[Federal Register Volume 75, Number 90 (Tuesday, May 11, 2010)]
[Rules and Regulations]
[Pages 26089-26091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11141]


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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 363


Securities Held in TreasuryDirect

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

ACTION: Final rule.

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SUMMARY: TreasuryDirect[supreg] is an account-based, book-
entry, online system for purchasing, holding, and conducting 
transactions in Treasury securities. This final rule benefits 
TreasuryDirect[supreg] customers by simplifying the 
procedures for advance scheduling of marketable Treasury security 
purchases, enhancing the process of scheduling reinvestments of 
marketable Treasury securities, and improving the procedures when the 
proceeds of the maturing security are insufficient to pay for a new 
security.

DATES: Effective Date: May 15, 2010.

ADDRESSES: You can download this Final Rule at the following Internet 
addresses: http://www.publicdebt.treas.gov or http://www.gpoaccess.gov/ecfr.

FOR FURTHER INFORMATION CONTACT:
    Elisha Whipkey, Director, Division of Program Administration, 
Office of Retail Securities, Bureau of the Public Debt, at (304) 480-
6319 or [email protected].
    Susan Sharp, Attorney-Adviser, Dean Adams, Assistant Chief Counsel, 
Edward Gronseth, Deputy Chief Counsel, Office of the Chief Counsel, 
Bureau of the Public Debt, at (304) 480-8692 or 
[email protected]>.

SUPPLEMENTARY INFORMATION:
    TreasuryDirect[supreg] is an online, account-based 
system for individuals and entities to purchase, hold, and conduct 
transactions in eligible Treasury securities. This final rule makes 
changes to the procedures for purchasing and reinvesting marketable 
Treasury securities.
    TreasuryDirect[supreg] currently allows a customer to 
schedule a marketable security purchase up to five years in advance. 
Because the auction schedule for marketable Treasury securities cannot 
be predicted with certainty that far in advance, some scheduled 
security purchases must be canceled when no matching security is 
available at that time. This final rule limits the advance scheduling 
of new purchases of marketable securities. One day each week, 
marketable securities that are scheduled for auction within 8 weeks 
will be made available on the TreasuryDirect[supreg] Web 
site for scheduling a purchase. These securities are the only 
marketable securities available for advance purchase. Marketable 
security purchases scheduled before May 15, 2010, to take effect after 
July 9, 2010, will be canceled.
    Treasury is streamlining the procedures for reinvesting marketable 
Treasury securities purchased and held in 
TreasuryDirect[supreg]. Prior to the effective date of this 
rule, a customer was required to take several steps to reinvest a 
marketable security. First, the customer had to determine the date that 
the security matured, then direct that the proceeds of the maturing 
security be used to purchase a certificate of indebtedness, and then 
schedule a new purchase to coincide with the maturity date of the 
original security, with the payment for the new security being made 
using the redemption proceeds of the certificate of indebtedness. Any 
purchase of a marketable security in which the payment was made through 
the redemption proceeds of the customer's certificate of indebtedness 
was treated as a reinvestment. The new procedure will streamline the 
reinvestment process by permitting the customer to schedule automatic 
reinvestments without requiring the customer to calculate dates and 
schedule purchases. Reinvestments will be limited at any one time to 25 
times for a 4-week bill, 7 times for a 13-week bill, 3 times for a 26-
week bill, and once for all other marketable security types. The 
customer can schedule a reinvestment either at the time of purchase or 
after the security is issued into the account. However, the customer 
cannot schedule, edit, or cancel a reinvestment when the maturing 
security goes into a closed book period, or when a noncompetitive bid 
for the replacement security is no longer accepted, whichever comes 
first. Because of the changes made to the reinvestment process, any 
marketable security purchase scheduled prior to the effective date of 
this rule, and with an effective issue date on or after the effective 
date of this rule (except for purchases scheduled to take effect after 
July 9, 2010, which, as noted above, will be canceled), will be treated 
as a new purchase, even if the transaction would have been treated as a 
reinvestment prior to this rule.
    In addition, the procedure is changing whenever there are 
insufficient funds from the maturing security to pay the full purchase 
price of the replacement security. Previously, in that event, 
TreasuryDirect[supreg] would cancel the transaction. This 
final rule provides that, in the event that the proceeds of the 
maturing security are insufficient to pay the full purchase price of 
the replacement security, the additional amount will be paid by either 
debiting the customer's primary account at a financial institution or 
by using the redemption proceeds from the customer's certificate of 
indebtedness. The source for the additional funds depends on how the 
maturing security was acquired. If the maturing security was purchased 
within TreasuryDirect[supreg] prior to the effective date of 
this rule, or purchased after the effective date of this rule and the 
source of the funds to purchase the security was a debit from a 
financial institution account, or if the maturing security was received 
through a transfer, then the customer's primary account at a financial 
institution will be debited for the additional amount. If there are 
insufficient funds in the customer's primary account at a financial 
institution, the reinvestment will be canceled. If the maturing 
security was purchased after the effective date of this rule using 
redemption proceeds from the customer's certificate of indebtedness, 
then a redemption from the customer's certificate of indebtedness will 
be made for the additional funds. If the amount available for 
redemption from the certificate of indebtedness is insufficient to pay 
the additional amount, the reinvestment will be canceled.

Procedural Requirements

    Executive Order 12866. This rule is not a significant regulatory 
action pursuant to Executive Order 12866.
    Administrative Procedure Act (APA). Because this rule relates to 
United States securities, which are contracts between Treasury and the 
owner of the security, this rule falls within the contract exception to 
the APA, 5 U.S.C. 553(a)(2). As a result, the notice, public comment, 
and delayed effective date provisions of the APA are inapplicable to 
this rule.
    Regulatory Flexibility Act. The provisions of the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq., do not apply to this rule 
because, pursuant to 5 U.S.C. 553(a)(2), it is not required to be 
issued with notice and opportunity for public comment.

[[Page 26090]]

    Paperwork Reduction Act (PRA). There is no new collection of 
information contained in this final rule that would be subject to the 
PRA, 44 U.S.C. 3501 et seq. Under the PRA, 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. The Office 
of Management and Budget already has approved all collections of 
information in 31 CFR part 363 under OMB control number 1535-0138.
    Congressional Review Act (CRA). This rule is not a major rule 
pursuant to the CRA, 5 U.S.C. 801 et seq., because it is a minor 
amendment that requires less reporting, and is not anticipated to have 
any effect on investors; therefore, it is not expected to lead to any 
of the results listed in 5 U.S.C. 804(2). This rule may take immediate 
effect after we submit a copy of it to Congress.

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:

PART 363--REGULATIONS GOVERNING SECURITIES HELD IN TREASURYDIRECT

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.; 
31 U.S.C. 3121, et seq.


0
2. Amend Sec.  363.6 by:
0
a. Adding the definition of ``Closed book period'' and ``Reinvestment'' 
in alphabetical order; and
0
b. Revising the definition of ``Owner,'' to read as follows:


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

* * * * *
    Closed book period means a period of four business days prior to 
the date a scheduled marketable security interest and/or maturity 
payment is made, during which time certain transactions will be delayed 
until after the closed book period is completed. (See Sec.  363.210.)
* * * * *
    Owner when referring to an individual, is either the single 
individual named in the registration of a security held in the single 
owner form of registration, the first individual named on a security 
held in the owner with beneficiary form of registration, the first 
individual named on a security held in the primary owner with secondary 
owner form of registration, or either individual named on a converted 
savings bond held in the coowner form of registration; when referring 
to a minor linked account, the owner is the minor; when referring to an 
entity, the owner is the entity.
* * * * *
    Reinvestment means using the redemption proceeds of a maturing 
marketable security to purchase a new marketable security of the same 
type and term, using the automatic reinvestment option available in 
TreasuryDirect.
* * * * *

0
3. Amend Sec.  363.202 by revising paragraph (a) to read as follows:


Sec.  363.202  What marketable Treasury securities may I purchase and 
hold through my TreasuryDirect [supreg] account?

    (a) Purchase. (1) Advance purchase. You may purchase any marketable 
Treasury security that is available for purchase through the 
TreasuryDirect [supreg] website. One day each week, marketable 
securities that are scheduled for auction within 8 weeks will be made 
available on the TreasuryDirect website for scheduling an advance 
purchase, and are the only marketable securities that you can schedule 
for advance purchase.
    (2) Purchases scheduled prior to May 15, 2010, with an effective 
issue date on or after May 15, 2010. (i) Any marketable security 
purchase scheduled prior to May 15, 2010, and with an effective issue 
date of May 15, 2010, through July 9, 2010, will be treated as a new 
purchase, even if the transaction would have been treated as a 
reinvestment under the rules in effect prior to May 15, 2010.
    (ii) Any marketable security purchase scheduled prior to May 15, 
2010, with an effective issue date after July 9, 2010, will be 
canceled.
* * * * *

0
4. Revise Sec.  363.205 to read as follows:


Sec.  363.205  How do I reinvest the proceeds of a maturing security 
held in TreasuryDirect [supreg]?

    (a) Method for reinvesting a maturing security. The only method of 
reinvesting a maturing marketable security in TreasuryDirect [supreg] 
is through the automatic reinvestment option available in your 
TreasuryDirect account. Purchasing a security by directing that the 
proceeds of a maturing security be used to purchase a certificate of 
indebtedness, and then scheduling the purchase of a new security using 
the redemption proceeds of the certificate of indebtedness, is not a 
reinvestment.
    (b) When a reinvestment can be scheduled, edited, or canceled. You 
can schedule your reinvestment either at the time of purchase or after 
the security is issued into your TreasuryDirect account. You cannot 
schedule, edit, or cancel a reinvestment when the maturing security 
goes into a closed book period, or when a noncompetitive bid for the 
replacement security is no longer accepted, whichever comes first.
    (c) What securities can be reinvested. Any marketable security can 
be reinvested.
    (d) Limits on scheduling reinvestments. Reinvestments will be 
limited at any one time to 25 times for a 4-week bill, 7 times for a 
13-week bill, 3 times for a 26-week bill, and once for all other 
marketable security types.
    (e) Canceling reinvestments. If there is no security available for 
reinvestment with an issue date that coincides with the maturity date 
or call date, if invoked, of the maturing security, and with the same 
type and term, the scheduled reinvestment will be canceled and the 
proceeds of the maturing security will be returned to the customer.
    (f) Procedure if there are insufficient funds from the maturing 
security to pay the full purchase price of the replacement security. If 
there are insufficient funds from the maturing security to pay the full 
purchase price of the replacement security, we will either debit your 
primary account at a financial institution or pay the additional funds 
using the redemption proceeds of your certificate of indebtedness.
    (1) Debit from primary account at financial institution. If the 
maturing security is purchased on or after May 15, 2010, we will pay 
the additional funds by a debit from your primary account at a 
financial institution if the maturing security was purchased within 
TreasuryDirect by a debit from a financial institution account or if 
the maturing security was received through a transfer. If we are unable 
to obtain sufficient funds from your primary account at a financial 
institution, the reinvestment will be canceled and we will refund the 
proceeds of the maturing security.
    (2) Withdrawal of funds from certificate of indebtedness. If the 
maturing security is purchased on or after May 15, 2010, we will pay 
the additional funds using the redemption proceeds of your certificate 
of indebtedness if the purchase of the maturing security was made using 
the certificate of indebtedness. If the amount available from a 
redemption of the certificate of indebtedness is insufficient to pay 
the additional amount, the reinvestment will be

[[Page 26091]]

canceled and we will refund the proceeds of the maturing security.
    (3) Special rules if the maturing security was purchased prior to 
May 15, 2010. If the maturing security was purchased within 
TreasuryDirect or received through a transfer prior to May 15, 2010, we 
will debit your primary account at a financial institution for the 
additional funds. If we are unable to obtain sufficient funds from your 
primary account at a financial institution, the reinvestment will be 
canceled and we will refund the proceeds of the maturing security

0
5. Revise Sec.  363.210 to read as follows:


Sec.  363.210  Is there any period of time during which I will be 
unable to process certain transactions regarding my security?

    A closed book period will be in effect for four business days prior 
to the date a marketable security interest and/or redemption payment is 
made. During the closed book period, you cannot change the registration 
of the security, change the payment destination of the proceeds, change 
the view or transaction rights, make transfers, initiate a SellDirect 
[supreg] transaction, or schedule, edit, or cancel a reinvestment. We 
will hold transactions requiring submission of a form for processing 
until the closed book period ends. If the security entered the closed 
book period due to a scheduled interest payment, we will delay until 
after the closed book period any SellDirect requests scheduled but not 
processed prior to the closed book period. If the security entered the 
closed book period due to a maturity payment, we will cancel SellDirect 
requests scheduled but not processed prior to the closed book period.

Richard L. Gregg,
Acting Fiscal Assistant Secretary.
[FR Doc. 2010-11141 Filed 5-10-10; 8:45 am]
BILLING CODE 4810-39-P