[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: 31CFR357.22] [Page 404-406] TITLE 31--MONEY AND FINANCE: TREASURY CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY PART 357--REGULATIONS GOVERNING BOOK-ENTRY TREASURY BONDS, NOTES AND BILLS (DEPARTMENT OF THE TREASURY CIRCULAR, PUBLIC DEBT SERIES NO. 2-86)--Table of Contents Subpart C--Treasury Direct Book-Entry Securities System (TREASURY DIRECT) Sec. 357.22 Transfers. (a) General. A security may be transferred only as authorized by this part. A security may be transferred from an account in TreasuryDirect to an account in TRADES, or from an account in TRADES to an account in TreasuryDirect. A security may also be transferred between accounts in TreasuryDirect. The Department may delay transfer of a newly purchased security from a TreasuryDirect account to an account in TRADES for a period not to exceed (30) calendar days from the date of issue. This provides time for the investor to become aware of any unauthorized debits. (1) Identification of securities to be transferred. The owner must identify the securities to be transferred within TREASURY DIRECT, or from TREASURY DIRECT to TRADES, in the manner required by the transaction request form. If such identification is not provided, the request will not be processed and will be returned. (2) Denominational amounts. A security may be transferred from an account only in a denominational amount authorized by the offering under which the security was issued. Any security remaining in the securities portfolio after the transfer must also be in an authorized denominational amount. (3) When transfer effective. A transfer of a security within TREASURY DIRECT, or from TRADES to TREASURY DIRECT, is effective when an appropriate entry is made in the name of the transferee on the TREASURY DIRECT records. A transfer from TREASURY DIRECT to TRADES is effective as provided in Subpart B. If a transfer of a security from a transferor in TREASURY DIRECT to a transferee in TRADES cannot be completed, and the security is sent back to TREASURY DIRECT, the Department will redeposit the security in the transferor's account and treat the transferor as the owner. (b) Transfer to Federal Reserve Bank for sale of securities in the secondary market. (1) Upon authorization by the investor, an unmatured security may be transferred to a Federal Reserve Bank acting as the designated fiscal agent of the United States, to be sold on behalf of the investor. (2) Definitions. In this section, unless the context indicates otherwise: 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. Par amount means the stated value of a security at original issuance. Price means the dollar amount to be paid for a security expressed as a percent of its current par amount. Security means any amount held in a TREASURY DIRECT account which is represented by a separate CUSIP number. Settlement amount, also referred to as net amount, is the amount deposited by the Federal Reserve Bank to the account of the investor at the financial institution designated by the investor to receive TREASURY DIRECT payments. This amount is equal to the par amount of the securities multiplied by the price, plus any accrued interest, and less the transaction fee. For inflation indexed securities, the settlement amount also includes any applicable inflation adjustment, as provided in 31 CFR Part 356. The settlement amount may be less than the par amount of the security. Settlement date is the date the settlement amount is released to the account at the financial institution designated by the investor for receipt of TREASURY DIRECT payments. Trade date means the date on which the Federal Reserve Bank enters into an agreement with a dealer for the sale of the security. 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 real yield, as defined in 31 CFR part 356. [[Page 405]] (3) Procedure. On an approved Treasury form, the owner must authorize a transfer of the security from the investor's TREASURY DIRECT account to the designated Federal Reserve Bank, and authorize the Federal Reserve Bank to sell the security. Rules in subpart C of this part governing the transfer of securities will apply to the transfer of the security to the Federal Reserve Bank. Generally, on the day that the security is transferred to the Federal Reserve Bank, the Federal Reserve Bank will make reasonable efforts to obtain a price quote from at least three dealers, and will enter into an agreement to sell the security to the dealer with the highest price quote for next day settlement. What constitutes reasonable effort shall be determined solely by the Federal Reserve Bank. On the next full business day after the trade date, the settlement amount shall be released by direct deposit (electronic funds transfer), as provided in Sec. 357.26 of this part, to the account at the financial institution designated by the investor to accept TREASURY DIRECT payments, except when the Department determines that extraordinary circumstances exist that require payment by other means. In the event that the Federal Reserve Bank is unable to obtain at least one price quote for the security, the security will be returned to the TREASURY DIRECT account of the investor on the next full business day following the receipt of the securities by the Federal Reserve Bank, and the Federal Reserve Bank will notify the investor. (4) Confirmation. The Federal Reserve Bank will send a confirmation of the sale to the investor upon completion of the transaction. Such confirmation will include such information as price, trade date, settlement date, settlement amount, also referred to as net amount, transaction fee, and yield to maturity. (5) Price. By authorizing the transfer and sale of the securities, the investor agrees to accept the price received by the Federal Reserve Bank from the dealer selected as having the highest price quote. (6) Transaction fee. A transaction fee shall be charged for each security sold on behalf of the investor. If the Federal Reserve Bank is unable to complete the sale of the security, no fee will be charged. By authorizing the sale of the security, the investor authorizes the Federal Reserve Bank to withhold the transaction fee prior to the Federal Reserve Bank initiating the payment of the settlement amount to the account at the financial institution designated by the investor to receive TREASURY DIRECT payments. The amount of the transaction fee will be published by notice in the Federal Register. (7) Termination. This service may be terminated at anytime without prior notice at the discretion of the Department. (8) Rights. The provisions applicable to TREASURY DIRECT transactions in subpart C shall apply to this section. The provisions applicable to transactions in TRADES in subpart B shall not apply to this section. (9) Irrevocability. The authorization of the investor for the transfer and sale of the securities shall be irrevocable when the transfer from the TREASURY DIRECT account of the investor to the account at the Federal Reserve Bank is effected. (10) Liability. The Department and the designated Federal Reserve Bank shall not be liable for changes in market conditions affecting the price received for the security, or for any loss which the investor may incur as a result of the transaction or the inability of the Federal Reserve Bank to complete the transaction. (c) Transfer upon death of an owner--(1) Right of survivorship. If a security is registered in beneficiary form or a form which provides for a right of survivorship, upon the death of an owner, the beneficiary or survivor shall be the sole and absolute owner, notwithstanding any purported testamentary disposition by the decedent and notwithstanding any State or other law to the contrary. The Department will honor a transaction request by a beneficiary or a survivor (in the case of a security registered in the form described in Sec. 357.21(b)(2)(i)(B)) only upon proof of death of an owner. (2) Succession under law of domicile. If a security is registered in a form that does not provide for a right of survivorship, succession shall be determined in [[Page 406]] accordance with the applicable law of the deceased owner's domicile at the time of death. (d) Representative succession. If a security is registered in the name of a representative who has died, resigned, or been removed, succession shall be determined in accordance with applicable law and the terms of the document under which the representative was acting. (e) Organizational succession--(1) Corporation and unincorporated association. If a security is registered in the name of a corporation or an unincorporated association that has been dissolved, merged or consolidated into another organization, succession shall be determined in accordance with applicable law and the terms of the documents by which the dissolution, merger, or consolidation was effected. (2) Partnership. If a partnership is dissolved or terminated, succession shall be determined in accordance with applicable law and the terms of the partnership agreement. (f) Succession of governmental officer. If a security is registered in the name and title of a governmental officer who has died, resigned, or has been removed, succession shall be determined in accordance with applicable law. (Approved by the Office of Management and Budget under control number 1535-0068) [51 FR 18265, May 16, 1986; 51 FR 18884, May 23, 1986, as amended at 53 FR 10074, Mar. 29, 1988; 62 FR 46861, Sept. 4, 1997; 64 FR 6527, Feb. 10, 1999]