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U ' t y J u - ^ o q February 26, 1985 To the Addressee: Enclosed is a copy of a statement issued on February 22, 1985 by the Treasury Department announcing plans to offer its marketable securities in book-entry form only, beginning about mid-vear 1986. Questions regarding this announcement should be directed to Robert J. Kammarada, Chief, Issues Division (Tel. No. 212-791-8180). Additional copies of the enclosure are available upon request directed to the Circulars Division. FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent of the United States TREASURY NEWS departm ent o f the Treasury • W ash in gto n , D.C. • Telephone 566-2041 FOR IMMEDIATE RELEASE February 2 2 , 1085 CONTACT? Brlen l e m o n 1202) ^§€-2041 TREASURY ANNOUNCES PLANS TO OFFER ITS MARKETABLE SECURITIES IN BOOK-ENTRY £ORM ONLY Th© Department of the Treasury has announced plans to offer issues of its marketable bonds and notes in b©ok-tnfery form exclusively, beginning in 1086* The Treasury hopes that thii early announcement will help investors and the financial community with their planning and enable States to change their laws, where such laws may still specify holding securities in (certificate for m for certain purposes* Although Treasury bond§ and notes are available today in both engraved certificate and book-entry form, approximately §5% of Treasury marketable securities* including all Treasury bill©* are presently held as book-entries* The book-entry procedure* in which lecuritiei are issued and maintained' as computerised records* offers important benefits to investors* the financial community* and the Treasury by substantially improving operating efficiency and eliminating the risk of loss in handling engraved certificates* Payment at maturity is automatic and does not require presentation of a security* Recognising the efficiencies of the book-entry system* the President0! Private Hector Survey ©n Cost Control fGrace Commission) has endorsed Treasury* plans for full book-entry. Investors may ©bfeain bonds and notes in book-sntry 'form today through depository institutions* brokers and dealer© that have book-entry accounts linked to or maintained directly at Federal Reserve Banks and Branches. When full book-entry is implemented in 1016* investors will also be able to establish ^©©k-^ntry bond and note accounts directly with the Treasury* as they ean today for Treasury bills* A new automated system currently ii being developed for Treasury by the Philadelphia Federal missive Bank . to maintain and service such marketable securities* Bonds and notes that have been issued under offering circulars that authorize both certificate and book-entry form will continue to be available in such forms even affcsr the implementation date for full book-entry in 1086* Bering the coming year* Treasury intends to provide periodic updates ©n the status of its book-entry plans. Federal Reserve Bank of New York QUESTIONS AND ANSWERS ABOUT F U U BOOK-ENTRY 1o t% is Treasury planning to move to f a ll tek-@ ntry? Iook-@ntfy securities ere s ig n ific a n tly less eostly t© Issue and s§F¥le§ thin engravad «eiri1?1eiissa Book-entry a ll© Riduetf the risk of loss t© investors. to Sfaat f a l l book-entry otant Full book-tniry means that about mid-1986 (the exact date his not yet t e n determined) the Trtasury w ill o ffe r new Issues of marketable Trtasury tends and notes 1n 'book-entry form only. Engraved c e rtific a te s w ill not be available fo r these issues, 3, -How bo^ook-entry Treasury secu rities d if f e r from registered securities? ieok-antry securities are evidenced by computer entries on the records ©f Treasury, a Federal Reiervi Bank, a fin an cial In s titu tio n , or other eu sto d to 0 while r§g1si©r§d securities are ©ngraved c e rtific a te s held by the 1 n v iit© r0 With book-entry s e c u ritie s , In terest payments and the par amount at m aturity ere paid autom atically, With registered s e c u ritie s , in te re s t 1s paid automatically® but the c e r tific a te must be presented fo r payment at maturity. 4a I'a what forms a rt Treasury securities eur?wt1y available? Treasury b ills have been offered only in bosk-entry form since 1979, Slew Issues of Treasury-bonds and nobii a rt o f f grid today 1n e ith e r book-entry or registered form* Be fefhst Trtasury securities are effected? All Treasury marketable securities w ill be affected . The elimination ©f engraved c e rtific a te s w ill only a ffe c t bonds and notes since b ills have been available ©r?1y in book-entry form since 1S79. However, a ll Treasury marketable securities - bonds, notes and b ills - w ill be affected In that they w ill a ll be fo^irned by a n§we single set e f regulations0 Uo other Treasury 3tcur1t1es0 Including savings bonds, w ill be affected. <So I f an investor frss 1 registered ©r b ia r tr 's te u r ity Issued prior to fu ll t e k - i n i r y 0 w ill i t have to be converted to book-entry 1n 1986? Mo. I f gfl o fferin g ©f Trtisury securities authorized th e ir Issusnct 1n t e r t r or registered form0 they w ill eontinu§ to'be available In such form u n til the maturity of those securities® end no outstanding c e rtific a te s w ill be affected by fu ll ^ok°@ atfjc (Over) ?o Will o^y existing book-entry account at a financial Institution b© affected by this change? Uo* Investors w ill be able to continue to have their Treasury securities held 1n book-entry accounts i t financial In stitu tio n s# brokers, Qt€o With this change, Investors w ill si so b§ abl© to hold book-entry bonds and Rotes directly in a Treasury account. So ®nee full book-entry is in effect# will t be abl© to purchase Treasury securities through a e w t P d a l fininelal Institution? Yes0 purchases can bt arranged 1n the same way as they apt today. In add1tionp ioveitors will bt able to purchase book-entry bonds and notes directly from a Federal Reserve Bank or Branch and have the book-entry securities held in an account maintained by the Department of the Treasury, A row automated system Is being developed which will allow Investors to have a single account with Treasury for their bonds, Rotes and b ills . 9o Mill I be charged a fe© for holding book-entn/ securities 1n an account with Treasury? It is expected that book-entry note and bond accounts with the Treasury will bt maintained free of charge# just as book-entry b ill accounts ore todayo 10o Will I be able to sell ©r pledge book-entry securities? Yes. look-entry bonds and notes held at financial Institutions and securities dealers will remain as marketable as bonds and notes issued in certificate form. However,, securities held 1n the Treasury system will not be available for a direct pledge or salt. They will f ir s t have to be transferred to a.financial institution before the pledge or sale can be conducted. lie Will any exceptions be raadt to full book-entry for Institutional investors who nay currently be required by State law or regulation to hold Treasury securities in certificate form? No. £6aw issu is of marketable Treasury securities will not b® available in certificate form once full book-entry is 1n effect.
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