[Federal Register Volume 60, Number 50 (Wednesday, March 15, 1995)]
[Rules and Regulations]
[Pages 13906-13907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6394]



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DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR 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)

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

ACTION: Final rule.

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SUMMARY: The Department of the Treasury (``Department'') is issuing in 
final form an amendment to 31 CFR Part 356, published as a final rule 
on January 5, 1993 (58 FR 412). This amendment clarifies the definition 
of the term ``bid'' and changes the required format for competitive 
bids for Treasury notes and bonds from two decimals to three decimals.

EFFECTIVE DATE: February 22, 1995.

FOR FURTHER INFORMATION CONTACT: Michael W. Sunner, Deputy Assistant 
Commissioner, Office of Financing, Bureau of the Public Debt (202) 219-
3350, or Margaret Marquette, Attorney-Adviser, Office of the Chief 
Counsel, Bureau of the Public Debt (202) 219-3320.

SUPPLEMENTARY INFORMATION: 31 CFR Part 356, also referred to as the 
uniform offering circular, sets out the terms and conditions for the 
sale and issuance by the Department of the Treasury to the public of 
marketable Treasury bills, notes, and bonds. The final rule contained 
herein amends Secs. 356.2 and 356.12 of the uniform offering circular.
    In Sec. 356.2, the definition of the term ``bid'' has been 
modified. The Department has become aware that securities dealers may 
enter into transactions whereby they effectively ``guarantee'' the 
amount and price of securities their customers will receive following a 
Treasury auction.<SUP>1 The price guaranteed may be simply an agreed-
upon price, or it may be a price fixed in terms of an agreed-upon 
standard, e.g., the weighted average auction price. The dealer may 
obtain securities to fulfill such a guarantee either through an auction 
bid or through the when-issued market, or both.

    \1\The guarantee described herein is not intended to refer to a 
securities dealer submitting or forwarding a noncompetitive bid for 
a customer.
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    The Department views the guarantee described above to be the 
equivalent of a when-issued trade between the dealer and its customer. 
Therefore, the Department has determined that, for purposes of 
Treasury's auction rules, any bid of the dealer to obtain securities to 
fulfill such a guarantee is a bid for the dealer's own account and not 
a bid for a customer, as the term customer is defined in the offering 
circular. This means that the recipient of the guarantee may not be 
listed as a customer in connection with any bid to fulfill the 
guarantee. Rather, the depository institution or dealer that has made 
the guarantee is considered the bidder and must include such amount as 
part of its own bid. The guaranteeing entity may reflect the guaranteed 
amount being included in its bid as a short position in calculating its 
net long position. If the recipient of the guarantee for a specific 
security also bids for that same security in its own name either 
directly or through a submitter, it must treat the amount of any 
guarantee as a long position in calculating its net long position. 
[[Page 13907]] 
    The definition of the term ``bid'' in Sec. 356.2 has been expanded 
to clarify that an offer to purchase a stated par amount of a security 
by a depository institution or dealer to fulfill a guarantee as 
described above is a bid for the depository institution's or dealer's 
own account and not a bid for a customer.
    In Sec. 356.12, the requirement to express a competitive bid with 
two decimals has been changed with regard to Treasury notes and bonds. 
Prior to the publication of this rule, a competitive bid for a note or 
bond had to show the yield bid, expressed with two decimals. Effective 
with the publication of this rule, such bids must show the yield bid, 
expressed with three decimals. The requirement for a competitive bid 
for a Treasury bill to show the discount rate bid, expressed with two 
decimals, remains unchanged. Further, the restriction against using 
fractions still applies to bids for all securities.
    The change from two decimal places to three decimal places for 
notes and bonds is being made to encourage greater participation in 
Treasury auctions.

Procedural Requirements

    This final rule 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 are no collections of information required by this final 
rule, and, therefore, the Paperwork Reduction Act does not apply.

List of Subjects in 31 CFR Part 356

    Bonds, Federal Reserve System, Government securities, Securities.

    Dated: March 9, 1995.
Gerald Murphy,
Fiscal Assistant Secretary.

    31 CFR Chapter II, Subchapter B, Part 356, is hereby 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.

    2. Section 356.2 is amended by revising the definition of ``bid'' 
to read as follows:


Sec. 356.2  Definitions.

* * * * *
    Bid means an offer to purchase a stated par amount of securities, 
either competitively or noncompetitively, in an auction. An offer to 
purchase a stated par amount of securities submitted by a depository 
institution or dealer to fulfill a guarantee to sell a specified amount 
of securities at an agreed-upon price or a price fixed in terms of an 
agreed-upon standard is a bid of the depository institution or dealer 
and not a bid of a customer.
* * * * *
    3. Section 356.12 is amended by revising paragraph (c)(1) to read 
as follows:


Sec. 356.12  Noncompetitive and competitive bidding.

* * * * *
    (c) * * *
    (1) Bid format.
    (i) Treasury bills. A competitive bid must show the discount rate 
bid, expressed with two decimals. Fractions may not be used.
    (ii) Treasury notes and bonds. A competitive bid must show the 
yield bid, expressed with three decimals. Fractions may not be used.
* * * * *
[FR Doc. 95-6394 Filed 3-14-95; 8:45 am]
BILLING CODE 4810-39-P