unaffiliated foreign residents arising from:

(1) All advance payments received from unaffiliated foreign residents for futuredeliveries of goods or future rendering of services (even though the fundshave been used in the production of goods not yet delivered), whetherpayable in cash or through barter agreements. (However, exclude allforward settling derivative contracts.)

(2) All other commercial liabilities (as defined in Section III.A above).

TRADE RECEIVABLES (Column 3)

Report gross claims on unaffiliated foreign residents arising from:

(1) Deferred receipts from the sale of goods exported from the United States orfrom the sale of goods acquired abroad, and from the sale of services toforeign residents.

(2) The return of goods or cancellation of service contracts.

(3) Overpayments for goods or services.

(4) Accrued claims for royalties and similar fees.

(5) Premiums due from insurance companies located in foreign countries.

ADVANCE PAYMENTS AND OTHER CLAIMS (Column 4)

Report gross claims on unaffiliated foreign residents arising from:

(1) Advance payments made to unaffiliated foreign residents for future deliveryof goods or for the future rendering of services or from rights to receivecommodities or services from unaffiliated foreign residents under barteragreements (excluding all forward settling derivative contracts).

(2) Goods that the reporter owns located in foreign countries. (If the goods arein transit report opposite the country of ultimate destination.)

(3) All other commercial claims (as defined in Section III.A above).


C. Memorandum Row Instructions

Assets Written Off this Quarter

Charge-offs or specific reserves for reportable claims taken partially or entirelyduring the reporting period should be reported in the row titled “Assets Written OffThis Quarter” (row 8200-9) only in the quarter they are established. (See GeneralInstructions Section I.E for detailed information on charge-offs.)

Foreign Currency Memorandum Rows

For each column, report the amounts of positions (converted into U.S. dollars usingthe closing spot exchange rate on the as-of date of the report) reported in the GrandTotal Row (9999-6) that are denominated in Canadian Dollars (8500-1), Euros(8500-2), British Pound Sterling (8500-3), Japanese Yen (8500-4), and All OtherForeign Currencies (8500-6).

Remaining Maturities Memorandum Rows

This section is required to be completed only by reporters with reportable liabilitiesof $200 million or more.

Report liabilities included in the Grand Total Row (9999-6) by remaining maturity.Remaining maturity is the amount of time remaining from the report date until thefinal contractual maturity date. (All foreign currency-denominated liabilities andclaims should be converted to U.S. dollars using the closing spot exchange rate onthe as-of date). Advance receipts and advance payments should be considered asmaturing in one year or less even if the product or work which the receipts orpayments pertain to will not be completed for more than one year.

Arrears (8020-9)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) that are past due. A liability is past due when principal orinterest due is unpaid for 30 days or more.

Non-Interest Paying Items without a Fixed Maturity (8030-6)In each column, report non-interest-bearing liabilities to foreign residents (bothU.S. dollar- and foreign currency-denominated) that have no stated maturity orthat rollover under continuing contract. (Items originally sold at a discount areconsidered interest bearing, even if they do not have a stated interest payment.Therefore, no liabilities sold at a discount should be reported in this row.)

Other Items without a Fixed Maturity (8040-3)In each column, report interest-bearing liabilities to foreign residents (both U.S.dollar- and foreign currency-denominated) that have no stated maturity or areunder continuing contract. (Items originally sold at a discount are consideredinterest bearing, even if they do not have a stated interest payment.)


Other, 90 Days or less (8051-9)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) with a remaining maturity no more than 90 days.



Over 270 Days to 1 Year (8054-3)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) with a remaining maturity of over 270 days but no morethan 1 year. (“Year” may be defined based upon 360 days, 365 days or 1 calendaryear, based upon the reporter’s business practices.)

Over 1 Year to 2 Years (8055-1)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) with a remaining maturity of over 1 year but no more than2 years. (“Year” may be defined based upon 360 days, 365 days or 1 calendaryear, based upon the reporter’s business practices.)

Over 2 Years (8057-8)In each column, report liabilities to foreign residents (both U.S. dollar- and foreigncurrency-denominated) with a remaining maturity of over 2 years. (“Year” may bedefined based upon 360 days, 365 days or 1 calendar year, based upon thereporter’s business practices.)

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IV. Glossary

Administrative Agent – An institution responsible for administering a loan, acting on behalfof all lenders, and acting as a conduit for all payments in a loan syndication. If a foreignresident is acting as an administrative agent, the borrower should report these loan liabilities toforeign residents on the TIC CQ-1 or TIC BL-1 form as appropriate.

American Depositary Receipt (ADR) – Negotiable certificates, typically issued by a U.S.-resident company for securities (usually shares of stock) issued by a foreign corporation. Thesecurities are backed by the foreign securities, which are held in a custodial account, either atthe issuing bank or by an agent. The ADRs themselves may be held in U.S. or foreign banks.ADRs are considered foreign securities, and purchases and sales of ADRs by U.S. residents arereportable on the TIC S form.

Brady Bonds – Collateralized dollar-denominated bonds issued by a foreign government orcentral bank in exchange for loans under the Brady Plan. Brady Bonds are considered long-term debt securities and are excluded from the TIC C forms. These securities should bereported on the TIC S form.

Brokerage Balances – Cash balances: 1) held by U.S. residents in brokerage and marginaccounts with foreign residents; and 2) held by foreign residents in brokerage and marginaccounts at U.S.-resident entities. Brokerage balances should be reported gross and includefunds that may be freely withdrawn or held to support positions in futures, securities or otherfinancial instruments. The following are examples that generate cash balances in brokeragebalances:

(1) Cash proceeds from selling securities short.(2) Cash margin or collateral placed to support open positions in futures (initial, maintenance

and margin) or options on exchanges, over-the-counter derivatives, and excess cashmargin or collateral retained from previous settlements of positions.

(3) Cash margin lent to foreign residents for their purchases of securities.(4) Cash interest and dividends on securities that have been pledged as collateral with foreign

residents.

Brokerage balances held at foreign entities should be reported as financial liabilities on the TICCQ-1 form. Liabilities to foreign residents from brokerage balances should be reported asfinancial claims on the TIC CQ-1 form.

Commercial Paper – Unsecured negotiable promissory notes usually sold at a discount andhaving a fixed maturity of 270 days or less. Holdings of commercial paper should be reportedon the TIC C forms at face value, as a short-term security unless held for your account by aU.S.-resident depository institution or other U.S. custodian.

Custodian – A bank or other organization that manages or administers the custody orsafekeeping of stock certificates, debt securities, or other assets for institutional and privateinvestors.

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Deposits – The unpaid balance of money or its equivalent received or held by a bank in theusual course of business and for which it has given or is obligated to give credit, eitherconditionally or unconditionally, including balances in a checking, savings, or time account, orwhich are evidenced by its certificate of indebtedness, or other similar name, or a check or draftdrawn against a deposit account and certified by the bank, or a letter of credit or a traveler'scheck on which the bank is primarily liable. Deposit balances (other than certificates of deposit)held by U.S. residents at foreign banks should be reported on the TIC CQ-1 form. Negotiableand non-negotiable CDs issued by foreign resident banks, regardless of maturity, should bereported on the TIC CQ-1 form unless held for your account by a U.S.-resident depositoryinstitution or other U.S.-resident custodian. (Also see glossary entry for Negotiable Certificatesof Deposits.)

Depositary Receipts – See American Depositary Receipts (“ADR”). Related types ofdepository receipts, such as Global Depositary Receipts, are reported in the same manner asADRs

Derivative Contracts – A derivative contract is a financial instrument or other contract withall three of the following characteristics:

(1) It has: (a) one or more underlyings; (b) one or more notional amounts; and (c)payment provisions. These terms determine the amount of the settlement orsettlements, and, in some cases, whether or not a settlement is required.

(2) It requires no initial net investment, or an initial net investment that is much smaller thanwould be required for other types of contracts that would be expected to have a similarresponse to changes in market factors.

(3) Its terms require or permit net settlement, it can readily be settled net by a meansoutside the contract, or it provides for delivery of an asset that puts the recipient in aposition not substantially different from net settlement.

Derivative contracts are excluded from the TIC C forms. Embedded derivatives that are notbifurcated under FAS 133 should not be separated from the host contract and should bereported on the TIC C forms. However, if an embedded derivative is bifurcated, the derivativeshould be excluded from the TIC C forms.

Development Banks – Entities owned by national governments other than the United Statesand are established to promote economic development of sectors of the economy, such astrade, housing, agriculture, finance and industry.

Direct Investment – A direct investment relationship exists when one firm owns 10% or moreof the voting securities of another incorporated business, or an equivalent interest in anunincorporated business, including a branch. If a direct investment relationship exists, thengenerally, all financial flows between the firms are considered direct investment. However, forbanking institutions direct investment is limited to intercompany holdings that are permanentinvestment. In general, only insurance underwriting subsidiaries of BHCs/FHCs and otherfinancial intermediaries report debt positions with affiliated firms, including direct investmentclaims and liabilities, on the TIC CQ-1 form. (See Section II.A, “Positions vis-à-vis Foreign–Resident Affiliates” for further information).

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Financial Intermediary – A financial intermediary is an organization or part thereof (e.g.,subsidiary or other operating unit) whose major activity is to raise or otherwise obtain funds toprovide to another entity. (An insurance company is not a financial intermediary). An “otherfinancial intermediary” is a financial intermediary other than a depository institution, a securitiesbroker or dealer, or a BHC/FHC.

Financing Lease – A lease is an agreement that transfers the right to use an asset for aspecified period of time. The TIC C forms follow the standards set forth in FASB Statement No.13, “Accounting for Leases” to distinguish a financing lease from an operating lease. Inparticular, if any one of the following criteria is met, a lease must be accounted for as afinancing (or capital) lease:

(1) Ownership of the property is transferred to the lessee at the end of the lease term, or(2) The lease contains a bargain purchase option, or(3) The lease term represents at least 75 percent of the estimated economic life of the leased

property, or(4) The present value of the minimum lease payments at the beginning of the lease term is

90 percent or more of the fair value of the leased property to the lessor at the inceptionof the lease less any related investment tax credit retained by and expected to be realizedby the lessor.

If none of the above criteria is met, the lease should be accounted for as an operating lease.

All positions arising from cross-border leases should be reported on the TIC CQ-1 form asdescribed in section II.A.

Foreign Resident – Any individual, corporation, or other organization located outside theUnited States. A corporation incorporated outside the United States is a foreign resident even ifit has no physical presence outside the United States. Foreigners/Foreign Residents include:

(1) Foreign governments and any subdivision, agency or instrumentality thereof, including allforeign official nonbanking institutions, even if located in the United States (e.g., anembassy, consulate, or other diplomatic establishment of a foreign country). (However, allU.S. subsidiaries of foreign corporations are U.S. residents.)

(2) Entities that have filed an IRS Form W-8, indicating that the individual or entity is anonresident alien or foreign entity not subject to certain United States information returnreporting or to backup withholding rules.

(3) Any corporation or other organization located outside the United States, including thebranches, subsidiaries, and other affiliates of U.S. entities located abroad.

(4) Individuals, including citizens of the United States, residing outside the United States.

EXCEPTION: Official international or regional organizations or subordinate or affiliated agenciesthereof, created by treaty or convention between sovereign states, even if located in the UnitedStates, including the International Bank for Reconstruction and Development (IBRD or World Bank),the International Monetary Fund (IMF), and the United Nations (UN), are also considered foreignresidents.

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Foreign-Resident Affiliate – Any foreign-resident entity for which the reporter owns, directly orindirectly, 10 percent or more of its voting equity (or the equivalent); or any foreign-resident“parent” company which owns 10 percent or more of the reporter’s voting equity (or theequivalent); or any foreign-resident company which is a subsidiary (50% or more owned) of aforeign parent company of the reporter.

Foreign-Resident Custodian – A custodian located outside the United States, including a foreignaffiliate of a U.S. custodian. Reporters should determine the location of a custodian according tothe country where the custodian is incorporated, or otherwise legally established, not according tothe country of custodian’s parent firm, and not according to the location of the custodian’soperations center.

Foreign Subcustodian – A foreign institution that holds in safekeeping foreign securities for aU.S. resident custodian.

Loans – A loan is generally an extension of credit resulting from direct negotiations between alender and a borrower. The loan may have originated through direct negotiations with theborrower or it may have been originated by another lender that directly negotiated with aborrower. Loans may take the form of promissory notes, acknowledgements of advance, due bills,invoices, overdrafts, and similar written or oral obligations. Loans include:

(1) factored accounts receivable.

(2) participations (acquired or held) in a single loan or pool of loans or receivables (Seediscussion of Participations).

(3) drawn syndicated loans.

(4) Repurchase/resale agreements, where securities have been transferred in return for cashbalances.

(5) Loans made to finance trade other than those between purchaser and seller of the tradedgood or service. (See Section II.A, “What to Report” for more information.)

Loans exclude those instruments that meet the definition of a security (See glossary entry forSecurities). Loans are reportable on the TIC C forms, regardless of maturity.

Loan Servicing Arrangements, Loan Servicer – An arrangement whereby one party (theloan servicer) agrees to collect payments from borrowers on behalf of the holder(s) of the loan.The loan servicer may be the originator of the loans, or may be another institution. If aforeign-resident is acting as a servicer or administrative agent, the borrower should report theseloan liabilities to foreign residents on the TIC BL-1 or TIC CQ-1 form as appropriate.

Negotiable Certificates of Deposit – Certificates of deposit evidenced by a negotiable(transferable) instrument or deposit in book entry form evidenced by a receipt or similaracknowledgement issued by the bank, that provides on its face that the amount of such depositis payable to bearer or any specified person (e.g., deposit notes, bank notes). U.S. heldforeign negotiable certificates of deposit should be reported on the TIC CQ-1 form and inMemorandum Row 8110-8 unless held for your account by a U.S.-resident depository institutionor other U.S-resident custodian.

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Overdraft – An overdraft exists when a depository institution honors a check or draft drawnagainst a deposit account in which insufficient funds are held. Overdrafts should be reportedgross and not netted against good balances. Overdrawn accounts at foreign banks are reportedon the TIC CQ-1 form as financial liabilities.

Participations – A loan agreement whereby one bank contracts with other banks toparticipate in making a loan to a borrower. Each participant should report the amount of itsown share in the participated loan. If a foreign-resident is acting as a servicer or administrativeagent, the borrower should report these loan liabilities to foreign residents on the TIC BL-1 orTIC CQ-1 form as appropriate.

Repurchase/Resale Agreements – A repurchase agreement is a transaction involving thesale of financial assets by one party to another, subject to an agreement by the seller torepurchase the assets at a specified date or in specified circumstances. A resale agreement(also known as a reverse repurchase agreement) is a transaction involving the purchase offinancial assets by one party from another, subject to an agreement by the purchaser to resellthe assets at a specified date or in specified circumstances.

Except as otherwise noted below under the discussion of FAS Statement No. 140, all repurchaseand resale agreement transactions with foreign residents in which cash balances are providedas part of the transaction, are to be reported as borrowings from, or loans to, foreign residentscollateralized by the underlying assets. In each case the amount of cash received/providedshould be reported. In particular:

(a) Funds received from foreign residents from repurchase agreements are reported as liabilitieson the TIC CQ-1 form, by country, and in memorandum row 8400-7. (The transfer of thesecurities should be excluded from purchases or sales on the TIC S form.)

(b) Funds lent to foreign residents through resale agreements should be reported as claims onthe TIC CQ-1 form., by country, and in memorandum row 8400-7. (The receipt of thesecurities as collateral should be excluded from purchases or sales on the TIC S form.)

Please note that all repurchase agreements should be reported gross (i.e., FIN 41 should not beapplied).

If a repurchase agreement does not qualify as a secured borrowing under FAS Statement No.140, the selling institution should account for the transaction as a sale of financial assets and aforward commitment to repurchase the security. Similarly, if a resale agreement does notqualify as a borrowing under FAS Statement No. 140, the purchasing institution should accountfor the transaction as a purchase of financial assets and a commitment to sell. In these cases,the transfer of the securities should be reported on the TIC S form and the exchange of cashshould be excluded from the TIC C forms. Securities lending agreements in which one securityis loaned in return for another are not reportable on the TIC forms.

Securities – Securities are any bill, note, bond, debenture, equity or similar instrument that iscommonly referred to as a security, excluding certificates of deposit. (In cases where it is notclear if a specific instrument is a security, contact the Federal Reserve Bank of New York.)Securities may be negotiable (tradable in secondary markets) or non-negotiable (not tradable insecondary markets).

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Securities are classified as short-term (original maturity of one year or less) or long-term(original maturity of more than one year). Long-term securities include securities with nostated maturity, including equity securities such as common stock, preferred stock, certificate ofinterests, partnership interests, and mutual fund shares. Long-term securities are excludedfrom the TIC C forms and should be reported only on the TIC S form.

Short-term securities, which include money market instruments such as Treasury bills, short-term agency securities, commercial and finance paper, bankers’ acceptances, and short-termnotes, should be reported on the TIC C forms, following the instructions in Sections II.A andII.B of this booklet for the TIC CQ-1 form. A summary of these reporting requirements follows:

The Reporting of Short-Term Securities

Situation Where to ReportClaims A TIC C reporter holds a foreign security

(including money market instruments)directly or is held in custody at a foreigncustodian or directly with a foreign centraldepository.

CQ-1

Liabilities A TIC C reporter issues a security (including

all bearer instruments) in a foreign market(unless the security is known to be held by aU.S. custodian other than the reporter)

CQ-1

Securities Brokers and Dealers – Generally, securities brokers are entities that regularlyengage in effecting securities transactions for others. A securities dealer is an entity thatengages in buying securities for its own account. However, the definition of securities dealersexcludes depository institutions and other institutions acting in a fiduciary capacity. (See theSecurities Exchange Act for a list of the activities that constitutes a dealer.)

Settlement Date Accounting – Under settlement date accounting, assets purchased are notrecorded until settlement date. Settlement date accounting should be used on the TIC C forms.

Subsidiary – A company in which another company (parent) owns 50% or more of the votingsecurities, or an equivalent interest.

Sweep Agreements – Sweep agreements are contractual agreements between institutionsand their customers that allow funds to be automatically transferred to another account at thesame institution, another institution, or into a financial instrument. Deposits and brokeragebalances held at a U.S. depository institution, broker, or dealer and “swept” by the U.S. entityinto a foreign-resident entity are excluded from the TIC C forms.

United States – The fifty (50) States of the United States, the District of Columbia, theCommonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and thefollowing: American Samoa, Baker Island, Guam, Howland Island, Jarvis Island, Johnston Atoll,

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Kingman Reef, Midway Islands, Navassa Island, Palmyra Atoll, U.S. Virgin Islands, and WakeIsland.

U.S. Military Facilities – Offices of United States banks located in foreign countries thatprovide financial services to persons in the United States Armed Forces stationed abroad. Forpurposes of these reports, United States military facilities are classified as banking officeslocated in the United States.

U.S. Resident – Any individual, corporation, or other organization located in the United States,including branches, subsidiaries, and affiliates of foreign entities located in the United States.Corporations incorporated in the United States are considered to be U.S. residents even if theyhave no physical presence in the United States.

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APPENDIX AReporting Requirement Flowcharts

Situation 1 - A U.S. resident has a liability to a foreign resident in the form ofa short-term negotiable or non-negotiable security

Flowchart 1a - A U.S. resident custodian is usedFlowchart 1b - No U.S. resident custodian is used

Situation 2 - A U.S. resident has a claim on a foreign resident in the form of ashort-term security or a certificate of deposit (of any maturity)

Flowchart 2a - A U.S. resident custodian is usedFlowchart 2b - No U.S. resident custodian is used

Situation 3 - Loans of U.S. residents (including drawn syndicated loans)

Flowchart 3a - A U.S. resident is servicing the loan or acting as an administrativeagent

Flowchart 3b – No U.S. resident is servicing the loan or acting as an administrativeagent

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Situation 1 - A U.S. resident has a liability to a foreign resident in the form ofa short-term security

Flowchart 1a - A U.S.-resident custodian is used

Flowchart 1b - No U.S.-resident custodian is used

U.S. TIC C issuer Foreign-resident personor custodian

Report on the TIC CQ-1 form.

Note: All short-term negotiable or non-negotiable securities issued directly in aforeign market should be reported in this manner.

Foreign person/investor U.S.-resident custodian

U.S.-resident issuerdoes not report thesecurity on the TICC forms.

Reports the security on theTIC B forms.

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Situation 2 - A U.S. resident has a claim on a foreign resident in the form of ashort-term security or a certificate of deposit (of any maturity)

Flowchart 2a - A U.S.-resident custodian is used

U.S. person/investor U.S.-resident custodian

Reports the security on theTIC B forms.

Flowchart 2b - No U.S.-resident custodian is used

U.S. person/investor Foreign custodian,debtor, or issuer

Report on the on the TICCQ-1 form (or on the TICBC or TIC BQ-2, Part 1form if not a TIC Creporter).

Does not report thesecurity or CD on theTIC C forms.

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Situation 3 - Loans of U.S. residents (including drawn syndicated loans)

Flowchart 3a - A U.S.-resident is servicing the loan or acting as anadministrative agent

Flowchart 3b – No U.S.-resident is servicing the loan or acting as anadministrative agent

U.S. resident borrower Foreign lender

Since no U.S. administrativeagent is used, the U.S. borrowerreports the liability to foreignresidents on the TIC CQ-1 form(or TIC BL-1 form if not a TICC reporter).

Foreign lenderU.S. resident borrower

U.S. administrative agent

U.S. administrative agent reportson the TIC B forms.

Loan

Loan

Does not reporton the TIC Cforms.

Appendix B

DEPARTMENT OF THE TREASURY

G E O G R A P H I C A L C L A S S I F I C A T I O NIncluding

Codes for Countries and International/Regional Organizations

The most recent version of this appendix is now a separate document.A copy is on the TIC website, next to these instructions, at: http://www.treas.gov/tic/forms.html

http://www.treas.gov/tic/forms.html

Appendix C

DEPARTMENT OF THE TREASURY

List of Certain Foreign Institutions Classifiedas Official for Purposes of Reporting on the Treasury

International Capital (TIC) Forms

The most recent version of this appendix is now a separate document.A copy is on the TIC website, next to these instructions, at: http://www.treas.gov/tic/forms.html

http://www.treas.gov/tic/forms.html

Reports of Liabilities to, and Claims on, Foreign Residents

Documents

Transcript of Reports of Liabilities to, and Claims on, Foreign Residents