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FEDERAL RESERVE B A * OF MEW YOR&C [ Circular No. 9496 ~j| May 20, 1983 TREASURY TAX AND LOAN ACCOUNTS Designation of Third-Party Custodians of Collateral T o A ll D e p o s i t o r y I n s titu tio n s in th e S e c o n d F e d e r a l R e s e r v e D i s tr ic t: The Federal R eserve Banks and the Treasury Department have jointly developed a standard agreement to be used to designate a depository institution as a third-party custodian o f collateral for Treasury Tax and Loan accounts and for deposits o f public m oney. Som e depository institutions have been acting as custodians in the past, either with or w ithout a formal agreem ent being com pleted. W e now request that all institutions functioning as custodians com ply with a standard agreem ent. Once any depository institution executes and returns to us the letter agreem ent in the form o f the Exhibit to A ppendix A to this B an k ’s Operating Circular N o. 18, the agreem ent set forth in A ppendix A w ill apply to that institution in all Federal Reserve Districts; and that institution may act as custodian o f Treasury Tax and Loan account collateral for other institutions regardless o f the Federal Reserve Districts in w hich they are located. A copy o f A ppendix A , together with a copy o f the standard agreement for your use, is enclosed. Arrangements sim ilar to those set forth in Appendix A to Operating Circular N o . 18 also w ill be found in the new A ppendix C to Operating Circular N o . 12, to be issued in the near future, w hich w ill govern third-party custody arrangements for collateral for this B an k ’s advances. Y ou w ill have to execute and return to us the letter agreements in both appendices if your institution w ishes to act as custodian o f collateral for both purposes. A ny questions regarding the new procedures m ay be directed, at the Head O ffice, to W alker F. Todd, A ssistant C ounsel (T el. N o. 212-791-5041) or Claudia K. A ngelakes, C hief, D iscount D ivision (T el. N o . 212-791-5394), and, at the B uffalo Branch, to Edw in E. M illiron, C hief, C ollection, Loans, and Fiscal A gen cy D ivision (T el. N o. 716-849-5043). A nth ony M . So lo m o n , President. LETTER AGREEMENT FOR THIRD-PARTY CUSTODY OF TREASURY TAX AND LOAN COLLATERAL [Federal Reserve Bank of New York 33 Liberty Street New York, New York 10045 Attention: Credit and Discount Department] or [Buffalo Branch Federal Reserve Bank o f New York P.O. Box 961 Buffalo, New York 14240 Attention: Collection, Loans, and Fiscal Agency Division] Gentlemen: In order to qualify and be designated by you as a third-party custodian for any Federal Reserve Bank of securities pledged to the Reserve Bank by any other depository institution (the “Pledgor”) to secure deposits of public money under 31 C.F.R. Parts 202 and 203, and in consideration of the benefits and privileges related to such qualification and designation, we agree to the provisions of Appendix A to your Operating Circular N o. 18, as revised from time to time. Enclosed is a list of Pledgors that have requested that we act as their custodian for this purpose. This letter is signed on our behalf by an officer duly authorized to execute such a document, as is evidenced by the certificate executed below. [Name o f Depository Institution ] [Street Address ] [City or Town, State ] [Zip Code] By: [Signature o f Authorized Officer] Print Name: Title: Date: I hereby certify, after review of this letter, Appendix A of Operating Circular No. 18 of the Federal Reserve Bank of New York, and the pertinent regulations issued by the Department of the Treasury at Title 31, Code of Federal Regulations, Parts 202 and 203, that the ............................................................................................... is authorized to apply to be a Custodian and that [name o f depository institution] .................................................................................. has been authorized and directed to execute this letter. [name o f authorized officer] IN WITNESS WHEREOF, I have signed my name [and affixed the seal of this depository institution]. By: [Signature o f Certifying Officer *] [corporate seal, if any] Print Name: Title: Date: * The officer m a k i n g [Enc. Cir. No. 9496] this c e r t i f i c a t i o n s h a l l h a v e t he a u t h o r i t y to d o so a n d m u s t not be the s a m e o f f i c e r s i g n i n g t h e letter. F e d e r a l o f [R e F Ie s e r v e w Y B amcc o r k Appendix A to Operating Circular No. 18 (Revised effective November 2, 1978) May 19, 1983 THIRD-PARTY CUSTODY AGREEMENT FOR TREASURY TAX AND LOAN COLLATERAL [Depository Institution’s Offer to Contract and Application for Designation as a Third-Party Custodian of Collateral Pledged Under 31 CoF„Ro Parts 202 and 203] T o A ll D e p o s i t o r y I n s titu tio n s in th e S e c o n d F e d e r a l R e s e r v e D is tr ic t: This operating circular appendix (the “Appendix”) sets forth the terms of the agreement between a depository institution (the “Custodian”) and this Bank regarding the holding, as agent for the Bank and any other Federal Reserve Bank in its capacity as Fiscal Agent o f the United States, of securities pledged to such Reserve Bank by any other depository institution (the “Pledgor”) to secure deposits o f public money under the provisions of Parts 202 and 203 of Title 31, Code o f Federal Regulations. To support its application for designa tion as custodian, and in furtherance o f this agreement, the Custodian repre sents that it is in the business of providing securities safekeeping services for other depository institutions and has done so for at least one year. In order for a Custodian to be qualified and designated as a Custodian by this Bank, the Custodian must execute and return to this Bank a letter agreement in the form specified in the Exhibit to this Appendix. T e r m s off a g r e e m e n t 1. The Custodian hereby applies to the Federal Reserve Bank of New York for designation to act as a third-party custodian for the Bank and any other Federal Reserve Bank (the “Reserve Bank”), and the Custodian promises to hold in its custody, as agent o f the Reserve Bank, those eligible securities pledged to the Reserve Bank by any Pledgor as collateral to secure deposits of public money under the provisions of 31 C.F.R. Parts 202 and 203. [Enc. Cir. No. 9496] 2. The Custodian promises to hold the securities pledged subject exclu sively to the Reserve Bank’s written or wired instructions for release, delivery, substitution, withdrawal, or other disposition. All securities shall be surren dered immediately upon receipt of a properly authorized written or wired instruction from the Reserve Bank to that effect. “Wired” transmissions as referred to in this Appendix may be sent by cable, fascimile, telegraph, or tele phone. 3. The Custodian promises to support every pledge of collateral by issuing to the Reserve Bank an advice of custody, in conformance with the fol lowing: (a) Each advice of custody shall be submitted to the Reserve Bank in accord ance with the Reserve Bank’s delivery time schedules. (b) Each advice of custody shall be issued only after the custodian has con firmed possession of the securities. (c) Each advice of custody issued shall include only securities that are nego tiable or transferable. (For requirements regarding assignment of secu rities, see 31 C.F.R. Section 202.6(d) or 203.15(e)). (d) Each advice of custody shall specify at least the following for each item of collateral represented by the advice: (i) the name of the Pledgor; (ii) the name of the Pledgor’s nominee, if any, in whose name the pledged securities are registered; (iii) an adequate description of the type and nature of the security, including the issuer, CUSIP number, issue date, maturity date, and rate of interest; and (iv) the face value of the security. 4. The Custodian promises to specify at the time of pledge the purpose of the pledge, i.e . , whether the collateral is being pledged to the Treasury under 31 C.F.R. Part 202 or Part 203, to notify the Reserve Bank of all pledges of collateral, and to adjust its records accordingly. 5. An advice of custody regularly issued with printed, facsimile, or other nonmanual signature of the Custodian shall have the same effect and be as bind ing on the Custodian as if issued and manually signed by an authorized officer of the Custodian. In order for such an advice of custody to be acceptable, the Custodian must provide the Reserve Bank with prior written notice of the Custodian’s procedures in this respect. 2 6. Each advice of custody issued to the Reserve Bank shall be conclusive evidence of the facts stated in the advice. 7. Any interest payments by the obligor with respect to securities pledged under this Appendix or the proceeds o f the redemption of maturing coupons shall be paid to the Pledgor, unless otherwise directed by wire or in writing by the Reserve Bank. 8. The Custodian holds securities as agent for the Reserve Bank without compensation from the Reserve Bank, free and clear of all liens, charges, or claims by the Custodian for safekeeping or otherwise. 9. With respect to book-entry or other securities pledged under this Appendix, the Custodian promises to indemnify and hold the Reserve Bank harmless for any loss arising from the destruction, disappearance, theft, or unauthorized release o f such securities, regardless of whether or not the Custodian has physical possession of the pledged securities. 10. With respect to those securities pledged under this Appendix that decline in value as payments of principal and/or interest are effected, the Custodian promises to provide to the Reserve Bank, on not less than a quarterly basis, a statement as to the current value of each declining-value security pledged. 11. The Custodian promises to comply with terms and conditions specified by the Reserve Bank under instructions issued to prescribe the routine mechan ics of pledging collateral, except that, in the event of any inconsistency between the terms o f this Appendix and the specified terms and conditions or the terms and conditions o f the Custodian’s advice of custody, the terms o f this Appendix shall prevail. 12. The Custodian promises to permit the Reserve Bank to inspect, during the Custodian’s regular business hours, the Custodian’s safekeeping premises, books and records of custodial accounts, and any securities pledged hereunder. 13. The acceptance of this Appendix and the designation of a depository institution as Custodian may be revoked by any Reserve Bank by providing the Custodian with advance written notice of such revocation. The revocation shall be effective ten days after the date the notice is sent or transmitted. A copy of such notice shall be transmitted simultaneously to each of the other Reserve Banks. The notice of revocation also may contain instructions to the Custodian concerning disposition of securities held pursuant to the terms of this Appen dix. 14. This Appendix, the “Offer to Contract and Application for Designa tion as a Third Party Custodian of Collateral Pledged Under 31 C.F.R. Parts 3 202 and 203, ” supersedes any prior agreements for this purpose that currrently may be in effect between the Custodian and a Reserve Bank. 15. In the absence o f contrary instructions, the Custodian may rely conclu sively upon any document or written or wired instruction received by it from the Reserve Bank or the Pledgor and signed, (a) in the case of the Federal Reserve Bank of New York, by an authorized person whose signature appears in its Operating Circular No. 1, as revised from time to time, (b) in the case of any other Reserve Bank, by an authorized person whose signature appears in its list o f authorized signatures that is equivalent to Operating Circular No. 1, and (c) in the case of the Pledgor, by an authorized person in accordance with a written list of signatures provided to the Custodian by the Pledgor. The Custodian shall have no duty of further inquiry regarding the authenticity of those documents or instructions. The Reserve Bank or the Pledgor, as appropriate, will confirm to the Custodian in writing any oral instruction as to addition, cancellation, or other revision of signing authority within one business day after the issuance of that instruction. 16. If the United States Department of the Treasury issues any amendment o f this Appendix, the Reserve Bank will endeavor to give notice of the amend ment to the Custodian as soon as possible and, in most instances, will endeavor to transmit the notice within 14 calendar days after the Reserve Bank receives the approved, final text of the amendment. Any amendment may be effective immediately and will apply to all pledges of securities under this Appendix made on or after the effective date of the amendment. 17. This Appendix shall be construed in accordance with and governed by Federal law, and the law o f the State of New York to the extent that such State law is not inconsistent with Federal law. A n th o n y M . S o l o m o n , President. 4 EXHIBIT I LETTER AGREEMENT FOR THIRD PARTY CUSTODY OF TREASURY TAX AND LOAN COLLATERAL [Federal Reserve Bank of New York 33 Liberty Street New York, New York 10045 Attention: Credit and Discount Department] or [Buffalo Branch Federal Reserve Bank o f New York P.O. Box 961 Buffalo, New York 14240 Attention: Collection, Loans, and Fiscal Agency Division] Gentlemen: In order to qualify and be designated by you as a third-party custodian for any Federal Reserve Bank of securities pledged to the Reserve Bank by any other depository institution (the “Pledgor”) to secure deposits of public money under 31 C.F.R. Parts 202 and 203, and in consideration of the benefits and privileges related to such qualification and designation, we agree to the provisions of Appendix A to your Operating Circular No. 18, as revised from time to time. Enclosed is a list of Pledgors that have requested that we act as their custodian for this purpose. This letter is signed on our behalf by an officer duly authorized to execute such a document, as is evidenced by the certificate executed below. [Name o f Depository Institution ] [Street Address ] [City or Town, State ] [Zip Code] By: [Signature o f Authorized Officer ] Print Name: Title: Date: 5 I hereby certify, after review of this letter, Appendix A of Operating Circular N o . 18 of the Federal Reserve Bank of New York, and the pertinent regulations issued by the Department of the Treasury at Title 31, Code of Federal Regulations, Parts 202 and 203, that t h e ......................................is authorized [name o f depository institution] to apply to be a Custodian and th a t............................................................ [name o f authorized officer] has been authorized and directed to execute this letter. IN WITNESS WHEREOF, I have signed my name [and affixed the seal of this depository institution]. By: ................................................................... [Signature o f Certifying Officer *] [corporate seal, if any] Print Name: Title: ......... Date: ......... * The officer m aking this certifica tio n sh a ll h ave the au th ority to do so an d m ust not be the sam e officer sign in g the letter. 6 ACCEPTANCE The Federal Reserve Bank of New York [, Buffalo Branch], acting as Fiscal Agent of the United States, and on behalf of each of the other Federal Reserve Banks, hereby designates...................................................................................... as [name o f depository institution ] third-party custodian and accepts the offer to contract made by the custodian, effective on the date set forth below, in accordance with the provisions of Appendix A to this Bank’s Operating Circular No. 18, as revised from time to time. Federal Reserve Bank of New York [Buffalo Branch] as Fiscal Agent o f the United States By: ........... [Signature o f Official] Print Name: Title: Date: 7
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