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federal reserve e . \ n' k cf Dallas DALLAS. TEXAS 75222 Circular No. 81-192 September 30, 1981 POLICY STATEMENT Forward Placem ent or Delayed Delivery Contracts and Interest R ate Futures Contracts TO ALL MEMBER BANKS, BANK HOLDING COMPANIES, AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The Board of Governors of the Federal Reserve System has issued an interpretation to clarify the fact th at sta te member banks and bank holding companies intending to take positions in interest ra te futures contracts specifying delivery of certificates of deposits issued by domestic banks should do so in accordance with requirem ents of the Board's existing policy statem ent governing futures and forward contracts on U.S. Government and Agency securities. The effective d ate of the interpretation is September 18, 1981. Printed on the following pages are a copy of the Board's press release dated September 18, 1981, and a copy of the Board's Policy Statem ent. Questions relating to interest ra te futures contracts with sta te member banks should be directed to Marvin C. McCoy of this Bank's Bank Supervision and Regulations Departm ent, Extension 6657. Additionally, questions relating to in terest ra te futures contracts with bank holding companies should be directed to Robert D. Hankins of this Bank's Holding Company Supervision Departm ent, Extension 6120. Additional copies of this circular will be furnished upon request to the Departm ent of Communications, Financial and Community Affairs of this Bank, Extension 6289. Sincerely yours, William H. Wallace First Vice President Banks and others are encouraged to use the following incom ing W A T S numbers in c ontacting this Bank: 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) For immediate release September 15, 1981 The Federal Reserve Board today issued an interpretation stating that bank holding companies and State member banks intending to take positions in interest rate futures contracts involving domestic bank certificates of deposit should do so in accordance with relevant Board policy statements on engaging in futures and forward contracts in U.S. government and agency securities. The Board's interpretation, effective September 18, is attached. Attachment FEDERAL RESERVE SYSTEM P o l i c y S ta te m e n ts Concerning Forward Placement o r Delayed D e l i v e r y C o n t r a c t s and I n t e r e s t Rate F u t u r e s C o n t r a c t s [Docket No. R-0261J AGENCY: Board o f Governors of t h e Federal Reserve System. ACTION: Interpretation. SUM ARY: This i n t e r p r e t a t i o n i s t o c l a r i f y t h e f a c t t h a t S t a t e member banks M i n t e n d i n g t o t a k e p o s i t i o n s in i n t e r e s t r a t e f u t u r e s c o n t r a c t s s p e c i f y i n g d e l i v e r y o f c e r t i f i c a t e s o f d e p o s i t i s s u e d by dome stic banks (bank C/D 's) should do so in a cc ord an ce with re q u ir e m e n ts o f t h e B o a r d 's e x i s t i n g p o l i c y s t a t e m e n t gov erning f u t u r e s and forward c o n t r a c t s on U.S. government and agency s e c u r i t i e s . Bank h o ld in g companies i n t e n d i n g t o engage in comparable a c t i v i t i e s sho uld do so in accorda nce w i t h t h e B o a r d 's e x i s t i n g p o l i c y s t a t e ment governing bank h o ld in g company p a r t i c i p a t i o n . EFFECTIVE DATE: September 18, 1981. FOR FURTHER INFORMATION CONTACT: Robert S. P l o t k i n , A s s i s t a n t D i r e c t o r , o r Michael J . S c h o e n f e l d , S e n i o r S e c u r i t i e s R e g u l a t i o n s A n a l y s t , D iv is io n o f Banking S u p e r v i s i o n and R e g u l a t i o n , Board of Governors of t h e Federal Reserve System, Washington, D.C. 20551 (202-452-2781). SUPPLEMENTARY INFORMATION: The t h r e e Federal bank r e g u l a t o r y a g e n c ie s have f o r m a l ly adopted g u i d e l i n e s f o r banks engaging in f u t u r e s , forward and standby c o n t r a c t s on U.S. government and agency s e c u r i t i e s . * In a d d i t i o n , t h e Board o f Governors i s s u e d a p o l i c y s t a t e m e n t gover ni ng t h e p a r t i c i p a t i o n o f bank ho ld in g companies and t h e i r nonbank s u b s i d i a r i e s i n f u t u r e s , forward and st an db y c o n t r a c t s on U.S. government and agency s e c u r i t i e s (45 Fed. Reg. 61595 (September 17, 1 9 8 0 )) . Co ncu rr en t w it h t h e Commodities F u t u r e s Trading Commission's approval o f t r a d i n g in f u t u r e s c o n t r a c t s s p e c i f y i n g d e l i v e r y o f bank C/D's and t h e commencement of exchange t r a d i n g of such c o n t r a c t s in J u l y 1981, t h e Board r e c e i v e d a number o f i n q u i r i e s co n ce rn in g t h e a p p l i c a b i l i t y o f t h e bank p o l i c y s t a t e m e n t t o such f u t u r e s c o n t r a c t a c t i v i t i e s . * See 45 Fed. Reg. 18116 (March 20, 1980); 45 Fed. Reg. 18120 (March 20, 1980); O f f i c e o f t h e C o m p t r o l l e r o f t h e Curre nc y, Banking C i r c u l a r 79 (2nd Rev.) (March 19, 1980). - 2 - The Board b e l i e v e s t h a t t h e p o l i c i e s and procedures ( i n c l u d i n g a c c ou nt in g re q u ir e m e n ts ) co n ta in ed in t h e r e f e r e n c e d bank p o l i c y st a t e m e n t should be followed by S t a t e member banks t h a t choose t o engage in t r a n s a c t i o n s in c o n t r a c t s s p e c i f y i n g d e l i v e r y of bank C /D 's . Fu rt he rm or e, t h e Board b e l i e v e s t h a t t h e r e f e r e n c e d bank h o ld in g company p o l i c y s t a t e m e n t would be a p p l i c a b l e t o any bank holding company o r nonbank s u b s i d i a r y u t i l i z a t i o n of f u t u r e s c o n t r a c t s s p e c i f y i n g d e l i v e r y o f bank C /D 's. By o r d e r of t h e Board of Governors of t h e Federal Reserve System, September 1, 1981. Wi l l i a m W Wi l es . S e c r e t a r y o f t h e Board t * F ederal Reserve Bank of Dallas DALLAS. TEXAS 75222 Circular No. 81-192 September 30, 1981 POLICY STATEMENT Forward Placement or Delayed Delivery Contracts and Interest Rate Futures Contracts TO ALL MEMBER BANKS, BANK HOLDING COMPANIES, AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The Board of Governors of the Federal Reserve System has issued an interpretation to clarify the fact that sta te member banks and bank holding companies intending to take positions in interest rate futures contracts specifying delivery of certificates of deposits issued by domestic banks should do so in accordance with requirements of the Board's existing policy statem ent governing futures and forward contracts on U.S. Government and Agency securities. The effective date of the interpretation is September 18, 1981. Printed on the following pages are a copy of the Board's press release dated September 18, 1981, and a copy of the Board's Policy Statement. Questions relating to interest ra te futures contracts with state member banks should be directed to Marvin C. McCoy of this Bank's Bank Supervision and Regulations Department, Extension 6657. Additionally, questions relating to interest rate futures contracts with bank holding companies should be directed to Robert D. Hankins of this Bank's Holding Company Supervision Department, Extension 6120. Additional copies of this circular will be furnished upon request to the Department of Communications, Financial and Community Affairs of this Bank, Extension 6289. Sincerely yours, William H. Wallace First Vice President Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank: 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above. FEDERAL RESERVE press release For immediate release September 15, 1981 The Federal Reserve Board today issued an interpretation stating that bank holding companies and State member banks intending to take positions in interest rate futures contracts involving domestic bank certificates of deposit should do so in accordance with relevant Board policy statements on engaging in futures and forward contracts in U.S. government and agency securities. The Board's interpretation, effective September 18, is attached. Attachment FEDERAL RESERVE SYSTEM P o li cy Statem en ts Concerning Forward Placement or Delayed D e liv e ry C o n t r a c t s and I n t e r e s t Rate F u t u r e s C o n t r a c t s [Docket No. R-0261] AGENCY: Board of Governors of t h e Federal Reserve System. ACTION: Interpretation. SUM ARY: This i n t e r p r e t a t i o n i s t o c l a r i f y t h e f a c t t h a t S t a t e member banks M i n t e n d i n g t o t a k e p o s i t i o n s in i n t e r e s t r a t e f u t u r e s c o n t r a c t s s p e c i f y i n g d e l i v e r y o f c e r t i f i c a t e s of d e p o s i t is su e d by domestic banks (bank C/D's) should do so in accordance with requ irem en ts of t h e B oar d's e x i s t i n g p o l i c y s t a t e m e n t governing f u t u r e s and forward c o n t r a c t s on U.S. government and agency s e c u r i t i e s . Bank holding companies i n t e n d i n g to engage in comparable a c t i v i t i e s should do so in accordance with t h e B oar d's e x i s t i n g p o l i c y s t a t e ment governing bank holding company p a r t i c i p a t i o n . EFFECTIVE DATE: September 18, 1981. FOR FURTHER INFORMATION CONTACT: Robert S. P l o t k i n , A s s i s t a n t D i r e c t o r , or Michael J . Sc h o e n fe ld , S e ni or S e c u r i t i e s R eg ul at io ns A n a l y s t , D iv is io n of Banking Su pe rv is io n and R e g u l a t i o n , Board of Governors of t h e Federal Reserve System, Washington, D.C. 20551 (202-452-2781). SUPPLEMENTARY INFORMATION: The t h r e e Federal bank r e g u l a t o r y a g e n c ie s have for ma ll y adopted g u i d e l i n e s f o r banks engaging in f u t u r e s , forward and standby c o n t r a c t s on U.S. government and agency s e c u r i t i e s . * In a d d i t i o n , t h e Board o f Governors i s s u e d a p o l i c y st a t e m e n t governing t h e p a r t i c i p a t i o n o f bank holding companies and t h e i r nonbank s u b s i d i a r i e s in f u t u r e s , forward and standby c o n t r a c t s on U.S. government and agency s e c u r i t i e s (45 Fed. Reg. 61595 (September 17, 1980)) . Concurrent with t h e Commodities F u tu r e s Trading Commission's approval o f t r a d i n g in f u t u r e s c o n t r a c t s s p e c i f y i n g d e l i v e r y o f bank C/D's and t h e commencement of exchange t r a d i n g of such c o n t r a c t s in J u l y 1981, th e Board r e c ei ve d a number of i n q u i r i e s con cer nin g t h e a p p l i c a b i l i t y o f t h e bank p o l i c y s ta t e m e n t to such f u t u r e s c o n t r a c t a c t i v i t i e s . * See 45 Fed. Reg. 18116 (March 20, 1980); 45 Fed. Reg. 18120 (March 20, 1980); O f f i c e of t h e Co mp tro ll er o f th e Currency, Banking C i r c u l a r 79 (2nd Rev.) (March 19, 1980). - 2 - The Board b e l i e v e s t h a t t h e p o l i c i e s and procedures ( i n c l u d i n g a ccounting re quire me nts ) con taine d in t h e re fe re n c ed bank p o li c y st atement should be followed by S t a t e member banks t h a t choose t o engage in t r a n s a c t i o n s in c o n t r a c t s s p e c i f y i n g d e l i v e r y of bank C /D 's . Furthermore, t h e Board b e l i e v e s t h a t t h e re fe re n c ed bank holding company p o li c y stat em en t would be a p p l i c a b l e to any bank holding company o r nonbank s u b s i d i a r y u t i l i z a t i o n of f u t u r e s c o n t r a c t s s p e c i f y i n g d e l i v e r y of bank C/D's. By o r d e r of t h e Board of Governors of t h e Federal Reserve System, September 1, 1981. Wi l l i am W Wi l es . S e c r e t a r y o f t h e Board
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