[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR356 App A]

[Page 388-390]

                  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

                   Subpart D_Miscellaneous Provisions

             Sec. Appendix A to Part 356--Bidder Categories

                    I. Categories of Eligible Bidders

    We describe below various categories of bidders eligible to bid in
Treasury auctions. You may use them to determine whether we consider you
and other persons or entities to be one bidder or more than one bidder
for auction bidding and compliance purposes. For example, we use these
definitions to apply the competitive and noncompetitive award
limitations and for other requirements. Notwithstanding these
definitions, we consider any persons or entities that intentionally act
together with respect to bidding in a Treasury auction to collectively
be one bidder. Even if an auction participant does not fall under any of
the categories listed below, it is our intent that no auction
participant receives a larger auction award by acquiring securities
through others than it could have received had it been considered one of
these types of bidders.
    (a) Corporation--We consider a corporation to be one bidder. A
corporation includes all of its affiliates, which may be persons,
partnerships, or other entities. We consider a business trust, such as a
Massachusetts or Delaware business trust, to be a corporation. We use
the term ``corporate structure'' to refer to the collection of
affiliates that we consider collectively to be one bidder. An affiliate
is any:
     Entity that is more than 50-percent owned,
directly or indirectly, by the corporation;
     Entity that is more than 50-percent owned,
directly or indirectly, by any other affiliate of the corporation;
     Person or entity that owns, directly or
indirectly, more than 50 percent of the corporation;
     Person or entity that owns, directly or
indirectly, more than 50 percent of any other affiliate of the
corporation; or
     Entity, a majority of whose board of directors or
a majority of whose general partners are directors or officers of the
corporation, or of any affiliate of the corporation.
    An entity that is more than 50-percent owned as described in this
definition is not an affiliate, however, if:
     The purpose of such ownership is to seek a return
on investment and not to engage in the business of the entity;
     The owner does not routinely exercise operational
or management control over the entity;
     The owner does not exercise any control over
investment decisions of the entity regarding U.S. Treasury securities;
     The corporation has written policies or
procedures, including ongoing compliance monitoring processes, that are
designed to prevent it from acting together with the entity regarding
participation in Treasury auctions or investment strategies regarding
Treasury securities being auctioned; and
     The corporation submits notice and certification
to us, as provided in this appendix A.
    A corporation that plans to make use of this exception to the
definition of ``affiliate'' must inform us of this fact in writing and
provide the following certification:
    [Name of corporation] hereby certifies that, with regard to any
entity of which it owns more than 50 percent as defined in appendix A to
31 CFR part 356, but for which the purpose of such ownership is to seek
a return on investment and not to engage in the business of the entity:
     We do not routinely exercise operational or
management control over the entity;
     We do not exercise any control over investment
decisions of the entity regarding U.S. Treasury securities;
     We have written policies or procedures, including
ongoing compliance monitoring processes, that are designed to prevent
the corporation from acting together with the entity regarding
participation in Treasury auctions or investment strategies regarding
Treasury securities being auctioned; and
     We will continue to meet the terms of this
certification until we notify the Treasury of a change.
    (b) Partnership--We consider a partnership to be one bidder if it is
a partnership for which the Internal Revenue Service has assigned a tax-
identification number. A partnership includes all of its affiliates,
which may be persons, corporations, general partners acting on behalf of
the partnership, or other entities. We use the term ``partnership
structure'' to refer to the collection of affiliates that we consider
collectively to be one bidder. We may consider a partnership structure
that contains one or more corporations as a ``partnership'' or a
``corporation,'' but not both.
    An affiliate is any:
     Entity that is more than 50-percent owned,
directly or indirectly, by the partnership;
     Entity that is more than 50-percent owned,
directly or indirectly, by any other affiliate of the partnership;
     Person or entity that owns, directly or
indirectly, more than 50 percent of the partnership;
     Person or entity that owns, directly or
indirectly, more than 50 percent of any other affiliate of the
partnership; or
     Entity, a majority of whose general partners or a
majority of whose board of directors are general partners or directors
of the

[[Page 389]]

partnership or of any affiliate of the partnership.
    An entity that is more than 50-percent owned as described in this
definition is not an affiliate, however, if:
     The purpose of such ownership is to seek a return
on investment and not to engage in the business of the entity;
     The owner does not routinely exercise operational
or management control over the entity;
     The owner does not exercise any control over
investment decisions of the entity regarding U.S. Treasury securities;
     The partnership has written policies or
procedures, including ongoing compliance monitoring processes, that are
designed to prevent it from acting together with the entity regarding
participation in Treasury auctions or investment strategies regarding
Treasury securities being auctioned; and
     The partnership submits notice and certification
to us, as provided in this appendix A.
    A partnership that plans to make use of this exception to the
definition of ``affiliate'' must inform us of this fact in writing and
provide the following certification:
    [Name of partnership] hereby certifies that, with regard to any
entity of which it owns more than 50 percent as defined in appendix A to
31 CFR part 356, but for which the purpose of such ownership is to seek
a return on investment and not to engage in the business of the entity:
     We do not routinely exercise operational or
management control over the entity;
     We do not exercise any control over investment
decisions of the entity regarding U.S. Treasury securities;
     We have written policies or procedures, including
ongoing compliance monitoring processes, that are designed to prevent
the partnership from acting together with the entity regarding
participation in Treasury auctions or investment strategies regarding
Treasury securities being auctioned; and
     We will continue to meet the terms of this
certification until we notify the Treasury of a change.
    (c) Government-related entity--We consider each of the following
entities to be one bidder:
    (1) A state government or the government of the District of Columbia
    (2) A unit of local government, including any county, city,
municipality, or township, or other unit of general government as
defined by the Bureau of the Census for statistical purposes.
    (3) A commonwealth, territory, or possession of the United States.
    (4) A governmental entity, body, or corporation established under
Federal, State, or local law.
    (5) A foreign central bank, the government of a foreign state, or an
international organization in which the United States holds membership.
This type of entity applies only when such entity is not using an
account at the Federal Reserve Bank of New York (See paragraph (f).).
    We generally consider an investment, reserve, or other fund of one
of the above government-related entities as part of that entity and not
a separate bidder. We will consider a government-related entity's fund
to be a separate bidder if it meets the definition of the ``trust or
other fiduciary estate'' category, or if applicable law requires that
the investments of such fund be made separately.
    (d) Trust or other fiduciary estate--We consider a legal entity
created under a valid trust instrument, court order, or other legal
authority that designates a trustee or fiduciary to act for the benefit
of a named beneficiary to be one bidder. The following conditions must
also be met for us to consider a trust entity to be one bidder:
     The legal entity must be able to be identified
by:
    1. The name or title of the trustee or fiduciary;
    2. Specific reference to the trust instrument, court order, or legal
authority under which the trustee or fiduciary is acting; and
    3. The unique IRS-assigned employer identification number (not
social security number) for the entity.
     The trustee or fiduciary must make the decisions
on participating in auctions on behalf of the trust or fiduciary estate.
    (e) Individual--We consider a person to be one bidder, regardless of
whether he or she is acting as an individual, a sole proprietor, or for
any entity not otherwise defined as a bidder. If a person meets the
definition of an affiliate within a corporate or partnership structure,
we will consider him or her to be a bidder in this ``individual''
category if the corporation or partnership is not bidding in the same
auction. We do not consider a person acting in an official capacity as
an employee or other representative of a bidder defined in any other
category to be an ``individual'' bidder. We consider a person, his or
her spouse, and any children under the age of 21 having a common
household to be one ``individual'' bidder.
    (f) Foreign and International Monetary Authority (``FIMA'')--We
consider one or more parties making up a foreign or international
monetary organization that is not private in nature to be a bidder
called a FIMA entity if at least one of the parties is a foreign or
international entity that is (i) financial in nature, or (ii) not
financial in nature but is authorized to open an account at the Federal
Reserve Bank of New York. We consider each of the following entities to
be a single FIMA entity:
    (1) A foreign central bank or regional central bank.

[[Page 390]]

    (2) A foreign governmental monetary or finance entity.
    (3) A non-governmental international financial organization that is
not private in nature (for example, the International Monetary Fund, the
World Bank, the Inter-American Development Bank, and the Asian
Development Bank).
    (4) A non-financial international organization that the United
States participates in (for example, the United Nations).
    (5) A multi-party arrangement of a governmental ministry and/or a
foreign central bank or monetary authority with a United States
Government Department and/or the Federal Reserve Bank of New York.
    (6) A foreign or international monetary entity or an entity
authorized by statute or by us to open accounts at the Federal Reserve
Bank of New York.
    (g) Other Bidder--We do not consider a bidder defined by any of the
above categories to be a bidder in this category. For purposes of this
definition, ``other bidder'' means an institution or organization with a
unique IRS-assigned employer identification number. This definition
includes such entities as an association, church, university, union, or
club. This category does not include any person or entity acting in a
fiduciary or investment management capacity, a sole proprietorship, an
investment account, an investment fund, a form of registration, or
investment ownership designation.

              II. How To Obtain Separate Bidder Recognition

    Under certain circumstances, we may recognize a major organizational
component (e.g., the parent or a subsidiary) in a corporate or
partnership structure as a bidder separate from the larger corporate or
partnership structure. We also may recognize two or more major
organizational components collectively as one bidder. All of the
following criteria must be met for such component(s) to qualify for
recognition as a separate bidder:
    (a) Such component(s) must be prohibited by law or regulation from
exchanging, or must have established written internal procedures
designed to prevent the exchange of, information related to bidding in
Treasury auctions with any other component in the corporate or
partnership structure;
    (b) Such component(s) must not be created for the purpose of
circumventing our bidding and award limitations;
    (c) Decisions related to purchasing Treasury securities at auction
and participation in specific auctions must be made by employees of such
component(s). Employees of such component(s) that make decisions to
purchase or dispose of Treasury securities must not perform the same
function for other components within the corporate or partnership
structure; and
    (d) The records of such component(s) related to the bidding for,
acquisition of, and disposition of Treasury securities must be
maintained by such component(s). Those records must be identifiable--
separate and apart from similar records for other components within the
corporate or partnership structure. To obtain recognition as a separate
bidder, each component or group of components must request such
recognition from us, provide a description of the component or group and
its position within the corporate or partnership structure, and provide
the following certification:
    [Name of the bidder] hereby certifies that to the best of its
knowledge and belief it meets the criteria for a separate bidder as
described in Appendix A to 31 CFR Part 356. The above-named bidder also
certifies that it has established written policies or procedures,
including ongoing compliance monitoring processes, that are designed to
prevent the component or group of components from:
    (1) Exchanging any of the following information with any other part
of the corporate [partnership] structure: (a) yields or rates at which
it plans to bid; (b) amounts of securities for which it plans to bid;
(c) positions that it holds or plans to acquire in a security being
auctioned; and (d) investment strategies that it plans to follow
regarding the security being auctioned, or
    (2) In any way intentionally acting together with any other part of
the corporate [partnership] structure with respect to formulating or
entering bids in a Treasury auction.
    The above-named bidder agrees that it will promptly notify the
Department in writing when any of the information provided to obtain
separate bidder status changes or when this certification is no longer
valid.

[69 FR 45202, July 28, 2004, as amended at 70 FR 29456, May 23, 2005]