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F ederal R eserve Bank o f D allas
F I S C A L A G E N T O F T H E U N IT E D S T A T E S

DALLAS, TEXAS

75222

Circular No. 67-168
August 23, 1967

PROPOSED AM ENDM ENT OF TREASURY DEPARTMENT CIRCULAR N O . 3 00
PROVIDING FOR BOOK-ENTRY TREASURY SECURITIES

To All Banking Institutions an d Others Concerned
in the Eleventh Federal Reserve District:

Enclosed is an excerpt from the F ederal R egister of August 2, 1967, containing a notice of proposed rule
m aking issued by the T reasury D epartm ent th a t would am end its Circular No. 300, “G eneral R egulations W ith
R espect to U nited States Securities.” T he proposed am endm ent provides for the issuance of transferable
T reasu ry bonds, notes, certificates of indebtedness, and bills in the form of “book entries,” as well as in definitive
(o r physical) form as a t present. Such book-entry T reasury securities would be m aintained on the records of
the several F ederal R eserve Banks, as fiscal agents of the U nited States, and the book-entry procedure would
apply w henever T reasury securities are deposited, on original issue or otherwise, w ith F ederal R eserve B anks
for any of the following purposes: ( 1 ) by a m em ber bank of the F ederal R eserve System for its sole account
and in lieu of the safekeeping of definitive T reasury securities by F ederal R eserve B anks in their individual
capacities, ( 2 ) as collateral for advances under R egulation A of the B oard of G overnors of the F ederal R eserve
System, ( 3 ) as collateral for T reasury T ax and Loan accounts under T reasury D epartm ent Circular No. 92,
or ( 4 ) as collateral for deposits of public m oneys under T reasury D ep artm en t C ircular No. 176.
T h e proposed am endm ent provides th a t any depositor which has definitive T reasury securities on deposit
w ith a F ederal R eserve B ank for any of the purposes specified above on th e effective d ate of the am endm ent,
or which th ereafter deposits definitive T reasury securities w ith a F ederal R eserve B ank for any such purpose,
will be deem ed to have consented to their conversion to book-entry T reasury securities. F ederal R eserve B anks
would continue, of course, to hold definitive T reasury securities for purposes other th an those indicated above.
U nder the proposed book-entry procedure, F ederal R eserve B anks would send depositors, for whose
account book-entry T reasury securities are entered, an advice describing such securities and indicating the
purpose for which the securities are held. W ithdraw als and transfers of book-entry T reasury securities m ay be
m ade upon a depositor requesting ( a ) delivery of like definitive T reasu ry securities to itself or on its order
to a transferee, or ( b ) transfer in book-entry form to any transferee eligible to deposit T reasury securities for
one of the purposes indicated above.
T h e T reasury D epartm ent has advised th a t the proposed am endm ent does not change th e taxable or
exem pt status of T reasury securities and does not set forth special rules of identification of book-entry T reasu ry
securities for tax purposes. Although such securities will not be identifiable by serial num ber, depositors may,
for purposes of determ ining the cost or other basis and holding period of securities, follow tax record-keeping
procedures essentially th e sam e as those they now follow w ith respect to definitive T reasury securities. How ­
ever, in any case where a depositor (1 ) has on deposit under the book-entry procedure securities of the sam e
issue acquired on different dates or a t different prices, (2 ) is not on a “first in-first out” (F IF O ) basis, and ( 3 )
is disposing of or w ithdraw ing only a p art of such book-entry securities, it should in its letter requesting such
action, or in a confirm atory letter or wire (if the original request was m ade by telephone), identify by date or
dates of acquisition and price or prices the lot or lots affected. If it does not do so, the IR S m ay conclusively
presum e th a t the bank is on a F IF O basis.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

T h e identifying d ata referred to would be solely for th e purpose of perm itting depositors to m ake appro­
priate current records to support, if the occasion should subsequently arise, the taxpayers’ own records and tax
reports. F ederal R eserve B anks would, accordingly, have no responsibility for attem pting to verify the accuracy
of th e identification data so specified and would not do so.
In its first phase, the book-entry procedure will not apply to securities held by a bank as “dealer” (as
defined in 26 C FR §1.471-5) for sale to custom ers in the ordinary course of business, as distinguished from
those held for investm ent. Therefore, during this phase book-entry T reasury securities deposited under the
procedure would be identified in the depositor’s own records as held for investm ent and the depositor would
not need to refer to this fact in its instructions to the F ederal R eserve B ank regarding the securities.
T h e proposed book-entry procedure is designed to help the T reasury D epartm ent and the F ederal R eserve
B anks handle a large volum e of T reasury securities through the use of m odern high speed data-processing
equipm ent. Use of the new procedure should lead to increased efficiency in the handling and servicing of
T reasu ry securities by the F ederal R eserve Banks. W hile the book-entry procedure will initially be applied
only to T reasu ry securities held by F ederal Reserve B anks for the purposes noted, it is hoped th a t the procedure
m ay ultim ately be extended to T reasury securities held for other purposes and depositors.
T h e notice of proposed rule m aking states th a t prior to final adoption consideration will be given to any
data, views or argum ents pertaining to the proposed am endm ent th a t are subm itted in writing, in duplicate, to
the Commissioner of Public D ebt, W ashington, D. C. 20220, within the period specified in th e notice. At the
p resent tim e it appears th a t th e earliest effective date of the book-entry procedure will be October 2, rath er
th an the Septem ber 5 date indicated in the Notice of Proposed R ule M aking.
Y ours very truly,
W atrous H. Irons
President

11216

Proposed Rule Making
§
.1
App
DEPARTMENT OF THE TREASURY3T0h6is 1 6subpart licab ility.
is applicable

Fiscal Service
[31

CFR Part 3 0 6 ]

UNITED STATES SECURITIES
Book-Entry Procedure; Notice of
Proposed Rule Making
N otice is hereby given, pursuant to th e
A dm inistrative Procedure A ct, approved
June 11, 1946, th a t th e regulations set
forth in Treasury D epartm ent Circular
No. 300, T hird R evision (31 CFR P art
306) are proposed to be further am ended
as ten tatively show n below. However,
prior to their final adoption, considera­
tion w ill be given to any data, views, or
argum ents pertain ing thereto w hich are
subm itted in w riting, in duplicate, to
th e C om m issioner o f th e Public Debt,
W ashington, D.C. 20220, w ith in th e pe­
riod of 30 days from th e date o f th is n o ­
tice in th e F e d e r a l R e g i s t e r .
[seal]

J ohn

K.

C arlock,

Fiscal Assistant Secretary.
J uly

28,1967.

D epartm ent Circular No. 300, Third
R evision, dated D ecem ber 23, 1964, is
hereby am ended effective Septem ber 5,
1967, by redesignating Subpart O (en ­
titled “M iscellaneous P rovisions” ) as
Subpart P, and renum bering §§ 306.115
through 306.118 as §§ 306.123 through
306.126, respectively, and by inserting a
new Subpart O as fo llo w s:

Subpart O— Book-Entry Procedure
§ 3 0 6 .1 1 5

D e fin itio n o f term s.

In th is subpart, un less th e con text
otherw ise requires or in d ic a tes:
(a) “Reserve B an k ” m eans a Federal
R eserve B ank and its branches acting as
Fiscal A gent of th e U nited S tates.
(b) “Treasury secu rity” m ean s a
transferable Treasury bond, note, certifi­
ca te of indebtedness, or bill issued under
th e Second L ib e r t y B o n d Act, as
am ended, in th e form of a definitive
Treasury security or a book entry T reas­
ury security.
(c) “D efinitive
Treasury
secu rity”
m eans a transferable Treasury bond,
note, certificate of indebtedness, or bill
issued under th e Second Liberty Bond
Act, as am ended, in th e form of a p h y si­
cal security.
(d) “B ook-entry Treasury secu rity”
m eans a transferable Treasury bond,
note, certificate o f indebtedness, or bill
issued under th e Second Liberty Bond
Act, as am ended, in th e form of an entry
m ade as prescribed in th is subpart on th e
records o f a R eserve Bank.

to any
T reasury securities now on deposit or
hereafter deposited w ith any Reserve
B an k for any purpose specified in § 306.118(a) except th a t no deposits w ill be
accepted thereunder on or after th e date
of m aturity or call of th e securities.1 Any
depositor w hich on th e effective date of
th is subpart h as definitive Treasury
securities on deposit w ith a R eserve B ank
(in eith er its individual capacity or as
F iscal A gent) for any purpose specified
in § 306.118(a) shall be deem ed to have
consented to their conversion to bookentry Treasury securities pursuant to th e
provisions of th is subpart, and in th e
m anner and under th e procedures pre­
scribed by th e R eserve Bank.
§ 3 0 6 .1 1 7

A u thority o f R eserve B ank s.

E ach R eserve B ank is hereby au th or­
ized and directed, in accordance w ith th e
provisions of th is subpart, to (a) issue
book-entry Treasury securities by m eans
of entries on its records w hich sh a ll in ­
clude th e nam e of the depositor, th e
am ount, th e title of th e loan (or th e
series) and th e m atu rity d a te ; (b) effect
conversions betw een book-entry T reas­
ury securities and definitive Treasury
securities; and (c) otherw ise service and
m a in ta in book-entry Treasury securities.
§ 3 0 6 .1 1 8 A ccounts su b ject to
entry p ro ced u re; p led g es.

b ook -

(a) T he book-entry procedure applies
to Treasury securities now on deposit or
h ereafter deposited in accounts w ith any
R eserve B ank (1) as collateral pledged
to a Reserve B ank (in its individual c a ­
p acity) for advances by it, (2) as co lla t­
eral pledged to th e U nited S ta tes under
T reasury D epartm ent Circulars No. 92
or 176, both as revised and am ended, and
(3) by a m em ber bank of th e Federal
R eserve System for its sole accou n t and
in lieu of th e safekeeping o f definitive
T reasury securities by a R eserve Bank
in its individual capacity. E ntries w ill be
m ade for th e am ounts deposited for each
specific purpose.
(b) A pledge of book-entry Treasury
securities in th e nam e of a pledgor, or
any in terest therein, in favor of a R e­
serve B ank in its ow n right as pledgee
or in favor of th e U nited S ta te s as
pledgee, is effected, n o tw ith sta n d in g any
provision of law to th e contrary, by th e
m aking of an appropriate en try under
paragraph (a) (1) or (2) of th is section,
of th e am ount o f th e securities pledged.
T he m aking of such entry sh a ll have th e
effect of a delivery o f a definitive T reas­
1 The date of call as defined In these regu­
lations (sec. 306.2) is “the date fixed in the
official notice of call published in the Federal
Register * * * on w hich th e obligor will
make paym ent of th e security before m a­
turity in accordance w ith its term s.”

ury security in bearer form representing
th e am ount of th e obligations pledged
and sh all effect a perfected security in ­
terest th erein in favor o f th e pledgee,
w ho sh all be a holder. N o filing or record­
in g w ith a public recording office or
officer sh all be necessary to perfect th e
pledge or security in terest in book-entry
Treasury securities under th is section.
P ledges of, or security in terest in, de­
fin itive Treasury securities w hich are
under pledge to a R eserve B ank in its
ow n right or to th e U nited S ta tes at the
tim e of th eir conversion to book-entry
Treasury securities sh all be fu lly effective
w ith respect to su ch book-entry Treasury
securities. A R eserve B ank, w hen re­
quested by th e pledgee, sh all convert
book-entry T reasury securities into d e­
fin itive T reasury securities and deliver
th em to th e pledgee for disposition under
th e applicable pledge arrangem ent; and
th e pledge or security in terest o f the
pledgee in th e book-entry Treasury se ­
curities prior to conversion sh all con­
tin u e to be fu lly effective w ith respect to
such definitive Treasury securities.
§ 3 0 6 .1 1 9 L im ita tio n s o n tran sfers or
p led ges.

E xcept as provided in th is subpart,
book-entry T reasury securities m ay not
be assigned, transferred, hypothecated,
pledged as collateral, or used as security
for th e perform ance of an obligation, and
th e Treasury D ep artm en t will n ot recog­
nize any such assignm ent, transfer, h y ­
pothecation, pledge or use.
§ 3 0 6 .1 2 0

W ithdraw als and transfers.

W ithdraw als and tran sfers of bookentry T reasury secu rities m ay be m ade
upon a depositor requesting (a) delivery
o f like definitive Treasury securities to
itse lf or on its order to a transferee, or
(b) tran sfer to any transferee eligible
under § 306.118(a). T h e m aking o f any
book-entry tran sfer by a R eserve B ank
sh a ll have th e sam e effect as a delivery
to th e tran sferee o f definitive Treasury
securities in bearer form . T h e tran sfer of
book-entry T reasury securities w ith in a
R eserve B ank w ill be m ade in accordance
w ith procedures established by th e latter
n o t in con sisten t w ith th is subpart. T he
tran sfer o f book-entry T reasury secu­
rities betw een R eserve B anks will be m ade
through a telegraphic tra n sfer procedure.
All requests fo r w ithdraw al or for tran s­
fer m u st be m ade prior to th e m aturity
or d ate of call of th e securities. Treasury
bonds and n o tes w hich are to be delivered
p h ysically upon w ithdraw al or transfer
m ay be issued eith er in reg istered 2 or in
bearer form .
8 Except for Treasury notes, EA and EO
Series.

FEDERAL REGISTER, VOL. 32 , NO. 148— WEDNESDAY, AUGUST 2, 1967

PROPOSED RULE MAKING
§ 3 0 6 .1 2 1

R egistered b on d s and n o tes.

No form al assign m en t sh all be required
for th e conversion to book-entry T reas­
ury secu rities of registered Treasury se­
curities held by a R eserve B ank (in eith er
its individual cap acity or as fiscal agen t)
on th e effective date of th is subpart for
any purpose specified in § 306.118(a).
R egistered Treasury securities deposited
th ereafter w ith a R eserve B ank for any
purpose specified in § 306.118(a) sh a ll be
assigned for conversion to book-entry
T reasury securities. T h e assignm ent,
w hich sh all be executed in accordance
w ith th e provisions of Subpart P of th e
regulations of th is part so fa r as appli­
cable, sh all be to “T he Secretary o f th e
T reasury for conversion to book-entry
T reasury secu rities by th e Federal R e­
serve B ank o f _________________________ _
as F iscal A gent o f th e U nited S ta tes.”
§ 3 0 6 .1 2 2
Servicin g book -en try T reas­
u ry se cu rities; p a y m en t o f in terest,
p a y m en t at m aturity or u p o n call.

In terest becom ing due on book-entry
T reasury securities sh a ll be charged in
th e Treasurer’s accou n t on th e in terest
due date and rem itted or credited in
accordance w ith th e depositors’ in stru c­
tions. S uch securities sh all be redeem ed
and charged in th e Treasurer’s accou n t
on th e d ate o f m aturity, call or advance
refunding, and th e redem ption proceeds,
principal and interest, sh all be disposed
o f in accordance w ith th e depositors’
instructions.
[F.R. Doc. 67-9042; Filed, Aug. 1, 1967;
8 :49 a.m.]

FEDERAL REGISTER, VOL. 32 , NO. 148— WEDNESDAY, AUGUST 2, 1967

11217


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102