Source: https://www.federalregister.gov/documents/2012/06/07/2012-13779/us-treasury-securities-state-and-local-government-series
Timestamp: 2018-08-17 21:58:29
Document Index: 586196228

Matched Legal Cases: ['art 344', '§\u2009344', '§\u2009344', 'art 344', '§\u2009344', '§\u2009344']

A Rule by the Fiscal Service on 06/07/2012
This final rule is effective June 7, 2012.
https://www.federalregister.gov/d/2012-13779 https://www.federalregister.gov/d/2012-13779
The Department of the Treasury (Treasury) is issuing this final rule to revise the regulations governing State and Local Government Series (SLGS) securities. SLGS securities are non-marketable Treasury securities that are only available for purchase by issuers of tax-exempt securities. Current financial market conditions have resulted in extraordinarily low yields in the secondary market for some marketable Treasury securities. As a result, rates applicable to non-marketable State and Local Government Series (SLGS) securities sold to issuers of tax-exempt securities could be negative. To prevent this, Treasury is instituting a floor on the daily SLGS rate, by amending the definition of “SLGS rate” and the definition of the “annualized effective Demand Deposit rate” for Demand Deposit SLGS securities. Additionally, Treasury is revising the definition of “Y” in the annualized effective Demand Deposit rate calculation formula to clarify the calculation method to be used during a year that contains a leap day.
You can download this Final Rule at the following Internet addresses: http://www.publicdebt.treas.gov, http://www.gpo.gov, or http://www.regulations.gov. It is also available for public inspection and copying at the Treasury Department Library, Main Treasury Building, 1500 Pennsylvania Avenue NW., Washington, DC 20220. To visit the library, call (202) 622-0990 for an appointment.
Debra Hines, Assistant Commissioner, Office of the Assistant Commissioner for Public Debt Accounting, Bureau of the Public Debt, at (304) 480-5101 or opda-sib@bpd.treas.gov, Edward Gronseth, Deputy Chief Counsel, Elizabeth Spears, Senior Attorney, or Brian Metz, Attorney-Adviser, Office of the Chief Counsel, Bureau of the Public Debt at (304) 480-8692.
The SLGS program assists state and local government issuers and other entities in complying with the yield restriction and rebate requirements applicable to tax-exempt bonds under the Internal Revenue Code. The SLGS rate on Time Deposit SLGS securities is derived from the Treasury yield curve, less Treasury's administrative costs. As Treasury's costs of administering the SLGS program have decreased so has the amount of the differential that exists between the SLGS rate and the Treasury borrowing rate. The differential was last changed in a 2005 Final Rule (70 FR 37904, June 30, 2005) when Treasury lowered the SLGS rate from 5 basis points below the current Treasury borrowing rates to 1 basis point below current Treasury borrowing rates.
In this rule, Treasury revises the definition of “SLGS rate” and “annualized effective Demand Deposit rate” to address the current extremely low yield environment. The revised definitions will prevent the calculation of the rates for SLGS securities from resulting in negative rates. No change is being made to Treasury's administrative costs. Additionally, to add clarification to part 344, Treasury revises the definition of “Y” in the annualized effective Demand Deposit rate calculation formula to clarify the calculation method to be used during a year that contains a leap day. This revision should not affect issuers' practices and systems.
While the formula for calculating the rate for Demand Deposit SLGS securities remains unchanged under § 344.7(a), the definition of “annualized effective Demand Deposit rate” is being amended. This has the effect of preventing the calculation of the rate for Demand Deposit SLGS securities from resulting in a negative rate. Demand Deposit SLGS securities will continue to bear a rate of interest based on an adjustment of the average yield for three-month (13-week) Treasury bills at the most recent auction. A new rate will be effective on the first business day following the regular auction of 13-week Treasury bills and will continue to be shown in the SLGS rate table. Lastly, Treasury's administrative costs for administering Demand Deposit SLGS securities remain unchanged under § 344.7(a)(2).
Executive Order 12866. This final rule is not a significant regulatory action pursuant to Executive Order 12866, dated September 30, 1993.
Accordingly, for the reasons set forth in the preamble, Treasury amends 31 CFR part 344 as follows:
2. Amend § 344.1 by revising the definition of “SLGS rate,” to read as follows:
3. Amend § 344.7 by:
b. Revising “I” and “Y” in Equation 1 in paragraph (a)(1)(i) to read as follows:
[FR Doc. 2012-13779 Filed 6-6-12; 8:45 am]