[Federal Register Volume 84, Number 192 (Thursday, October 3, 2019)]
[Proposed Rules]
[Pages 52936-52980]
[FR Doc No: 2019-20491]

Vol. 84

Thursday,

No. 192

October 3, 2019

Part II

 Securities and Exchange Commission

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17 CFR Parts 210, 229, and 249

 Update of Statistical Disclosures for Bank and Savings and Loan
Registrants; Proposed Rule

Federal Register / Vol. 84 , No. 192 / Thursday, October 3, 2019 /
Proposed Rules

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 229, and 249

[Release No. 33-10688; 34-86984; File No. S7-02-17]
RIN 3235-AL79

Update of Statistical Disclosures for Bank and Savings and Loan
Registrants

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: We are proposing rules to update our statistical disclosures
for banking registrants. These registrants currently provide many
disclosures in response to the items set forth in Industry Guide 3
(``Guide 3''), Statistical Disclosure by Bank Holding Companies, which
are not Commission rules. The proposed rules would update the
disclosures that investors receive, codify certain Guide 3 disclosures
and eliminate other Guide 3 disclosures that overlap with Commission
rules, U.S. Generally Accepted Accounting Principles (``U.S. GAAP''),
or International Financial Reporting Standards (``IFRS''). In addition,
we propose to relocate the codified disclosures to a new subpart of
Regulation S-K and to rescind Guide 3.

DATES: Comments should be received on or before December 2, 2019.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/proposed.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number S7-02-17 on the subject line.

Paper Comments

     Send paper comments to Vanessa A. Countryman, Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.

All submissions should refer to File Number S7-02-17. This file number
should be included on the subject line if email is used. To help us
process and review your comments more efficiently, please use only one
method of submission. The Commission will post all comments on the
Commission's website (http://www.sec.gov/rules/proposed.shtml).
Comments also are available for website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. All comments received will be posted without change. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make publicly available.
    Studies, memoranda or other substantive items may be added by the
Commission or staff to the comment file during this rulemaking. A
notification of the inclusion in the comment file of any such materials
will be made available on the Commission's website. To ensure direct
electronic receipt of such notifications, sign up through the ``Stay
Connected'' option at www.sec.gov to receive notification by email.

FOR FURTHER INFORMATION CONTACT: Stephanie Sullivan, Associate Chief
Accountant, or Dana Hartz, Accountant, Division of Corporation Finance,
at<PHONE_NUMBER>, U.S. Securities and Exchange Commission, 100 F
Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The Commission is proposing to amend 17 CFR
229.404 (``Item 404 of Regulation S-K'') under the Securities Act of
1933 (``Securities Act'') \1\ and the Securities Exchange Act of 1934
(``Exchange Act''); \2\ 17 CFR 210.9-03 (``Rule 9-03 of Regulation S-
X'') under the Securities Act and the Exchange Act; and 17 CFR 249.220f
(``Form 20-F'') under the Exchange Act. In addition, the Commission is
proposing to add a new subpart, 17 CFR 229.1400 (``Item 1400 of
Regulation S-K''), which would include 17 CFR 229.1401 through 17 CFR
229.1406, and is proposing to rescind 17 CFR 229.801(c) and 229.802(c)
Guide 3 Securities Act Industry Guide and Guide 3 Exchange Act Industry
Guide (``Guide 3'') under the Securities Act and Exchange Act.
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    \1\ 15 U.S.C. 77a et seq.
    \2\ 15 U.S.C. 78a et seq.
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Table of Contents

I. Introduction and Backgrounds
    A. Background
    B. Issuance of the Request for Comment
II. Proposed New Subpart 1400 of Regulation S-K
    A. Codification
    B. Proposed Scope
    C. Proposed Applicability to Domestic Registrants and Foreign
Registrants
    D. Reporting Periods
    E. Distribution of Assets, Liabilities, and Stockholders'
Equity; Interest Rate and Interest Differential (Average Balance,
Interest and Yield/Rate Analysis and Rate/Volume Analysis)
    F. Investment Portfolio
    G. Loan Portfolio
    H. Allowance for Credit Losses
    I. Deposits
III. Certain Existing Guide 3 Disclosures That Would Not Be Codified
in Proposed Subpart 1400 of Regulation S-K
    A. Return on Equity and Assets
    B. Short-Term Borrowings
IV. Proposed Changes to Article 9 of Regulation S-X
V. General Request for Comments
VI. Economic Analysis
    A. Introduction
    B. Baseline
    C. Economic Effects
    D. Effects on Efficiency, Competition, and Capital Formation
    E. Request for Comment
VII. Paperwork Reduction Act
    A. Background
    B. Burden and Cost Estimates Related to the Proposed Rules
    C. Request for Comment
VIII. Small Business Regulatory Enforcement Fairness Act
IX. Regulatory Flexibility Act Certification
X. Statutory Authority and Text of Proposed Rules

I. Introduction and Backgrounds

A. Background

    Guide 3 was first published in 1976 as ``a convenient reference to
the statistical disclosures sought by the staff of the Division of
Corporation Finance in registration statements and other disclosure
documents filed by bank holding companies (``BHCs'').'' \3\ Guide 3
calls for disclosure in seven areas: (1) ``distribution of assets,
liabilities and stockholders' equity; interest rates and interest
differential'', (2) investment portfolios, (3) loan portfolios, (4)
summary of loan loss experience, (5) deposits, (6) return on equity and
assets, and (7) short-term borrowings. Guide 3 applies to BHCs,\4\
although other registrants, including savings and loan holding
companies, provide Guide 3 disclosures to the extent applicable. The
Guide 3 Release noted that ``as the

operations of bank holding companies have diversified, it has become
increasingly difficult for investors to identify the sources of income
of such companies.'' \5\ The Division believed that disclosure of the
same statistical information about BHCs on a regular, periodic basis
would assist in assessing their future earning potential and enable
investors to compare BHCs more easily.\6\ Guide 3 has been amended over
time to provide more consistency with Article 9 of Regulation S-X
(``Article 9'') \7\ and to elicit additional information about various
risk elements involved in lending and deposit activities.\8\
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    \3\ Guides for Statistical Disclosure by Bank Holding Companies,
Release No. 33-5735 (Aug. 31, 1976) [41 FR 39007] (``Guide 3
Release''). When it published the Guide 3 Release, the Commission
stated that ``[t]he Guides are not Commission rules nor do they bear
the Commission's official approval; they represent policies and
practices followed by the Commission's Division of Corporation
Finance in administering the disclosure requirements of the federal
securities laws.'' Guide 3 was originally published as Securities
Act Guide 61 and Exchange Act Guide 3. In 1982, Securities Act Guide
61 and Exchange Act Guide 3 were redesignated as Securities Act
Industry Guide 3 and Exchange Act Industry Guide 3. See Rescission
of Guides and Redesignation of Industry Guides, Release No. 33-6384
(Mar. 16, 1982) [47 FR 11476].
    \4\ Rule 1-02(e) of Regulation S-X [17 CFR 210.1-02(e)] defines
a BHC as ``a person who is engaged, either directly or indirectly,
primarily in the business of owning securities of one or more banks
for the purpose, and with the effect, of exercising control.''
    \5\ See supra note 3.
    \6\ Id.
    \7\ 17 CFR 210.9-01 through 9-07. Article 9 sets forth the form
and content of the consolidated financial statements filed for bank
holding companies and for any financial statements of banks that are
included in filings with the Commission.
    \8\ Amendments to Guides for Statistical Disclosure by Bank
Holding Companies, Release No. 33-6221 (July 8, 1980) [45 FR 47138]
(``1980 Guide 3 Release''); Revision of Financial Statement
Requirements and Industry Guide Disclosure for Bank Holding
Companies, Release No. 33-6458 (Mar. 7, 1983) [48 FR 11104];
Revision of Industry Guide Disclosures for Bank Holding Companies,
Release No. 33-6478 (Aug. 11, 1983) 48 FR 37609 (together with
Release 33-6458 the ``1983 Guide 3 Releases''); Notification of
Technical Amendments to Securities Act Industry Guides, Release No.
33-9337 (Jul. 13, 2012) [77 FR 42175] (``2012 Guide 3 Release'').
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    Since the last substantive revision to Guide 3 in 1986,\9\ the
Commission has adopted disclosure requirements \10\ and the Financial
Accounting Standards Board (``FASB'') \11\ and International Accounting
Standards Board (``IASB'') \12\ have issued accounting standards that
have changed the financial reporting obligations for registrants
engaged in financial services. Consequently, some of the disclosures
called for by Guide 3 overlap with subsequently adopted Commission
rules, U.S. GAAP, or IFRS.\13\
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    \9\ This revision added disclosures regarding loans and
extensions of credit to borrowers in countries experiencing
liquidity problems. See Amendments to Industry Guide Disclosures by
Bank Holding Companies, Release No. 33-6677 (Nov. 25, 1986) [51 FR
43594].
    \10\ For example, the Commission adopted Item 305 of Regulation
S-K [17 CFR 229.305] in 1997. Disclosure of Accounting Policies for
Derivative Financial Instruments and Derivative Commodity
Instruments and Disclosure of Quantitative and Qualitative
Information about Market Risk Inherent in Derivative Financial
Instruments, Other Financial Instruments and Derivative Commodity
Instruments, Release No. 33-7386 (Jan. 31, 1997) [62 FR 6044]
(``Disclosure of Market Risk Sensitive Instruments Release'').
    \11\ The Commission has broad authority and responsibility under
the federal securities laws to prescribe the methods to be followed
in the preparation of accounts and the form and content of financial
statements to be filed under those laws. See, e.g., Sections 7 [15
U.S.C. 77g], 19(a) [15 U.S.C. 77s(a)] and Schedule A, Items (25) and
(26) [15 U.S.C. 77aa(25) and (26)] of the Securities Act and
Sections 3(b) [15 U.S.C. 78c(b)], 12(b) [17 CFR 781(b)] and 13(b)
[17 CFR 78m(b)] of the Exchange Act. To assist it in meeting this
responsibility, the Commission historically has looked to private
sector standard-setting bodies designated by the accounting
profession to develop accounting principles and standards. In 2003,
in accordance with criteria established by the Sarbanes-Oxley Act,
the Commission designated the FASB as the private sector accounting
standard setter for U.S. financial reporting. See Policy Statement:
Reaffirming the Status of the FASB as a Designated Private-Sector
Standard Setter, Release No. 33-8221 (Apr. 25, 2003) [68 FR 23333].
    \12\ The IASB, which is subject to oversight by the IFRS
Foundation, is responsible for IFRS. For further information, see
http://www.ifrs.org/About-us/Pages/IFRS-Foundation-and-IASB.aspx.
    \13\ References to IFRS throughout are to IFRS as issued by the
IASB.
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B. Issuance of the Request for Comment

    On March 1, 2017, the Commission published a request for comment on
possible changes to Industry Guide 3 (the ``Request for Comment'').\14\
The Request for Comment sought feedback on a number of areas,
including:
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    \14\ See Request for Comment on Possible Changes to Industry
Guide 3 (Statistical Disclosures by Bank Holding Companies); Release
No. 33-10321 (Mar. 1, 2017) [82 FR 12757].
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     Whether, and in which respects, the specific quantitative
and qualitative disclosures called for by Guide 3 should be modified,
including elimination due to overlapping disclosure requirements in
U.S. GAAP, IFRS, or other regulatory disclosure regimes;
     The types of information about registrants in the
financial services industry that investors find important and the
degree to which other disclosure regimes, such as those instituted by
U.S. banking agencies, may be used by investors;
     Whether Guide 3 disclosures should be applicable to
registrants other than BHCs; and
     Whether the reporting periods for Guide 3 disclosures
should be modified.
    In response to the Request for Comment, commenters expressed a
range of views. Most commenters expressed support for an update to
Guide 3.\15\ Many of these commenters stated that Guide 3 disclosures
that overlap with Commission rules, U.S. GAAP, and IFRS should be
eliminated.\16\ Some commenters stated there are overlapping
disclosures contained in the U.S. banking agencies public regulatory
reports.\17\ However, one commenter noted the U.S. banking agencies
information may be of limited use to investors given the volume and
level of detail of it.\18\ Furthermore, several commenters noted that
the primary purpose of U.S. banking agencies reporting is different
from the Commission's disclosure objectives.\19\ Several commenters
called for the Guide 3 disclosures to be less prescriptive and more
principles-based.\20\
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    \15\ See letters from American Bankers Association (``ABA'')
(June 28, 2017); American Express Company (``AmEx'') (July 7, 2017);
BDO USA LLP (``BDO'') (May 4, 2017); Berry Dunn McNeil & Parker LLC
(``BerryDunn'') (July 6, 2017); Center for American Progress
(``CAP'') (July 7, 2017); Center for Audit Quality (``CAQ'') (May 8,
2017); Canadian Bankers Association (``CBA'') (June 2, 2017);
Clearing House Association L.L.C., Securities Industry and Financial
Markets Association (``CH/SIFMA'') (June 29, 2017); Crowe Horwath
LLP (``Crowe'') (July 6, 2017); Deloitte & Touche (``Deloitte'')
(June 1, 2017); Ernst & Young LLP (``EY'') (May 24, 2017);
International Bancshares Corporation (``IBC'') (July 7, 2017);
Independent Community Bankers of America (``ICBA'') (May 8, 2017);
KPMG LLP (``KPMG'') (July 7, 2017); PNC Financial Services Group
Inc. (``PNC'') (July 6, 2017); Public Citizen (July 7, 2017); RSM US
LLP (``RSM'') (April 25, 2017); PricewaterhouseCoopers LLP (``PwC'')
(June 28, 2017); Sumitomo Mitsui Financial Group, Inc. (submitted by
Davis Polk & Wardwell LLP) (``SMFG'') (June 30, 2017); and XBRL US
(``XBRL US'') (July 7, 2017).
    \16\ See letters from ABA; AmEx; BDO; BerryDunn; CAQ; CBA; CH/
SIFMA; Crowe; Deloitte; EY; IBC; ICBA; KPMG; Mizuho Financial Group
Inc. (``MFG'') (submitted by Simpson Thacher & Bartlett) (July 7,
2017); Mitsubishi UFJ Financial Group (``MUFG'') (submitted by Paul
Weiss) (July 7, 2017); PNC; PwC; and RSM.
    \17\ See letters from ABA; Amex; CH/SIFMA; Deloitte; IBC; KPMG;
and PNC.
    \18\ See letter from CH/SIFMA.
    \19\ See letters from ABA; Amex; CAQ; CH/SIFMA; Crowe; Deloitte;
EY; PwC; and RSM.
    \20\ See letters from ABA; AmEx; BDO; CAQ; Crowe; Deloitte; EY;
KPMG; and PNC.
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    A few commenters recommended that we consider addressing items such
as (1) market risk and derivatives disclosures, (2) regulatory capital
and other information currently required to be reported to U.S. banking
agencies, (3) implementation and compliance with the Volcker Rule,\21\
and (4) merchant banking and commercial assets information.\22\ Some of
these items affect a broader population of registrants than those
addressed in this release and are activities for which Commission
rules, U.S. GAAP, or IFRS already require detailed disclosures, such as
derivatives. In addition, some of the recommended disclosures would
likely give rise to confidentiality concerns related to confidential
supervisory information \23\ under the federal banking regulations.\24\
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    \21\ See Prohibitions and Restrictions on Proprietary Trading
and Certain Interests In, and Relationships With, Hedge Funds and
Private Equity Funds; Release No. BHCA-1 (Dec. 10, 2013) [79 FR
5535], which is commonly referred to as the Volcker Rule. The
Volcker Rule is intended to prohibit banks from engaging in
proprietary trading, which involves the bank using its funds to make
short term trades in securities, derivatives, or commodity futures.
    \22\ See letters from CAP; Public Citizen; Ethics Metrics, LLC
(``EM'') (May 8, 2017); and RSM.
    \23\ See 12 CFR 261.20.
    \24\ The U.S. banking agencies have rules that address the
disclosure of confidential supervisory information. Except in very
limited circumstances, financial institutions are prohibited by law
from disclosing nonpublic supervisory information to nonrelated
third parties without written permission from the appropriate U.S.
banking agency.

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    In developing our proposal, we considered the above
recommendations, as well as the other comments received in response to
the Request for Comment. Although the Request for Comment asked for
feedback on a number of areas, in this release we focus on commenter
feedback relevant to our proposals. We welcome additional feedback and
encourage interested parties to submit comments on any or all aspects
of the proposed amendments. When commenting, it would be most helpful
if you include the reasoning behind your position or recommendation.

II. Proposed New Subpart 1400 of Regulation S-K

A. Codification

    In the Request for Comment, the Commission sought input on whether
any of the Guide 3 disclosures should be codified as Commission
rules.\25\ Some commenters recommended codifying these disclosures,\26\
while others recommended that they not be codified.\27\ Most of the
latter commenters cited the ease of updating as the reason for not
codifying the disclosures.\28\ One commenter further stated that
codification would not enhance adherence by registrants and that
retaining Guide 3 as guidance would continue to allow registrants
flexibility in their approach to disclosure.\29\
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    \25\ In 1996, the Commission's Task Force on Disclosure
Simplification recommended relocating the industry guides, including
Guide 3, into Regulation S-K. See Report of the Task Force on
Disclosure Simplification (Mar. 5, 1996), available at http://www.sec.gov/news/studies/smpl.htm. Currently, Instruction 13 to
Regulation S-K Item 303(a) [17 CFR 229.303(a)] directs the attention
of bank holding companies to the information called for by Guide 3.
Additionally, an Instruction to Item 4 of Form 20-F indicates that
the information specified in any industry guide that applies to the
registrant should be furnished, and Item 7(c) of Form 1-A states
that the disclosure guidelines in all Securities Act Industry Guides
must be followed, and to the extent the industry guides are codified
into Regulation S-K, the Regulation S-K industry disclosure items
must be followed. We propose to amend Item 4 of Form 20-F to refer
to proposed Items 1400 through 1406 of Regulation S-K.
    \26\ See letters from Crowe; Deloitte; and EY.
    \27\ See letters from ABA; AmEx; CBA; and CH/SIFMA.
    \28\ See letters from ABA; AmEx; and CH/SIFMA.
    \29\ See letter from CH/SIFMA.
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    We propose updating and codifying certain Guide 3 disclosures in a
new Subpart 1400 of Regulation S-K.\30\ This is consistent with the
approach taken by the Commission when it has modernized other Industry
Guides.\31\ This proposed approach would mitigate uncertainty about
when these disclosures must be included in Commission filings and
enhance comparability across banking registrants, both foreign and
domestic. Furthermore, the process to update an Industry Guide is the
same as amendments to disclosure requirements. While there may be a
decrease in flexibility driven by codification of the proposed rules
into Regulation S-K, we believe this reduced flexibility is outweighed
by the benefits of certainty about whether the disclosures are
required. We also believe codification would streamline compliance by
including these disclosures in Regulation S-K along with other non-
financial statement disclosure requirements.
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    \30\ The Industry Guides, or Guide 3 specifically, are
referenced in instructions to Forms 20-F and 1-A, as well as in
instructions to Items 303 and 404 of Regulation S-K. We have
proposed to replace these references, as applicable, with a
reference to the proposed Subpart 1400 of Regulation S-K. We also
propose to delete the reference to potential problem loans in Item
III.C.1 and 2 of Guide 3 and Instruction 4(c) of Item 404 of
Regulation S-K because we are not proposing to codify these
disclosures. See Section II.G for further discussion.
    \31\ For example, Industry Guide 2 was revised and codified in
Subpart 1200 of Regulation S-K (17 CFR 229.1201 through 1208),
Modernization of Oil and Gas Reporting, Release No. 33-8995 [74 FR
2157]. The Commission also recently consolidated the property
disclosure requirements for mining registrants in a new Subpart 1300
of Regulation S-K, Modernization of Property Disclosures for Mining
Registrants, Release No. 33-10570 (October 31, 2018) [83 FR 66344].
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    Request for Comment:
    1. Should we codify the Guide 3 disclosures in new subpart 1400 of
Regulation S-K, generally as proposed? Should some disclosures remain
in Guide 3? If so, which ones?

B. Proposed Scope

i. Background
    By its terms, Guide 3 applies to BHCs. However, the disclosures
called for by Guide 3 are also provided by other registrants with
material lending and deposit activities, including savings and loan
holding companies.\32\ In the Request for Comment, the Commission
acknowledged that BHCs today conduct a wider array of activities than
at the time of Guide's publication.\33\ Moreover, a wider range of
companies, such as insurance companies, online marketplace lenders,\34\
and other financial technology companies \35\ engage in some of the
activities addressed by the Guide 3 disclosure areas. However, these
companies normally do not engage in deposit-taking activities and
therefore do not provide Guide 3 disclosures. Based on these
observations, the Commission asked whether Guide 3 should employ an
activity-based scope, rather than a scope based on the type of
registrant. For example, the Commission asked whether the Guide 3
investment disclosures should be extended to other registrants, such as
those engaged in the financial services industry, regardless of whether
the registrant is a BHC or has material lending and deposit-taking
activities. The Commission also asked whether Guide 3 should employ a
principles-based approach, instead of using bright-line percentages or
dollar amount thresholds to trigger disclosure.
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    \32\ Many registrants refer to Staff Accounting Bulletin Topic
11:K--Application of Article 9 and Guide 3 (``SAB 11:K''), which
states that ``[t]he SEC staff believes [Guide 3 information] would
be material to a description of business of [non-BHC] registrants
with material lending and deposit activities . . .'' The Industry
Guides and SAB 11:K are not rules, regulations or statements of the
Commission. If the proposed rule is adopted, the staff intends to
rescind SAB 11:K.
    \33\ For example, some BHCs engage in activities involving asset
management, investment management, physical commodities, insurance,
and broker-dealer activities.
    \34\ Online marketplace lending is a method of debt financing,
generally through loans, that does not use a traditional financial
institution as an intermediary.
    \35\ Financial technology companies develop or provide
technological innovation in financial services. For example, a
financial technology company may use computer programs and other
technology to support or enable banking and financial services
activities.
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ii. Comments on Scope
    Several commenters stated that the applicability of Guide 3
disclosures to non-BHC registrants should be clarified.\36\ For
example, a registrant with material lending or deposit-taking
activities, but not both, may be uncertain about whether, and if so
which, Guide 3 disclosures it should provide. Furthermore, uncertainty
may exist about when investment, short-term borrowings, or return on
equity and asset disclosures should be provided because those
disclosures do not necessarily correspond to a ``material lending and
deposit activity'' threshold. One commenter noted that this uncertainty
could impede capital formation, because a registrant may incur costs to
prepare Guide 3 disclosures that are not required.\37\ One commenter
stated that Guide 3 should continue to apply to BHCs and other
registrants with material lending and deposit activities as this
provides useful information to investors.\38\ Another commenter stated
that Guide 3

disclosures should apply to non-BHC registrants that have significant
operations in which credit is provided.\39\ Several commenters
recommended an activity-based approach for Guide 3 disclosures,\40\ and
some of them recommended that it be specific to the material operations
of the registrant.\41\ Another commenter stated that an activity-based
approach could be based on numerical thresholds, such as the percentage
of a registrant's revenues derived from interest or dividends.\42\
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    \36\ See letters from CAQ; Crowe; Deloitte; EY; KPMG; and PwC.
    \37\ See letter from Crowe.
    \38\ See letter from CH/SIFMA.
    \39\ See letter from ABA.
    \40\ See letters from BDO; CAQ; CH/SIFMA; Deloitte; EY; KPMG;
and RSM.
    \41\ See letters from CAQ; EY; and KPMG.
    \42\ See letter from RSM.
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iii. Proposed Scope
    We are proposing that the proposed disclosure requirements continue
to apply to BHCs, as well as include most of the registrants that under
existing practice provide the disclosures called for by Guide 3.\43\
Proposed Item 1401 of Regulation S-K would apply to banks, BHCs,
savings and loan associations, and savings and loan holding companies
(together, ``bank and savings and loan registrants''). Most commenters
focused on the need to clarify the existing practice of providing Guide
3 disclosures when there are material lending and deposit-taking
activities. We believe identifying and codifying the types of
registrants within the scope of the proposed rules would provide this
clarification. We also believe this scope would capture the majority of
registrants that predominantly engage in the activities covered by
existing Guide 3 and for which these activities are material.\44\ We do
not believe there is a large population of non-banking registrants that
are providing Guide 3 disclosure today that only engage in one or a few
of the activities addressed by its disclosure areas, e.g., lending and
deposit-taking. Furthermore, we believe registrants should be able to
easily ascertain whether they are a bank or savings and loan
registrant, reducing confusion regarding the applicability of the
disclosures to non-BHCs.
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    \43\ See supra note 32.
    \44\ There are only four registrants that have loans and bank
deposits on their balance sheet, but are not within the proposed
scope. See Table 1: Registrants Currently Applying Guide 3 in the
Economic Analysis.
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    We are not proposing to expand the scope to include other
registrants, such as insurance companies, online marketplace lenders or
other financial technology companies. While the proposed disclosures
may be relevant to other registrants in the financial services
industry, commenters provided limited feedback on the types of
registrants, other than BHCs, that the Guide 3 disclosures would be
applicable to and whether it would be material under an activities-
based approach. We believe additional feedback on how investors of
registrants outside of the proposed scope would use the proposed
disclosures would be valuable. Further, we would like to understand
whether these other registrants are providing similar information in a
different format. We encourage interested parties, including those
outside of the banking industry, to provide feedback on the proposed
disclosures as they relate to registrants outside of the proposed
scope.
    Request for Comment:
    2. Is the proposed scope of the proposed rules sufficiently clear?
If not, how should we revise the scope to make it clearer? Should the
proposed rules specifically include banks, savings and loan
associations, and savings and loan holding companies, as proposed? If
not, why not?
    3. Are there other types of registrants that should be included?
For example, should we expand the scope of the proposed rules to
include credit unions or all financial services registrants with
material operations in any of the activities covered by the proposed
rules? What are the other types of registrants that have material
operations in any of the activities covered by the proposed rules?
Would expanding the scope in this way elicit information material to an
investment decision or are these registrants providing similar
information in a different format? Would it enhance comparability? Are
there particular burdens that financial services registrants, including
domestic and foreign registrants, other than those within the proposed
scope, would face in providing the disclosures? If so, what are the
burdens and would these burdens outweigh the benefits of the
disclosures? Are there ways to modify the proposal to help alleviate
the burdens of providing the disclosures for these registrants?
    4. If we expand the scope to include all financial services
registrants, how should we define a financial services registrant for
this purpose? For example, should we define a financial services
registrant to include entities that fall within the scope of ASC 942
Financial Services--Depository and Lending under U.S. GAAP? \45\ Or
should we define a financial services registrant as one that directly,
or indirectly through its subsidiaries, engages primarily in providing
financial services, including banking, investment, asset management, or
other financial services? If so, would any of the following types of
financial registrants be included in the definition: banks and bank
holding companies, savings associations and savings and loan
association holding companies, insurance companies, broker dealers,
finance companies, foreign financial institutions, mortgage companies,
online marketplace lenders, real estate investment trusts (``REITs''),
asset managers, investment advisers, or government-sponsored
enterprises? If the scope was expanded to include all financial
services registrants, are there types of registrants, such as business
development companies, that should be excluded?
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    \45\ ASC 942 provides incremental industry-specific guidance to
the entities within its scope. The guidance in the Financial
Services--Depositary and Lending topic applies to the following
entities: (a) Finance companies, including finance company
subsidiaries, (b) depositary institutions insured by either (1) the
FDIC's Deposit Insurance Fund, or (2) the National Credit Union
Administration's National Credit Union Share Insurance Fund, (c)
bank holding companies, (d) savings and loan association holding
companies, (e) branches and agencies of foreign banks regulated by
U.S. federal banking regulatory agencies, (f) state-chartered banks,
credit unions, and savings institutions that are not federally
insured, (g) foreign financial institutions whose financial
statements are purported to be prepared in conformity with
accounting principles generally accepted in the United States, (h)
mortgage companies, and (i) corporate credit unions.
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    5. If the scope included all financial services registrants, should
we require disclosure only for the activities that are material to the
business or financial statements of a registrant, or should disclosure
be required for each of the areas covered by the proposed rules? Would
a bright-line threshold work better for determining when these
disclosures should be provided? If so, what bright-line threshold would
be appropriate?
    6. Should we consider an activity-based standard, such as one that
captures material lending and deposit-taking activity, irrespective of
registrant type? Should we consider a broader standard that would
capture material lending or deposit-taking activity? What other
activities could serve as the basis for such a standard? What
additional types of registrants would be captured by an activity-based
standard?
    7. Are there registrants currently providing the Guide 3
disclosures that would not provide disclosures based on the proposed
scope? If so, what types of registrants and which of the disclosures
would they no longer provide? Would this change result in the loss of
information material to an investment decision related to those
registrants?

C. Proposed Applicability to Domestic Registrants and Foreign
Registrants

i. Background
    General Instruction 1 to Guide 3 states that the disclosures apply
to the description of business portions of those registration
statements and other specified filings for which financial statements
are required. General Instruction 6 to Guide 3 indicates that the
disclosures also apply to foreign registrants to the extent the
information is available or can be compiled without unwarranted or
undue burden and expense. Instructions to Item 4 of Form 20-F also
indicate that the information specified in any industry guide that
applies to the registrant should be furnished.\46\ The staff has
observed that bank and savings and loan registrants that are foreign
registrants, including foreign private issuers, typically provide the
Guide 3 disclosures.
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    \46\ Form 40-F [17 CFR 249.240f] does not have a similar
requirement, but the staff has observed that Canadian foreign
private issuers that are financial institutions typically provide
Guide 3 disclosures in their Form 40-F filings.
     Foreign private issuers are a subset of foreign registrants,
and include any foreign issuer other than a foreign government,
except for an issuer that has more than 50% of its outstanding
voting securities held of record by U.S. residents and any of the
following: A majority of its officers or directors are citizens or
residents of the United States; more than 50% of its assets are
located in the United States; or its business is principally
administered in the United States. See Rule 405 of Regulation C [17
CFR 230.405] and Exchange Act Rule 3b-4(c) [17 CFR 240.3b-4(c)].
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    In the Request for Comment, the Commission asked whether these
foreign registrants should provide the Guide 3 disclosures, whether
IFRS disclosures provide the same or similar information as those
called for by Guide 3, whether there are concepts or disclosures in
Guide 3 that are not recognized under or contradict IFRS, and whether
the unwarranted or undue burden or expense accommodation for foreign
registrants was still necessary.
ii. Comments on Applicability to Domestic Registrants and Foreign
Registrants
    One commenter stated that Guide 3 should not apply to foreign
banking registrants.\47\ This commenter, along with several other
commenters,\48\ stated that foreign registrants face challenges in
providing certain Guide 3 disclosures because they are based on U.S.
GAAP or U.S. banking concepts that do not exist under IFRS.\49\ Some
commenters stated that the disclosures called for by Guide 3 should be
aligned with the measurement and disclosure principles in IFRS, or
provide more flexibility in accommodating accounting differences
between U.S. GAAP and IFRS.\50\ These commenters recommended, at a
minimum, that foreign private issuers that apply IFRS be permitted to
provide disclosures that address the objectives of the Guide 3
disclosure in a manner consistent with IFRS principles.\51\
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    \47\ See letter from CH/SIFMA.
    \48\ See letters from CAQ; CBA; Deloitte; EY; KPMG; SMFG; and
PwC.
    \49\ In 2008 the Commission began accepting financial statements
of foreign private issuers prepared in accordance with IFRS as
issued by the IASB without reconciliation to U.S. GAAP. See Item
17(c) of Form 20-F and Acceptance from Foreign Private Issuers of
Financial Statements Prepared in Accordance with International
Financial Reporting Standards Without Reconciliation to U.S. GAAP,
Release No. 33-8879 (Dec. 21, 2007) [73 FR 985].
    \50\ See letters from CAQ; CBA; EY; and KPMG.
    \51\ The commenters that opposed applying Guide 3 to foreign
registrants also recommended this approach if foreign private
issuers continue to be scoped into the disclosures. See letter from
CH/SIFMA.
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    Two commenters addressed circumstances where information called for
by Guide 3 is unavailable and cannot be compiled without unwarranted or
undue burden or expense \52\ and recommended the staff continue to
evaluate requests for disclosure accommodations.\53\ For example, one
of these commenters stated that, in some situations, the staff has not
objected to a foreign private issuer providing information that is
different from what a domestic registrant would provide under Guide 3
as long as it achieves the same objective as the information called for
by Guide 3.\54\ Another commenter stated that corresponding home
country standards provide adequate protection to investors, and noted
that the act of converting existing financial reporting systems into
systems that would generate the information to provide the exact
disclosures called for by Guide 3 would result in significant
costs.\55\
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    \52\ General Instruction 6 to Guide 3 states that it should be
brought to the staff's attention if Guide 3 information is
unavailable to foreign registrants and cannot be compiled without
undue burden or expense. The instruction further states that in
evaluating the reasonableness of assertions by registrants that the
compilation of requested information, such as historical data or
daily averages, would involve an unwarranted or undue burden or
expense, the staff takes into consideration, among other factors,
the size of the registrant, the estimated costs of compiling the
data, the electronic data processing capacity of the registrant, and
efforts in process to obtain the information in future periods.
    \53\ See letters from SMFG and PwC.
    \54\ See letter from PwC.
    \55\ See letter from SMFG.
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iii. Proposed Rule--Applicability to Domestic Registrants and Foreign
Registrants
    Our proposed rules would apply to both domestic registrants and
foreign registrants. We recognize that there are significant
differences between U.S. GAAP and IFRS in some of the items called for
by Guide 3, such as the measurement of credit losses and disclosures of
financial instruments, among other areas.\56\ As a result, the proposed
rules would provide flexibility in identifying specific categories and
classes of instruments that should be disclosed. In several instances,
the proposed rules specifically link the disclosure requirements to the
categories or classes of financial instruments disclosed in the
registrant's U.S. GAAP or IFRS financial statements. Furthermore, the
proposed rules explicitly exempt foreign private issuers applying IFRS
(``IFRS registrants'') from certain of the disclosure requirements that
are not applicable under IFRS.\57\ We believe these elements of the
proposed rules substantially address the challenges foreign registrants
may face in providing the required disclosures. We do not believe this
flexibility for IFRS registrants will significantly change the level of
information disclosed by these registrants because Guide 3 currently
provides latitude in the categories used for certain of its disclosures
and IFRS registrants generally do not provide Guide 3 disclosures that
are not applicable under IFRS.
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    \56\ For example, currently under U.S. GAAP (ASC 310-10-35-4),
impairment on a loan is recognized when it is probable that a loss
has been incurred, while IFRS 9, effective January 1, 2018 for
calendar year companies, requires a 12-month expected credit loss
measurement unless there has been a significant increase in credit
risk, in which case it is a lifetime expected credit loss
measurement. Differences will continue to exist for credit loss
measurement between U.S. GAAP and IFRS subsequent to the adoption of
Accounting Standards Update (``ASU'') 2016-13- Financial
Instruments--Credit Losses (Topic 326) (``New Credit Loss
Standard''). When effective, the New Credit Loss Standard will
replace the current U.S. GAAP incurred loss methodology with a
methodology that reflects expected credit losses over the entire
contractual terms of the financial instruments. This differs from
the 12-month expected credit loss measurement methodology that may
be applicable in IFRS 9. Additionally, U.S. GAAP has recognition and
disclosure requirements related to troubled debt restructurings
(TDRs) (ASC 310-40) and nonaccrual loans (ASC 310-10-50-6), but
neither of these concepts exists in IFRS.
    \57\ For example, there is not a concept of nonaccrual loans in
IFRS.
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    All registrants, not just foreign registrants, can avail themselves
of relief from providing information that is ``unknown and not
reasonably available to the registrant'' under 17 CFR 230.409
(``Securities Act Rule 409'') and 17 CFR 240.12b-21 (``Exchange Act
Rule 12b-21'').\58\ These rules also consider

whether obtaining the information would involve ``unreasonable effort
or expense,'' which we believe is similar to the ``unwarranted or undue
burden or expense'' threshold described in General Instruction 6 to
Guide 3. Given that the proposed rules do not change the availability
of Securities Act Rule 409 and Exchange Act Rule 12b-21 to foreign
registrants, and because we believe the purpose of the thresholds
overlap, we propose not to codify the Guide 3 accommodation for undue
burden or expense.\59\
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    \58\ Securities Act Rule 409 and Exchange Act Rule 12b-21 state
that information required need be given only insofar as it is known
or reasonably available to the registrant. If any required
information is unknown and not reasonably available to the
registrant, either because the obtaining thereof would involve
unreasonable effort or expense, or because it rests peculiarly
within the knowledge of another person not affiliated with the
registrant, the information may be omitted. The rule provides two
additional conditions. The first is that the registrant must give
such information on the subject that it possesses or can acquire
without unreasonable effort or expense, together with the sources of
that information. The second is that the registrant must include a
statement either showing that unreasonable effort or expense would
be involved or indicating the absence of any affiliation with the
person within whose knowledge the information rests and stating the
result of a request made to such person for the information.
    \59\ See supra note 52.
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    Request for Comment:
    8. Should foreign registrants be subject to the proposed rules?
    9. Should we, as proposed, not codify the Guide 3 accommodation for
undue burden or expense? For which aspects of the proposed rules would
foreign registrants need to rely on this accommodation that would not
be covered by Securities Act Rule 409 and Exchange Act Rule 12b-21?
Would foreign registrants still seek to discuss an accommodation or
alternative presentation with the staff if this provision is not
codified?
    10. Are there particular challenges or costs that foreign
registrants would face in complying with the proposed rules as compared
to domestic registrants? If so, what are those challenges or costs and
are there ways the proposed rules could be modified to help alleviate
those challenges and costs?
    11. Would IFRS registrants face any different or additional
challenges in complying with the proposed rules relative to other
foreign private issuers applying a different comprehensive basis of
accounting along with an U.S. GAAP reconciliation? If so, what
challenges would they face and why? Are there other proposed disclosure
requirements that we should explicitly state do not apply to IFRS
registrants? If so, which ones?
    12. Would there be a reduction in material information being
disclosed due to the proposed flexibility for IFRS registrants, that
is, reference to IFRS categories and exemption from disclosures that
are not applicable under IFRS? Would the proposed flexibility for IFRS
registrants impact the material information needed to make investment
decisions and comparability of that information?

D. Reporting Periods

i. Background
    Guide 3 currently calls for five years of Loan Portfolio and
Summary of Loan Loss Experience data and three years of all other
information. However, Guide 3 states that registrants with less than
$200 million of assets or $10 million of net worth \60\ may present
only two years of the information. In addition, Guide 3 calls for
interim period disclosures when there is a material change in the
information presented or when a new trend has become evident.\61\ At
the time Guide 3 was issued, only two years of financial statements
were required as the current three year requirement was adopted in
1980.\62\ Commenters of the Guide 3 Release stated that five years of
historical information would be ``extremely difficult to obtain in some
cases, especially where detailed breakdowns of certain assets or
reserves are requested.'' \63\ Therefore, the Guide 3 Release also
stated that historical information need not be provided if it's not
presently available and cannot be compiled without unwarranted or undue
burden or expense.
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    \60\ Net worth is the amount by which assets exceeds liabilities
and thus represents the total stockholders' equity of a registrant.
    \61\ In practice, registrants that provide Guide 3 disclosures
generally provide interim disclosures.
    \62\ Amendments to Annual Report Form, Related Forms, Rules,
Regulations, and Guides; Integration of Securities Act Disclosure
Systems, Release No. 33-6231 (Sept. 25, 1980) [45 FR 63630].
    \63\ See supra note 3.
---------------------------------------------------------------------------

    In the Request for Comment, the Commission asked whether the
reporting periods called for by Guide 3 should be modified, and if so,
how; whether the reporting periods should match Regulation S-X
requirements for financial statements and scaled disclosure
requirements for smaller reporting companies (``SRCs'') \64\ and
emerging growth companies (``EGCs''); \65\ and whether the reporting
periods should explicitly include interim periods.
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    \64\ An SRC is a registrant that had a public float of less than
$250 million as of the last business day of its most recently
completed second fiscal quarter, or had annual revenues of less than
$100 million during its most recently completed fiscal year and no
public float or a public float of less than $700 million. See Rule
405 of Regulation C, Rule 12b-2 of the Exchange Act [17 CFR 240.12b-
2], and Item 10(f) of Regulation S-K [17 CFR 229.10(f)].
    \65\ An EGC is a registrant with less than $1.07 billion in
total annual gross revenues during its most recently completed
fiscal year. If a registrant qualifies as an EGC on the first day of
its fiscal year, it maintains that status until the earliest of: (1)
The last day of the fiscal year of the registrant during which it
has total annual gross revenues of $1.07 billion or more; (2) the
last day of its fiscal year following the fifth anniversary of the
first sale of its common equity securities pursuant to an effective
registration statement; (3) the date on which the registrant has,
during the previous 3-year period, issued more than $1.07 billion in
non-convertible debt; or (4) the date on which the registrant is
deemed to be a ``large accelerated filer'' (as defined in Exchange
Act Rule 12b-2). See Rule 405 of Regulation C under the Securities
Act and Rule 12b-2 of the Exchange Act.
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ii. Comments on Reporting Periods
    Many commenters recommended reducing the Guide 3 reporting
periods.\66\ Most of these commenters recommended using the reporting
periods for which financial statements are required.\67\ A number of
these commenters recommended reducing the reporting periods for certain
types of registrants,\68\ including those that provide scaled
disclosures under Commission rules.\69\ Several other commenters
recommended the Commission evaluate the relevance of reporting periods
that go beyond the financial statement periods.\70\
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    \66\ See letters from ABA; AmEx; CBA; CH/SIFMA; Crowe; EY; ICBA;
KPMG; and RSM.
    \67\ See letters from ABA; AmEx; CBA; CH/SIFMA; Crowe; EY; and
KPMG.
    \68\ Commenters recommended reduced reporting periods for SRCs,
EGCs, foreign private issuers and non-issuer targets in Form S-4 [17
CFR 239.25] registration statements.
    \69\ See letters from ABA; AmEx; Crowe; EY; and RSM.
    \70\ See letters from BDO; CAQ; Deloitte; and PwC.
---------------------------------------------------------------------------

    One commenter suggested that interim period disclosures should only
be called for when such disclosures are necessary to reflect material
changes since the issuance of the annual financial statements,\71\
while several others \72\ called for no interim period disclosures.
---------------------------------------------------------------------------

    \71\ See letter from CH/SIFMA.
    \72\ See letters from ABA; AmEx; CAQ; and CBA.
---------------------------------------------------------------------------

iii. Proposed Rule--Reporting Periods
    We propose defining the term ``reported period'' for purposes of
new Subpart 1400 of Regulation S-K to mean each annual period required
by Commission rules for a registrant's financial statements. Our rules
generally require two years of balance sheets and three years of income
statements,\73\ except that SRCs may present only two years of income
statements \74\ and EGCs may present only two years of financial
statements in initial public offerings of common equity securities.\75\
However,

with respect to the disclosure of credit ratios, the disclosure would
be required for each of the last five fiscal years in initial
registration statements by new bank and savings and loan registrants
and in offering statements by new bank and savings and loan issuers
under Regulation A (``Regulation A offering statements''). But, as
discussed further in Section II.H.iv, pursuant to Securities Act Rule
409 and Exchange Act Rule 12b-21 the information would only be required
insofar as it is known or reasonably available to the registrant.\76\
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    \73\ 17 CFR 210.3 (``Article 3 of Regulation S-X'').
    \74\ 17 CFR 210.8 (``Article 8 of Regulation S-X'').
    \75\ Securities Act Sec.  7(a)(2)(A), 15 U.S.C. 77g(a)(2)(A).
    \76\ See discussion of proposed credit ratios disclosure in
Section II.H.iv.
---------------------------------------------------------------------------

    We are proposing to reduce the required reporting periods to align
them with the relevant annual periods required by Commission rules for
a registrant's financial statements because we believe the proposed
disclosures are integrally related to the financial statements. We also
believe this change is consistent with other Commission rulemakings
over the years.\77\ There have been changes in technology since Guide 3
was issued, in particular the availability of past financial statements
and other disclosure made in filings on the Commission's Electronic
Data Gathering, Analysis, and Retrieval system (``EDGAR''). As such,
the historical information that would be omitted from the proposed
disclosures will generally be accessible through registrant's prior
filings on EDGAR. Furthermore, the reduction of repetitive disclosures,
reduction in costs and burdens to registrants and leveraging the use of
technology is in line with the 2015 Fixing America's Surface
Transportation Act (the ``FAST Act'') mandate \78\ and the related
rulemaking.\79\
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    \77\ For example, the Commission in 1980 eliminated the five-
year Summary of Operations disclosure and adopted the Management's
Discussion and Analysis (``MD&A'') disclosure requirement for the
periods covered by the financial statements. See supra note 62.
    \78\ Public Law 114-94, Sec. 72003, 129 Stat. 1312 (2015).
    \79\ FAST Act Modernization and Simplification of Regulation S-
K. Release No. 33-10618 (Mar. 20, 2019) [84 FR 12674].
---------------------------------------------------------------------------

    In addition, we propose to slightly modify the current interim
period instruction to clarify that the threshold to include an
additional interim period is based on whether there is a material
change in the information or the trend evidenced thereby, which is
consistent with the existing wording in General Instruction 3 and with
the discussion of the interim period disclosure threshold added to
Guide 3 in the 1980 Guide 3 Release.\80\ The proposed rules would not
codify the existing language in General Instruction 3(d) which states
that any additional interim period should be included if necessary to
keep the information from being misleading because we believe this
standard is encompassed within the general disclosure requirement in 17
CFR 230.408 (``Securities Act Rule 408'') and 17 CFR 240.12b-20
(``Exchange Act Rule 12b-20'').\81\
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    \80\ The 1980 Guide 3 Release reduced the frequency of interim
period Guide 3 disclosures by amending the reported period
definition to only call for information for a subsequent interim
period ``if a material change in the information presented or the
trend evidenced thereby has occurred.'' See 1980 Guide 3 Release,
supra note 8.
    \81\ Securities Act Rule 408 and Exchange Act Rule 12b-20
require disclosure of material information that may be necessary to
make the required statements, in light of the circumstances under
which they are made, not misleading.
---------------------------------------------------------------------------

    Request for Comment:
    13. Would the proposed reporting periods provide the number of
years of information an investor needs to analyze and comprehend
changes in trends? If not, what additional information would be
material for purposes of this analysis?
    14. Would the proposed change in reporting periods result in a loss
of information material to an investment decision? If so, please
explain how.
    15. Should the proposed rules require interim period disclosures
even if there is not a material change in the information or a trend
that has become evident? If so, why?
    16. Should we, as proposed, require five years of Credit Ratio
disclosures in initial registration statements or initial Regulation A
offering statements of bank and savings and loan registrants or should
we align the number of required years to those in other Commission
rules? Would a requirement to provide five years of Credit Ratio
disclosure impose undue burdens on registrants considering an initial
registration statement or initial Regulation A offering statement?
Should initial registration statements and initial Regulation A
offering statements include additional reporting period information for
any of the other proposed disclosures? If so, which ones, and for which
reporting periods?

E. Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rate and Interest Differential (Average Balance, Interest and
Yield/Rate Analysis and Rate/Volume Analysis)

i. Background
    For registrants with material net interest earnings, like bank and
savings and loan registrants, future earnings depend significantly on
present and future economic conditions, as changes in interest rates
can have a significant impact on these registrants' performance. As
such, investors and other users of registrant disclosures would benefit
from understanding the components of net interest earnings in order to
evaluate the impact of potential changes in interest rates on future
income of these registrants.
    Average balance sheets provide investors with an indication of the
balance sheet items that have been, and have the potential to be, most
affected by changes in interest rates as well as an indication of a
registrant's ability to move into or out of positions with favorable or
unfavorable risk/return characteristics.\82\ For example, an average
balance sheet may provide an indication of whether a registrant is
asset-sensitive or liability-sensitive.\83\ Liability-sensitive
registrants that rely heavily on short-term and other rate-sensitive
funding sources may experience significant increases in future funding
costs in a rising interest rate environment. Such registrants may be
unable to offset an increase in funding costs with a higher yield on
assets, which could result in an adverse impact on net interest
earnings.
---------------------------------------------------------------------------

    \82\ See Guide 3 Release, supra note 3.
    \83\ A registrant is asset sensitive when the impact of the
change in its assets is larger than the impact of the change in its
liabilities after a change in prevailing interest rates. An asset-
sensitive registrant's earnings or net income increases when
prevailing rates rise and declines when prevailing rates fall. A
liability-sensitive registrant has a long-term asset maturity and
repricing structure, relative to a shorter-term liability structure.
For example, liability-sensitive registrants may have significant
exposure to longer-term mortgage-related assets that reprice slowly
while relying heavily on rate-sensitive funding sources that reprice
more quickly.
---------------------------------------------------------------------------

    Item I.A of Guide 3 calls for balance sheets that show the average
daily balances \84\ of significant categories of assets and
liabilities, including all major categories of interest-earning assets
and interest-bearing liabilities.\85\ Item I.B of Guide 3 calls for the
disclosure of:
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    \84\ Guide 3 indicates that if the collection of data on a daily
average basis would involve unwarranted or undue burden or expense,
weekly or month end averages may be used, provided they are
representative of the operations of the registrant. The basis used
for presenting averages should be disclosed when not presented on a
daily average basis.
    \85\ Item I.A of Guide 3 indicates that major categories of
interest-earning assets should include loans, taxable investment
securities, non-taxable investment securities, interest-bearing
deposits in other banks, federal funds sold and securities purchased
with agreements to resell, other short-term investments and other
assets. Major categories of interest-bearing liabilities should
include savings deposits, other time deposits, short-term debt,
long-term debt and other liabilities.
---------------------------------------------------------------------------

     Interest earned or paid \86\ on the average amount of each
major category

of interest-earning asset and interest-bearing liability;
---------------------------------------------------------------------------

    \86\ The interest earned and interest paid reported on the
average balance sheet is based on the amounts reported in the
audited financial statements. Under U.S. GAAP and IFRS, reported
interest expense may differ from the cash paid for interest during
the period.
---------------------------------------------------------------------------

     Average yield for each major category of interest-earning
asset;
     Average rate paid for each major category of interest-
bearing liability;
     Average yield on all interest-earning assets;
     Average effective rate paid on all interest-bearing
liabilities; and
     Net yield on interest-earning assets.\87\
---------------------------------------------------------------------------

    \87\ Net yield is net interest earnings divided by total
interest-earning assets, with net interest earnings equaling the
difference between total interest earned and total interest paid.
---------------------------------------------------------------------------

    Item I.C of Guide 3 calls for a rate and volume analysis of
interest income and interest expense for the last two fiscal years.
This analysis is segregated by each major category of interest-earning
asset and interest-bearing liability into amounts attributable to:
     Changes in volume (changes in volume multiplied by the old
rate);
     Changes in rates (changes in rates multiplied by the old
volume); and
     Changes in rates and volume (changes in rates multiplied
by changes in volume).
    Lastly, Instruction 5 to Item I states that if disclosure regarding
foreign activities is required pursuant to General Instruction 7 of
Guide 3,\88\ the information required by paragraphs A, B and C of Item
I should be further segregated between domestic and foreign activities
for each significant category of assets and liabilities disclosed
pursuant to Item I.A, as well as disclosure of the percentage of total
assets and total liabilities attributable to foreign activities.
---------------------------------------------------------------------------

    \88\ Instruction 7 of Guide 3 clarifies that foreign data need
not be presented if the registrant is not required to make separate
disclosures concerning its foreign activities pursuant to the test
set forth in Rule 9-05 of Regulation S-X [17 CFR 210.9-05]. Rule 9-
05 requires disclosure when foreign activities, which include loans
and other revenue producing assets, exceed 10% of (1) assets, (2)
revenue, (3) income (loss) before income tax expense, or (4) net
income (loss).
---------------------------------------------------------------------------

    In the Request for Comment, the Commission asked whether the
existing disclosures called for by Guide 3 provide investors with
information material to an investment decision and whether the
disclosures would otherwise overlap with information required by
Commission rules, U.S. GAAP or IFRS.
ii. Comments on Distribution of Assets, Liabilities and Stockholders'
Equity; Interest Rate and Interest Differential (Average Balance,
Interest and Yield/Rate Analysis and Rate/Volume Analysis)
    Many commenters stated that the existing distribution of ``assets,
liabilities and stockholders' equity; interest rate and interest
differential'' disclosures called for by Item I of Guide 3 may be of
value to investors and others.\89\ Most of these commenters indicated
that Item I does not overlap in its entirety with Commission rules or
U.S. GAAP.\90\ However, one commenter stated that the presentation of
the change in interest income and expense called for by Item I.C is
duplicative of disclosures in MD&A and that the rate/volume analysis is
not representative of how financial institutions currently manage
interest rate risk and, thus, should be eliminated.\91\ Several
commenters stated that the disclosures called for by Items I.A and I.B
of Guide 3 are not specifically required by IFRS unless the period-end
balances are not representative of activity during the period,\92\ and
indicated that the disclosures called for by Item I.C are unique to
Guide 3.\93\
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    \89\ See letters from ABA; AmEx; CAQ; CH/SIFMA; Crowe; Deloitte;
EY; KPMG; PNC; PwC; and RSM.
    \90\ See letters from ABA; AmEx; CAQ; Crowe; Deloitte; EY; KPMG;
PNC; PwC; and RSM.
    \91\ See letter from CH/SIFMA.
    \92\ IFRS 7.35, IFRS 7.BC48 and IFRS 7.IG20 require this
additional disclosure if period-end information is unrepresentative
of a registrant's exposure during the period.
    \93\ See letters CAQ; EY; KPMG; and PwC.
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iii. Proposed Rule--Distribution of Assets, Liabilities and
Stockholders' Equity; Interest Rate and Interest Differential (Average
Balance, Interest and Yield/Rate Analysis and Rate/Volume Analysis)
    Proposed Item 1402 of Regulation S-K would codify all of the
disclosures currently called for by Item I of Guide 3 and further
disaggregate the categories of interest-earning assets and interest-
bearing liabilities required for disclosure. The new categories of
interest-earning assets represent the separation of federal funds \94\
sold and securities purchased with agreements to resell. The new
categories of interest-bearing liabilities represent the separation of
federal funds purchased and securities sold under agreements to
repurchase,\95\ and the disclosure of commercial paper.\96\ We believe
these more disaggregated categories would provide investors with
further detail of the drivers of the changes in net interest earnings
and the sources of funding.\97\ Furthermore, the proposed rules would
also codify the instructions related to foreign activities contained in
General Instruction 7 and Instruction 5 of Item I of Guide 3. We
believe the distinction between foreign and domestic activities
continues to provide relevant information regarding registrants'
activities and can provide insight into drivers of changes in business
focus as well as factors driving material changes in interest-earning
assets and interest-bearing liabilities, and the related interest
rates.
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    \94\ The federal funds rate is the interest rate that banks
charge one another for borrowing funds overnight. Federal funds are
excess funds that banks deposit with the Federal Reserve Bank for
lending to other banks.
    \95\ ASC 860-10 defines a repurchase agreement as an arrangement
under which a transferor (repo party) transfers a security to a
transferee (repo counterparty or reverse party) in exchange for cash
and concurrently agrees to reacquire the security at a future date
for an amount equal to the cash exchanged plus a stipulated interest
factor.
    \96\ Commercial paper consists of short-term promissory notes
issued primarily by corporations. Maturities range up to 270 days
but average about 30 days.
    \97\ Item VII of Guide 3 currently call for disclosures related
to short-term borrowings and requires disclosure for (1) Federal
funds purchased and securities sold under agreements to repurchase;
(2) commercial paper; and (3) other short-term borrowings, to the
extent the average balance of those categories meet or exceed 30
percent of stockholders' equity at the end of the period. As
discussed in Section III.B below, we are proposing not to codify all
of those disclosures. However, given that the proposed Item 1402 of
Regulation S-K would require disaggregated disclosure for federal
funds purchased, securities sold under agreements to repurchase, and
commercial paper, including the average amount outstanding and the
average effective rate paid on these liabilities, the proposed rule
effectively would codify the disclosure currently called for by Item
VII.3. We believe the average outstanding balance and yield of these
short-term borrowing categories could be material for investors.
---------------------------------------------------------------------------

    While some bank and savings and loan registrants manage interest
rate risk using more complex models or systems than a rates and volume
analysis, we believe this disclosure nevertheless provides material and
comparable information to investors about the drivers of the changes in
net interest earnings across registrants in a simple format.
Furthermore, we do not believe that all bank and savings and loan
registrants would provide these disclosures, in the same format and
level of detail, under the existing principles-based MD&A \98\
requirements to discuss whether material increases in net sales \99\
are due to increases in

prices,\100\ or increases in volume,\101\ or due to the introduction of
new products or services. We believe the proposed level of detail for
these disclosures strikes a balance between providing sufficient
information to help investors understand the changes in interest
earning income and expense from period to period, and excessive amount
of information that could make it difficult to understand the material
drivers. We are therefore proposing to codify these disclosures.
---------------------------------------------------------------------------

    \98\ See Item 303(a)(3)(iii) of Regulation S-K.
    \99\ For registrants preparing their income statement in
accordance with Rule 9-04 of Regulation S-X, the closest equivalent
to net sales is net interest income. Net interest income represents
interest revenue less interest expense. Net interest income is
typically the primary component of sales revenue for financial
institutions.
    \100\ For registrants preparing their income statement in
accordance with Rule 9-04 of Regulation S-X, the closest equivalent
to increases in prices is increases in interest rates.
    \101\ For registrants preparing their income statement in
accordance with Rule 9-04 of Regulation S-X, the closest equivalent
to increases in volume is increases in net interest earning assets
such as securities or loans.
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    Request for Comment:
    17. Should we codify, as proposed, all of the disclosures currently
called for by Item I of Guide 3? If not, which disclosures should not
be codified?
    18. Should we codify, as proposed, the rate and volume analysis
called for by Item I.C?
    19. Are the additional categories of interest-earning assets and
interest-bearing liabilities proposed for disclosure appropriate? Are
there other categories for which disclosure should be required?
    20. Should we codify, as proposed, General Instruction 7 of Guide 3
and General Instruction 5 of Item I regarding disclosure of foreign
activities? Is the threshold for disclosure of foreign activities
appropriate? If not, how should it be revised?

F. Investment Portfolio

i. Background
    The investment portfolio disclosures currently called for by Item
II of Guide 3 provide investors with information about the types of
investments a registrant holds, the earnings potential of those
investments, and their risk characteristics. Item II.A of Guide 3 calls
for disclosure of the book value \102\ of investments by specified
categories \103\ as of the end of each reported period. Item II.B calls
for a maturity analysis for each category of investment as of the end
of the latest reported period, as well as the weighted average yield
for each range of maturities.\104\ When the aggregate book value of
securities from a single issuer exceeds 10% of stockholders' equity as
of the end of the latest reported period, Item II.C calls for
disclosure of the name of the issuer and the aggregate book value and
aggregate market value of those securities.
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    \102\ At the time Guide 3 was issued, most securities were
accounted for at cost with the exception of certain marketable
securities, which were carried at the lower of aggregate cost or
market value. The FASB issued FASB Statement No. 115, Accounting for
Certain Investments in Debt and Equity Securities, an accounting
standard creating three types of investment securities categories
and the related accounting for each, in 1993.
    \103\ The specified categories are obligations of: (1) U.S.
Treasury and other U.S. Government agencies and corporations; (2)
States of the U.S and political subdivisions; and (3) other
securities including bonds, notes, debentures and stock of business
corporations, foreign governments and political subdivisions,
intergovernmental agencies and the Federal Reserve Bank.
    \104\ The ranges of maturities are securities due (1) in one
year or less, (2) between one and five years, (3) between five and
ten years, and (4) after ten years.
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    Subsequent to the last substantive revisions to Guide 3, the FASB
and IASB have issued accounting standards that require disclosures that
are similar to many of the investment portfolio disclosures called for
by Guide 3. For example, U.S. GAAP requires disclosure, by major
security type,\105\ of the amortized cost basis, aggregate fair value
and information about the contractual maturities \106\ as of the date
of the most recent balance sheet presented, among other disclosures,
for both held-to-maturity (``HTM'') and available-for-sale (``AFS'')
debt securities, which overlaps with the disclosures called for by
Items II.A and II.B.\107\ IFRS requires disclosure of the fair value
and carrying value of each class \108\ of a registrant's financial
instruments, but only requires a maturity analysis of financial
instruments held for managing liquidity risk if necessary for users to
evaluate the nature and extent of liquidity risk.\109\ Additionally,
both U.S. GAAP \110\ and IFRS \111\ require disclosure of significant
concentrations of credit risk, which we believe substantially overlaps
with the disclosure called for by Item II.C related to the issuer name
and aggregate book value and market value of securities exceeding 10%
of stockholders equity. Neither U.S. GAAP nor IFRS requires disclosure
of the weighted average yield information for each maturity category
called for by Item II.B.
---------------------------------------------------------------------------

    \105\ ASC 320-10-50-1B states that major security types should
be based on the nature and risks of the security and that an entity
should consider all of the following when considering whether
disclosure for a particular security type is necessary: (a) Shared
activity or business sector, (b) vintage, (c) geographic
concentration, (d) credit quality, and (e) economic characteristics.
Financial institutions, including banks, savings and loan
associations, savings banks, credit unions, finance companies and
insurance entities are required to include the nine securities
categories listed in ASC 942-320-50-2, although additional types may
also be necessary: (a) Equity securities, segregated by either (1)
industry type or (2) registrant size, or (3) investment objective;
(b) debt securities issued by U.S. Treasury and other U.S.
government corporations and agencies; (c) debt securities issued by
states of the United States and political subdivisions of the
states; (d) debt securities issued by foreign governments; (e)
corporate debt securities; (f) residential mortgage-backed
securities; (g) commercial mortgage-backed securities; (h)
collateralized debt obligations; and (i) other debt obligations.
    \106\ ASC 320-10-50-3 and ASC 320-10-50-5(f) both indicate that
maturity information may be combined in appropriate groupings. Those
paragraphs also both state that in complying with these
requirements, financial institutions (see paragraph ASC 942-320-50-
1) shall disclose the fair value and net carrying amount (if
different from fair value) of debt securities on the basis of at
least the following four maturity groupings: (a) Within one year,
(b) after one year through five years, (c) after five years through
ten years, and (d) after ten years.
    \107\ ASC 320-10-50-2 and ASC 320-10-50-5.
    \108\ IFRS 7.6 requires disclosures by classes of financing
instruments, which are defined as ``. . . classes that are
appropriate to the nature of the information disclosed and that take
into account the characteristics of those financial instruments.''
    \109\ IFRS 7.25 and IFRS 7.B11E.
    \110\ ASC 825-10-50-20 and 21 requires disclosure of significant
concentrations of credit risk arising from all financial
instruments, including information about the (shared) activity,
region, or economic characteristic that identifies the
concentration, the maximum amount of loss due to credit risk, that,
based on the gross fair value of the financial instrument, the
registrant would incur if the parties to the financial instruments
that make up the concentration failed completely to perform
according to the terms of the contracts and the collateral or other
security, information related to any collateral and policies
regarding master netting arrangements
    \111\ IFRS 7.34(a) requires disclosure of risks based on
information provided internally to management and IFRS 7.34(c)
requires disclosure of concentrations of risk if not apparent from
the other disclosure requirements. IFRS 7.B8 states that disclosure
of concentration of credit risk should include: (a) A description of
how management determines concentrations, (b) a description of the
shared characteristic that identifies each concentration (e.g.
counterparty, geographical area, currency or market), and, (c) the
amount of the risk exposure associated with all financial
instruments sharing that characteristic.
---------------------------------------------------------------------------

    In the Request for Comment, the Commission asked whether the
investment portfolio disclosures called for by Guide 3 provide
information material to an investment decision and whether Commission
rules, U.S. GAAP, or IFRS require the same or similar information.
ii. Comments on the Investment Portfolio
    Many commenters indicated that a substantial portion of the
investment portfolio disclosures called for by Guide 3 overlap with
Commission rules and U.S. GAAP.\112\ Most of these commenters stated
that the overlap

should be eliminated,\113\ while one indicated, given the substantial
overlap, that Guide 3 should be eliminated in its entirety.\114\
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    \112\ See letters from ABA; AmEx; BerryDunn; CAQ; CH/SIFMA;
Crowe; Deloitte; EY; KPMG; MFG; MUFG; PNC; and PwC.
    \113\ See letters from ABA; AmEx; BerryDunn; CAQ; CH/SIFMA;
Crowe; Deloitte; EY; KPMG; MUFG; and PwC.
    \114\ See letter from PNC.
---------------------------------------------------------------------------

    Many commenters noted that the book value of investments
disclosures called for by Item II.A of Guide 3 overlap with U.S.
GAAP.\115\ Most of these commenters also stated that the maturity
disclosure called for by Item II.B overlaps with U.S. GAAP.\116\ By
contrast, most of these commenters indicated that the weighted average
yield disclosure called for by Item II.B is not redundant with U.S.
GAAP requirements.\117\ Two of these commenters further stated that the
weighted average yield disclosure may be of value to investors and
others.\118\ Regarding the disclosures called for by Item III.C
relating to investments exceeding 10% of stockholders' equity, several
commenters characterized this disclosure as unique to Guide 3.\119\
However, one commenter \120\ said the disclosure is largely duplicative
of the U.S. GAAP significant concentrations of credit risk arising from
financial instruments disclosures.\121\ Lastly, a few commenters noted
that there is some overlap between the investment portfolio disclosures
called for by Guide 3 and IFRS disclosure requirements, and stated that
the overlap should be eliminated.\122\
---------------------------------------------------------------------------

    \115\ See letters from ABA; AmEx; BerryDunn; CAQ; CH/SIFMA; EY;
KPMG; MFG; MUFG; PNC; and PwC.
    \116\ See letters from ABA; AmEx; BerryDunn; CAQ; CH/SIFMA; EY;
KPMG; MFG; PNC; and PwC.
    \117\ See letters from ABA; AmEx; BerryDunn; CAQ; CH/SIFMA; EY;
KPMG; PNC; and PwC.
    \118\ See letters from ABA and AmEx.
    \119\ See letters from CAQ; EY; KPMG; PNC; and PwC.
    \120\ See letter from CH/SIFMA.
    \121\ See supra note 110.
    \122\ See letters from CAQ; EY; KPMG; and PwC.
---------------------------------------------------------------------------

iii. Proposed Rule--Investment Portfolio
    The proposed rules would not codify the following disclosures in
Item II: (a) Book value information; (b) the maturity analysis of book
value information; and (c) the disclosures related to investments
exceeding 10% of stockholders' equity. We are proposing not to codify
these disclosures because they substantially overlap with U.S. GAAP and
IFRS disclosure requirements. Therefore, the proposed rules should not
result in the loss of information material to an investment decision.
We also note that this proposal is generally consistent with the
Commission's recent efforts to streamline its disclosure requirements
when they overlap with reasonably similar U.S. GAAP or IFRS disclosure
requirements.\123\
---------------------------------------------------------------------------

    \123\ See Disclosure Update and Simplification, Release No. 33-
10532 (Aug. 17, 2018) [83 FR 50148].
---------------------------------------------------------------------------

    Proposed Item 1403 of Regulation S-K would codify the weighted
average yield disclosure for each range of maturities by category of
debt securities currently called for by Item II.B, with a change to the
categories presented. Specifically, the categories of debt securities
in the proposed rules would be the categories required to be disclosed
in the registrant's U.S. GAAP \124\ or IFRS \125\ financial statements.
The proposed rules would only apply to debt securities that are not
carried at fair value through earnings. Guide 3 calls for disclosures
about both debt and equity securities and does not specifically exclude
debt securities that are carried at fair value through earnings.\126\
We believe this change is appropriate given that maturity and yield
disclosures are not applicable to equity securities. Furthermore, we
believe the weighted average yield disclosure is most relevant for debt
securities that are not carried at fair value through earnings because
these debt securities are often held longer than debt securities
carried at fair value through the income statement (such as trading
securities),\127\ and thus the weighted average yield and maturity
information would appear to be more meaningful for these
securities.\128\ We believe the proposed weighted average yield
disclosure does not overlap with U.S. GAAP or IFRS requirements and
provides investors with information to better evaluate the performance
of the portfolio. Furthermore, revising the categories of debt
securities to conform to the categories presented in accordance with
U.S. GAAP or IFRS would enhance the consistency of the investment
disclosures in a registrant's filing and increase their usefulness to
investors. This also would ease the preparation burden on registrants
because they would no longer have to present separate or additional
categories between the Guide 3 disclosures and the financial
statements.
---------------------------------------------------------------------------

    \124\ See supra note 105.
    \125\ See supra note 108.
    \126\ Guide 3 was last amended in 1986 and at that time, most
investment securities were accounted for at cost, except for certain
marketable securities. As such, the Guide 3 investment disclosures
were applicable to most investment securities and thus it was
unnecessary to limit the disclosure by type or accounting model of
investment. SFAS 115 ``Accounting for Certain Investments and Debt
and Equity Securities'' was issued 1993 and created three categories
of investment securities: HTM, AFS, and trading securities. These
same categories exist in U.S. GAAP today (ASC 320-10-25-1). Of these
categories, only trading securities are carried at fair value
through earnings and thus would not be subject to the proposed rule.
However, debt securities classified as HTM and AFS would be subject
to the proposed rule. Additionally, U.S. GAAP (ASC 825-10-15-4)
allows registrants to elect to measure certain eligible items, e.g.,
investment securities, at fair value, with changes in fair value
recognized through earnings. Thus, where a registrant made this
election to measure debt securities at fair value through earnings,
those debt securities would also not be subject to the proposed
rule. For IFRS registrants, only debt securities that are
subsequently measured at amortized cost, or fair value through other
comprehensive income, would be subject to the proposed rule.
    \127\ ASC 320-10-25-1(a) states that if a security is acquired
with the intent of selling it within hours or days, the security
shall be classified as trading. However, at acquisition, an entity
is not precluded from classifying as trading a security it plans to
hold for a longer period.
    \128\ ASC 320-10-50 only requires information about the
contractual maturities of securities that are classified as either
HTM or AFS, and does not require similar disclosure for securities
classified as trading.
---------------------------------------------------------------------------

    Request for Comment:
    21. The proposed rules would not codify the investment portfolio
book value disclosures currently called for by Item II.A. Would this
result in the loss of information material to an investment decision
not readily available elsewhere in Commission filings? If so, what
material information would be lost and how should we codify it?
    22. The proposed rules would not codify the maturity analysis of
book value disclosures called for by Item II.B, but would codify the
weighted average yield for each range of maturities. Would this result
in the loss of information material to an investment decision not
readily available elsewhere in Commission filings? Would the more
principles-based IFRS maturity disclosure \129\ result in the loss of
material information about IFRS registrants, or would IFRS registrants
within the scope of the proposed rules continue to provide the maturity
analysis for debt securities absent a specific requirement? Are there
additional disclosures related to a maturity analysis that we should
codify to avoid the potential loss of information material to an
investment decision?
---------------------------------------------------------------------------

    \129\ IFRS 7.B11E requires a maturity analysis of financial
instruments that registrants hold for managing liquidity risk if
necessary for users to evaluate the nature and extent of liquidity
risk; whereas U.S. GAAP requires contractual maturities disclosure
for HTM and AFS debt securities without an ``if necessary'' concept.
---------------------------------------------------------------------------

    23. Should we codify, as proposed, the weighted average yield
disclosure for each range of maturities in Item II.B of Guide 3 for
debt securities not carried at fair value through earnings? Should the
proposed rules also require this disclosure for debt securities carried
at

fair value through earnings, including trading securities or debt
securities where the fair value option is elected? If so, how would
this information be used by investors?
    24. The proposed weighted average yield disclosure would only apply
to debt securities. Should this proposed rule require disclosures
related to equity securities? If so, what additional disclosures should
be required? Would this information be available without undue cost or
burden?
    25. Should the categories for the weighted average yield disclosure
in the proposed rules be conformed to those presented in the U.S. GAAP
or IFRS financial statements as proposed? Given that U.S. GAAP and IFRS
do not require the same categories to be disclosed,\130\ would the lack
of standardization of the categories disclosed among registrants result
in confusion for investors? If so, how should we revise the proposed
rules to avoid such confusion? For example, should we codify the Guide
3 investment categories?
---------------------------------------------------------------------------

    \130\ U.S. GAAP and IFRS have a principles-based approach for
determining the categories of investments to be disclosed. See supra
notes 105 and 108. Thus, both U.S. GAAP and IFRS registrants will
make judgments about the categories to be disclosed and there likely
will not be consistency amongst all registrants.
---------------------------------------------------------------------------

    26. The proposed rules would not codify disclosure of the name of
any issuer and aggregate book value and market value of the securities
of such issuer that exceeds 10% of stockholders' equity as called for
in Item II.C of Guide 3. Would this result in the loss of information
material to an investment decision in light of the fact that U.S. GAAP
\131\ and IFRS \132\ require reasonably similar disclosure about
significant concentrations of credit risk? Would the ``significant''
threshold in U.S. GAAP and IFRS likely result in the same or nearly the
same population of securities being disclosed as the current 10%
bright-line threshold in Item II.C. of Guide 3?
---------------------------------------------------------------------------

    \131\ See supra note 110.
    \132\ See supra note 111.
---------------------------------------------------------------------------

    27. Is there additional information material to an investment
decision related to investment securities that should be disclosed? If
so, what information should be disclosed and how would this information
be used by investors? Would there be a significant cost or burden to
registrants in providing this additional information?

G. Loan Portfolio

i. Background
    A registrant's loan portfolio may consist of various categories of
loans, including consumer loans, such as residential real estate,
credit card and auto loans, as well as commercial loans, such as
commercial real estate, lease financings, and wholesale loans. Loan
portfolio compositions differ considerably among registrants because
lending activities are influenced by many factors, including the type
of organization, management's objectives and philosophies about
diversification and credit risk management, the availability of funds,
credit demands, interest rate margins and regulations, among others.
Different types of loans have different characteristics. For example,
commercial loans tend to have shorter maturities than residential real
estate loans and are more likely to have balloon payments at maturity.
Further, the composition of a registrant's loan portfolio may vary
substantially over time due to factors such as changes in regulation or
management strategy. For example, if management expects interest rates
to rise, it may seek to increase the registrant's holdings of variable-
rate mortgages.
    The loan portfolio disclosures in Item III of Guide 3 provide
investors with information about the registrant's loan investment
policies and lending practices, including: (1) The types of lending in
which a registrant engages; (2) the nature of credit risk inherent in
the loan portfolio, including types of loans and portfolio maturity;
(3) indications of loan collectibility risks; and (4) portfolio
concentrations.
    Item III.A of Guide 3 calls for disclosure of the amount of loans
in specified categories \133\ as of the end of each period. Item III.B
calls for a maturity analysis \134\ for each category of loans as of
the end of the latest reported period, along with a separate
presentation of all loans due after one year with fixed interest rates
versus those with floating or adjustable interest rates.\135\ Item
III.C.1 calls for disclosure of the aggregate amount of domestic and
foreign \136\ loans in each of the following categories:
---------------------------------------------------------------------------

    \133\ The specified categories are, for domestic loans: (1)
Commercial, financial and agricultural, (2) real estate--
construction, (3) real estate--mortgage, (4) installment loans to
individuals, and (5) lease financing, and for foreign loans: (6)
governments and official institutions, (7) banks and other financial
institutions, (8) commercial and industrial, and (9) other. The
instructions to Item III.A indicate that registrants may present a
series of loan categories other than those specified if considered a
more appropriate presentation.
    \134\ The range of maturities are loans due (1) in one year or
less, (2) between one and five years, (3) between five and ten
years, and (4) after ten years. This information need not be
presented for mortgage real estate loans, installment loans to
individuals and lease financing. Foreign loan categories may be
aggregated.
    \135\ Instruction 3 to Item III.B states that determinations
should be based upon contract terms. However, such terms may vary
due to the registrant's ``rollover policy,'' in which case the
maturity should be revised as appropriate and the rollover policy
should be briefly discussed.
    \136\ See supra note 88.
---------------------------------------------------------------------------

     loans accounted for on a nonaccrual basis; \137\
---------------------------------------------------------------------------

    \137\ The term ``nonaccrual'' is not defined in U.S. GAAP or
Commission rules. U.S. banking agencies require their regulated
financial institutions to file publicly available Consolidated
Reports of Condition and Income (Call Reports). Call Report
instructions generally require an asset to be reported as nonaccrual
if: (1) It is maintained on a cash basis because of deterioration in
the financial condition of the borrower, (2) payment in full of
principal or interest is not expected, or (3) principal or interest
has been in default for a period of 90 days or more unless the asset
is both well secured and in the process of collection. Certain
loans, such as consumer loans and purchased credit-impaired loans,
are not placed on nonaccrual status as discussed in the nonaccrual
definitions section of Call Report Schedule RC-N-2. Guide 3 also
currently calls for and U.S. GAAP also requires disclosure of the
registrant's nonaccrual policy.
---------------------------------------------------------------------------

     loans accruing but contractually past due 90 days or more
as to principal or interest payments; and
     loans classified as troubled debt restructurings
(``TDRs'') \138\ that are not otherwise disclosed as being on
nonaccrual status or past due 90 days or more.\139\
---------------------------------------------------------------------------

    \138\ Under U.S. GAAP, a restructuring of a debt is a TDR if the
creditor, for economic or legal reasons related to the debtor's
financial difficulties, grants a concession to the debtor that it
would not otherwise consider. See ASC 310-40-15-5.
    \139\ Guide 3 originally called for disclosure of nonperforming
loans and a discussion of the risk elements associated with those
loans for which there were serious doubts as to the ability of the
borrowers to comply with the present loan payment terms. The current
Item III.C.1 disclosures reflect amendments made in 1980 and 1983 to
promote consistency with bank regulatory disclosure requirements and
comparability among registrants. See 1980 Guide 3 Release, supra
note 8; and 1983 Guide 3 Releases, supra note 8.
---------------------------------------------------------------------------

    Item III.C.2 calls for descriptions of the nature and extent of any
potential problem loans \140\ at the end of the most recent reported
period and the policy for placing loans on nonaccrual status. The
instructions to Item III.C.2 call for disclosure of the foregone
interest income and recognized interest income for nonaccrual loans and
TDRs during the period.
---------------------------------------------------------------------------

    \140\ Potential problem loans are loans not disclosed pursuant
to Item III.C.1, except where known information about possible
credit problems of borrowers (which are not related to transfer risk
inherent in cross-border lending activities) causes management to
have serious doubts as to the ability of the borrowers to comply
with the present loan repayment terms and which may result in
disclosure of the loans pursuant to Item III.C.1.
---------------------------------------------------------------------------

    If material amounts of the loans described above are outstanding to
borrowers in any foreign country, Guide 3 states that each country
should be identified and that the amounts

outstanding should be quantified.\141\ Item III.C.3 calls for
disclosure of the aggregate amount of cross-border outstandings \142\
to borrowers in each foreign country where they exceed 1% of total
assets.\143\ These disclosures should be provided by category of
foreign borrower specified by Item III.A. Where current conditions in a
foreign country give rise to liquidity problems that are expected to
have a material impact on the timely repayment of principal or interest
on the country's private or public sector debt, Guide 3 calls for:
---------------------------------------------------------------------------

    \141\ For purposes of determining the amount of outstandings to
be reported, loans made to or deposits placed with a branch of a
foreign bank located outside the foreign bank's home country should
be considered as loans to or deposits with the foreign bank.
    \142\ Cross-border outstandings are defined as loans (including
accrued interest), acceptances, interest-bearing deposits with other
banks, other interest-bearing investments and any other monetary
assets which are denominated in dollars or other nonlocal currency.
The foreign outstandings disclosure was added in 1983 to consolidate
all risk-related disclosure guidelines in one section of Guide 3 and
to emphasize the risks present in cross-border lending activities.
See 1983 Guide 3 Releases, supra note 8.
    \143\ For countries whose outstandings are between 0.75% and 1%
of total assets, the names of the countries and the aggregate amount
of outstandings attributable to them should be disclosed.
---------------------------------------------------------------------------

     A description of the nature and impact of the
developments;
     An analysis of the changes in aggregate outstandings to
borrowers in each country for the most recent reported period;
     Quantitative information about interest income and
interest collected during the most recent period; and
     Quantitative information about any outstandings that may
be subject to a restructuring.
    Item III.C.4 calls for disclosure as of the end of the most recent
reported period of any concentration of loans exceeding 10% of total
loans not otherwise disclosed as a category of loans pursuant to Item
III.A.\144\ Item III.D calls for disclosure as of the end of the most
recent reported period of the nature and amounts of any other interest-
bearing assets that would be disclosed under Item III.C.1 or III.C.2 if
those assets were loans.
---------------------------------------------------------------------------

    \144\ Loan concentrations are considered to exist when there are
amounts loaned to multiple borrowers engaged in similar activities
which would cause them to be similarly affected by economic or other
conditions. For example, loans may be concentrated in a specific
industry, such as the energy sector, and exceed the 10% threshold.
---------------------------------------------------------------------------

    Subsequent to the last substantive revisions to Guide 3, the FASB
and IASB have issued accounting standards that have resulted in
similar, and sometimes overlapping, loan disclosure. For example, U.S.
GAAP requires major categories of loans to be presented separately
either on the balance sheet or in the financial statement
footnotes,\145\ similar to the disclosure called for by Item III.A of
Guide 3. U.S. GAAP also requires disclosure, by class of financing
receivable,\146\ of nearly all of the same information related to loans
accounted for as nonaccrual and accruing loans contractually past due
90 days or more, as specified by Item III.C.1(a) and (b) and Item
III.C.3 of Guide 3.\147\ There are two main differences between the
disclosures called for by the Instructions to Item III.C.1 and U.S.
GAAP. The first is that U.S. GAAP does not require disclosure of the
amount of gross interest income that would have been recorded during
the period for the loans classified as nonaccrual or TDRs if they had
been current in accordance with their original terms and had been
outstanding throughout the period or since origination. The second
difference is that U.S. GAAP does not explicitly require disclosure
separately between domestic and foreign nonaccrual loans, accruing
loans contractually past due 90 days or more and TDRs. Furthermore,
U.S. GAAP requires information about TDRs, although there is a
difference between the U.S. GAAP disclosures and those called for by
Item III.C.1(c).\148\ Specifically, U.S. GAAP only requires disclosure
of TDRs occurring during each period that an income statement is
presented and does not provide a cumulative level of TDRs existing on
the balance sheet, similar to the disclosure called for by Item
III.C.1(c). However, U.S. GAAP requires additional TDR disclosures
beyond those called for by Guide 3.\149\
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    \145\ ASC 310-10-45-2 and ASC 310-10-50-3.
    \146\ U.S. GAAP uses the term ``financing receivable,'' and a
loan is considered a type of financing receivable. A class of
financing receivable is defined as a group of financing receivables
determined on the basis of all of the following: (a) Initial
measurement attribute (for example, amortized cost), (b) risk
characteristics of the financing receivable, and (c) a registrant's
method for monitoring and assessing credit risk.
    \147\ ASC 310-10-50-6 requires disclosure of the policy for
placing financing receivables on nonaccrual, as well as the policy
for resuming accrual of interest. ASC 310-10-50-7 requires
disclosure of nonaccrual loans and loans 90 days or more past due
and still accruing by class of financing receivable. ASC 310-10-50-
7A requires disclosure of an analysis of the age of the recorded
investment in financing receivables at the end of the reporting
period that are past due, as determined by the entity's policy. ASC
310-10-50-15 requires disclosure of impaired loans and of the
related amount of interest income that was recognized during the
time the loans were impaired.
    \148\ ASC 310-10-50-33 requires disclosure, by class of
financing receivable, of quantitative and qualitative information
about TDRs occurring during the period.
    \149\ ASC 310-10-50-33 requires disclosure, by class of
financing receivable, of qualitative and quantitative information
about how the financing receivables were modified, the financial
effects of the modifications, and by portfolio segment, qualitative
information about how such modifications were factored into the
determination of the allowance for credit losses. ASC 310-10-50-34
requires, by class of financing receivable, qualitative and
quantitative information about TDRs that were modified within the
previous 12 months and for which there was a payment default
occurring during the period, including the types of financing
receivables that defaulted, the amount of financing receivables that
defaulted, and by portfolio segment, qualitative information about
how such defaults are factored into the determination of the
allowance for credit losses.
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    In addition, while certain of the disclosures currently called for
by Guide 3 are not completely duplicative of U.S. GAAP requirements, we
believe that in certain cases U.S. GAAP requires reasonably similar
disclosures. For example, while there is not a specific disclosure
requirement in U.S. GAAP analogous to the potential problem loans
disclosure called for by Item III.C.2, U.S. GAAP requires disclosure of
credit quality indicators \150\ by class of financing receivable.\151\
Additionally, Item 303 of Regulation S- K\152\ requires a discussion of
known trends and uncertainties in MD&A that may help supplement the
U.S. GAAP disclosures.

When considered together, we believe these U.S. GAAP and MD&A
disclosures allow an investor to evaluate loans where management has
doubts about the borrowers' ability to comply with loan repayment
terms. Additionally, while U.S. GAAP does not require the exact
disclosures called for by Item III.C.3 regarding cross-border
outstanding loans to countries where conditions give rise to liquidity
problems expected to have a material impact on repayment of principal
or interest, or by Item III.C.4 regarding other concentrations of
loans, we believe the combination of certain U.S. GAAP \153\ and
Regulation S-X \154\ disclosure requirements call for reasonably
similar information.
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    \150\ A credit quality indicator is defined as a statistic about
the credit quality of financing receivables. ASC 310-10-55-19
provides the following examples of credit quality indicators:
Consumer credit risk scores, credit-rating-agency ratings, a
registrant's internal credit risk grades, loan-to-value ratios,
collateral, collection experience, or other internal metrics.
    \151\ ASC 310-10-50-29 and 30 requires a description of the
credit quality indicator, the recorded investment in financing
receivables by credit quality indicator, the date or range of dates
in which the information was updated for each credit quality
indicator, and qualitative information on how internal risk ratings,
if disclosed, relate to the likelihood of loss.
    \152\ Item 303(a) of Regulation S-K requires a registrant to
discuss its financial condition, changes in financial condition, and
results of operations. Instruction 3 to paragraph 303(a) states that
the discussion should focus on the material events and uncertainties
known to management that would cause reported financial information
not to be necessarily indicative of future operating results or of
future financial condition. The instruction further states that it
would include descriptions and amounts of (A) matters that would
have an impact on future operations and have not had an impact in
the past, and (B) matters that have had an impact on reported
operations and are not expected to have an impact upon future
operations.
     Similarly, for foreign private issuers, Item 5.D. of Form 20-F
requires a foreign private issuer to discuss, for at least the
current financial year, any known trends, uncertainties, demands,
commitments or events that are reasonably likely to have a material
effect on the company's net sales or revenues income from continuing
operations, profitability, liquidity, or capital resources, or that
would cause reported financial information not necessarily to be
indicative of future operating results or financial condition.
    \153\ See supra note 110.
    \154\ Rule 9-05 requires disclosure when foreign activities,
which include loans and other revenue producing assets, exceed 10%
of (1) assets, (2) revenue, (3) income (loss) before income tax
expense, or (4) net income (loss).
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    Lastly, while U.S. GAAP does not require specific disclosure
related to other interest bearing assets that would be required to be
disclosed by Item III.C.1 or Item C.2 if they were loans, it does
require disclosure of nonaccrual and past due financing receivables,
including items such as credit cards, notes receivables and trade
receivables with maturities of more than one year, consistent with the
disclosures currently called for by Item III.D of Guide 3.\155\ When it
takes effect, the New Credit Loss Standard \156\ will increase the
credit quality-related disclosures for loans. For example, it will
require registrants to present credit quality indicator disclosures by
year of origination and require additional disclosures about loans on
nonaccrual status.\157\
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    \155\ ASC 310-10-50-5B.
    \156\ The FASB has an ongoing project to reconsider the
effective dates for major standards, including the New Credit Loss
Standard. As currently issued, the New Credit Loss Standard is
effective for public business entities that meet the definition of
an SEC filer for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. Entities that
are not public business entities are provided a delayed effective
date of two years. Thus, an EGC that chooses to elect the private
company timeline for adopting new or revised accounting standards
may defer adopting the New Credit Loss Standard until their fiscal
year beginning after December 15, 2021. As part of its ongoing
project, available at: https://www.fasb.org/jsp/FASB/FASBContent_C/ProjectUpdateExpandPage&cid=1176173010144, the FASB has proposed to
amend the New Credit Loss Standard effective dates so that SEC
filers that are eligible to be a SRC, as defined by the SEC, and
entities that are not SEC filers would be provided a delayed
effective date of three years. Thus, SRCs, EGCs and non-SEC filers
would be able to elect to defer adopting the New Credit Loss
Standard until their fiscal year beginning after December 15, 2022.
    \157\ ASC 326-20-50-6 and ASC 326-20-50-16 and 17.
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    IFRS often requires similar loan disclosure to that called for by
Item III of Guide 3, as follows:
     IFRS requires the disclosure of the carrying value (and
fair value) of each class of financial instruments, similar to the
disclosure called for by Item III.A.\158\
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    \158\ See supra note 108.
---------------------------------------------------------------------------

     IFRS requires disclosure of the credit risk management
process, credit exposure, and how changes in the gross carrying amount
of financial instruments contributed to the changes in the loss
allowance, which is similar to the types of information called for by
Items III.C.1 and 2.\159\ Additionally, Item 5.D of Form 20-F \160\
requires a discussion of known trends and uncertainties that may
supplement the IFRS disclosures. When considered together, we believe
these disclosures allow an investor to evaluate loans where management
has doubts about the borrowers' ability to comply with repayment terms.
The nonaccrual and TDR disclosures called for by Items III.C.1 and 2
are not applicable under IFRS because, unlike in U.S. GAAP, there is no
concept of TDRs or nonaccrual loans in IFRS. However, IFRS does require
disclosure related to the nature and effect of modifications of
contractual cash flows on financial instruments that have not resulted
in derecognition from the balance sheet.\161\
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    \159\ IFRS 7.35I, IFRS 7.IG20B, and IFRS 7.35M.
    \160\ See supra note 152.
    \161\ IFRS 7.35J.
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     IFRS requires disclosure about significant concentrations
of credit risk, which is similar to the types of disclosures called for
by Item III.C.3 related to cross-border outstanding loans or to
countries where conditions give rise to liquidity problems expected to
have a material impact on repayment of principal or interest, the Item
III.C.4 disclosure regarding other concentrations of loans, and the
Item III.D disclosure related to other interest bearing assets.\162\
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    \162\ See supra note 111.
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    In the Request for Comment, the Commission asked whether Commission
rules, U.S. GAAP or IFRS require the same or similar information as
called for by Guide 3 and whether the disclosures provide investors
with information material to an investment decision.
ii. Comments on the Loan Portfolio
    Many commenters indicated that substantial portions of the Item III
disclosures overlap with U.S. GAAP or Commission rules.\163\ For
example, a number of commenters stated that the disclosures called for
by Item III.A--Types of Loans--overlap with U.S. GAAP \164\ and that
the disclosures called for by Item III.C.1 related to nonaccrual, past
due and restructured loans overlap with U.S. GAAP.\165\ One commenter
noted that, while U.S. GAAP requires similar, but not identical,
information, its requirements are more extensive than the Guide 3
disclosures.\166\
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    \163\ See letters from ABA; AmEx; BerryDunn; CAQ; CBA; CH/SIFMA;
Crowe; Deloitte; EY; KPMG; ICBA; MFG; MUFG; PNC; PwC; and RSM.
    \164\ See letters from BerryDunn; CAQ; CH/SIFMA; EY; KPMG; MFG;
MUFG; PNC; and PwC.
    \165\ See letters from BerryDunn; CAQ; CH/SIFMA; Deloitte; EY;
KPMG; MFG; MUFG; PNC; and PwC.
    \166\ See letter from Deloitte.
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    Several commenters indicated that U.S. GAAP addresses the objective
of the potential problem loans disclosure called for by Item
III.C.2.\167\ Additionally, a few commenters indicated that while U.S.
GAAP may not require the same information about potential problem
loans, this disclosure would appear to be more appropriate for
MD&A.\168\ These commenters also noted that the relevance of problem
loans could change significantly upon the effectiveness of the New
Credit Loss Standard. Several commenters stated that the disclosure
related to foreign outstandings called for by Item III.C.3 Risk
Elements and the loan concentrations disclosure called for by Item
III.C.4 are similar to disclosures required by U.S. GAAP.\169\
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    \167\ See letters from CAQ; CH/SIFMA; EY; KPMG; MFG; PNC; and
PwC.
    \168\ See letters from ABA and AMEX.
    \169\ See letters from CAQ; CH/SIFMA; Deloitte; EY; KPMG; MFG;
PNC; and PwC.
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    A few commenters stated that the disclosures called for by Item
III.D relating to other (i.e., non-loan) interest bearing assets, while
not explicitly required by U.S. GAAP, likely overlap with areas of U.S.
GAAP that address credit risk disclosures for financial
instruments.\170\ However, two other commenters thought that this
disclosure is only called for by Item III.D of Guide 3 and is not
required by U.S. GAAP and ``may be useful'' to some investors.\171\
While commenter feedback on this point was mixed, no commenter pointed
to specific material information that would be lost if Item III.D
disclosures were not codified.
---------------------------------------------------------------------------

    \170\ See letters from CAQ; EY; KPMG; PNC; and PwC.
    \171\ See letters from ABA and AmEx.
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    Several commenters did not view the maturity and sensitivities to
changes in interest rate disclosures called for by Item III.B as
redundant with Commission rules or U.S. GAAP,\172\ and a few of these
commenters said the information ``may be useful'' to some

investors.\173\ However, a number of these commenters noted that Item
305 of Regulation S-K--Quantitative and Qualitative Disclosures about
Market Risk, requires similar disclosure to that called for by Guide
3.\174\
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    \172\ See letters from ABA; AmEx; BerryDunn; CAQ; CH/SIFMA;
KPMG; PNC; and PwC.
    \173\ See letters from ABA; AmEx; and CH/SIFMA.
    \174\ See letters from CAQ; EY; KPMG; PNC; and PwC.
---------------------------------------------------------------------------

    Several commenters indicated that there is some overlap between the
disclosures called for by Item III of Guide 3 and IFRS.\175\ For
example, several commenters noted that IFRS \176\ calls for disclosure
of financial instruments by class, but acknowledged that the classes
disclosed would require judgment by management versus the prescriptive
categories in Guide 3.\177\ Commenters also highlighted certain areas
where there are potential differences. For example, several commenters
said that IFRS does not align with the maturities and sensitivities to
changes in interest rate disclosures called for by Item III.B because
IFRS includes a threshold that must be met before disclosure is
required.\178\ Specifically, IFRS requires disclosure of a maturity
analysis of financial instruments a registrant holds for managing
liquidity risk if that information is necessary to enable users of the
financial statements to evaluate the nature and extent of liquidity
risk.\179\ Additionally, many commenters stated that IFRS and Guide 3
differ in the treatment and presentation of past due and nonaccrual/
impaired loans, given that there is no concept of nonaccrual or TDRs
under IFRS.\180\ Lastly, several commenters stated that there is no
specific disclosure requirement under IFRS similar to that called for
by Items III.C.2-C.4 and III.D.\181\ However, these commenters also
indicated that the disclosure framework under IFRS is consistent with
the Guide 3 instructions and that any significant concentration risk
(by class of financial instrument) should be disclosed under IFRS.
---------------------------------------------------------------------------

    \175\ See letters from CAQ; EY; KPMG; and PwC.
    \176\ See supra note 108.
    \177\ See letters from CAQ; EY; KPMG; and PwC.
    \178\ Id.
    \179\ See supra note 129.
    \180\ See letters from CAQ; CBA; CH/SIFMA; Deloitte; EY; KPMG;
and PwC.
    \181\ See letters from CAQ; EY; KPMG; and PwC.
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iii. Proposed Rule--Loan Portfolio
    The proposed rules would not include the loan category disclosure
currently called for by Item III.A of Guide 3, the loan portfolio risk
elements disclosure called for by Item III.C and the other interest
bearing assets disclosure called for by Item III.D,\182\ as we believe
reasonably similar disclosures are required by Commission rules, U.S.
GAAP, or IFRS as discussed in more detail above. Proposed Item 1404 of
Regulation S-K would codify the maturity by loan category disclosure
currently called for by Item III.B, but the loan categories may
increase as it would be the categories required to be disclosed in the
registrant's U.S. GAAP \183\ or IFRS \184\ financial statements.
Existing Guide 3 provided latitude to registrants to use loan
categories outside of those identified in Guide 3 ``if considered a
more appropriate presentation.'' Therefore, we believe some registrants
may already be using the U.S. GAAP or IFRS loan categories for the
Guide 3 disclosures. Additionally, the proposed rules would codify the
existing Guide 3 instruction stating that the determination of
maturities should be based on contractual terms. We also propose to
clarify the ``rollover policy'' for these disclosures by stating that,
to the extent non-contractual rollovers or extensions are included for
purposes of measuring the allowance for credit losses under U.S. GAAP
or IFRS, such non-contractual rollovers or extensions should be
considered for purposes of the maturities classification and that the
policy should be briefly disclosed. This clarification may represent a
change from existing Guide 3 application, which provides that the
determination of maturities should be revised as appropriate to comply
with the registrant's ``rollover policy'' and makes no reference to
U.S. GAAP or IFRS.\185\ The proposed rules also would codify the
disclosure currently called for by Item III.B of the total amount of
loans due after one year that have (a) predetermined interest rates and
(b) floating or adjustable interest rates and would specify that this
disclosure should also be segregated by the loan categories disclosed
in the registrant's U.S. GAAP or IFRS financial statements. Item III.B
currently permits the exclusion of certain loan categories (real
estate-mortgage, installment loans to individuals and lease financing)
and the aggregation of other loan categories (foreign loans to
governments and official institutions, banks and other financial
institutions, commercial and industrial and other loans) from the
maturity and sensitivity to changes in interest rates disclosure. The
proposed rule would not provide any exclusion of loan categories, or
permit the aggregation of any loan categories, for purposes of this
disclosure. We are not aware of any reason why the proposed disclosure
would be less relevant or useful for these specific loan categories,
nor do we think the information would be any more burdensome for
registrants to produce, or for investors to evaluate, for these
categories.
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    \182\ The proposed rule also deletes the loan presentation
disclosure required under Rule 9-03(7)(a)-(c) of Regulation S-X. See
Section IV below.
    \183\ See supra notes 145 and 146.
    \184\ See supra note 108.
    \185\ See supra note 135.
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    The proposed rules would codify the Guide 3 loan disclosures that
we believe elicit information material to an investment decision and do
not overlap with other existing disclosure requirements or principles.
Furthermore, we believe revising the current loan categories to conform
to the loan categories required by U.S. GAAP or IFRS would promote
consistency of loan portfolio disclosures throughout a registrant's
filing. Lastly, we believe that specifically linking the maturities
guidance to whether the rollovers or extensions are included for
purposes of measuring the allowance for credit losses under U.S. GAAP
or IFRS promotes comparability and consistency amongst U.S. GAAP or
IFRS registrants and provides a more objective basis to make the
maturities determination. The proposed changes would thereby assist
investors in evaluating the disclosures while also reducing the burdens
on registrants to prepare such disclosures because registrants should