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F ed er a l R eser ve Ba n k



DALLAS, TEXAS 7 5 2 2 2

Circular No. 74-23
January 28, 1974


To All Banking Institutions and Others Concerned
in the Eleventh Federal Reserve D istrict:

In our Circulars Nos. 73-64, dated March 30, 1973, 73-264, dated October 18, 1973, and 74-17,
dated January 21, 1974, we reported on the status of the program for the further expansion of the
book-entry procedure (a) to include Treasury securities held by all member banks throughout the
country for the account of their customers, and (b) to include eligible U. S. Government Agency
securities. Circular No. 73-64 also set forth the options available to each member bank in the
Eleventh Federal Reserve District with respect to opening “Investment,” “Trust,” and “General”
book-entry accounts, in addition to the various book-entry collateral accounts maintained by this
Bank. The expanded book-entry program offers to member banks the opportunity to reduce sub­
stantially the risk of loss of definitive securities; to eliminate the repetitive and burdensome
handling of such securities and related coupons; and to expedite and simplify the delivery of
securities in connection with sales and other market transactions, through the telegraphic transfer
Following is a report on the progress being made in the application of the expanded book-entry
program to Treasury and eligible Government Agency securities and in the development of the
telegraphic securities-transfer procedure.
Treasury securities

During the past year, through the joint efforts of the Federal Reserve System and member
banks throughout the country considerable progress has been made in converting marketable
Treasury securities held by member banks into book-entry form. Data compiled by the United
States Treasury Department indicates that, of a total of $270.2 billion of marketable Treasury
securities outstanding as of December 31, 1973, $176.6 billion — 65.3 percent — had been converted
into book-entry form. Of the remaining $93.6 billion of Treasury securities eligible for conversion
into book-entry form, $87 billion — 32.2 percent of total marketable Treasury securities — were
held in bearer form and $6.6 billion — 2.5 percent — were held in registered form.
Information available to the Federal Reserve Banks indicates that the majority of the Treasury
securities not yet converted into book-entry form consists of holdings by banks for customers,
including correspondent banks, nonbank dealers, and trust (fiduciary) accounts, and that such
holdings are maintained primarily in major financial centers such as New York City. Discussions

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are currently being held with member banks in each Federal Reserve District urging that all
reasonable steps be taken to expedite the conversion into book-entry form, at the earliest practicable
date, of the remaining definitive Treasury securities being held by banks.
Agency securities

Circulars Nos. 73-64, 73-264, and 74-17 also referred to the issuance of regulations by several
United States Government Agencies to permit application of the book-entry procedure to their
obligations. As a result of those regulations, approximately $3 billion of securities issued by the
Banks for Cooperatives, Federal Home Loan Banks, Federal Intermediate Credit Banks, Federal
Land Banks, and the United States Postal Service held by member banks throughout the country
have already been converted into book-entry form. This represents approximately eight percent
of the estimated $36.5 billion in bearer securities of those Agencies that are currently outstanding.
In addition to the Agencies enumerated above, the Farmers Home Administration, on December
6, 1973, published a book-entry regulation in the Federal Register and issued securities eligible
for issuance in book-entry form dated December 28, 1973. Accordingly, any securities eligible for
conversion into book-entry form that are issued by the Farmers Home Administration and deposited
with us for safekeeping will be converted into book-entry form.
Also, the Federal National Mortgage Association published a proposed book-entry regulation in
the Federal Register on December 14, 1973, inviting comment from interested persons on or before
January 18, 1974.
Telegraphic securities transfers

The facilities of the Federal Reserve interdistrict wire network are increasingly being employed
to effect the transfer of Government Agency Securities eligible for conversion into book-entry
form between the Federal Reserve Bank of New York and other Federal Reserve Banks and
Branches. Delivery of such securities by wire in this District can be made only to book-entry
accounts maintained in the name of a member bank.
It is urged that your bank review the advantages and savings that can be realized with full
utilization of the book-entry procedure. Representatives of this Bank will be glad to provide you
with any information that will assist you in the development of internal procedures. Questions
regarding this circular letter or the book-entry procedure should be directed to the officers in
charge of Fiscal Agency activities at any of our offices.
Additional copies of this circular will be available on request.
Yours very truly,
P. E. Coldwell

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