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Fe d e r a l R e s e r v e Ba n k o f Da l l a s DALLAS, TEXAS February 12, 1963 To the Member Banks of the Eleventh Federal Reserve District: Enclosed for your information is Bulletin No. 10 of this Bank, entitled Purchase and Sale of Securities. This bulletin contains general information concerning the services of this Bank and its branches in purchasing and selling securities of the United States or its agencies for member banks, which services have been made available to member banks for many years but have not previously been included in one of our operating bulletins. This bulletin should be inserted in the ring binder of Bulletins and Regulations supplied to member banks. Please acknowledge receipt of the bulletin by signing and returning the enclosed postal card. Yours very truly, Watrous H. Irons President 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. 10 Effective February 12, 1963 PURCHASE AND SALE OF SECURITIES T o the Member Banks o f the Eleventh Federal Reserve D istrict: This bulletin describes the services o f the Federal Reserve Bank o f Dallas as agent in purchasing and selling securities o f the United States or its agencies for member banks. These services are limited to actual purchases and sales o f securities and do not include investment advisory facilities. Any bank initiating a purchase or sale order through this bank or a branch o f this bank shall by such action be deemed to have agreed to the terms and conditions o f this bulle tin. 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. A s a service to member banks in the Eleventh District, this bank will place orders for the purchase or sale o f securities o f the United States Govern ment or its agencies with security dealers. 2. Such orders will be placed as agent o f the member bank with recog nized dealers as soon as practicable after their receipt by this bank; however, orders for sales o f securities not in the possession o f this bank will be de ferred pending receipt o f the securities. I f a dealer is not designated, this bank will place the purchase or sale order with the dealer who quotes the most favorable price for the member bank. Usually such orders are placed on the basis o f competitive bids or offers. Ordinarily, on the day o f receipt o f a pur chase or sale request from a member bank, orders are placed for “ regular” de livery on the next business day, but when a member bank so requests, an effort will be made to effect a “ cash” delivery on the same day the order is placed. 3. N o charge will be made for this service except incidental expenses such as shipping charges, insurance, wire transfer fees, etc. These costs, if incurred, will be charged to the member bank’s reserve account. 4. A member bank’s reserve account will be debited for security purchases and credited for security sales unless other instructions are issued by the member bank. 5. Member banks placing orders directly with dealers may utilize this bank’s facilities for the receipt or delivery o f any class o f securities for their accounts and for the payment or collection o f funds for their accounts; how ever, this bank should be notified o f the exact amount, including interest, to be charged or credited to the reserve account. — 2— BULLETIN No. 10 INSTRUCTIONS BY MEMBER BANKS 6. Purchase and sale orders will be placed only upon instructions from an official of a member bank whose signature is on file with this bank. Instruc tions may be transmitted by letter or by telegraph or telephone, subject to con firmation by letter mailed the same day. 7. Instructions should contain a complete description o f the securities (type o f obligation, coupon rate, maturity and face amount). I f the securities are held by this bank, the custody acknowledgment number should also be given. 8. Instructions should state whether the purchase or sale is to be made at the market or at a stated price. I f no price is indicated, the order will be considered to be for purchase or sale at the market. I f a price is stated, the order should show the maximum period during which the purchase or sale may be made at that price. I f no period is specified, such orders will be held open for ten business days from the date o f receipt, and will be canceled at the expiration o f that time unless renewed by the member bank. 9. Orders to sell should indicate how the securities are held by this bank (e.g., safekeeping, collateral to the Treasury tax and loan account, pledged to secure an advance, etc.) or the source from which this bank may expect to receive the securities. 10. Orders to purchase should contain instructions as to the disposition o f the securities. REGISTERED GOVERNMENT SECURITIES 11. Sellers o f registered Government securities are responsible for their assignment in a form that is satisfactory to the United States Treasury D e partment. Credit for the proceeds o f the sale o f registered Government secur ities will, in all instances, be subject to the release o f registration by the Treasury Department after the sale has been completed. In the event the Treasury Department refuses fo r any reason to release securities from regis tration and this bank is called upon to make a refund on the sales handled through it, the amount o f such refund will be charged to the account o f the member bank. W hen specifically so requested, this bank will, as fiscal agent o f the United States, accept registered securities assigned in accordance with the regulations o f the Treasury Department, to be forwarded to the Treasury D e partment for release from registration and exchange fo r coupon securities, and after such exchange is completed, will dispose o f the coupon securities in ac cordance with the instructions o f the member bank. INSURANCE ON SECURITIES SHIPPED BY REGISTERED MAIL 12. A n y securities which are shipped to this bank to be sold for the ac count o f the sending member bank should be transmitted by insured registered mail, prepaid express, or other prepaid carrier. Securities shipped by registered mail may be insured while in transit under insurance policies maintained by this bank subject to the same terms, conditions, and restrictions that apply to BULLETIN No. 10 — 3— securities sent to this bank for safekeeping, as set forth in Bulletin N o. 7, Custody o f Securities. Shipments o f securities made by this bank by registered mail will be insured under these policies unless instructions to the contrary are received from the member bank on whose order or fo r whose account the securities are shipped. LIMITATION OF LIABILITY OF THIS BANK 13. Any bank or other party shipping or causing the shipment o f secur ities to this bank shall by such action be deemed to have agreed that the risk o f loss in such shipments occurring prior to the actual delivery o f the securities to this bank by the Post Office, including the Federal Reserve Postal Station on the premises o f this bank, express company, or other carrier, is not assumed by this bank but is on the sender. Also, any bank ordering shipments o f secur ities from this bank shall by such action be deemed to have agreed that this bank in making such shipments undertakes merely to make delivery to the Post Office, including the Federal Reserve Postal Station on the premises o f this bank, express company, or other carrier, and that the risk o f loss occurring subsequent to such delivery is not assumed by this bank but is on the party ordering such shipment. 14. The Federal Reserve Bank o f Dallas assumes no liability in connection with transactions handled under the terms o f this circular except fo r loss re sulting from negligent failure to follow a member bank’ s instructions. 15. This bank will not be responsible for the genuineness, validity, or al teration of or any defect in securities handled under the terms o f this bulletin. RIGHT TO AMEND 16. The right is reserved by this bank to withdraw, add to, or amend at any time any o f the terms and conditions o f this bulletin. Yours very truly, Watrous H . Irons President
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