[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR356.17]

[Page 362-363]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
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)--Table of Contents
 
             Subpart B--Bidding, Certifications, and Payment
 
Sec. 356.17  Responsibility for payment.

    A bidder agrees to pay the settlement amount for any securities 
awarded to it in the auction. (See Sec. 356.25.) In addition, certain 
payments or provisions for payment are required at the time a tender is 
submitted. The specific requirements, outlined in this section, depend 
on whether awarded securities will be delivered in TREASURY DIRECT or 
TRADES.
    (a) TREASURY DIRECT. For securities to be held in TREASURY DIRECT, 
payment of the par amount and announced accrued interest and/or 
inflation adjustment, if any, must be submitted with the tender unless 
other provisions have been made, such as payment by an authorized 
electronic means providing for immediately available funds or by charge 
to the funds account of a depository institution.
    (1) Payment with tender. For bills, payment must be by cash, 
depository institution (cashier's or teller's) check, certified check, 
currently dated Treasury or fiscal agency check made payable to the 
bidder, or definitive Treasury securities maturing on or before the 
issue date of the securities being auctioned, but which are not overdue 
as defined in the general regulations governing United States securities 
(31 CFR 306.25). Also, maturing securities held in TREASURY DIRECT may 
be used as payment for new securities that are being offered, provided 
that the appropriate transaction request is received timely. For notes 
or bonds, payment must be in one of the forms described above for bills, 
or by personal check. Checks submitted to a Federal Reserve Bank must be 
made payable to that Bank and checks submitted to the Bureau of the 
Public Debt must be made payable to the Bureau of the Public Debt.
    (2) Payment by authorized electronic means. Payment may be made by 
electronic means approved by the Department, provided the bidder, or the 
submitter on behalf of the bidder, has met the necessary conditions and 
has satisfactorily completed any required authorizations for such means 
of payment, in accordance with 31 CFR part 370.
    (3) Authorized charge to a funds account. If a depository 
institution or

[[Page 363]]

dealer submits a tender for a TREASURY DIRECT bidder and payment is not 
submitted with the tender or made by an authorized electronic means, an 
authorization from a depository institution to charge the institution's 
funds account at a Federal Reserve Bank must be on file with the Bank to 
which the tender was submitted.
    (b) TRADES. For securities to be held in TRADES, payment of the par 
amount and announced accrued interest and/or inflation adjustment, if 
any, must be submitted with the tender unless other provisions have been 
made, such as payment by an authorized electronic means providing for 
immediately available funds or by charge to the funds account of a 
depository institution.
    (1) Payment with tender. Where payment is submitted with the tender, 
payment must be by one of the means specified under paragraph (a)(1) of 
this section.
    (2) Payment by authorized electronic means. Payment may be made by 
electronic means approved by the Department, provided the bidder, or the 
submitter on behalf of the bidder, has met the necessary conditions, and 
has satisfactorily completed any required authorizations, for such means 
of payment.
    (3) Authorized charge to a funds account. Where payment is not 
submitted with the tender or made by an authorized electronic means, an 
authorization to charge the funds account of a depository institution 
must be provided as follows:
    (i) A depository institution with a funds account submitting tenders 
directly to a Federal Reserve Bank may authorize the Bank to charge its 
funds account upon delivery of the securities.
    (ii) A submitter that chooses not to pay by charge to its funds 
account or a submitter that does not have a funds account must, prior to 
the submission of a tender, have an acknowledged autocharge agreement on 
file at the Federal Reserve Bank to which the tender is submitted. By 
submitting a tender for securities to be paid for under such autocharge 
agreement, the submitter authorizes the Federal Reserve Bank to provide, 
to the depository institution whose funds account will be charged under 
the agreement, notice of the total par amount of, and price to be 
charged for, securities awarded as a result of the submitter's tender.
    (iii) In addition, a submitter that is a member of a clearing 
corporation may instruct that delivery and payment be made through the 
clearing corporation for securities awarded to the submitter for its own 
account, provided that the following requirements are met:
    (A) The submitter must, prior to the submission of a tender for such 
securities, have a delivery and payment agreement with the clearing 
corporation acknowledged by, and on file at, the Federal Reserve Bank to 
which the tender is submitted. By entering into such an agreement, the 
submitter authorizes the Federal Reserve Bank to provide to the clearing 
corporation notice of the par amounts of, prices to be charged for, and 
total payment amounts for, securities awarded to the submitter for its 
own account.
    (B) An autocharge agreement between the clearing corporation and the 
depository institution must, prior to the submission of a tender for 
such securities, be acknowledged by, and on file at, the Federal Reserve 
Bank servicing the depository institution. By entering into such an 
agreement, the clearing corporation authorizes the Federal Reserve Bank 
to which the tender is submitted to provide, to the depository 
institution whose funds account will be charged under the agreement, 
notice of the total aggregate par amount of, prices to be charged for, 
and total payment amounts for, securities to be delivered to the 
clearing corporation's designated account at the depository institution.

[58 FR 414, Jan. 5, 1993, as amended at 59 FR 28774, June 3, 1994. 
Redesignated at 61 FR 37010, July 16, 1996, as amended at 61 FR 54909, 
Oct. 22, 1996; 62 FR 852, Jan. 6, 1997; 62 FR 32032, June 12, 1997]