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									                                                                                Wednesday,
                                                                                January 19, 2000




                                                                                Part VII

                                                                                Department of the
                                                                                Treasury
                                                                                Fiscal Service

                                                                                31 CFR Part 375
                                                                                Marketable Treasury Securities
                                                                                Redemption Operations; Final Rule




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3114          Federal Register / Vol. 65, No. 12 / Wednesday, January 19, 2000 / Rules and Regulations

DEPARTMENT OF THE TREASURY                            the long term, this enhanced liquidity                  limit the size of the buyback program.
                                                      could reduce the government’s interest                  Both commenters suggested a budget
Fiscal Service                                        expense and promote more efficient                      accounting policy change—that these
                                                      capital markets.                                        premiums be amortized over the
31 CFR Part 375                                          Second, buybacks will enhance our                    remaining life of the security bought
                                                      ability to exert greater control over the               back.
Marketable Treasury Securities                        maturity structure of the outstanding                      We consider this issue to be outside
Redemption Operations                                 debt. Without a buyback program,                        the scope of these regulations, which set
AGENCY:  Bureau of the Public Debt,                   further reductions in Treasury new                      out the terms and conditions of
Fiscal Service, Department of the                     issue sizes and frequencies could be                    redemption operations.
Treasury.                                             necessary. A buyback program,                              Several comment letters made
                                                      however, will provide us the option of                  recommendations on the scheduling of
ACTION: Final rule.
                                                      managing the maturity structure of the                  redemption operations. Two
SUMMARY:    The Department of the                     debt by selectively targeting the                       commenters wanted them to be held in
Treasury (‘‘Treasury,’’ ‘‘We,’’ or ‘‘Us’’) is         maturities of debt to be repurchased.                   conjunction with the regular Treasury
issuing rules in final form setting out                  Third, buybacks will provide an                      quarterly refunding auctions in
the terms and conditions by which we                  additional cash management tool,                        February, May, August, and November.
may redeem outstanding, unmatured                     absorbing excess cash in periods when                   Another commenter recommended that
marketable Treasury securities. We are                tax revenues usually exceed immediate                   redemption operations be held close to
establishing a new part in the Code of                spending needs.                                         auctions of Treasury securities of
Federal Regulations for this purpose.                    In addition, although not a primary                  similar maturity, while another
Redemption operations (‘‘buybacks’’)                  reason for conducting buybacks, we may                  commenter suggested only a regular
will help us better manage our financing              occasionally be able to reduce the                      schedule of redemption operations. Two
needs, promote more efficient capital                 government’s interest expense by                        commenters preferred that redemption
markets, and may lower financing costs                purchasing ‘‘off-the-run’’ debt and                     operations not be conducted near
for taxpayers.                                        replacing it with lower-yield ‘‘on-the­                 potential delivery dates for Treasury
EFFECTIVE DATE: January 19, 2000.                     run’’ debt.1                                            futures contracts.
                                                         On August 5, 1999 (64 FR 42626), we                     Commenters recommended a variety
ADDRESSES: You may download this
                                                      published proposed rules for public                     of maturity ranges to buy back. For
final rule from the Bureau of the Public
                                                      comment that laid out the proposed                      example, one commenter advocated that
Debt’s Internet site at the following                                                                         securities with 15 to 25 years remaining
                                                      terms and conditions by which we
address: www.publicdebt.treas.gov. It is                                                                      to maturity were the best candidates for
                                                      would conduct buybacks. The closing
also available for public inspection and                                                                      the Treasury to purchase, while another
                                                      date for comments was October 4, 1999.
copying at the Treasury Department                                                                            commenter recommended that Treasury
                                                      As explained in more detail below, after
Library, Room 5030, Main Treasury                                                                             buy back debt within the two-year to
                                                      considering the comments provided, we
Building, 1500 Pennsylvania Avenue,                                                                           five-year maturity range to minimize
                                                      have decided to adopt the proposed
N.W., Washington, D.C. 20220. To visit                                                                        any effects on the average length of the
                                                      methodology for conducting buybacks.
the library, call (202) 622–0990 for an                                                                       debt outstanding. Another commenter
appointment.                                          II. Comments Received in Response to                    suggested that Treasury avoid buying
FOR FURTHER INFORMATION CONTACT: Lori                 the Proposed Rule                                       back those securities that are the
Santamorena (Executive Director) or                      We received 13 comment letters on                    ‘‘cheapest-to-deliver’’ for Treasury
Chuck Andreatta (Senior Financial                     the proposed rule 2—five from securities                futures contracts.
Advisor), Bureau of the Public Debt,                  firms, four from individuals, and one                      Two commenters expressed concern
Government Securities Regulations                     each from a major trade association, the                about the effect that redemption
Staff, (202) 691–3632.                                Treasury advisory committee of a major                  operations may have on the remaining
SUPPLEMENTARY INFORMATION:                            trade association, a futures exchange,                  liquidity of off-the-run issues. Both
                                                      and a Federal Reserve Bank. Overall                     suggested limiting redemption
I. Background                                         these commenters were supportive of                     operations for a particular security to 10
   The government’s improved fiscal                   the proposal. No commenters opposed                     percent of its outstanding amount. One
position has caused Treasury’s                        the proposal. As explained below, the                   of these commenters also suggested that
borrowing needs to decline                            comments raised a series of policy or                   at least $1 billion of a security always
significantly, and we have been                       technical issues related to                             remain outstanding. On the other hand,
adjusting the government’s borrowing                  implementation.                                         one commenter advocated that ‘‘issues
program accordingly. Our adjustments                                                                          with less than $2 billion outstanding
                                                      A. Debt Management Policy Issues                        should be removed from the market,’’
to date have distributed the required
cuts in market borrowing across all                     Two commenters expressed concern                      while another commenter saw ‘‘no
maturity areas. In this environment, we               that the budget accounting treatment of                 reason to state a limit on the specific
began examining the concept of                        any premiums that Treasury would pay                    amount of any given security that the
purchasing outstanding Treasury                       to buy back Treasury securities could                   Treasury can purchase.’’
securities in the market.                                                                                        The issues of the scheduling of
   Buybacks will provide us with greater                 1 A Treasury security is ‘‘on-the-run’’ when it is
                                                                                                              redemption operations, the maturities to
flexibility to manage the government’s                the newest security issue of its maturity (e.g., in     redeem, and the remaining supply of
                                                      October the two-year note issued September 30
debt and to respond to our improved                   would be on the run‘‘ while the two-year note           securities redeemed are not addressed
fiscal condition. First, buybacks will                issued August 31 would be ‘‘off-the-run’’). An on-      in the final rule. For each operation we
enhance market liquidity by allowing us               the-run security is normally the most liquid issue      will first announce when the operation
to maintain regular issuances of new                  for that maturity.                                      will occur and which maturity sector or
                                                         2 The comment letters are available for
benchmark securities across the                       downloading on the Internet and for inspection and
                                                                                                              sectors will be eligible for redemption.
maturity spectrum, in greater volume                  copying at the Treasury Department Library at the       We will determine the amount of any
than would otherwise be possible. Over                addresses provided earlier in this rule.                particular security to redeem during the


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             Federal Register / Vol. 65, No. 12 / Wednesday, January 19, 2000 / Rules and Regulations                                                 3115

redemption operation consistent with                    Redemption operations will at least                     In response, we want to emphasize
our debt management goals.                           initially be a multiple-price process in                that participation in a Treasury
                                                     which successful offerors will receive                  redemption operation will be entirely
B. Technical/Operational Issues
                                                     the price at which they offered                         voluntary and that securities industry
   Two commenters recommended that                   securities. Multiple-price redemption                   rules for dealing fairly with customers
we issue redemption operation                        operations will allow us to make                        prohibit securities dealers from
announcements several days in advance                immediate use of the Federal Reserve                    conducting unauthorized customer
of the redemption operations. They                   Bank of New York’s electronic system                    transactions.
contended that a relatively long notice              for executing open market operations.                      Finally, one comment letter consisted
period would give securities dealers                 At some future time, however, we might                  of a series of questions regarding various
more time to prepare for the redemption              want to evaluate the potential merits of                aspects of the redemption program, but
operation, to canvass their customers to             a single-price process.                                 made no recommendations.
determine their levels of interest, and                 One commenter noted that the                         III. Changes From the Proposed Rule
that it would aid price discovery. One               proposed rule was silent on the length
commenter, however, preferred ‘‘a                    of time between the closing time for                       After taking the comments we
relatively short lead time * * * , not               submission of offers and the time that                  received into consideration, we are
unlike the process for a Federal Reserve             confirmations will be provided to                       adopting this final rule setting out the
coupon pass.’’                                                                                               terms and conditions by which we may
                                                     submitters. The commenter stressed that
   We are not addressing the notice                                                                          redeem outstanding, unmatured
                                                     this time period should be as short as
period in the final rule so that we can                                                                      marketable Treasury securities. The
                                                     possible because of the submitting
                                                                                                             final rule adopts the proposed rule
retain flexibility in the timing of                  dealers’ exposure to market risk during
                                                                                                             without significant changes. The only
announcements.                                       this timeframe.
                                                                                                             changes that have been made are in the
   Opinion was fairly evenly divided on                 We will provide confirmations                        definitions of ‘‘Accrued interest,’’
the issue of whether Treasury should                 (results messages) to submitters, and                   ‘‘Price,’’ and ‘‘Privately held amount’’
announce the specific securities that are            issue a redemption operation results                    (§ 375.2), and in the descriptions of the
eligible for redemption or merely                    press release, as quickly as possible                   redemption operation announcement
announce a particular range of                       following the deadline for submitting                   (§ 375.10), how to submit an offer
maturities that will be purchased. Those             offers.                                                 (§ 375.12), and who is responsible for
who favored announcing specific issues                  In the preamble to the proposed rule,                delivering securities (§ 375.15).
primarily argued that this would help                we indicated that settlement would                         The description of the redemption
dealers add eligible securities to their             occur on the day after the redemption                   operation announcement was revised to
inventories prior to the redemption                  operation in conformance with the                       add the range of maturities of eligible
operation. Commenters preferring                     market’s next-day settlement convention                 securities as one of the details that we
announcing a range of securities                     for other Treasury securities                           will provide.
contended that participants would have               transactions. We specifically requested                    The description of how to submit an
greater flexibility to decide which                  comment, however, on settlement-                        offer was revised to provide us greater
securities to offer, and Treasury would              related issues. Two commenters                          flexibility in which electronic system
have greater flexibility to decide which             recommended that there be at least two                  we will use for receiving offers. The
securities to purchase. One commenter                days between a redemption operation                     proposed rule specified the Federal
also predicted that announcing a                     and settlement, primarily to inform any                 Reserve Bank of New York’s Trading
maturity range would mitigate the                    customers that their offers had been                    Room Automated Processing System
‘‘announcement effect’’ of the prices of             accepted and to facilitate timely                       (TRAPS) as the system through which
specific issues increasing as a direct               delivery of customer securities. Another                submitters must submit offers. While
result of the announcement.                          commenter specifically urged a three-                   TRAPS is the system through which
   The announcement will provide the                 day settlement timeframe because that is                submitters will submit offers,
maturity sector or sectors that will be              the settlement standard for corporate                   eliminating specific mention of this
eligible for redemption. It will also                debt.                                                   system in the final rule allows for a
provide descriptions of each security                   We will initially provide a minimum                  different system to be used at some
within those maturity sectors including              of two days between a redemption                        future date.
the CUSIP number, interest rate,                     operation and settlement. This                             The description of who is responsible
maturity date, and the amount                        timeframe, however, is not stated in the                for delivering securities was revised to
outstanding.                                         final rule. Rather, the redemption                      clarify that submitters are responsible
   One commenter recommended that                    operation and settlement dates will be                  for delivering all securities we accept in
we use a proprietary electronic system               provided in the redemption operation                    a redemption operation, including any
for processing offers different from the             announcement.                                           securities for which they submitted
Federal Reserve Bank of New York’s.                     We also received a comment that the                  offers on behalf of others.
We will use the Federal Reserve Bank of              definition of ‘‘accrued interest’’ should                  In addition, we eliminated the
New York’s system, however, because it               be revised to clarify that the time period              paragraphs on the maximum amount
is already in place at the location where            covered in the accrued interest                         offered (§ 375.13) and deliveries of
offers will be received and it meets our             calculation includes the settlement date.               definitive securities (§ 375.23). We
processing needs.                                    We agree with this recommendation.                      removed the limit on the maximum
   Another commenter suggested that                     One comment letter expressed                         amount of a particular security that a
Treasury consider using a single-price               confusion over whether participation in                 submitter may offer because it is not
rather than a multiple-price auction                 redemption operations would be                          necessary operationally. The Federal
mechanism. This commenter suggested                  voluntary and concern that the Treasury                 Reserve Bank of New York’s electronic
that submitters may make more                        might purchase, or a securities dealer                  system will accept the correct amount of
aggressive offers in a single-price                  might offer to sell, a Treasury security                an offer, even if the offer exceeds the
format.                                              without the permission of its owner.                    security’s amount outstanding.


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3116         Federal Register / Vol. 65, No. 12 / Wednesday, January 19, 2000 / Rules and Regulations

   We eliminated the paragraph that                  375.2	 What special definitions apply to this           income earned between the last interest
would have permitted deliveries of                       rule?                                               payment date up to and including the
definitive securities because developing             375.3	 What is the role of the Federal                  settlement date.
                                                         Reserve Bank of New York in this                       Bank means the Federal Reserve Bank
a process for timely definitive deliveries               process?
would have been too complex                                                                                  of New York.
operationally in relation to any                     Subpart B—Offering, Certifications, and                    Customer means a person or entity on
participation we might expect from                   Delivery                                                whose behalf a submitter has been
holders of definitive securities.                    375.10	 What is the purpose of the                      directed to submit an offer of a specified
Relatively few Treasury securities                       redemption operation announcement?                  amount of securities in a specific
continue to be held in definitive form.              375.11	 Who may participate in a                        redemption operation.
                                                         redemption operation?                                  Minimum offer amount means the
Those still holding definitive securities            375.12 How do I submit an offer?
can easily convert them to book-entry                                                                        smallest par amount of a security that
                                                     375.13 What requirements apply to offers?
securities if they wish to participate in            375.14 Do I have to make any certifications?            may be offered to the Treasury. We will
any future redemption operations.                    375.15	 Who is responsible for delivering               state the minimum offer amount in the
   A summary of the main features of the                 securities?                                         redemption operation announcement.
final rule that remain unchanged from                                                                           Multiple means the smallest
                                                     Subpart C—Determination of Redemption
the proposed rule are:                                                                                       additional par amount of a security that
                                                     Operation Results; Settlement
   (1) We will issue an announcement of                                                                      may be offered to the Treasury. We will
an upcoming redemption operation,                    375.20	 When will the Treasury decide on                state the multiple in the redemption
                                                         which offers to accept?
including the expected maximum                                                                               operation announcement.
                                                     375.21	 When and how will the Treasury
amount of the operation;                                 announce the redemption operation
                                                                                                                Offer means an offer to deliver for
   (2) Offers will be competitive, on the                results?                                            redemption a stated par amount of a
basis of price, to three decimals;                   375.22	 Will I receive confirmations and, if            specific security to the Treasury at a
   (3) Redemption operations will be a                   I am submitting offers for others, do I             stated price.
multiple-price process in which                          have to provide confirmations?                         Price means the dollar amount to be
successful offerors receive the price at             375.23	 How does the securities delivery                paid for a security expressed as a
which they offered securities;                           process work?                                       percent of its current par amount.
   (4) Only primary dealers as                       Subpart D—Miscellaneous Provisions                         Privately held amount means the total
designated by the Federal Reserve Bank               375.30	 Does the Treasury have any
                                                                                                             amount outstanding of a security less
of New York will be allowed to submit                    discretion in this process?                         holdings of the Federal Reserve System
offers for themselves or others, enabling            375.31	 What could happen if someone does               and Federal Government accounts.
use of the Bank’s existing electronic                    not fully comply with the redemption                   Redemption amount means the
systems; and                                             operation rules or fails to deliver                 maximum par amount of securities that
   (5) There will be no limits on the                    securities?                                         we are planning to redeem through a
number of offers per security or on the                Authority: 5 U.S.C. 301; 31 U.S.C. 3111;              redemption operation. We will state the
total number of offers from a particular             12 U.S.C. 391.                                          redemption amount in the redemption
submitter.                                                                                                   operation announcement.
                                                     Subpart A—General Information                              Redemption operation means a
IV. Procedural Requirements
                                                                                                             competitive process by which the
  This final rule is not a ‘‘significant             § 375.0 What authority does the Treasury
                                                     have to redeem its securities?
                                                                                                             Treasury accepts offers of marketable
regulatory action’’ under Executive                                                                          Treasury securities that by their terms
Order 12866. Although we issued this                    Section 3111 of Title 31 of the United               are not immediately payable.
rule in proposed form to benefit from                States Code authorizes the Secretary of                    Security means an outstanding
public comment, the notice and public                the Treasury to use money received                      unmatured obligation of the United
procedures and delayed effective date                from the sale of an obligation and other                States Government that the Secretary is
requirements of the Administrative                   money in the general fund of the                        authorized to buy, redeem or refund
Procedure Act do not apply, under 5                  Treasury to buy, redeem, or refund, at                  under section 3111 of Title 31 of the
U.S.C. 553(a)(2).                                    or before maturity, outstanding bonds,                  United States Code.
  Since no notice of proposed                        notes, certificates of indebtedness,                       Settlement means full and complete
rulemaking was required, the provisions              Treasury bills, or savings certificates of              delivery of and payment for securities
of the Regulatory Flexibility Act (5                 the United States Government. For the                   redeemed.
U.S.C. 601 et seq.) do not apply.                    purposes of this part, we will refer to                    Settlement amount means the par
                                                     these outstanding obligations as                        amount of each security that we redeem,
List of Subjects in 31 CFR Part 375                  ‘‘securities.’’                                         multiplied by the price we accept in a
  Bonds, Federal Reserve System,                                                                             redemption operation, plus any accrued
Government securities, Securities.                   § 375.1 Where are the rules for the
                                                     redemption operation located?                           interest.
  For the reasons stated in the                                                                                 Settlement date means the date
                                                       The provisions in this part and the
preamble, part 375 is added to 31 CFR                                                                        specified in the redemption operation
                                                     redemption operation announcement
chapter II to read as follows:                                                                               announcement on which you must
                                                     govern the redemption of marketable
                                                     Treasury securities under 31 U.S.C.                     deliver a security to the Treasury for
PART 375—MARKETABLE TREASURY                                                                                 payment.
SECURITIES REDEMPTION                                3111. (See § 375.10.)
                                                                                                                Submitter means an entity submitting
OPERATIONS                                           § 375.2 What special definitions apply to               offers directly to the Treasury for its
Subpart A—General Information                        this rule?                                              own account, for the account of others,
Sec.                                                   The definitions in 31 CFR part 356                    or both. (See § 375.11(a).)
375.0	 What authority does the Treasury              govern this part except as follows:                        Tender means a computer
     have to redeem its securities?                    Accrued interest means an amount                      transmission or document submitted in
375.1	 Where are the rules for the                   payable by the Treasury as part of the                  a redemption operation that contains
     redemption operation located?                   settlement amount for the interest                      one or more offers.


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              Federal Register / Vol. 65, No. 12 / Wednesday, January 19, 2000 / Rules and Regulations                                                3117

   We (‘‘us’’) means the Secretary of the            Federal Reserve Bank of New York. You                   Subpart C—Determination of
Treasury and his or her delegates,                   must submit any tenders in an approved                  Redemption Operation Results;
including the Treasury Department, the               format and the Bank must receive them                   Settlement
Bureau of the Public Debt, and their                 prior to the closing time stated in the
representatives. The term also includes                                                                      § 375.20 When will the Treasury decide on
                                                     redemption operation announcement. If                   which offers to accept?
the Federal Reserve Bank of New York,                we do not receive your tenders timely,
acting as fiscal agent of the United                 we will reject them. Your tenders are                     We will determine which offers or
States.                                              binding on you after the closing time                   portions of offers to accept after the
   You means a prospective submitter in              specified in the redemption operation                   closing time for receipt of tenders. All
a redemption operation.                                                                                      such determinations will be final.
                                                     announcement. You are responsible for
§ 375.3 What is the role of the Federal              ensuring that we receive your tenders                   § 375.21 When and how will the Treasury
Reserve Bank of New York in this process?            on time. We will not be responsible in                  announce the redemption operation
  As fiscal agent of the United States,              any way for any unauthorized tender                     results?
the Federal Reserve Bank of New York                 submissions or for any delays, errors, or                 We will make an official
performs various activities necessary to             omissions in submitting tenders.                        announcement of the redemption
conduct a redemption operation under                                                                         operation results through a press
this part. These activities may include              § 375.13    What requirements apply to                  release. For each security we redeem,
                                                     offers?
but are not limited to:                                                                                      the press release will include such
  (a) Accepting and reviewing tenders;                  (a) General. You may only submit                     information as the amounts offered and
  (b) Calculating redemption operation               competitive offers (specifying a price).                accepted, the highest price accepted,
results;                                             All offers must state the security                      and the remaining privately held
  (c) Issuing notices of redemptions;                description, par amount, and price of                   amount outstanding.
  (d) Accepting deliveries of Treasury
                                                     each security offered. All offers must                  § 375.22 Will I receive confirmations and, if
securities at settlement; and
                                                     equal or exceed the minimum offer                       I am submitting offers for others, do I have
  (e) Processing the Treasury payment
for securities delivered at settlement.              amount, and be in the multiple, stated                  to provide confirmations?
                                                     in the redemption operation                               (a) Confirmations to submitters. We
Subpart B—Offering, Certifications,                  announcement.                                           will provide a confirmation of
and Delivery                                            (b) Price format. You must express                   acceptance or rejection in the form of a
                                                     offered prices in terms of price per $100               results message to submitters of offers
§ 375.10 What is the purpose of the
redemption operation announcement?                   of par with three decimals, e.g., 102.172.              by the close of the business day of the
                                                     The first two decimals represent                        redemption operation.
   We provide public notice that we are
                                                     fractional 32nds of a dollar. The third                   (b) Confirmation of customer offers. If
redeeming Treasury securities by
                                                     decimal represents eighths of a 32nd of                 you submit a successful offer for a
issuing a redemption operation
                                                     a dollar, and must be a 0, 2, 4, or 6. For              customer, you are responsible for
announcement. This announcement
                                                     example, an offer of 102.172 means one                  notifying that customer of the
lists the details of each proposed
                                                     hundred two and seventeen 32nds and                     impending redemption.
redemption operation, including the
maximum redemption amount, the                       two eighths of a 32nd, or in decimals,                  § 375.23 How does the securities delivery
range of maturities of eligible securities,          102.5390625.                                            process work?
descriptions of the securities that fall                (c) Maximum number of offers. There                    If any of the offers you submitted are
within that maturity range, and the                  is no limit on the number of offers you                 accepted, you must transfer the correct
redemption operation and settlement                  may make for each eligible security.                    book-entry Treasury securities in the
dates. The redemption operation                      There is also no limit on the number of                 correct par amount against the correct
announcement and this part specify the               eligible securities you may offer.                      settlement amount on the settlement
terms and conditions of a redemption                                                                         date. You must deliver the securities to
operation. If anything in the redemption             § 375.14 Do I have to make any                          the account specified in the redemption
operation announcement differs from                  certifications?                                         operation announcement.
anything in this part, the redemption
                                                       By submitting a tender offering a
operation announcement will apply.                                                                           Subpart D—Miscellaneous Provisions
Accordingly, you should read the                     security or securities for sale, you certify
applicable redemption operation                      that you are in compliance with this                    § 375.30 Does the Treasury have any
announcement along with this part.                   part and the redemption operation                       discretion in this process?
                                                     announcement.                                              (a) We have the discretion to:
§ 375.11 Who may participate in a
                                                     § 375.15 Who is responsible for delivering                 (1) Accept or reject any offers or
redemption operation?
                                                     securities?                                             tenders submitted in a redemption
   (a) Submitters. To be a submitter, you                                                                    operation;
must be an institution that the Federal                As a submitter, you are responsible                      (2) Redeem less than the amount of
Reserve Bank of New York has approved                for delivering any securities we accept                 securities specified in the redemption
to conduct open market transactions                  in the redemption operation, including                  operation announcement;
with the Bank.                                       any securities for which you submitted
   (b) Others. A person or entity other                                                                         (3) Add to, change, or waive any
                                                     offers on behalf of others. (See § 375.23.)             provision of this part; or
than a submitter may participate only if             All securities you deliver must be free
it arranges to have an offer or offers                                                                          (4) Change the terms and conditions
                                                     and clear of all liens, charges, claims,                of a redemption operation.
submitted on its behalf by a submitter.
                                                     and any other restrictions.                                (b) Our decisions under this part are
§ 375.12   How do I submit an offer?                                                                         final. We will provide a public notice if
  As a submitter, you must submit an                                                                         we change any redemption operation
offer in a tender to the Treasury via the                                                                    provision, term or condition.


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3118         Federal Register / Vol. 65, No. 12 / Wednesday, January 19, 2000 / Rules and Regulations

§ 375.31 What could happen if someone                This could include barring the person or                require you to pay liquidated damages
does not fully comply with the redemption            entity from participating in future                     of up to 1% of your projected settlement
operation rules or fails to deliver                  redemption operations under this part                   amount.
securities?
                                                     and future auctions under 31 CFR part                     Dated: January 13, 2000.
  (a) General. If a person or entity fails           356. We also may refer the matter to an
to comply with any of the redemption                                                                         Donald V. Hammond,
                                                     appropriate regulatory agency.                          Fiscal Assistant Secretary.
operation rules in this part, we will
consider the circumstances and take                    (b) Liquidated damages. If you fail to                [FR Doc. 00–1250 Filed 1–18–00; 8:45 am]
what we deem to be appropriate action.               deliver securities on time, we may                      BILLING CODE 4810–39–U




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