[Federal Register Volume 69, Number 11 (Friday, January 16, 2004)]
[Rules and Regulations]
[Pages 2506-2508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1039]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 363


Regulations Governing New Treasury Direct System

AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.

ACTION: Final rule.

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SUMMARY: New Treasury Direct (also referred to as Treasury Direct) is a 
book-entry, online system for purchasing, holding and conducting 
transactions in Treasury securities. This rule amends the regulations 
relating to accounts belonging to minors. This rule also sets forth the 
rules for custom accounts, which are accounts created for a specific 
purpose. This rule also removes references to special forms of 
registration for decedents' and incompetents' estates. Rather than 
change registrations for these circumstances, we will handle the 
transactions offline.
    When we initiated New Treasury Direct, we published but deferred 
the implementation of several sections dealing with minor accounts. All 
deferred sections dealing with minor accounts have been deleted or 
amended in their entirety, and the new sections are effective with this 
rule.

DATES: This rule is effective January 16, 2004.

ADDRESSES: You can download this final rule at the following Internet 
address: http://www.publicdebt.treas.gov.

FOR FURTHER INFORMATION CONTACT:

Elisha Whipkey, Director, Division of Program Administration, Office of 
Securities Operations, Bureau of the Public Debt, at (304) 480-6319 or 
[email protected].
Susan Klimas, Attorney-Adviser, Office of the Chief Counsel, Bureau of 
the Public Debt, at (304) 480-8692 or [email protected].
Dean Adams, Assistant Chief Counsel, Office of the Chief Counsel, 
Bureau of the Public Debt, at (304) 480-8692 or 
[email protected].
Edward Gronseth, Deputy Chief Counsel, Bureau of the Public Debt, at 
(304) 480-8692 or [email protected].

SUPPLEMENTARY INFORMATION: New Treasury Direct is an account-based, 
online, book-entry system for purchasing, holding, and conducting 
transactions in Treasury securities via the Internet. Currently, Series 
EE and Series I savings bonds are offered through New Treasury Direct. 
Initially, only adult individuals were able to open accounts in New 
Treasury Direct. This rule will permit a parent or person who provides 
the chief financial support for a minor to open and access an account 
for a minor as custodian of the account.
    The custodian is a fiduciary for the minor. The account is held in 
the name and social security number of the minor. The securities held 
in the minor's account are registered in the name and social security 
number of the minor, with the minor as sole owner, owner with 
beneficiary, or primary owner with secondary owner of the securities. 
The minor's account is a separate account that is linked to the primary 
New Treasury Direct account of the custodian. The custodian may access 
the minor's account using the custodian's primary New Treasury Direct 
account as a portal.
    Using his or her own New Treasury Direct account, the custodian may 
access the minor's account to purchase and make transactions in 
securities on the minor's behalf. The custodian must certify that he or 
she is acting on behalf of the minor when he or she opens the minor's 
account and in all subsequent transactions in the account. The 
custodian may transfer the securities without a change in registration 
to another custodian for the same minor. The custodian may grant the 
right to view the securities to another New Treasury Direct account 
holder, and may grant the right to redeem the securities to a secondary 
owner named on the minor's securities. When the minor reaches the age 
of 18 years, the transactions that the custodian may make in the 
minor's account are limited to purchasing securities and transferring 
securities to another account identified by the minor's social security 
number, whether that is an account maintained by another custodian for 
the minor, or the minor's own previously established primary account. 
(We will continue to refer to a minor who has attained the age of 18 
years by the term ``minor'', until the minor's securities are 
transferred to the minor's (now adult's) own primary account.) The 
minor may also contact us when he reaches the age of 18 to have the 
securities transferred from the custodian's account to the minor's 
primary account.
    In addition to permitting accounts on behalf of minors, this rule 
permits custom accounts, which are accounts that are linked to the 
primary account of the owner. A custom account contains securities in 
the same form of registration as the primary account, but the owner may 
informally designate a purpose for the custom account. However, the 
designation has no legal effect on the securities held in the account; 
the registration of the securities determines ownership. The annual 
purchase limitation will include securities held in custom accounts.
    We are also deleting sections referring to special forms of 
registration. Initially, we had planned to permit representatives of a 
decedent's estate and guardians of an incompetent to make online 
transactions in securities held by a decedent or an incompetent through 
the personal New Treasury Direct account of the representative or 
guardian. At this time we believe that the interests of our customers 
will be better served by focusing our resources on expanding the scope 
of our basic online services. We therefore provide offline servicing 
for estates through our customer service staff.
    When we initiated New Treasury Direct, we published but deferred 
the implementation of several sections of the regulations, including 
those related to minors. We have since revised our thinking on the 
treatment of minor accounts. Therefore, the provisions of the 
regulations published in Volume 67 of the Federal Register at page 
64276, on October 17, 2002, relating to minor accounts, will never be 
implemented. In their place, this rule will apply, as of the date of 
its publication in the Federal Register.

Procedural Requirements

    This final rule does not meet the criteria for a ``significant 
regulatory action'' as defined in Executive Order 12866. Therefore, the 
regulatory review procedures contained therein do not apply.
    This final rule relates to matters of public contract and 
procedures for United States securities. The notice and public 
procedures requirements and delayed effective date requirements 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 Regulatory 
Flexibility Act (5 U.S.C. 601, et seq.) does not apply.
    We ask for no new collections of information in this final rule. 
Therefore,

[[Page 2507]]

the Paperwork Reduction Act (44 U.S.C. 3507) does not apply.

List of Subjects in 31 CFR Part 363

    Bonds, Electronic funds transfer, Federal Reserve system, 
Government securities, Securities.


0
Accordingly, for the reasons set out in the preamble, 31 CFR chapter 
II, subchapter B, is amended as follows:
0
1. The authority citation for part 363 continues to read as follows:

    Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3102, et seq., 
3105 and 3125.

PART 363--REGULATIONS GOVERNING SECURITIES HELD IN THE NEW TREASURY 
DIRECT SYSTEM

0
2. Revise Sec.  363.4 to read as follows:


Sec.  363.4  How is New Treasury Direct different from the Treasury 
Direct system?

    New TreasuryDirect is an online (Internet-accessible only) system 
which currently provides for the purchase and holding of book-entry 
U.S. savings bonds and will eventually also provide for the purchase 
and holding of marketable Treasury securities. There is also a separate 
TreasuryDirect system (TreasuryDirect), available since 1986, for 
purchasing and holding marketable Treasury securities in book-entry 
form. The TreasuryDirect system for marketable securities offers more 
limited online services. The terms and conditions for TreasuryDirect 
are found at part 357, and are substantially different from the terms 
and conditions of securities held in New Treasury Direct.
0
3. Amend Sec.  363.6 by revising the definitions of ``minor'', 
``transfer'', and ``you'', and by adding other definitions in 
alphabetical order, to read as follows:


Sec.  363.6  What special terms do I need to know to understand this 
part?

* * * * *
    Custodian of a minor account means a person who opens an account on 
behalf of the minor. (See Sec.  363.27 for more information about minor 
accounts.)
    Custom account means an account that you establish for a specific 
purpose that is linked to your primary account. You use your primary 
account as the portal to open and access your custom linked account. 
(See Sec.  363.15 for more information about custom accounts.)
* * * * *
    De-link means the online process by which all securities contained 
within the minor linked account are moved to the minor's primary New 
Treasury Direct account and the linked account is deactivated.
* * * * *
    Linked account means an account that is a separate account from 
your primary account, but connected to your primary account. You use 
your primary account as a portal to open and access the linked account. 
(See Sec.  363.15 for more information about linked accounts.)
    Minor means an individual under the age of 18 years. The term minor 
is also used to refer to an individual who has attained the age of 18 
years but has not yet taken control of the securities contained in his 
or her minor account.
    Minor linked account means an account that you control on behalf of 
a minor. You use your primary account as the portal to open and access 
the minor linked account. (See Sec. Sec.  363.15 and 363.27 for more 
information about minor accounts.)
* * * * *
    Primary account means the account that you establish when you first 
open your New Treasury Direct account; your primary account is the 
portal used to open and access all your linked accounts. (See Sec.  
363.15 for more information about primary accounts.)
* * * * *
    Transfer means moving a minimum amount of $25 (consisting of 
principal and proportionate interest) of a security from one New 
Treasury Direct account to another. The transfer of a specific security 
may be restricted by the terms of this part that apply to that 
security.
* * * * *
    You or your refers to a New Treasury Direct primary account holder.

0
4. Revise Sec.  363.15 to read as follows:


Sec.  363.15  What is a New Treasury Direct account?

    A New Treasury Direct account is an online account maintained by us 
solely in your name in which you may hold and conduct transactions in 
eligible book-entry Treasury securities.
    (a) Primary Account. Your primary account that you establish when 
initially opening your New Treasury Direct account may contain the 
following Treasury securities:
    (1) Treasury securities that are your personal holdings, in sole 
owner, owner with beneficiary, and primary owner with secondary owner 
forms of registration; and
    (2) gifts that have not yet been delivered.
    (b) Linked account. A linked account is an account that is a 
separate account from your primary account, but that is connected to 
your primary account. You use your primary account as a portal to open 
and access the linked account. Linked accounts include the following:
    (1) Custom account. A custom account is an account that is linked 
to your primary account. You use your primary account as the portal to 
open and access your custom account. You may informally designate a 
purpose for the custom account, for example, ``vacation fund'', or 
``Johnny's college fund''. However, the designation as to purpose has 
no legal effect; the registration of the securities held in the custom 
account determines ownership (Annual purchase limitations include 
securities held in custom accounts). You may use your custom account to 
buy, redeem and transfer securities that you own in sole owner, owner 
with beneficiary, and primary owner with secondary owner forms of 
registration. You may also buy and deliver gift securities from your 
custom account.
    (2) Minor account. A minor account is an account established by a 
custodian for a person who has not yet reached the age of 18 years. A 
minor account is linked to the custodian's primary account. The minor 
is the owner of the securities, but the custodian controls the account 
on behalf of the minor. (See Sec.  363.27 for more information about 
minor accounts.)

0
5. Amend Sec.  363.24 by adding paragraph (p) to read as follows:


Sec.  363.24  What transactions can I perform online through my New 
Treasury Direct account?

* * * * *
    (p) You can open and access any linked accounts using your primary 
account as a portal.

0
6. Revise Sec.  363.27 to read as follows:


Sec.  363.27  What do I need to know about accounts for minors who have 
not had a legal guardian appointed by a court?

    (a) Opening an account in the name of a minor. (1) A parent or a 
person who provides the chief financial support of a minor may open an 
account for a minor. The person opening the account for a minor is 
referred to as the custodian of the minor's account.
    (2) The custodian is a fiduciary for the minor as to the securities 
held in the minor's account.
    (3) The custodian must have an existing primary New Treasury Direct 
account in order to open the minor's account.
    (i) The minor's account is an account that is linked to the 
custodian's primary account.
    (ii) The custodian must use his or her primary New Treasury Direct 
account as a portal to open and access the minor's account.

[[Page 2508]]

    (4) Securities contained in the minor's account will be registered 
in the name and SSN of the minor, in either sole owner, owner with 
beneficiary, or primary owner with secondary owner forms of 
registration.
    (b) Procedure for opening an account for a minor. (1) Online 
instructions will be provided for establishing an account for a minor.
    (2) The custodian must certify that all transactions conducted 
through the account will be on the minor's behalf.
    (c) Procedure for conducting transactions in the minor's account. 
The custodian must conduct all transactions in the minor's account on 
behalf of the minor. Access to the minor's account is through the 
custodian's primary account.
    (d) Transactions permitted in the minor's account. (1) The 
custodian may purchase securities for and on behalf of the minor 
through the minor's account.
    (2) The custodian may redeem securities on behalf of the minor 
through the minor's account. We will report the interest earned on the 
security to the name and SSN of the minor.
    (3) The custodian may not purchase gift securities from the minor's 
account.
    (4) The custodian may not transfer securities from the minor's 
account if the transfer will result in a change of ownership in the 
security.
    (5) Securities may be transferred to the minor's account.
    (6) Gift securities may be delivered to the minor's account.
    (7) The custodian may grant the right to view securities in the 
minor's account to another New Treasury Direct account holder, and may 
grant the right to redeem securities in the minor's account to a 
secondary owner, if any, named on the securities held in the minor's 
account.
    (e) When the minor reaches the age of 18 years. (1) The only 
transactions that the custodian may make in the minor's account after 
the minor attains the age of 18 years are to purchase new securities, 
and to transfer the securities contained in the minor's account to 
another account in the name and SSN of the minor. The receiving account 
in the name and SSN of the minor may be a primary account established 
by the minor, or it may be another minor linked account with the same 
or a different custodian. The custodian may transfer one or more of the 
securities at a time, or the custodian may de-link the account and 
transfer all of the securities contained in the account to the minor's 
previously established primary New Treasury Direct account. The minor 
must establish his or her own primary New Treasury Direct account prior 
to transfer of his or her securities.
    (2) In order to gain control of the securities held in the minor's 
account, the minor must first open his or her own primary account.
    (3) The minor may gain control of the securities held in the 
minor's account by the custodian transferring the securities held in 
the minor's account to the minor's primary account, or the minor may 
request that Public Debt transfer the securities to his or her primary 
account.
    (f) Liability. We rely on the certification of the custodian that 
he or she is acting on behalf of the minor. We are not liable to the 
minor, or any other person or party acting on behalf of the minor, for 
the actions of the custodian, nor are we liable for the application of 
any proceeds from the transfer or redemption of securities held in the 
minor's account. The custodian agrees to indemnify and hold harmless 
the United States in the event that we suffer any loss on account of 
any claim relating to a minor account.


Sec. Sec.  363.28 through 363.32  [Removed and reserved]

0
7. Remove and reserve Sec. Sec.  363.28 through 363.32.

0
8. Revise Sec.  363.36 to read as follows:


Sec.  363.36  What securities can I purchase and hold in my New 
Treasury Direct account?

    You can purchase and hold eligible Treasury securities in your 
account. Current eligible securities are book-entry Series EE and I 
savings bonds. We intend to designate additional Treasury securities as 
eligible securities from time to time.


Sec.  363.51  [Amended]

0
9. Amend Sec.  363.51 by removing paragraph (b) and redesignating 
paragraphs (c) and (d) as (b) and (c), respectively.

0
10. Amend Sec.  363.66 to read as follows:


Sec.  363.66  What forms of registration are available for book-entry 
savings bonds?

    The forms of registration available are single owner, owner with 
beneficiary, and primary owner with secondary owner.


Sec. Sec.  363.70 and 363.71  [Removed and reserved]

0
11. Remove and reserve Sec. Sec.  363.70 and 363.71.

0
12. Revise Sec.  363.82 to read as follows:


Sec.  363.82  May an account owner deliver a book-entry savings bond 
purchased as a gift to a minor?

    An account owner may deliver a bond purchased as a gift to a minor. 
The account owner must deliver the security to the minor's linked 
account. Once delivered, the bond will be under the control of the 
custodian of the minor's account. (See Sec.  363.27.)


Sec. Sec.  363.85  [Removed and reserved]

0
13. Remove and reserve Sec.  363.85.


Sec.  363.90  [Amended]

0
14. Amend Sec.  363.90 by removing paragraph (a)(3) and redesignating 
paragraphs (a)(4), (5), and (6) as paragraphs (a)(3), (4), and (5), 
respectively.


Sec.  363.96  [Amended]

0
15. Amend Sec.  363.96 by removing paragraph (e).

    Dated: January 13, 2004.
Donald V. Hammond,
Fiscal Assistant Secretary.
[FR Doc. 04-1039 Filed 1-13-04; 3:11 pm]
BILLING CODE 4810-39-P