2010-31489. Regulations Governing Book-Entry Treasury Bonds, Notes and Bills Held in Legacy Treasury Direct; Regulations Governing Securities Held in Treasury Direct

AGENCY:

Bureau of the Public Debt, Fiscal Service, Treasury.

ACTION:

Final rule.

SUMMARY:

Treasury's retail electronic systems for holding Treasury marketable securities began with the goal of permitting investors to buy and hold marketable Treasury securities until maturity. As a cost-saving measure, Treasury is returning the Legacy Treasury Direct and TreasuryDirect systems to this initial vision by eliminating the SellDirect program that permits investors to sell their marketable securities on the open market through a Federal Reserve Bank. Investors will now need to transfer a marketable security to a broker or financial institution in order to effect a sale of the security prior to maturity.

DATES:

Effective Date: December 17, 2010.

ADDRESSES:

You can download this Final Rule at the following Internet addresses: http://www.publicdebt.treas.gov,, http://www.gpo.gov,, or http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Elisha Whipkey, Director, Division of Program Administration, Office of Retail Securities, Bureau of the Public Debt, at [phone] or [e-mail].

Susan Sharp, Attorney-Adviser; Ann Fowler, Attorney-Adviser; Dean Adams, Assistant Chief Counsel; Edward Gronseth, Deputy Chief Counsel, Office of the Chief Counsel, Bureau of the Public Debt, at [phone] or [e-mail].

SUPPLEMENTARY INFORMATION:

Treasury's retail electronic systems for holding Treasury marketable securities began with the goal of permitting investors to buy and hold marketable Treasury securities until maturity. In 1997 Treasury offered Legacy Treasury Direct investors the ability, for a fee, to sell their marketable securities on the secondary market, thus bypassing the need to transfer their securities to a broker or financial institution for sale. When Treasury began offering marketable securities in TreasuryDirect, its electronic, online system, the SellDirect service was offered to investors in that system as well. Because SellDirect was inconsistent with the initial vision of the marketable retail program, Treasury specifically reserved the right to end the program at any time.

SellDirect volumes are low because most investors using the Legacy Treasury Direct and TreasuryDirect systems hold their securities to maturity. From Fiscal Year 2005 to Fiscal Year 2009, an annual average of 13,000 securities worth approximately $800 million were sold through SellDirect, less than 1.5 percent of holdings. Alternative services by brokers or financial institutions are available to conduct sales. As a cost-saving measure, Treasury is returning the Legacy Treasury Direct and TreasuryDirect systems to their initial vision of buy and hold to maturity by eliminating SellDirect. Investors will now need to transfer a marketable security to a broker or financial institution in order to effect a sale of the security before maturity.

Procedural Requirements

Executive Order 12866. This rule is not a significant regulatory action pursuant to Executive Order 12866.

Administrative Procedure Act (APA). Because this rule relates to United States securities, which are contracts between Treasury and the owner of the security, this rule falls within the contract exception to the APA, 5 U.S.C. 553(a)(2). As a result, the notice, public comment, and delayed effective date provisions of the APA are inapplicable to this rule.

Regulatory Flexibility Act. The provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., do not apply to this rule because, pursuant to 5 U.S.C. 553(a)(2), it is not required to be issued with notice and opportunity for public comment.

Paperwork Reduction Act (PRA). There is no new collection of information contained in this final rule that would be subject to the PRA, 44 U.S.C. 3501 et seq. Under the PRA, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB control number. The Office of Management and Budget already has approved all collections of information in 31 CFR Part 357 (OMB No. 1535-0068) and Part 363 (OMB No. 1535-0138).

Congressional Review Act (CRA). This rule is not a major rule pursuant to the CRA, 5 U.S.C. 801 et seq., because it is a minor amendment that is expected to decrease costs for taxpayers; therefore, this rule is not expected to lead to any of the results listed in 5 U.S.C. 804(2). This rule may take immediate effect after we submit a copy of it to Congress and the Comptroller General.

List of Subjects

31 CFR Part 357

• Banks
• Banking
• Bonds
• Electronic funds transfers
• Government securities
• Reporting and recordkeeping requirements

31 CFR Part 363

• Bonds
• Electronic funds transfer
• Federal Reserve System
• Government securities
• Securities

Accordingly, for the reasons set out in the preamble, 31 CFR Chapter II, Subchapter B, is amended as follows:

PART 357—REGULATIONS GOVERNING BOOK-ENTRY TREASURY BONDS, NOTES AND BILLS HELD IN TREASURY/RESERVE AUTOMATED DEBT ENTRY SYSTEM (TRADES) AND LEGACY TREASURY DIRECT

1. The authority citation for part 357 continues to read as follows:

Authority: 31 U.S.C. chapter 31; 5 U.S.C. 301; 12 U.S.C. 391.

2. Revise the heading for Part 357 to read as set forth above.

3. Amend § 357.22 by removing paragraph (b) and redesignating paragraphs (c), (d), (e), and (f) as paragraphs (b), (c), (d), and (e).

PART 363—REGULATIONS GOVERNING SECURITIES HELD IN TREASURYDIRECT

4. The authority citation for part 363 continues to read as follows:

Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3102, et seq.; 31 U.S.C. 3121, et seq.

§ 363.6

[Amended]

5. Remove the definition of “Sell Direct” from § 363.6.

6. Amend § 363.10 by adding paragraph (c) to read as follows:

§ 363.10

What is a TreasuryDirect account?

* * * * *

(c) Closing an account. If a TreasuryDirect primary account and all associated linked accounts have had no holdings and no activity for a period of two years, we reserve the right to close the account, along with all linked accounts.

§ 362

[Amended]

7. Amend § 363.22 by removing the phrase “including a transfer for a Sell Direct transaction,” from the second sentence in paragraph (a)(3)(ii).

§ 363.27

[Amended]

8. Amend § 363.27 by removing the phrase “, and may request a Sell Direct transaction” from the second sentence in paragraph (e)(4).

§ 363.209

[Removed and reserved]

9. Remove and reserve § 363.209.

§ 363.210

[Amended]

10. Amend § 363.210 by removing the phrase “initiate a SellDirect transaction,” from the second sentence and removing the fourth and fifth sentences.

Richard L. Gregg,

Fiscal Assistant Secretary.