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Fe d e r a l R e s e r v e B a n k of Dallas DALLAS. TEXAS 7 5 2 2 2 Circular N o. 69-217 August 21, 1969 AMENDMENTS TO REGULATIONS D AND Q To All Member Banks in the Eleventh Federal Reserve District: The Board of Governors of the Federal Reserve System adopted, effective August 15, 1969, clarifying amendments to the recently adopted regulatory provisions narrowing the exceptions under Regulation D and Regulation Q that are available to banks using repurchase agreements. Two copies of the amendments are enclosed. It is requested that member banks place one copy with Regulation D and one copy with Regulation Q in the ring binder containing the Regulations of the Board of Governors and the Bulletins of this Bank. Also enclosed is a copy of the Board’s press release regarding the amendments. Yours very truly, P. E. Coldwell President Enclosures (3) This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) TITLE 12 — BANKS AND BANKING CHAPTER I I — FEDERAL RESERVE SYSTEM SUBCHAPTER A — BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [Regulations D, Q ] PART 204 — RESERVES OF MEMBER BANKS PA RT 217 — INTEREST ON DEPOSITS Repurchase Agreements on Part Interests in Government and Agency Obligations 1. Effective August 15, 1969, Section 2 0 4.1(f) and Section 2 17.1 (f) are amended by striking in clause (2 ) thereof “(other than a part interest in such obligations)”. 2a. The purpose of the amendment is to eliminate the requirement that a member bank must transfer its entire interest in a particular obligation in order for a borrowing by it through a “sale” under repurchase agreement of direct obligations of, or obligations that are fully guaranteed as to principal and interest by, the United States or any agency thereof to be classified as a nondeposit borrowing. b. The amendment, which constitutes a minor relaxation of a recent amendment (published in the Federal Register of lu ly 30, 1969, 34 F.R. 12430) narrowing the scope of permissible nondeposit bank liabilities on repurchase agreements, was adopted by the Board without following the procedures of section 553 of Title 5, United States Code, relating to notice, public participation, and deferred effective dates. Requiring a bank to trans fer its entire interest in a Government or agency obligation in order for its liability to be classified as a nondeposit borrowing can be avoided by the denominational exchange procedures available with respect to such obliga tions. In the circumstances, the Board found that the time, inconvenience, and cost to both member banks and the Government that would be involved if the recent amendment became fully effective as earlier adopted would be contrary to the public interest. Adopted August 15, 1969. By order of the Board of Governors. (Signed) Kenneth A . Kenyon Kenneth A. Kenyon, Deputy Secretary. (SEAL) TITLE 12 — BANKS A N D BAN KING CHAPTER II — FEDERAL RESERVE SYSTEM SUBCHAPTER A — BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM [Regulations D, Q I PART 204 — RESERVES OF MEMBER BANKS PA RT 217 — INTEREST ON DEPOSITS Repurchase Agreements on Part Interests in Government and Agency Obligations 1. Effective August 15, 1969, Section 2 0 4.1(f) and Section 2 17.1 (f) are amended by striking in clause (2 ) thereof “ (other than a part interest in such obligations)”. 2a. The purpose of the amendment is to eliminate the requirement that a member bank must transfer its entire interest in a particular obligation in order for a borrowing by it through a “sale” under repurchase agreement of direct obligations of, or obligations that are fully guaranteed as to principal and interest by, the United States or any agency thereof to be classified as a nondeposit borrowing. b. The amendment, which constitutes a minor relaxation of a recent amendment (published in the Federal Register of July 30, 1969, 34 F.R. 12430) narrowing the scope of permissible nondeposit bank liabilities on repurchase agreements, was adopted by the Board without following the procedures of section 553 of Title 5, United States Code, relating to notice, public participation, and deferred effective dates. Requiring a bank to trans fer its entire interest in a Government or agency obligation in order for its liability to be classified as a nondeposit borrowing can be avoided by the denominational exchange procedures available with respect to such obliga tions. In the circumstances, the Board found that the time, inconvenience, and cost to both member banks and the Government that would be involved if the recent amendment became fully effective as earlier adopted would be contrary to the public interest. Adopted August 15, 1969. By order of the Board of Governors. (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Deputy Secretary. (SEAL) FEDERAL press RESERVE release For immediate release. A u gu st 15, 1969. The Board of Governors of the Federal Reserve S y s t e m today issued a c la ri f yi ng amendment to rec en tl y adopted r e gu la t or y provisions n a r r o w i n g the e xemptions under R e g u l a t i o n D R eg ul a t i o n Q (interest on deposits) repurc h as e agreements. (member b a n k reserves) and that are av a ilable to banks using The cl a ri f i c a t i o n w i l l permit banks to continue to execute repurc ha s e a greements on a part interest in T r e a su ry or Federal agency o b l ig a ti on s that are eligible for p u rchase by Reserve Banks, and to cl assify their liability thereon as a nondeposit borrowing. As issued b y the Board on Jul y 24, amendments to Regulations D and Q granted exemptions t h e r ef r om for r ep ur c h a s e agreements T r easury or Federal ag ency o b ligations "other obl i ga ti o ns ." involving than a part interest The clarif yi ng amendment delet es in such the phrase "other than a part interest in such obligati on s ." A repur ch as e agreement involves the sale of ma rket instruments w i t h an agreement to buy them b a c k at a later date. T he clarifying a me ndment constitutes a minor ad ap ta t io n of the provisi on s adopted during J ul y and eliminates the requi re me n t that a member ban k must transfer its entire interest in a particular Tre as ur y or Federal agency issue under this type tran sa ct i on for the ex e mption to apply. -0-
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