[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR357.13]

[Page 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 
HELD IN LEGACY TREASURY DIRECT--Table of Contents
 
     Subpart B_Treasury/Reserve Automated Debt Entry System (TRADES)
 
Sec.  357.13  Obligations of the United States and the Federal Reserve 
Banks with respect to Book-entry Securities and security interests.

    (a) Who is entitled to deal with an interest in a Book-entry 
Security that has been credited to a Participant's Security Account? 
Except in the case of a security interest in favor of the United States 
or a Federal Reserve Bank or otherwise as provided in Sec.  357.12 (e), 
for the purposes of this subpart B, the United States and the Federal 
Reserve Banks treat the Participant as exclusively entitled to perform 
the following functions, even if the Treasury or a Federal Reserve Bank 
has any information or notice to the contrary:
    (1) Issue a Transfer Message,
    (2) Receive interest and other payments with respect thereof, and
    (3) Exercise all the rights and powers with respect to the Security,
    (b) Are the Federal Reserve Banks and Treasury liable for Adverse 
Claims? The Federal Reserve Banks and Treasury are not liable to a 
Person asserting or having an Adverse Claim to a Security Entitlement or 
to a Book-entry Security in a Participant's Securities Account. This 
includes any such claim arising as a result of the transfer or 
disposition of a Book-entry Security by a Federal Reserve Bank, pursuant 
to a Transfer Message that the Federal Reserve Bank reasonably believes 
to be genuine.
    (c) When is the obligation of the United States to pay interest and 
principal with respect to Book-entry Securities discharged? The 
obligation is discharged once payment is made as follows:
    (1) A Federal Reserve Bank credits the appropriate amount of 
interest on Book-entry Securities to a Funds Account maintained at the 
Bank, or pays it as directed by the Participant.
    (2) Book-entry Securities are redeemed according to their terms, a 
Federal Reserve Bank withdraws the securities from the Participant's 
Securities Account in which they are maintained, and either:
    (i) Credits the amount of the Redemption proceeds, including both 
principal and interest, where applicable, to a Funds Account at the 
Bank, or
    (ii) Pays such principal and interest as directed by the 
Participant.
    (d) What does a Participant need to do in connection with the 
Redemption of a Book-entry Security? No action by the Participant is 
required.