[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: 31CFR356.2]

[Page 352-355]
 
                  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 A--General Information
 
Sec. 356.2  Definitions.

    In this part, unless the context indicates otherwise:
    Accrued interest means an amount payable to the Department for such 
part of the next semiannual interest payment that represents interest 
income attributed to the period prior to the date of issue. (See 
appendix B, section I, paragraph C.)
    Adjusted value means, for an interest component stripped from an 
inflation-indexed security, an amount derived by multiplying the 
semiannual interest rate by the par amount and then multiplying this 
value by 100 divided by the Reference CPI of the original issue date (or 
dated date, when the dated date is different from the original issue 
date). (See Appendix B, Section IV to this part, for an example of how 
to calculate the adjusted value for interest components stripped from an 
inflation-indexed security.)
    Auction means a bidding process by which the Department sells 
marketable Treasury securities to the public.
    Autocharge agreement means a written agreement between a submitter 
and a depository institution or between a clearing corporation and a 
depository institution, acknowledged by a Federal Reserve Bank, which 
authorizes a Federal Reserve Bank to deliver securities awarded at 
auction to the book-entry account of the depository institution or, when 
authorized, to a TREASURY DIRECT account, and to charge a funds account 
of the depository institution for the settlement amount of the 
securities. (See exhibit B for a sample autocharge agreement between a 
submitter and a depository institution.)
    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.
    Bidder, as further defined in appendix A, means a person or an 
entity that bids either directly or through an entity authorized to 
submit bids for customers in an auction. In some cases, two or more 
persons or entities are considered to be one bidder based on their 
relationship or their actions in participating in an auction.
    Bid-to-cover ratio means the total par amount of securities bid for 
by the public divided by the total par amount of securities awarded to 
the public. The bid-to-cover ratio excludes any bids or awards for 
accounts of foreign and international monetary authorities at Federal 
Reserve Banks and for the account of the Federal Reserve Banks.
    Book-entry security means a security the issuance and maintenance of 
which are represented by an accounting entry or electronic record and 
not by a certificate. Treasury book-entry securities may generally be 
held in either TRADES or in TREASURY DIRECT. (See Sec. 356.3.)

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    Business day means any day other than a Saturday, Sunday, or other 
day on which the Federal Reserve Banks are not open for business.
    Call means the redemption, pursuant to the terms specified in its 
offering announcement, of a security, in whole or in part, prior to 
maturity, at the option of the Secretary.
    Clearing corporation means a clearing agency as defined in Section 3 
of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(23)) that is 
registered with the Securities and Exchange Commission pursuant to 
Section 17A of the Securities Exchange Act of 1934 and the rules 
thereunder.
    Competitive bid means a bid to purchase a stated par amount of 
securities at a specified yield or discount rate.
    Consumer Price Index (CPI) means the monthly non-seasonally adjusted 
U.S. City Average All Items Consumer Price Index for All Urban 
Consumers, published by the Bureau of Labor Statistics of the Department 
of Labor. (See appendix D.)
    Corpus means the principal component of a stripped security and 
future callable semiannual interest payments, if any.
    CUSIP means Committee on Uniform Securities Identification 
Procedures.
    CUSIP number means the unique identifying number assigned to each 
separate security issue and each separate STRIPS component. CUSIP 
numbers are provided by the CUSIP Service Bureau of Standard & Poor's 
Corporation.
    Customer means a bidder on whose behalf a depository institution or 
dealer has been directed to submit or forward a competitive or 
noncompetitive bid for a specified amount of securities in a specific 
auction. Only depository institutions and dealers may submit or forward 
bids for customers, whether directly to a Federal Reserve Bank or the 
Bureau of the Public Debt, or through an intermediary depository 
institution or dealer.
    Daily interest decimal means, for a fixed-principal security, the 
interest factor attributable to one day of an interest payment period 
per $1,000 par amount.
    Dated date means the date from which interest accrues. The dated 
date and issue date are the same except when the date from which 
interest accrues is prior to the issue date.
    Dealer means an entity that is registered or has given notice of its 
status as a government securities broker or government securities 
dealer, pursuant to Section 15C(a)(1) of the Securities Exchange Act of 
1934.
    Delivery and payment agreement means a written agreement between a 
clearing corporation and a submitter, acknowledged by a Federal Reserve 
Bank, authorizing the Federal Reserve Bank, with respect to securities 
awarded to the submitter for its own account, to deliver such securities 
to, and accept payment from, a depository institution acting on behalf 
of the clearing corporation pursuant to an acknowledged autocharge 
agreement.
    Department means the United States Department of the Treasury.
    Depository institution means:
    (1) An entity described in section 19(b)(1)(A), excluding 
subparagraph (vii), of the Federal Reserve Act (12 U.S.C. 461(b)(1)(A)). 
Under section 19(b)(1)(A) of the Federal Reserve Act, the term 
depository institution includes:
    (i) Any insured bank as defined in 12 U.S.C. 1813 or any bank which 
is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (ii) Any mutual savings bank as defined in 12 U.S.C. 1813 or any 
bank which is eligible to make application to become an insured bank 
under 12 U.S.C. 1815;
    (iii) Any savings bank as defined in 12 U.S.C. 1813 or any bank 
which is eligible to make application to become an insured bank under 12 
U.S.C. 1815;
    (iv) Any insured credit union as defined in 12 U.S.C. 1752 or any 
credit union which is eligible to make application to become an insured 
credit union under 12 U.S.C. 1781;
    (v) Any member as defined in 12 U.S.C. 1422; and
    (vi) Any savings association (as defined in 12 U.S.C. 1813) which is 
an insured depository institution (as defined in the Federal Deposit 
Insurance Act, 12 U.S.C. 1811, et seq.) or is eligible to apply to 
become an insured depository institution under such Act.
    (2) Any agency or branch of a foreign bank as defined by the 
International

[[Page 354]]

Banking Act of 1978, as amended (12 U.S.C. 3101).
    Discount means the difference between par and the price of the 
security, when the price is less than par.
    Discount amount means the discount divided by 100 and multiplied by 
the par amount.
    Discount rate, also referred to as ``bank discount rate,'' means an 
annualized rate of return to maturity on bills, expressed in percentage 
terms and based on a 360-day year. (See appendix B for formulas and 
examples.)
    Federal Reserve Bank means a Federal Reserve Bank or a branch of a 
Federal Reserve Bank.
    Funds account means a cash account maintained by a depository 
institution at a Federal Reserve Bank.
    Index means the Consumer Price Index, which is used as the basis for 
making adjustments to principal amounts of inflation-indexed securities. 
(See appendix D.)
    Index ratio means, for any particular date and any particular 
inflation-indexed security, the Reference CPI applicable to such date 
divided by the Reference CPI applicable to the original issue date (or 
dated date, when the dated date is different from the original issue 
date). (See appendix B, section I, paragraph B.)
    Inflation-adjusted principal means, for an inflation-indexed 
security, the value of the security derived by multiplying the par 
amount by the applicable index ratio as described in appendix B, section 
I, paragraph B.
    Interest rate means the annual percentage rate of interest paid on 
the par amount or the inflation-adjusted principal of a specific issue 
of notes or bonds. (See appendix B for methods and examples of interest 
calculations on notes and bonds.)
    Intermediary means a depository institution or dealer that forwards 
bids for customers to another depository institution or dealer and not 
directly to a Federal Reserve Bank or the Bureau of the Public Debt.
    Investment adviser means any person or entity that has investment 
discretion for the bids or positions of a person or entity not 
considered part of the investment adviser under the bidder definitions 
in Appendix A of this part. Investment discretion includes determining 
what, how many, and when securities shall be purchased or sold. A person 
or entity managing investments for itself is not considered an 
investment adviser for such investments. Where a person is employed or 
supervised by an entity in connection with his activities as an 
investment adviser, such person is considered to be part of that entity.
    Issue date means the date specified in the offering announcement on 
which a security is issued as an obligation of the United States, and 
from which interest normally begins to accrue.
    Marketable security means a security that is negotiable and 
transferable, i.e., may be bought and sold in the secondary market.
    Maturity date means the date specified in the offering announcement 
on which a security becomes due and payable, and ceases to earn 
interest.
    Minimum to hold means the smallest amount of a security that will be 
issued to a bidder and may be held in any book-entry account. Unless 
otherwise stated in the offering announcement, the minimum to hold is 
the same as the minimum bid amount given in the offering announcement.
    Multiple-price auction means an auction in which each successful 
competitive bidder pays the price equivalent to the yield or rate that 
it bid.
    Multiple to hold means the smallest additional amount of a security 
that will be issued to a bidder and may be held in any book-entry 
account above the minimum to hold. Unless otherwise stated in the 
offering announcement, the multiple to hold is the same as the multiple 
to bid amount given in the offering announcement.
    Noncompetitive bid means, for a single-price auction, a bid to 
purchase securities at the highest yield or discount rate of awards to 
competitive bidders. For a multiple-price auction, a noncompetitive bid 
means a bid to purchase securities at the weighted average yield or 
discount rate of awards to competitive bidders.
    Par means a price of 100. (See appendix B.)
    Par amount means the stated value of a security at original 
issuance.
    Person means a natural person.

[[Page 355]]

    Premium means the difference between par and the price of the 
security, when the price is greater than par.
    Premium amount means the premium divided by 100 and multiplied by 
the par amount.
    Price means the price of a security as calculated using the formulas 
in appendix B.
    Public offering means the par amount of securities offered to the 
public for purchase in an auction. For all bills except cash management 
bills, the public offering is the amount specified in the offering 
announcement, less securities awarded in the auction to the Federal 
Reserve Banks for the accounts of foreign and international monetary 
authorities (up to the amount of maturing securities held by such 
accounts). For notes, bonds, and cash management bills, the public 
offering is the same as the amount specified in the offering 
announcement.
    Real yield means, for an inflation-indexed security, the yield based 
on the payment stream in constant dollars, i.e., before adjustment by 
the index ratio.
    Reference CPI (Ref CPI) means, for an inflation-indexed security, 
the index number applicable to a given date. (See appendix B, section I, 
paragraph B.)
    Reopening means the auction of an additional amount of an 
outstanding security.
    Secretary means Secretary of the Treasury.
    Security means a Treasury bill, note, or bond, each as described in 
this part, and any other obligation issued by the Secretary that, by the 
terms of the applicable offering announcement, is made subject to this 
part. Security includes an interest or principal component under the 
STRIPS program (see below).
    Settlement means final and complete payment for securities awarded 
in an auction.
    Settlement amount means the par amount of securities awarded less 
any discount amount and plus any premium amount and/or any accrued 
interest. For inflation-indexed securities, the settlement amount also 
includes any inflation adjustment when such securities are reopened or 
when the dated date is different from the issue date.
    Single-price auction means an auction in which all successful 
bidders pay the same price regardless of the yields or rates they each 
bid.
    STRIPS (Separate Trading of Registered Interest and Principal of 
Securities) means the Department's program under which eligible 
securities are authorized to be separated into principal and interest 
components, and transferred separately. These components are maintained 
in book-entry accounts, and transferred, in TRADES.
    Submitter means the person or entity submitting bids directly to a 
Federal Reserve Bank or the Bureau of the Public Debt for its own 
account, for the account of others, or both. The only submitters that 
are permitted to submit bids for the account of others are depository 
institutions and dealers.
    Tender means the document or computer transmission submitted to a 
Federal Reserve Bank or the Bureau of the Public Debt by which a bidder 
bids for securities.
    TINT means an interest component from a stripped security.
    TRADES means the Treasury/Reserve Automated Debt Entry System.
    TREASURY DIRECT means the TREASURY DIRECT Book-Entry Securities 
System. (See 31 CFR part 357, subpart C.)
    Weighted average means the average of the yields or discount rates 
at which securities are awarded to competitive bidders weighted by the 
par amount of securities allotted at each yield or discount rate.
    Yield, also referred to as ``yield to maturity,'' means the 
annualized rate of return to maturity on a fixed-principal security 
expressed as a percentage. For an inflation-indexed security, yield 
means the real yield. (See appendix B.)

[58 FR 414, Jan. 5, 1993, as amended at 59 FR 28774, June 3, 1994; 60 FR 
13907, Mar. 15, 1995; 61 FR 37010, July 16, 1996; 61 FR 43637, Aug. 23, 
1996; 62 FR 850, Jan. 6, 1997; 62 FR 25114, May 8, 1997; 63 FR 35783, 
June 30, 1998; 64 FR 3634, Jan. 25, 1999]