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D ALLAS, TEXAS

November 8, 1956

To the Member Banks of the
Eleventh Federal Reserve District:

Enclosed is a copy of our operating Bulletin No. 7 relating
to the custody of securities, revised as of November 7, 1956.
The revised copy should be substituted in your ring binder
for Bulletin No. 7 dated January 1, 1945. We shall be pleased
to furnish additional copies of this bulletin upon request.
Yours very truly,
Watrous H. Irons
President
Enclosure

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

FEDERAL RESERVE BANK
OF DALLAS

BULLETIN No. 7
Effective November 7, 1956
(Superseding Bulletin N o. 7
dated January 1, 1945)

CUSTODY OF SECURITIES
T o the Member Banks o f the
Eleventh Federal Reserve District:
This bulletin describes the services o f the Federal Reserve Bank o f
Dallas relating to the custody o f securities and supersedes Operating Bulletin
No. 7, dated January 1, 1945. A n y member bank depositing, either directly or
through others, securities with this bank, or its branches, shall, by such action,
be understood to have agreed to the terms and conditions set forth herein. For
purposes o f this bulletin, and, unless otherwise stated, all references to the
Federal Reserve Bank o f Dallas or “ this bank” shall include its branches at
El Paso, Houston and San Antonio.
SCOPE OF SERVICE

1. The services described herein are maintained primarily for the con­
venience o f member banks located outside o f Federal Reserve cities. Under
special circumstances, however, these services may be extended to member
banks located in those cities.
2. Except as hereinafter provided, only securities which are neither
assigned nor pledged and which are owned by the depositing bank will be
accepted. Securities acceptable for custody by this bank include all bonds, notes,
certificates o f indebtedness, and Treasury bills issued or guaranteed by the
United States Government, and miscellaneous state, municipal or corporate
bonds. Such securities will be held in custody for the account, at the risk and
subject only to the order o f the member bank named as owner in the acknowl­
edgment issued by this bank.
3. Securities belonging to member banks which are pledged to depart­
ments, agencies, or officials o f the United States Government to be held sub­
ject to the instructions thereof will be accepted pursuant to any A ct o f Congress
or any regulation or request o f the Secretary o f the Treasury providing for
the deposit o f securities with a Federal Reserve Bank.
4. Securities belonging to member banks which are pledged to officials o f
states, or political subdivisions thereof, as security for public deposits, will be
accepted when application is made jointly by the member bank and the public
body whose deposit is secured. Special forms are furnished by the Federal
Reserve Bank for this purpose.
5. N o charge will be made for holding securities in custody, but charges
will be made to cover cost o f transportation and insurance on incoming and
outgoing shipments o f securities, for telephone and telegraph expense, and
collection charges, if any, made by collecting banks.
LIMITATION OF LIABILITY ON SECURITIES HELD IN CUSTODY

6. Each bank or other party depositing securities with this bank either
directly or through others shall by such action be deemed to have agreed that
the Federal Reserve Bank o f Dallas:

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BULLETIN No. 7

a. W ill be responsible only for the exercise o f the same diligence
with which it cares for its own property;
b. W ill not be liable for any loss o f such securities when a loss is
due to any cause other than lack o f such diligence;
c. W ill not be responsible for the genuineness, validity, or altera­
tion o f or any defect in such securities; and
d. W ill not be obligated to maintain any form of insurance for
the account of the depositor in relation to securities held in
custody for it.
ACKNOWLEDGMENTS AND RECEIPTS

Acknowledgments
7. Nonnegotiable and nontransferable acknowledgments are issued to
cover unpledged securities held in custody and for securities pledged as col­
lateral to secure Treasury T ax and Loan accounts as well as those to be held
as security for member bank indebtedness. It will be unnecessary to return
these acknowledgments when securities are withdrawn, since the securities
covered thereby will be surrendered or otherwise disposed of upon receipt o f
appropriate instructions over the authorized signature of an officer o f the
member bank named in the acknowledgment as owner.
Formal Receipts
8. Formal receipts are issued in letter form for securities pledged as
collateral, under the terms o f Treasury Department Circular No. 176, to
secure United States Government deposits and for securities pledged to secure
deposits o f United States District Court appointed trustees and receivers.
Formal receipts must be returned when securities pledged under the foregoing
classes are withdrawn.
Joint Safekeeping Receipts
9. Joint safekeeping receipts are issued to both depositor and depository
fo r securities pledged as collateral to secure deposits o f states a n d /or political
subdivisions th ereof; also for securities pledged to secure uninvested funds o f
Trust Departments o f member banks on deposit in the commercial banking
department o f such banks. Joint safekeeping receipts must be returned when
the securities covered by such receipts are withdrawn.
SERVICES PERFORMED BY FEDERAL RESERVE BANK

10. In the absence o f specific instructions to the contrary, this bank will
endeavor to perform certain services as outlined herein but will assume no
liability for failure to perform such services. These services are intended
merely as an aid to member banks and do not relieve the member bank o f its
own duty to keep itself informed o f maturities, call dates, and other informa­
tion affecting its own portfolio.
Collection o f Maturing United States Government
Securities (Unpledged)
11. Unpledged United States Government securities and fully guaranteed
obligations o f its agencies which are payable by the Federal Reserve Bank of

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BULLETIN N o. 7

Dallas as fiscal agent o f the United States and held by it in custody will, in the
absence o f specific instructions from the owner, be withdrawn prior to maturity
or redemption call date, and the proceeds credited to the member bank’s account
on the due date.
Collection o f Maturing Municipal or
Corporate Securities (Unpledged)
12. Upon receipt o f written authority furnished by the owning bank, this
bank will enter for collection, under the terms and conditions o f the current
bulletin o f this bank governing the collection o f noncash items, maturing un­
pledged municipal or corporate securities payable in a city other than the
domicile o f the owning bank. Securities payable in the city or town in which
the owning bank is located, or payable outside the continental United States,
will be shipped to the owning bank. The shipping charges for collecting munici­
pal or corporate securities will be charged to the owning bank’s account.
Exchange o f Maturing Securities (Unpledged)
13. Under instructions from a member bank, this bank will effect the ex­
change o f maturing unpledged United States Government securities for
available new issues. Upon receipt o f the new securities to be held in custody,
a new acknowledgment will be issued therefor.
Pledged Securities
14. N o action will be taken by this bank relative to maturing or called
securities which are pledged, except upon receipt of appropriate written in­
structions o f the owning bank and the pledgee. W hen so instructed, maturing
securities, other than United States Government securities, will be handled for
collection under the terms and conditions o f the current bulletin o f this bank
governing the collection o f noncash items, and United States Government
securities will be redeemed. Disposition o f the proceeds, when available, will be
made upon receipt o f appropriate instructions.
Notice of Called or Maturing Securities
15. This bank will notify banks o f the approaching maturity of United
States Government securities only if such securities are pledged, or if new
issues o f securities are to be offered in exchange therefor. Notice o f maturity
o f all municipal or corporate securities will be given in advance o f maturity
date. However, this bank does not maintain a called securities record, and,
therefore, cannot undertake to advise banks when securities are called for
redemption.
Municipal or Corporate Securities Received
for the Account of Member Banks
16. Under appropriate written instructions from a member bank, this bank
will accept for the member bank’s account municipal or corporate securities
delivered by brokers and others and make payment therefor at the price stipu­
lated in the purchasing bank’s letter. In handling these transactions, this bank
acts solely as agent for the member bank and assumes no responsibility fo r the
genuineness, validity or any alteration o f the securities received.

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BULLETIN No. 7

Collection of Maturing Coupons
17.
Unless otherwise instructed, this bank w ill: (1 ) credit the owning bank
on maturity date for maturing coupons detached from United States Govern­
ment securities and fully guaranteed obligations of its agencies which are
payable by the Federal Reserve Bank o f Dallas as fiscal agent o f the United
States and held in custody for its account; and (2 ) enter fo r collection, under
terms o f this bank’s current bulletin governing the collection o f noncash items,
coupons detached from other securities held in custody and credit the account
o f the owning bank upon receipt o f proceeds. Municipal or corporate coupons
payable in the city or town in which the owning bank is located, or payable
outside the continental United States, will be shipped to the owning bank.
Coupons attached to securities which are pledged as collateral to a customer’s
note held under rediscount or as collateral to an advance by this bank and held
by this bank will not be clipped and handled for collection, unless specific in­
structions are received in connection therewith.
Unpaid Coupons
18. Coupons entered for collection and returned unpaid will be reattached
to the securities from which they were detached, and the owning bank will be
advised o f the reason for nonpayment. In the absence o f specific instructions
from the owning bank, no further effort will be made to collect on these and
subsequent coupons attached to such securities.
PLEDGING SECURITIES

To United States Government
19. U pon written instructions from the owning bank and subject to the
approval o f the Treasury Department, this bank will hold securities pledged to
departments, agencies and officials of the United States as collateral to secure
deposits under the terms o f Treasury Department Circular No. 176.
To United States District Courts
20. Under designation as custodian by a United States District Court and
at the request o f the Court and a member bank, this bank will hold as collateral,
securities pledged to secure court deposits. Securities held as collateral to
secure United States District Court deposits can be substituted for, or with­
drawn, only under order o f the Court.
T o United States District Court Appointed Trustees
21. Under designation as custodian by a United States District Court, this
bank will hold in custody securities pledged as collateral to secure deposits o f
trustees in bankruptcy or receivership. Securities held as collateral to secure
deposits o f Court appointed trustees can be substituted for, or withdrawn, only
under order o f the Court.

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BULLETIN No. 7

Collateral to Treasury Tax and Loan Account
22. This bank will hold securities pledged by a member bank to secure its
Treasury T ax and Loan account. Deposit, release, or substitution of pledged
securities should be authorized by this bank acting as fiscal agent for the
United States.
PLEDGING SECURITIES — JOINT SAFEKEEPING

W ith State Treasurer — State o f Texas
23. A t the request of a member bank, subject to the approval o f the State
Depository Board, this bank will hold in joint safekeeping securities pledged
as collateral to secure deposits o f the State Treasurer. Application fo r deposit,
withdrawal, or substitution o f such pledged securities should be made on
appropriate forms furnished by this bank.
W ith Political Subdivisions
24. A t the request o f a member bank and the governing body o f a political
subdivision, this bank will hold in joint safekeeping securities pledged as col­
lateral to secure deposits o f the political subdivision. Requests for deposits,
substitutions, or withdrawals should be made on appropriate forms furnished
by this bank and executed jointly by the depository bank and the governing
body o f the political subdivision. (This paragraph is not applicable in any
state where law requires such pledged securities to be deposited within the
state.)
Trust Departments of Member Banks
25. A t the request o f a member bank and the member bank’s Trust De­
partment, this bank will hold in joint safekeeping securities pledged as col­
lateral to secure deposits o f uninvested funds o f the member bank’s Trust
Department. Deposits, withdrawals, or substitutions o f the pledged securities
should be authorized by the joint execution by the member bank and its Trust
Department o f appropriate forms furnished by this bank.
INSURANCE ON SECURITIES SHIPPED BY REGISTERED MAIL

26. Regardless o f any other provision of this bulletin, any bank or other
party shipping, or causing the shipment of, securities to this bank shall by such
action be deemed to have agreed that the risk o f loss on such shipments occur­
ring prior to the actual delivery thereof to this bank by the post office, express
company, or other carrier is not assumed by this bank but is on the sender.
Likewise, any bank ordering shipments o f securities from this bank shall by
such action he deemed to have agreed that this bank in making such shipments
undertakes merely to make delivery to the post office, express company, or
other carrier, and that the risk o f loss occurring subsequently to such delivery
is not assumed by this bank but is on the party ordering such shipment.
27. The Federal Reserve Bank o f Dallas holds open insurance policies
under which registered mail shipments o f securities made to or by this bank
may be insured. These policies afford protection against loss from the time of
acceptance by the messenger or carrier, whether within or without the premises
o f the sender, and end when actual delivery has been made to the office of

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BULLETIN No. 7

the addressee. They do not, however, cover losses through theft by the em­
ployees o f the sender or the addressee, or losses by risks generally referred to
as “ war risks.”
28. The policies contain the following clause eliminating such coverages:
“ T o cover . . . risks o f physical loss of or damage to or destruction
o f property insured, except theft on the part o f employees of
senders or addressees, but this policy does not insure against:
(a ) capture, seizure, arrest, restraint, detainment, confiscation,
preemption, requisition or nationalization, and the consequences
thereof or o f any attempt thereat, whether in time o f peace or
war and whether lawful or otherwise; any consequences o f hos­
tilities or war-like operations (whether there be a declaration o f
war or not) but the foregoing shall not exclude collision, explosion
or contact with any fixed or floating object (other than a mine or
torpedo), stranding, heavy weather or fire unless caused directly
(and independently o f the nature o f the voyage or service which
the vessel concerned or, in the case o f a collision any other vessel
involved therein, is perform ing) by a hostile act by or against a
belligerent power, the term ‘power’ as used herein including any
authority maintaining naval, military or air forces in association
with a p ow er; or any loss or damage caused by any weapon o f war
employing atomic fission or radioactive force whether in time of
peace or w ar; (b ) the consequences o f civil war, revolution, re­
bellion, insurrection, or civil strife arising therefrom, piracy, risks
o f contraband or illegal transportation or trade, and seizure or
destruction under quarantine or customs regulations.”
29. The liability o f the insurers under these policies is limited to
$10,000,000 on property from any one sender to any one addressee on any one
day unless dispatched by two or more trains, in which event the limit of
liability shall apply to each train separately.
30. Shipments o f securities by this bank, other than shipments made in
its capacity as fiscal agent o f the United States at the expense and risk of the
United States, will be made by registered mail, and, unless instructed to the
contrary, this bank will insure them as provided herein under the registered
mail policies referred to at the expense o f the member bank.
31. Shipments o f securities to the Federal Reserve Bank may be insured
under the registered mail policies referred to, at the expense and risk o f the
sender, provided the following conditions are observed:
a. On the day a shipment is made to this bank, an advice must
be sent by ordinary mail to the office to which the shipment is
addressed, showing the name of the shipper, the number o f
sacks or packages comprising the shipment, a description o f
the contents, and the amount of insurance to be effected. A
copy o f this advice should be placed in the shipment.
b. The contents o f all shipments must be verified and enclosed in
a strong wrapper, envelope, or cloth or canvas bag, securely
sealed with wax, paper seal, or in any manner acceptable to the
post office at the place o f mailing.

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BULLETIN No. 7

c. The verifying, packaging and sealing must be done by an em­
ployee o f the sender, and the sealed package must be in charge
o f a responsible person until deposited and registered at the
post office, or shall be in the custody o f an armored car service
in transit from the office o f the sender to the post office.
d. In the event o f loss o f a shipment insured under the registered
mail policies referred to, claim will be made on behalf o f the
member bank for the amount for which the shipment is in­
sured. Prompt notice o f loss should be given this bank,
together with all available details regarding the loss.
32.
Shipments o f securities by this bank as fiscal agent o f the United States
at the expense and risk o f the United States will be made by registered mail
and will be insured under the Government Losses in Shipment Act. This
coverage is provided for shipments o f United States securities upon original
issue and United States securities in exchange for temporary certificates. Risk
o f loss by the United States from such shipments terminates upon delivery by
the post office. Stock of unissued United Savings Bonds shipped to issuing
agents is the property o f the United States, and hence such shipments are at
the expense and risk o f the United States and the interest o f the Government
does not cease upon delivery by the post office.

REVISION OF THIS BULLETIN

33.
The right is reserved to withdraw, add to, or amend at any time, any
o f the provisions o f this bulletin.
Yours very truly,
Watrous H . Irons

President

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