Sale and Issue of Marketable Book-Entry Treasury Bills, Notes, and Bonds, 26084-26087 [E9-12787]
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Federal Register / Vol. 74, No. 103 / Monday, June 1, 2009 / Rules and Regulations
those presented in the interim rule, and
is further supported by the commenters
and the points they raised.
As noted in the preamble to the
interim rule, the Board expects bank
holding companies that issue Senior
Perpetual Preferred Stock under the
CPP, TIP, CAP, and AGP like all other
bank holding companies, to hold capital
commensurate with the level and nature
of the risks to which they are exposed.
In addition, the Board expects bank
holding companies that issue Senior
Perpetual Preferred Stock to
appropriately incorporate the dividend
features of the stock into the
organization’s liquidity and capital
funding plans. Bank holding companies
should not construe the Board’s
decision to allow the inclusion of the
Senior Perpetual Preferred Stock as an
unrestricted core capital element in
bank holding companies’ tier 1 capital
as in any way (1) detracting from the
Board’s longstanding stance regarding
the unacceptability of a rate step-up in
other tier 1 capital instruments or (2)
reflecting a decision by the Board to
allow cumulative perpetual preferred
stock to be includable in bank holding
companies’ tier 1 capital in excess of the
limits established for restricted core
capital elements under the Board’s
capital guidelines for bank holding
companies.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
requires an agency that is issuing a final
rule to prepare and make available a
regulatory flexibility analysis that
describes the impact of the final rule on
small entities.19 The RFA provides that
an agency is not required to prepare and
publish a regulatory flexibility analysis
if the agency certifies that the final rule
will not have a significant economic
impact on a substantial number of small
entities.20 Under regulations issued by
the Small Business Administration,21 a
small entity includes a bank holding
company with assets of $175 million or
less (a small bank holding company). As
of December 31, 2008, there were
approximately 2,586 small bank holding
companies.
As a general matter, the Board’s riskbased and leverage capital guidelines for
bank holding companies apply only to
a bank holding company that has
consolidated assets of $500 million or
more. Accordingly, this final rule will
not affect small bank holding companies
and, for this reason, the Board hereby
certifies that the rule will not have a
19 5
U.S.C. 603(a).
U.S.C. 605(b).
21 See 13 CFR 121.201.
15:22 May 29, 2009
Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of 1995
(44 U.S.C. 3506), the Board has
reviewed the final rule to assess any
information collections. There are no
collections of information as defined by
the Paperwork Reduction Act in the
final rule.
Use of Plain Language
Section 722 of the Gramm-LeachBliley Act, Public Law 106–102,
requires the Federal banking agencies to
use plain language in all proposed and
final rules published after January 1,
2000. The Board invited comment on
how to make the interim rule easier to
understand. The Board received one
comment generally criticizing the
Board’s capital adequacy guidelines as
difficult to understand.
The Board acknowledges that the
regulation of a banking organization’s
capital is a complex area. The Board’s
capital guidelines necessarily must
reflect this complexity. Nevertheless,
the Board has endeavored to present
this final rule, like all of its capital
rules, in a manner that, in light of the
nature and complexity of the subject
matter, is as brief, comprehensible, and
straightforward as possible.
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b. Revise footnote 8 in section
II.A.1.c.ii.(2) to read as follows:
■
Appendix A to Part 225—Capital
Adequacy Guidelines for Bank Holding
Companies: Risk-Based Measure
II. * * *
A. * * *
1. * * *
a. * * *
ii. Qualifying noncumulative perpetual
preferred stock, including related surplus,
and senior perpetual preferred stock issued
to the United States Department of the
Treasury (Treasury) under the Troubled
Asset Relief Program (TARP), established by
the Emergency Economic Stabilization Act of
2008 (EESA), Division A of Public Law 110–
343 (which for purposes of this appendix
shall be considered qualifying
noncumulative perpetual preferred stock),
including related surplus;
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c. * * *
ii. * * *
(2) * * *
8 Notwithstanding this provision, senior
perpetual preferred stock issued to the
Treasury under the TARP, established by the
EESA, may be included in tier 1 capital. In
addition, traditional convertible perpetual
preferred stock, which the holder must or can
convert into a fixed number of common
shares at a preset price, generally qualifies for
inclusion in tier 1 capital provided all other
requirements are met.
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List of Subjects in 12 CFR Part 225
Administrative practice and
procedure, Banks, Banking, Federal
Reserve System, Holding companies,
Reporting and recordkeeping
requirements, Securities.
By order of the Board of Governors of the
Federal Reserve System, May 21, 2009.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. E9–12628 Filed 5–29–09; 8:45 am]
BILLING CODE 6210–02–P
Board of Governors of the Federal
Reserve System
DEPARTMENT OF THE TREASURY
Fiscal Service
12 CFR Chapter II
Authority and Issuance
31 CFR Part 356
For the reasons stated in the preamble,
the Board of Governors of the Federal
Reserve System amends part 225 of
chapter II of title 12 of the Code of
Federal Regulations as follows:
[Docket No. BPD GSRS 09–01; Department
of the Treasury Circular, Public Debt Series
No. 1–93]
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)
AGENCY: Bureau of the Public Debt,
Fiscal Service, Treasury.
ACTION: Final rule.
■
1. The authority citation for part 225
continues to read as follows:
■
Authority: 12 U.S.C. 1817(j)(13), 1818,
1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b),
1972(1), 3106, 3108, 3310, 3331–3351, 3906,
3907, and 3909; 15 U.S.C. 1681s, 1681w,
6801 and 6805.
■
■
20 5
VerDate Nov<24>2008
significant impact on a substantial
number of small bank holding
companies.
2. In appendix A to part 225:
a. Revise section II.A.1.a.ii.; and
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Sale and Issue of Marketable BookEntry Treasury Bills, Notes, and Bonds
SUMMARY: The Department of the
Treasury (‘‘Treasury’’ or ‘‘We’’) is
issuing in final form amendments to the
Uniform Offering Circular for the Sale
and Issue of Marketable Book-Entry
Treasury Bills, Notes, and Bonds. This
final rule makes conforming changes to
several sections of the Uniform Offering
Circular to be consistent with Treasury’s
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current auction practices. The first
change modifies the description of
Treasury bills to clarify that they may be
issued at a discount or at par, depending
upon the auction results. The second
change clarifies that the rate or yield bid
in Treasury bill or Treasury fixedprincipal securities auctions must be a
positive number or zero. The third
change eliminates a provision related to
‘‘guaranteed bid’’ arrangements that was
intended for multiple-price auctions.
Because Treasury no longer conducts
multiple-price auctions, the provision is
no longer needed or effective. The
fourth change updates an example of the
proration of auction awards at the
highest accepted yield or discount rate
to reflect the change in minimum and
multiple bid amounts to $100 for all
Treasury marketable securities auctions
that became effective in 2008. The fifth
change modifies the provision for the
notification of auction awards and
settlement amounts to provide language
consistent with related provisions of the
Uniform Offering Circular. Finally, we
are updating several references to the
Bureau of the Public Debt’s Web site to
reflect the current URL.
DATES:
Effective June 1, 2009.
This final rule is available
on the Bureau of the Public Debt’s Web
site at: https://www.treasurydirect.gov. It
is also available for public inspection
and copying at the Treasury Department
Library, Room 1428, Main Treasury
Building, 1500 Pennsylvania Avenue,
NW., Washington, DC 20220. To visit
the library, call (202) 622–0990 for an
appointment.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT: Lori
Santamorena, Lee Grandy, or Kevin
Hawkins, Department of the Treasury,
Bureau of the Public Debt, Government
Securities Regulations Staff, (202) 504–
3632.
Part 356 of
title 31 of the Code of Federal
Regulations, also referred to as the
Uniform Offering Circular (‘‘UOC’’ or
‘‘auction rules’’), sets out the terms and
conditions for the sale and issuance by
the Treasury to the public of marketable
book-entry Treasury bills, notes, and
bonds.1 The UOC, together with the
offering announcement for each auction,
represents a comprehensive statement of
the terms and conditions. This final rule
makes conforming changes to the UOC
to reflect Treasury’s current auction
practices.
SUPPLEMENTARY INFORMATION:
1 The UOC was published as a final rule in
January 1993. See 58 FR 412, January 5, 1993. The
circular, as amended, is codified at 31 CFR part 356.
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15:22 May 29, 2009
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I. Treasury Bills Description
The UOC currently describes Treasury
bills as being ‘‘issued at a discount.’’ 2
Under certain market conditions,
however, an auction can result in
Treasury bills being issued at par (in
essence yielding zero percent).3
Treasury bill offering announcements,4
starting in December 2008, clarified, in
a footnote, that ‘‘Treasury bills will be
issued at a discount or at par.’’ In
keeping with Treasury’s practice of
incorporating the terms and conditions
of Treasury auctions into the UOC, the
description of Treasury bills at 31 CFR
356.5(a)(1) is being modified to state
that Treasury bills may be ‘‘issued at a
discount or at par, depending upon the
auction results.’’
II. Competitive Bid Format
Treasury is adding a sentence to each
of the descriptions of the competitive
bid formats for Treasury bills and
Treasury fixed-principal securities in 31
CFR 356.12 to clarify that the rate or
yield bid must be a positive number or
zero.5
III. Guaranteed Bids
The UOC contains several provisions
to regulate bidders 6 in a Treasury
auction. We are eliminating a provision
at 31 CFR 356.14(a) related to
‘‘guaranteed bid’’ arrangements in
Treasury auctions that is no longer
needed. Specifically, we are eliminating
the provision in 31 CFR 356.14(a) that
states, ‘‘If a bid from a depository
institution or a dealer fulfills a
guarantee to a customer to sell a
specified amount of securities at an
agreed-upon price, or a price fixed in
terms of an agreed-upon standard, then
the bid is a bid of that depository
institution or dealer. It is not a customer
bid.’’ This particular provision dates
back to 1995 when Treasury conducted
multiple-price auctions, which are
auctions in which each successful
competitive bidder pays the price
equivalent to the yield or rate that it bid.
Prior to the close for submission of
competitive bids, certain dealers were
entering into arrangements to guarantee
their customers 7 a price conditioned on
2 31
CFR 356.5(a)(1).
4-week bill auctions conducted on
December 9, 16, and 23, 2008, resulted in Treasury
bills being issued at par. See Treasury securities
auction 2008 press releases for 4-week bills at:
https://treasurydirect.gov/instit/annceresult/press/
preanre/2008/2008_4week.htm.
4 Id.
5 31 CFR 356.12(c)(1)(i) and (ii).
6 The UOC defines a ‘‘bidder’’ at 31 CFR 356.2 to
include persons and entities who offer to purchase
Treasury securities in an auction through a
depository institution or dealer.
7 See definition of ‘‘customer’’ at 31 CFR 356.2.
26085
the outcome of the auction (e.g., the
weighted average yield determined in
the auction).8 This provision was added
in response to and intended to address
that specific practice. In 1998, Treasury
shifted to single-price auctions for all
Treasury marketable securities, which
are auctions in which all successful
bidders pay the same price regardless of
the yields or rates they each bid.9
Because Treasury no longer conducts
multiple-price auctions, the provision is
no longer needed or effective. Treasury
expects any depository institution or
dealer guaranteeing bids in a singleprice auction to reexamine this practice,
confirm that the bidder has been
properly identified on the bid, and raise
any questions with Treasury staff.
Questions related to particular facts and
circumstances may be directed to the
Government Securities Regulations Staff
at the telephone number listed above.
Treasury expects transparency in the
submission of all auction bids,
including those for customers, to
maintain the integrity of the auction
process. All auction participants,
including bidders, customers, and
submitters must comply with Treasury’s
auction rules. This rule makes no
changes to the general UOC
requirements of 31 CFR 356.12 bidding
restrictions, 31 CFR 356.13 net long
position reporting, 31 CFR 356.14
proper identification of customers, 31
CFR 356.16 certifications, and 31 CFR
356.24 confirmations required from any
customer awarded a par amount equal
to or greater than $750 million.
IV. Proration Example
On March 20, 2008, Treasury
amended the UOC to lower the
minimum and multiple par amounts for
which bidders may bid in all Treasury
marketable securities auctions from
$1,000 to $100.10 We are updating the
example in 31 CFR 356.21(a) of the
proration of auction awards at the
highest accepted yield or discount rate
to reflect the $100 minimum and
multiple bid amounts.
V. Settlement Notification
The UOC includes certain notification
requirements of auction awards. We are
making a nonsubstantive change to the
3 The
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8 See 60 FR 13906, March 15, 1995. The
‘‘guarantee bid’’ provision was subsequently moved
from the definition of ‘‘bid’’ in 31 CFR 356.2 to 31
CFR 356.14(a) when the UOC was converted to
plain language in 2004. See 69 FR 45202, July 28,
2004.
9 See November 1998 Quarterly Refunding
Statement remarks by Gary Gensler, Treasury
Assistant Secretary for Financial Markets (October
28, 1998) https://www.treas.gov/press/releases/
rr2782.htm.
10 See 73 FR 14937, March 20, 2008.
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Federal Register / Vol. 74, No. 103 / Monday, June 1, 2009 / Rules and Regulations
§ 356.5 What types of securities does the
Treasury auction?
first sentence in 31 CFR 356.24(c) to
conform to the language in 31 CFR
356.24(a).
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(a) * * *
(1) Are issued at a discount or at par,
depending upon the auction results;
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■ 3. Section 356.12 is amended by
revising paragraphs (c)(1)(i) and (ii) to
read as follows:
VI. Web Site References
Information regarding Treasury’s
marketable securities auctions can be
found on or accessed by way of the
Bureau of the Public Debt’s Web site.
The Web site has changed and it can
now be accessed at https://
www.treasurydirect.gov instead of its
previous address, https://
www.publicdebt.treas.gov. Therefore,
we are updating the references to the
Web site at 31 CFR 356.23(a) and 31
CFR 356.31(a) accordingly.
§ 356.12 What are the different types of
bids and do they have specific
requirements or restrictions?
*
Procedural Requirements
This final rule only makes conforming
changes to the UOC and, therefore, does
not meet the criteria for a ‘‘significant
regulatory action’’ pursuant to Executive
Order 12866. Because this rule relates to
public contracts and procedures for
United States securities, the notice,
public comment, and delayed effective
date provisions of the Administrative
Procedure Act are inapplicable,
pursuant to 5 U.S.C. 553(a)(2).
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 is no new collection of
information contained in this final rule,
and, therefore, the Paperwork Reduction
Act does not apply. The Office of
Management and Budget has approved
the collections of information already
contained in 31 CFR part 356, under
control number 1535–0112. Under the
Paperwork Reduction Act, an agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a valid OMB control number.
List of Subjects in 31 CFR Part 356
Bonds, Federal Reserve System,
Government securities, Securities.
■ For the reasons set forth in the
preamble, 31 CFR part 356 is amended
as follows:
PART 356—SALE AND ISSUE OF
MARKETABLE BOOK-ENTRY
TREASURY BILLS, NOTES, AND
BONDS (DEPARTMENT OF THE
TREASURY CIRCULAR, PUBLIC DEBT
SERIES NO. 1–93)
1. The authority citation for part 356
continues to read as follows:
■
Authority: 5 U.S.C. 301; 31 U.S.C. 3102, et
seq.; 12 U.S.C. 391.
2. Section 356.5 is amended by
revising paragraph (a)(1) to read as
follows:
■
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15:22 May 29, 2009
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(c) * * *
(1) * * *
(i) Treasury bills. A competitive bid
must show the discount rate bid,
expressed with three decimals in .005
increments. The third decimal must be
either a zero or a five, for example,
5.320 or 5.325. We will treat any
missing decimals as zero, for example,
a bid of 5.32 will be treated as 5.320.
The rate bid may be a positive number
or zero.
(ii) Treasury fixed-principal
securities. A competitive bid must show
the yield bid, expressed with three
decimals, for example, 4.170. We will
treat any missing decimals as zero, for
example, a bid of 4.1 will be treated as
4.100. The yield bid may be a positive
number or zero.
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*
■ 4. Section 356.14 is amended by
revising paragraph (a) to read as follows:
§ 356.14 What are the requirements for
submitting bids for customers?
(a) Institutions that may submit bids
for customers. Only depository
institutions or dealers may submit bids
for customers (see definitions at
§ 356.2), or for customers of
intermediaries, under the requirements
set out in this section.
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■ 5. Section 356.21 is amended by
revising paragraph (a) to read as follows:
§ 356.21 How are awards at the high yield
or discount rate calculated?
(a) Awards to submitters. We
generally prorate bids at the highest
accepted yield or discount rate under
§ 356.20(a)(2) of this part. For example,
if 80.15% is the announced percentage
at the highest yield or discount rate, we
award 80.15% of the amount of each bid
at that yield or rate. A bid for $100
million at the highest accepted yield or
discount rate would be awarded
$80,150,000 in this example. We always
make awards for at least the minimum
to bid, and above that amount we make
awards in the appropriate multiple to
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bid. For example, Treasury bills may be
issued with a minimum to bid of $100
and multiples to bid of $100. Say we
accept an $18,000 bid at the high
discount rate, and the percent awarded
at the high discount rate is 88.27%. We
would award $15,900 to that bidder,
which is an upward adjustment from
$15,888.60 ($18,000 × .8827) to the
nearest multiple of $100. If we were to
award 4.65% of bids at the highest
accepted rate, for example, the award
for a $100 bid at that rate would be
$100, rather than $4.65, in order to meet
the minimum to bid for a bill issue.
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6. Section 356.23 is amended by
revising paragraph (a) to read as follows:
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§ 356.23 How are the auction results
announced?
(a) After the conclusion of the
auction, we will announce the auction
results through a press release that is
available on our Web site at https://
www.treasurydirect.gov.
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7. Section 356.24 is amended by
revising paragraph (c) to read as follows:
■
§ 356.24 Will I be notified directly of my
awards and, if I am submitting bids for
others, do I have to provide confirmations?
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*
(c) Notification of awards and
settlement amounts to a depository
institution having an autocharge
agreement with a submitter or a clearing
corporation. We will provide notice to
each depository institution that has
entered into an autocharge agreement
with a submitter or a clearing
corporation of the amount to be charged,
on the issue date, to the institution’s
funds account at the Federal Reserve
Bank servicing the institution. We will
provide this notification no later than
the day after the auction.
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*
8. Section 356.31 is amended by
revising paragraph (a) to read as follows:
■
§ 356.31
work?
How does the STRIPS program
(a) General. Notes or bonds may be
‘‘stripped’’—divided into separate
principal and interest components.
These components must be maintained
in the commercial book-entry system.
Stripping is done at the option of the
holder, and may occur at any time from
issuance until maturity. We provide the
CUSIP numbers and payment dates for
the principal and interest components
in auction announcements and on our
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Web site at https://
www.treasurydirect.gov.
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Renee V. Wright, Program Manager,
Docket Operations, telephone 202–366–
9826.
Gary Grippo,
Acting Fiscal Assistant Secretary.
[FR Doc. E9–12787 Filed 5–28–09; 4:15 pm]
SUPPLEMENTARY INFORMATION:
BILLING CODE 4810–39–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[Docket No. USCG–2009–0218]
Drawbridge Operation Regulation;
Sacramento River, Knights Landing,
CA
Coast Guard, DHS.
Notice of temporary deviation
from regulations.
AGENCY:
ACTION:
SUMMARY: The Commander, Eleventh
Coast Guard District, has issued a
temporary deviation from the regulation
governing the operation of the Knights
Landing Drawbridge across the
Sacramento River, mile 90.1, at Knights
Landing, CA. The deviation is necessary
to allow the bridge owner, California
Department of Transportation, to
perform maintenance and replace the
paint coating system for the drawbridge.
This deviation allows the bridge to
remain in the closed-to-navigation
position during the deviation period.
DATES: This deviation is effective from
7 a.m. on June 1, 2009 to 7 a.m. on
November 26, 2009.
ADDRESSES: Documents mentioned in
this preamble as being available in the
docket are part of docket USCG–2009–
0346 and are available online by going
to https://www.regulations.gov, selecting
the Advanced Docket Search option on
the right side of the screen, inserting
USCG–2009–0218 in the Docket ID box,
pressing Enter, and then clicking on the
item in the Docket ID column. This
material is also available for inspection
or copying at the Docket Management
Facility (M–30), U.S. Department of
Transportation, West Building Ground
Floor, Room W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590,
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
e-mail David H. Sulouff, Chief, Bridge
Section, Eleventh Coast Guard District;
telephone 510–437–3516, e-mail
David.H.Sulouff@uscg.mil. If you have
questions on viewing the docket, call
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15:22 May 29, 2009
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California
Department of Transportation requested
a temporary change to the operation of
the Knights Landing Drawbridge, mile
90.1, Sacramento River, at Knights
Landing, CA. The drawbridge opens on
signal if at least 12 hours’ notice is given
as required by 33 CFR 117.189(b). The
deviation period would allow the
drawspan to remain in the closed-tonavigation position from 7 a.m. on June
1, 2009 to 7 a.m. on November 26, 2009,
to perform maintenance and replace the
paint coating system on the drawbridge.
The Knights Landing Drawbridge
navigation span provides a minimum
vertical clearance of 3 feet above the
100-year floodplain. During the
deviation period, the vertical clearance
will be reduced by no more than 5 feet,
due to an under-deck work platform and
sealed containment the length of the
bridge. Navigation on the waterway
consists mainly of recreational vessels.
During the past 7 years, in addition to
the annual bridge openings for
maintenance, the bridge drawspan was
open one time for a sailboat.
No alternative routes are available.
The bridge drawspan can open for an
emergency if 72 hours’ advance notice
is given to the bridge owner. This
temporary deviation has been
coordinated with all affected waterway
users. No objections to the proposed
temporary deviation were raised.
Vessels that can transit the bridge,
while in the closed-to-navigation
position, may continue to do so at any
time.
In accordance with 33 CFR 117.35(e),
the drawbridge must return to its regular
operating schedule immediately at the
end of the designated time period. This
deviation from the operating regulations
is authorized under 33 CFR 117.35.
Dated: May 14, 2009.
P.F. Zukunft,
Rear Admiral, U.S. Coast Guard Commander,
Eleventh Coast Guard District.
[FR Doc. E9–12599 Filed 5–29–09; 8:45 am]
BILLING CODE 4910–15–P
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26087
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 165
[Docket No. USCG–2009–0330]
RIN 1625–AA00
Safety Zone; June and July Northwest
Harbor Safety Zone; Northwest Harbor,
San Clemente Island, CA
Coast Guard, DHS.
Temporary final rule.
AGENCY:
ACTION:
SUMMARY: The Coast Guard is
establishing a safety zone on the
navigable waters of the Northwest
Harbor of San Clemente Island in
support of the Naval Underwater
Detonation. This safety zone is
necessary to ensure non-authorized
personnel and vessels remain safe by
keeping clear of the hazardous area
during the training activity. Persons and
vessels are prohibited from entering
into, transiting through, or anchoring
within this safety zone unless
authorized by the Captain of the Port
(COTP) or his designated representative.
DATES: This rule is effective from June
1, 2009 through July 31, 2009.
ADDRESSES: Documents indicated in this
preamble as being available in the
docket are part of docket USCG–2009–
0330 and are available online by going
to https://www.regulations.gov, selecting
the Advanced Docket Search option on
the right side of the screen, inserting
USCG–2009–0330 in the Docket ID box,
pressing Enter, and then clicking on the
item in the Docket ID column. They are
also available for inspection or copying
at two locations: the Docket
Management Facility (M–30), U.S.
Department of Transportation, West
Building Ground Floor, Room W12–140,
1200 New Jersey Avenue, SE.,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this temporary
rule, call or e-mail Petty Officer Kristen
Beer, Waterways Management, U.S.
Coast Guard Sector San Diego, Coast
Guard; telephone 619–278–7262, e-mail
Kristen.A.Beer@uscg.mil. If you have
questions on viewing the docket, call
Renee V. Wright, Program Manager,
Docket Operations, telephone 202–366–
9826.
SUPPLEMENTARY INFORMATION:
Regulatory Information
The Coast Guard is issuing this
temporary final rule without prior
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[Federal Register Volume 74, Number 103 (Monday, June 1, 2009)]
[Rules and Regulations]
[Pages 26084-26087]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12787]
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 356
[Docket No. BPD GSRS 09-01; Department of the Treasury Circular, Public
Debt Series No. 1-93]
Sale and Issue of Marketable Book-Entry Treasury Bills, Notes,
and Bonds
AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (``Treasury'' or ``We'') is
issuing in final form amendments to the Uniform Offering Circular for
the Sale and Issue of Marketable Book-Entry Treasury Bills, Notes, and
Bonds. This final rule makes conforming changes to several sections of
the Uniform Offering Circular to be consistent with Treasury's
[[Page 26085]]
current auction practices. The first change modifies the description of
Treasury bills to clarify that they may be issued at a discount or at
par, depending upon the auction results. The second change clarifies
that the rate or yield bid in Treasury bill or Treasury fixed-principal
securities auctions must be a positive number or zero. The third change
eliminates a provision related to ``guaranteed bid'' arrangements that
was intended for multiple-price auctions. Because Treasury no longer
conducts multiple-price auctions, the provision is no longer needed or
effective. The fourth change updates an example of the proration of
auction awards at the highest accepted yield or discount rate to
reflect the change in minimum and multiple bid amounts to $100 for all
Treasury marketable securities auctions that became effective in 2008.
The fifth change modifies the provision for the notification of auction
awards and settlement amounts to provide language consistent with
related provisions of the Uniform Offering Circular. Finally, we are
updating several references to the Bureau of the Public Debt's Web site
to reflect the current URL.
DATES: Effective June 1, 2009.
ADDRESSES: This final rule is available on the Bureau of the Public
Debt's Web site at: https://www.treasurydirect.gov. It is also available
for public inspection and copying at the Treasury Department Library,
Room 1428, Main Treasury Building, 1500 Pennsylvania Avenue, NW.,
Washington, DC 20220. To visit the library, call (202) 622-0990 for an
appointment.
FOR FURTHER INFORMATION CONTACT: Lori Santamorena, Lee Grandy, or Kevin
Hawkins, Department of the Treasury, Bureau of the Public Debt,
Government Securities Regulations Staff, (202) 504-3632.
SUPPLEMENTARY INFORMATION: Part 356 of title 31 of the Code of Federal
Regulations, also referred to as the Uniform Offering Circular (``UOC''
or ``auction rules''), sets out the terms and conditions for the sale
and issuance by the Treasury to the public of marketable book-entry
Treasury bills, notes, and bonds.\1\ The UOC, together with the
offering announcement for each auction, represents a comprehensive
statement of the terms and conditions. This final rule makes conforming
changes to the UOC to reflect Treasury's current auction practices.
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\1\ The UOC was published as a final rule in January 1993. See
58 FR 412, January 5, 1993. The circular, as amended, is codified at
31 CFR part 356.
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I. Treasury Bills Description
The UOC currently describes Treasury bills as being ``issued at a
discount.'' \2\ Under certain market conditions, however, an auction
can result in Treasury bills being issued at par (in essence yielding
zero percent).\3\ Treasury bill offering announcements,\4\ starting in
December 2008, clarified, in a footnote, that ``Treasury bills will be
issued at a discount or at par.'' In keeping with Treasury's practice
of incorporating the terms and conditions of Treasury auctions into the
UOC, the description of Treasury bills at 31 CFR 356.5(a)(1) is being
modified to state that Treasury bills may be ``issued at a discount or
at par, depending upon the auction results.''
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\2\ 31 CFR 356.5(a)(1).
\3\ The 4-week bill auctions conducted on December 9, 16, and
23, 2008, resulted in Treasury bills being issued at par. See
Treasury securities auction 2008 press releases for 4-week bills at:
https://treasurydirect.gov/instit/annceresult/press/preanre/2008/2008_4week.htm.
\4\ Id.
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II. Competitive Bid Format
Treasury is adding a sentence to each of the descriptions of the
competitive bid formats for Treasury bills and Treasury fixed-principal
securities in 31 CFR 356.12 to clarify that the rate or yield bid must
be a positive number or zero.\5\
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\5\ 31 CFR 356.12(c)(1)(i) and (ii).
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III. Guaranteed Bids
The UOC contains several provisions to regulate bidders \6\ in a
Treasury auction. We are eliminating a provision at 31 CFR 356.14(a)
related to ``guaranteed bid'' arrangements in Treasury auctions that is
no longer needed. Specifically, we are eliminating the provision in 31
CFR 356.14(a) that states, ``If a bid from a depository institution or
a dealer fulfills a guarantee to a customer to sell a specified amount
of securities at an agreed-upon price, or a price fixed in terms of an
agreed-upon standard, then the bid is a bid of that depository
institution or dealer. It is not a customer bid.'' This particular
provision dates back to 1995 when Treasury conducted multiple-price
auctions, which are auctions in which each successful competitive
bidder pays the price equivalent to the yield or rate that it bid.
Prior to the close for submission of competitive bids, certain dealers
were entering into arrangements to guarantee their customers \7\ a
price conditioned on the outcome of the auction (e.g., the weighted
average yield determined in the auction).\8\ This provision was added
in response to and intended to address that specific practice. In 1998,
Treasury shifted to single-price auctions for all Treasury marketable
securities, which are auctions in which all successful bidders pay the
same price regardless of the yields or rates they each bid.\9\ Because
Treasury no longer conducts multiple-price auctions, the provision is
no longer needed or effective. Treasury expects any depository
institution or dealer guaranteeing bids in a single-price auction to
reexamine this practice, confirm that the bidder has been properly
identified on the bid, and raise any questions with Treasury staff.
Questions related to particular facts and circumstances may be directed
to the Government Securities Regulations Staff at the telephone number
listed above.
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\6\ The UOC defines a ``bidder'' at 31 CFR 356.2 to include
persons and entities who offer to purchase Treasury securities in an
auction through a depository institution or dealer.
\7\ See definition of ``customer'' at 31 CFR 356.2.
\8\ See 60 FR 13906, March 15, 1995. The ``guarantee bid''
provision was subsequently moved from the definition of ``bid'' in
31 CFR 356.2 to 31 CFR 356.14(a) when the UOC was converted to plain
language in 2004. See 69 FR 45202, July 28, 2004.
\9\ See November 1998 Quarterly Refunding Statement remarks by
Gary Gensler, Treasury Assistant Secretary for Financial Markets
(October 28, 1998) https://www.treas.gov/press/releases/rr2782.htm.
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Treasury expects transparency in the submission of all auction
bids, including those for customers, to maintain the integrity of the
auction process. All auction participants, including bidders,
customers, and submitters must comply with Treasury's auction rules.
This rule makes no changes to the general UOC requirements of 31 CFR
356.12 bidding restrictions, 31 CFR 356.13 net long position reporting,
31 CFR 356.14 proper identification of customers, 31 CFR 356.16
certifications, and 31 CFR 356.24 confirmations required from any
customer awarded a par amount equal to or greater than $750 million.
IV. Proration Example
On March 20, 2008, Treasury amended the UOC to lower the minimum
and multiple par amounts for which bidders may bid in all Treasury
marketable securities auctions from $1,000 to $100.\10\ We are updating
the example in 31 CFR 356.21(a) of the proration of auction awards at
the highest accepted yield or discount rate to reflect the $100 minimum
and multiple bid amounts.
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\10\ See 73 FR 14937, March 20, 2008.
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V. Settlement Notification
The UOC includes certain notification requirements of auction
awards. We are making a nonsubstantive change to the
[[Page 26086]]
first sentence in 31 CFR 356.24(c) to conform to the language in 31 CFR
356.24(a).
VI. Web Site References
Information regarding Treasury's marketable securities auctions can
be found on or accessed by way of the Bureau of the Public Debt's Web
site. The Web site has changed and it can now be accessed at https://www.treasurydirect.gov instead of its previous address, https://www.publicdebt.treas.gov. Therefore, we are updating the references to
the Web site at 31 CFR 356.23(a) and 31 CFR 356.31(a) accordingly.
Procedural Requirements
This final rule only makes conforming changes to the UOC and,
therefore, does not meet the criteria for a ``significant regulatory
action'' pursuant to Executive Order 12866. Because this rule relates
to public contracts and procedures for United States securities, the
notice, public comment, and delayed effective date provisions of the
Administrative Procedure Act are inapplicable, pursuant to 5 U.S.C.
553(a)(2).
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 is no new collection of information contained in this final
rule, and, therefore, the Paperwork Reduction Act does not apply. The
Office of Management and Budget has approved the collections of
information already contained in 31 CFR part 356, under control number
1535-0112. Under the Paperwork Reduction Act, an agency may not conduct
or sponsor, and a person is not required to respond to, a collection of
information unless it displays a valid OMB control number.
List of Subjects in 31 CFR Part 356
Bonds, Federal Reserve System, Government securities, Securities.
0
For the reasons set forth in the preamble, 31 CFR part 356 is amended
as follows:
PART 356--SALE AND ISSUE OF MARKETABLE BOOK-ENTRY TREASURY BILLS,
NOTES, AND BONDS (DEPARTMENT OF THE TREASURY CIRCULAR, PUBLIC DEBT
SERIES NO. 1-93)
0
1. The authority citation for part 356 continues to read as follows:
Authority: 5 U.S.C. 301; 31 U.S.C. 3102, et seq.; 12 U.S.C. 391.
0
2. Section 356.5 is amended by revising paragraph (a)(1) to read as
follows:
Sec. 356.5 What types of securities does the Treasury auction?
* * * * *
(a) * * *
(1) Are issued at a discount or at par, depending upon the auction
results;
* * * * *
0
3. Section 356.12 is amended by revising paragraphs (c)(1)(i) and (ii)
to read as follows:
Sec. 356.12 What are the different types of bids and do they have
specific requirements or restrictions?
* * * * *
(c) * * *
(1) * * *
(i) Treasury bills. A competitive bid must show the discount rate
bid, expressed with three decimals in .005 increments. The third
decimal must be either a zero or a five, for example, 5.320 or 5.325.
We will treat any missing decimals as zero, for example, a bid of 5.32
will be treated as 5.320. The rate bid may be a positive number or
zero.
(ii) Treasury fixed-principal securities. A competitive bid must
show the yield bid, expressed with three decimals, for example, 4.170.
We will treat any missing decimals as zero, for example, a bid of 4.1
will be treated as 4.100. The yield bid may be a positive number or
zero.
* * * * *
0
4. Section 356.14 is amended by revising paragraph (a) to read as
follows:
Sec. 356.14 What are the requirements for submitting bids for
customers?
(a) Institutions that may submit bids for customers. Only
depository institutions or dealers may submit bids for customers (see
definitions at Sec. 356.2), or for customers of intermediaries, under
the requirements set out in this section.
* * * * *
0
5. Section 356.21 is amended by revising paragraph (a) to read as
follows:
Sec. 356.21 How are awards at the high yield or discount rate
calculated?
(a) Awards to submitters. We generally prorate bids at the highest
accepted yield or discount rate under Sec. 356.20(a)(2) of this part.
For example, if 80.15% is the announced percentage at the highest yield
or discount rate, we award 80.15% of the amount of each bid at that
yield or rate. A bid for $100 million at the highest accepted yield or
discount rate would be awarded $80,150,000 in this example. We always
make awards for at least the minimum to bid, and above that amount we
make awards in the appropriate multiple to bid. For example, Treasury
bills may be issued with a minimum to bid of $100 and multiples to bid
of $100. Say we accept an $18,000 bid at the high discount rate, and
the percent awarded at the high discount rate is 88.27%. We would award
$15,900 to that bidder, which is an upward adjustment from $15,888.60
($18,000 x .8827) to the nearest multiple of $100. If we were to award
4.65% of bids at the highest accepted rate, for example, the award for
a $100 bid at that rate would be $100, rather than $4.65, in order to
meet the minimum to bid for a bill issue.
* * * * *
0
6. Section 356.23 is amended by revising paragraph (a) to read as
follows:
Sec. 356.23 How are the auction results announced?
(a) After the conclusion of the auction, we will announce the
auction results through a press release that is available on our Web
site at https://www.treasurydirect.gov.
* * * * *
0
7. Section 356.24 is amended by revising paragraph (c) to read as
follows:
Sec. 356.24 Will I be notified directly of my awards and, if I am
submitting bids for others, do I have to provide confirmations?
* * * * *
(c) Notification of awards and settlement amounts to a depository
institution having an autocharge agreement with a submitter or a
clearing corporation. We will provide notice to each depository
institution that has entered into an autocharge agreement with a
submitter or a clearing corporation of the amount to be charged, on the
issue date, to the institution's funds account at the Federal Reserve
Bank servicing the institution. We will provide this notification no
later than the day after the auction.
* * * * *
0
8. Section 356.31 is amended by revising paragraph (a) to read as
follows:
Sec. 356.31 How does the STRIPS program work?
(a) General. Notes or bonds may be ``stripped''--divided into
separate principal and interest components. These components must be
maintained in the commercial book-entry system. Stripping is done at
the option of the holder, and may occur at any time from issuance until
maturity. We provide the CUSIP numbers and payment dates for the
principal and interest components in auction announcements and on our
[[Page 26087]]
Web site at https://www.treasurydirect.gov.
* * * * *
Gary Grippo,
Acting Fiscal Assistant Secretary.
[FR Doc. E9-12787 Filed 5-28-09; 4:15 pm]
BILLING CODE 4810-39-P
