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The Treasury International Capital (TIC) system is a series of statistical reports prepared by the United States Department of the Treasury. Monthly and quarterly reports document transactions between US sellers and foreign buyers of US securities and financial instruments. Data is collected from a select group of financial organizations and reflect transactions whose amounts rise above a minimum level. Treasury International Capital reports are frequently used as an economic indicator by investors; however, the process is primarily intended to gather data relevant for balance of payment (BOP) analysis.
The US participant in a transaction can be any entity located within the US, including branches and subsidiaries of foreign corporations. This includes organizations incorporated in the US even if they maintain no physical presence in the country. With BOP in mind, a US branch of a foreign corporation would be a resident, but a foreign branch of a US corporation would not. Transactions involving US securities between non-resident entities are not part of Treasury International Capital reporting. Since US securities are heavily traded in financial markets worldwide, TIC data will not reflect large numbers of transactions that do not impact the BOP.
A range of data is subject to reporting including cross-border trades involving both short-term securities and long-term, which come to maturity in over one year. Equity market instruments, such as stocks, derivatives and options are covered by Treasury International Capital monthly and quarterly reporting. Foreign ownership of US equity is far less common than ownership of US debt, however. TIC data thus has a greater influence on the Treasury and corporate bond markets, which are more directly affected by interest rates and the value of the dollar.
The Treasury International Capital system only measures cross-border financial flow related to portfolio management and position trading. Direct investments in a US resident corporation by a foreign entity in order to exercise an ownership interest are recorded by the US Department of Commerce. Cross-border capital transactions of the US Government are also excluded from TIC data, though they are part of Department of Commerce reports on the balance of payments.
TIC data is referenced in several other governmental reports. The US Bureau of Economic Analysis (BEA) publishes International Transactions Accounts and the International Investment Position of the United States. Both of these reports rely heavily on Treasury International Capital data. The BEA publications in turn form the basis for the US Federal Reserve Board's Flow of Funds Accounts of the United States subsection on world financial flows.
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