[Federal Register Volume 64, Number 27 (Wednesday, February 10, 1999)]
[Rules and Regulations]
[Pages 6526-6527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3155]
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 357
Regulations Governing Book-Entry Treasury Bonds, Notes and Bills
AGENCY: Bureau of the Public Debt, Fiscal Service, Department of the
Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the regulations governing book-entry
Treasury bills, bonds, and notes by changing the time period during
which the Department of the Treasury (Treasury) may delay the transfer
of a newly-purchased security from TreasuryDirect to an account in
TRADES. The previous rule provided that for Treasury bonds and notes
purchased on original issue or on the
[[Page 6527]]
additional issue of an outstanding issue, transfer from or within
TreasuryDirect could be delayed for a period not to exceed 14 calendar
days. The potential delay was to ensure that payment, if made by check,
could be received and properly credited to Treasury's account. This
amendment permits Treasury to delay the transfer of a newly-purchased
security from TreasuryDirect to an account in TRADES for a period not
to exceed 30 days. The previous 14 day period is not appropriate if
using Pay Direct. With Pay Direct, investors purchase securities by
having the funds electronically deducted from their deposit account at
their financial institution and the 30 day period provides additional
time for the investor to become aware of any unauthorized debit. This
change benefits Treasury in preventing the transfer and sale of the
security before the investor has time to discover any unauthorized
debit that may have occurred.
DATES: Effective February 10, 1999.
FOR FURTHER INFORMATION CONTACT: Maureen Parker, Director, Division of
Securities Systems, Bureau of the Public Debt (304) 480-7761; Susan
Klimas, Attorney-Adviser, Office of the Chief Counsel, Bureau of the
Public Debt (304) 480-3688; Edward C. Gronseth, Deputy Chief Counsel,
Office of the Chief Counsel, Bureau of the Public Debt (304) 480-3692.
SUPPLEMENTARY INFORMATION: The previous rule permitted Treasury to
delay the transfer of a Treasury bond or note (but not a bill)
purchased on original issue or on the additional issue of an
outstanding issue. The delay could not exceed 14 calendar days from the
date of issue. The purpose of the delay was to protect Treasury from a
loss by providing enough time for a personal check written in payment
for the security to clear. The delay prevented an owner from
transferring the security into an account in TRADES and selling the
security before the check could clear, thus preventing a potential loss
to Treasury. Bills were not included in the securities subject to the
delay because a personal check cannot be used to pay for a bill.
Currently, an investor has the additional option of paying for a
security through Pay Direct, which is a debit to the investor's
checking or savings account at a financial institution. Pay Direct may
be used to purchase bills as well as notes or bonds. If the debit is
unauthorized, the investor may not discover the debit for a period of
time which may exceed the previous 14 day delay period. If the security
is transferred to an account in TRADES and sold on the market prior to
the discovery of an unauthorized debit, Treasury could sustain a loss
because Treasury would make a reimbursement to the account holder at
the depository financial institution. Therefore, this rule has been
amended to provide the investor a reasonable period of time to discover
any unauthorized debit. The 30 day time frame will now apply to bills,
since bills may be paid for by Pay Direct.
The time period of 30 days is considered a reasonable period of
time for an investor to discover an unauthorized debit. Of course, an
investor could discover an unauthorized debit after the 30 day period
of time. However, there is a need to balance the burden placed on an
investor and the risk to Treasury from an unauthorized debit. The 30
day time frame was considered a reasonable balance among various
interests.
Procedural Requirements
This final rule does not meet the criteria for a ``significant
regulatory action,'' pursuant to Executive Order 12866.
This final rule relates to matters of public contract and
procedures for U.S. securities. Accordingly, pursuant to 5 U.S.C. 553
(a) (2), the notice, public comment and delayed effective date
provisions of the Administrative Procedure Act do not apply.
As no notice of proposed rulemaking is required, the provisions of
the Regulatory Flexibility Act (5 U.S.C. 601, et seq.) do not apply.
There are no new collections of information contained in this final
rule., Therefore, the Paperwork Reduction Act does not apply.
List of Subjects in 31 CFR Part 357
Bonds, Electronic funds transfer, Federal Reserve System,
Government securities, Securities.
Dated: February 2, 1999.
Donald V. Hammond,
Fiscal Assistant Secretary.
For the reasons stated in the preamble, the Department of the
Treasury amends 31 CFR part 357 as set forth below:
PART 357--GENERAL REGULATIONS GOVERNING BOOK-ENTRY TREASURY BONDS,
NOTES AND BILLS
1. The authority citation for Part 357 continues to read as
follows:
Authority: 31 U.S.C. Chapters 31, 5 U.S.C. 301 and 12 U.S.C.
391.
2. Amend Sec. 357.22 by revising the introductory text of paragraph
(a) to read as follows:
Sec. 357.22 [Amended]
(a) General. A security may be transferred only as authorized by
this part. A security may be transferred from an account in
TreasuryDirect to an account in TRADES, or from an account in TRADES to
an account in TreasuryDirect. A security may also be transferred
between accounts in TreasuryDirect. The Department may delay transfer
of a newly purchased security from a TreasuryDirect account to an
account in TRADES for a period not to exceed (30) calendar days from
the date of issue. This provides time for the investor to become aware
of any unauthorized debits.
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[FR Doc. 99-3155 Filed 2-9-99; 8:45 am]
BILLING CODE 4810-39-P