Secretary of the Treasury is satisfied as to the identity of the security and that any missing portions are not sufficient to form the basis of a valid claim against the United States. (c) If the security is one which by the provisions of law or by the terms of its issue is nontransferable or is transferable only by operation of law.12 12 (d) If the owner or holder is the United States, a Federal Reserve Bank, a Federal Government corporation, a State, the District of Columbia, a Territory or possession of the United States, a municipal corporation, or, if applicable, a political subdivision of any of the foregoing, or a foreign government. Subpart O-Book-Entry Procedure AUTHORITY: The provisions of this Subpart O issued under sec. 8, 50 Stat. 481, as amended, R.S. 3706; secs. 1, 4, 18, 5, 40 Stat. 288 as amended, 290, as amended, 1309, as amended; secs. 19, 20, 48 Stat. 343, as amended; 31 U.S.C. 738a, 739, 752, 752a, 753, 754, 754a, 754b. SOURCE: The provisions of this Subpart O appear at 36 F.R. 6749, Apr. 8, 1971, unless otherwise indicated. § 306.115 Definition of terms. In this subpart, unless the context otherwise requires or indicates: (a) "Reserve Bank" means a Federal Reserve Bank and its branches acting as Fiscal Agent of the United States and when indicated acting in its individual capacity. (b) "Treasury security" means a Treasury bond, note, certificate of indebtedness, or bill issued under the Second Liberty Bond Act, as amended, in the form of a definitive Treasury security or a book-entry Treasury security. (c) "Definitive Treasury security" means a Treasury bond, note, certificate of indebtedness, or bill issued under the Second Liberty Bond Act, as amended, in engraved or printed form. (d) "Book-entry Treasury security" means a Treasury bond, note, certificate of indebtedness, or bill issued under the Second Liberty Bond Act, as amended, in the form of an entry made as prescribed in this subpart on the records of a Reserve Bank. (e) "Pledge" includes a pledge of, or any other security interest in, Treasury 12 Other than savings bonds and savings notes, which are not subject to these regulations. 66-069-72- -13 securities as collateral for loans or advances or to secure deposits of public monies or the performance of obligation. an * * (f) "Date of call" (see § 306.2) is "the date fixed in the official notice of call published in the FEDERAL REGISTER * on which the obligor will make payment of the security before maturity in accordance with its terms." (g) "Member bank" means any national bank, State bank, or bank or trust company which is a member of a Reserve Bank. (h) "Book-entry custodian" means a bank, banking institution, financial firm, or similar party, which (1) regularly accepts in the course of its business Treasury securities as a custodial service for customers, (2) maintains accounts in the name of such customers reflecting ownership of or interest in such securities which are deposited in a book-entry account under § 306.117(a) (3) with such customers' consent, and (3) complies with the procedures and conditions for maintaining such accounts prescribed by the Reserve Bank maintaining such book-entry Treasury securities. § 306.116 Authority of Reserve Banks. Each Reserve Bank is hereby authorized, in accordance with the provisions of this subpart, to (a) issue book-entry Treasury securities by means of entries on its records which shall include the name of the depositor, the amount, the loan title (or series) and maturity date; (b) effect conversions between bookentry Treasury securities and definitive Treasury securities; (c) otherwise service and maintain book-entry Treasury securities; and (d) issue a confirmation of transaction in the form of a written advice (serially numbered or otherwise) which specifies the amount and description of any securities, that is, loan title (or series) and maturity date, sold or transferred and the date of the transaction. § 306.117 Scope and effect of bookentry procedure. (a) A Reserve Bank as Fiscal Agent of the United States may apply the bookentry procedure provided for in this subpart to any Treasury securities which have been or are hereafter deposited for any purpose in accounts with it in its individual capacity under terms and conditions which indicate that the Reserve Bank will continue to maintain such deposit accounts in its individual capacity, notwithstanding application of the book-entry procedure to such securities. This paragraph is applicable, but not limited, to securities deposited: (1) As collateral pledged to a Reserve Bank (in its individual capacity) for advances by it; (2) By a member bank for its sole account; (3) By a member bank held for the account of its customers; (4) In connection with deposits in a member bank of funds of States, municipalities, or other political subdivisions; or, (5) In connection with the performance of an obligation or duty under Federal, State, municipal, or local law, or judgments or decrees of courts. The application of the book-entry procedure under this paragraph shall not derogate from or adversely affect the relationships that would otherwise exist between a Reserve Bank in its individual capacity and its depositors concerning any deposits under this paragraph. Whenever the book-entry procedure is applied to such Treasury securities, the Reserve Bank is authorized to take all action necessary in respect of the bookentry procedure to enable such Reserve Bank in its individual capacity to perform its obligations as depository with respect to such Treasury securities. (b) A Reserve Bank as Fiscal Agent of the United States shall apply the bookentry procedure to Treasury securities deposited as collateral pledged to the United States under Treasury Department Circulars Nos. 92 and 176, both as revised and amended, and may apply the book-entry procedure, with the approval of the Secretary of the Treasury, to any other Treasury securities deposited with a Reserve Bank as Fiscal Agent of the United States. (c) Any person having an interest in Treasury securities which are deposited with a Reserve Bank (in either its individual capacity or as Fiscal Agent) for any purpose shall be deemed to have consented to their conversion to book-entry Treasury securities pursuant to the provisions of this subpart, and in the manner and under the procedures prescribed by the Reserve Bank. (d) No deposits shall be accepted under this section on or after the date of maturity or call of the securities. (a) (1) A pledge of book-entry Treasury securities maintained under § 306.117 is effected, notwithstanding any provision of law to the contrary, by a Reserve Bank making an appropriate entry in its records of the amount of the securities pledged. (2) In addition, a pledge of transferable book-entry Treasury securities maintained under § 306.117(a)(3), or under any other provision of § 306.117 to the extent and in the manner provided under procedures prescribed by the Reserve Bank maintaining the book-entry Treasury securities, may be effected by (i) the making of appropriate entries on the books of a member bank or other book-entry custodian which evidence that such Treasury securities are held by it for the account of the pledgee, and (ii) issuance by such member bank or bookentry custodian of an advice directed to the pledgee reflecting such entries and acknowledging such holding. (b) The making of such entries under paragraph (a) of this section, and issuance of any required advice as provided for in paragraph (a)(2) of this section, (i) shall have the effect of a delivery of definitive Treasury securities in bearer form in the amount of the obligations pledged; (ii) shall have the effect of a taking of delivery by the pledgee; (iii) shall effect a perfected security interest therein in favor of the pledgee; and (iv) shall constitute such pledgee a holder. (c) No filing or recording with a public recording office or officer shall be necessary to perfect any pledge in any bookentry Treasury securities under this subpart. (d) A Reserve Bank shall, upon receipt of appropriate instructions, convert book-entry Treasury securities into definitive Treasury securities and deliver them to its depositor; and the pledge interest of the pledgee in such book-entry Treasury securities prior to conversion to definitive securities shall continue without interruption to be fully effective with respect to such definitive securities. § 306.119 Limitations on transfers or pledges. Except as provided in this subpart, book-entry Treasury securities may not be assigned, transferred, hypothecated, pledged as collateral, or used as security for the performance of an obligation. § 306.120 Withdrawals and transfers. (a) (1) Withdrawals and transfers of book-entry Treasury securities may be made upon a depositor of a Reserve Bank requesting (i) delivery of like definitive Treasury securities to itself or on its order to a transferee, or (ii) transfer to any transferee eligible to maintain a book-entry account in its name with a Reserve Bank under § 306.117. (2) In addition, a transfer of transferable book-entry Treasury securities maintained under § 306.117(a)(3) may be effected, by (i) the making of appropriate entries on the books of a member bank or other book-entry custodian which evidence that such Treasury securities are held by it for account of the transferee, and (ii) issuance by such member bank or book-entry custodian of an advice directed to the transferee reflecting such entries and acknowledging such holding. (b) The transfer of a book-entry Treasury security as provided in this section shall have the same effect as a delivery to the transferee of definitive Treasury securities in bearer form. The transfer of book-entry Treasury securities within a Reserve Bank will be made in accordance with procedures established by the latter not inconsistent with this subpart. The transfer of book-entry Treasury securities between Reserve Banks may be made through a telegraphic transfer procedure. (c) All requests for withdrawal or for transfer must be made prior to the maturity or date of call of the securities. Treasury bonds and notes which are actually to be delivered upon withdrawal or transfer may be issued either in registered or in bearer form, except that EA and EO series of Treasury notes will be issued in bearer form only. -9 ury securities held by a Reserve Bank (in either its individual capacity or as Fiscal Agent) on the effective date of this subpart for any purpose specified in § 306.117(a). Registered Treasury securities deposited thereafter with a Reserve Bank for any purpose specified in § 306.117 shall be assigned for conversion to book-entry Treasury securities. The assignment, which shall be executed in accordance with the provisions of Subpart F of the regulations in this part, so far as applicable, shall be to "Federal Reserve Bank of as Fiscal Agent of the United States, for conversion to book-entry Treasury securities." § 306.123 Servicing book-entry Treasury securities; payment of interest, payment at maturity or upon call. Interest becoming due on book-entry Treasury securities shall be charged in the Treasurer's account on the interest due date and remitted or credited in accordance with the depositor's instructions. Such securities shall be redeemed and charged in the Treasurer's account on the date of maturity, call or advance refunding, and the redemption proceeds, principal and interest, shall be disposed of in accordance with the depositor's instructions. Subpart P-Miscellaneous Provisions SOURCE: The provisions of this Subpart P contained in Department Circular 300, Third Revision, 29 F.R. 19020, Dec. 30, 1964, unless otherwise noted. Redesignated, 32 F.R. 15672, Nov. 14, 1967 and 36 F.R. 12833, July 8, 1971. § 306.125 Additional requirements. In any case or any class of cases arising under these regulations the Secretary of the Treasury may require such additional evidence and a bond of indemnity with or without surety, as may in his judgment be necessary for the protection of the interests of the United States. § 306.126 Waiver of regulations. The Secretary of the Treasury reserves the right, in his discretion, to waive or modify any provision or provisions of these regulations in any particular case or class of cases for the convenience of the United States or in order to relieve any person or persons of unnecessary hardship, if such action is not inconsistent with law, does not impair any existing rights, and he is satisfied that such action would not subject the United States to any substantial expense or liability. § 306.127 Preservation of existing rights. Nothing contained in these regulations shall limit or restrict existing rights which holders of securities heretofore issued may have acquired under the circulars offering such securities for sale or under the regulations in force at the time of acquisition. § 306.128 Supplements, amendments or revisions. The Secretary of the Treasury may at any time, or from time to time, prescribe additional, supplemental, amendatory or revised regulations with respect to United States securities. Appendix-Computation of Interest on Treasury Bonds, Treasury Notes, and Treasury Certificates of Indebtedness, and Computation of Discount on Treasury Bills TREASURY BONDS, TREASURY NOTES, AND TREAS- Computation of interest will be made on an annual basis in all cases where interest is payable in one amount for the full term of the security, unless such term is an exact quarter-year (3 months) or an exact halfyear (6 months), when it is provided that interest shall be computed on a quarterly or semiannual basis, respectively. If the term of the securities is exactly one year, the interest is computed for the full period at the specified rate, regardless of the number of days in such period. If the term of the securities is less than one full year, the annual interest period for purposes of computation is considered to be the full year from but not including the date of issue to and including the anniversary of such date. If the term of the securities is more than one full year, computation is made on the basis of one full annual interest period, ending with the maturity date, and a fractional part of the preceding full annual interest period. The computation of interest for any fractional part of an annual interest period is made on the basis of 365 actual days in any such period, or 366 days if February 29 falls within such annual period. COMPUTATION OF INTEREST ON A SEMIANNUAL BASIS ONE DAY'S INTEREST IS 1/181, 1/182, 1/183 OR 1/184 OF 1/2 YEAR'S INTEREST Computation of interest will be made on a semiannual basis in all cases where interest is payable for one or more full half-year (6 months) periods, or for one or more full halfyear periods and a fractional part of a halfyear period. A semiannual interest period is an exact half-year or 6 months, for computation purposes, and may comprise 181, 182, 183 or 184 actual days. An exact half-year's interest at the specified rate is computed for each full period of exactly 6 months, irrespective of the actual number of days in the half-year. If the initial interest covers a fractional part of a half-year, computation is made on the basis of the actual number of days in the half-year (exactly 6 months) ending on the day such initial interest becomes due. If the initial interest covers a period in excess of 6 months, computation is made on the basis of one full half-year period, ending with the interest due date, and a fractional part of the preceding full half-year period. Interest for any fractional part of a full half-year period is computed on the basis of the exact number of days in the full period, including February 29 whenever it falls within such a period. The number of days in any half-year period is shown in the following table: ONE DAY'S INTEREST IS 189, 160, 161, OR 12 OF 14 YEAR'S INTEREST Computation of interest will be made on a quarterly basis in all cases where interest is payable for one or more full quarter-year periods, or for one or more full quarter-year periods and a fractional part of a quarteryear period. A quarter-year interest period is an exact quarter-year of three months, and may comprise 89, 90, 91 or 92 days. An exact quarteryear's interest is computed for each full quarter-year period irrespective of the actual number of days in the quarter-year. For a fractional part of any quarter-year, computation is on the basis of the actual number of days in such quarter-year (February 29 being included if it falls within any such quarteryear). If the initial interest covers a fractional part of a quarter-year (preceding a full quarter-year period), computation is on the basis of the actual number of days in the quarter-year (exactly months) ending on the day such initial interest becomes due; if the final interest covers a fractional part of a quarter-year (following a full quarter-year period), computation is on the basis of the actual number of days in the quarter-year beginning on the day such final interest begins to accrue and ending exactly three months thereafter. The number of days in any quarter-year period is shown in the following table: In the appended tables decimals are set forth for use in computing interest for fractional parts of interest periods. The decimals cover interest on $1,000 for one day in each possible quarterly (table I), semiannual (table II), and annual (table III) interest period, at all rates of interest, in steps of % percent, from 1% to 6 percent. The amount of interest accruing on any date (for a fractional part of an interest period) on $1,000 face amount of any issue of Treasury bonds, Treasury notes, or Treasury certificates, of indebtedness may be ascertained in the following way: (1) The date of issue, the dates for the payment of interest, the basis (quarterly, semiannual or annual) upon which interest is computed, and the rate of interest (percent per annum) may be determined from the text of the security, or from the official circular governing the issue. (2) Determine the interest period of which the fraction is a part, and calculate the number of days in the full period to determine the proper column to be used in selecting the decimal for one day's interest. (3) Calculate the actual number of days in the fractional period from but not including the date of issue or the day on which the last preceding interest payment was made, to and including the day on which the next succeeding interest payment is due or the day as of which the transaction which terminates the accrual of additional interest is effected. (4) Multiply the appropriate decimal (one day's interest on $1,000) by the number of days in the fractional part of the interest period. The appropriate decimal will be found in the appended table for interest payable quarterly, semiannually, or annually, as the case may be, opposite the rate borne by the security, and in the column showing the ful interest period of which the fractional period is a part. (For interest on any other amount, multiply the amount of interest on $1,000 by the other amount expressed as a decimal of $1,000.) Treasury Bills The methods of computing discount rates on U.S. Treasury Bills are given below: Computation will be made on an annual basis in all cases. The annual period for bank discount is a year of 360 days, and all computations of such discount for a fractional part of a year will be made on that basis. The annual period for true discount is one full year from but not including the date of issue to and including the anniversary of such date. Computation of true discount for a fractional part of a year will be made on the basis of 365 days in the year, or 366 days if February 29 falls within the year. Bank Discount The bank discount rate on a Treasury bill may be ascertained by (1) subtracting the sale price of the bill from its face value to obtain the amount of discount; (2) dividing the amount of discount by the number of days the bill is to run to obtain the amount of discount per day; (3) multiplying the amount of discount per day by 360 (the number of days in a commercial year of 12 months of 30 days each) to obtain the amount of discount per year; and (4) dividing the amount of discount per year by the face value of the bill to obtain the bank discount rate. |