Managers of domestic funds with securities that are owned by foreign residents may need to take note of an important filing deadline on the horizon.
Treasury International Capital Benchmark Form SHL (Form SHL) is a benchmark survey of U.S. international portfolio capital positions conducted by the Department of the Treasury once every five years. Form SHL is a requirement for U.S. resident issuers, which includes private funds, mutual funds, and other similar domestic pooled investment vehicles. Domestic funds whose securities are owned by foreign residents equal to or exceeding $100 million must report data. Additionally, this is on a per fund basis. Only domestic funds that cross the $100 million threshold are required to file. This is not an aggregate amount of all domestic funds an advisers manages.
In instances where there is a master-feeder structure, with the master fund being a domestic on-shore fund and the feeder being a foreign offshore fund, no reporting look-through is required for the off-shore investors. The off-shore fund will simply be treated as a single investor and that is the information that is to be reported. This is also the case when a foreign adviser has established a U.S. master fund. In that instance, if the U.S. master fund has a foreign feeder fund that exceeds the $100 million threshold, the foreign adviser would be required to complete the Form SHL.
The information provided is as of the close of business on June 28, 2019, and must be submitted to the Federal Reserve Bank of New York no later than August 30, 2019.
This survey collects information on foreign-resident holdings of U.S. securities, which includes equities, short-term debt securities (including certain money market instruments) and long-term debt securities.
According to the Treasury, the following are required to report:
- U.S. persons who manage the safekeeping of U.S. securities (as specified below) for foreign persons. These U.S. persons, who include the affiliates in the United States of foreign entities, and are henceforth referred to as U.S. custodians, must report on this survey if the total market value of the U.S. securities whose safekeeping they manage on behalf of foreign persons – aggregated over all accounts and for all U.S. branches and affiliates of their firm – is $100 million or more as of June 30, 2019.
- U.S. persons who issue securities, if the total market value of their securities owned directly by foreign persons – aggregated over all securities issued by all U.S. subsidiaries and affiliates of the firm, including investment companies, trusts, and other legal entities created by the firm – is $100 million or more as of June 30, 2019. U.S. issuers should report only foreign holdings of their securities which are directly held for foreign residents, i.e., where no U.S.-resident custodian or central securities depository is used. Securities held by U.S. nominees, such as bank or broker custody departments, should be considered to be U.S.-held securities as far as the issuer is concerned.
- U.S. persons who receive a letter from the Federal Reserve Bank of New York that requires the recipient of the letter to file Schedule 1, even if the recipient is under the exemption level of $100 million and need only report ‘‘exempt’’ on Schedule 1.
More information on Form SHL can be found at the Treasury.gov Resource Center and instructions can be found here. Respondents also can call the Federal Bank of New York at (212) 720-6300 or (646) 730-6300, or email SHLA.help@ny.frb.org.
The survey should be mailed to:
Federal Reserve Bank of New York, Data and Statistics Function
6th Floor
33 Liberty Street
New York, NY 10045-0001
