Regulations Governing Book-Entry Treasury Bonds, Notes and Bills; Regulations Governing Payments by the Automated Clearing House Method

DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Parts 357 and 370

Regulations Governing Book-Entry Treasury Bonds, Notes and Bills;

Regulations Governing Payments by the Automated Clearing House Method

AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.

ACTION: Final rule.

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SUMMARY: The purpose of this final rule is to amend the general

regulations governing book-entry Treasury securities, which apply to

investors in the TREASURY DIRECT system, to require the Bureau of the

Public Debt to send prenotification messages when an investor has

requested that payments on his account be made by the Automated

Clearing House (ACH) method, and to modify the number of days required

to wait after a prenotification message is sent before live dollar

entries can be initiated. This amendment will bring the procedures for

prenotification messages for TREASURY DIRECT ACH payments in conformity

with the procedures for the National Automated Clearing House

Association (NACHA). Part 370 governs payments by the ACH method when

such payments are made by Treasury on account of United States

securities, including ACH payments in the TREASURY DIRECT system. This

rule affects only ACH payments in the TREASURY DIRECT system. Because

the amended Part 357 will contain some prenotification procedures

inconsistent with Part 370, Part 370 will indicate that it applies to

ACH payments made by Treasury on account of United States securities,

except as otherwise provided.

EFFECTIVE DATE: February 16, 1996.

FOR FURTHER INFORMATION CONTACT: Maureen Parker, Director, Division of

Securities Systems, Bureau of the Public Debt, Parkersburg, West

Virginia, 26106-1328, (304) 480-7761 or Susan Klimas, Attorney-Adviser,

Office of the Chief Counsel, Bureau of the Public Debt, (304) 480-5192.

SUPPLEMENTARY INFORMATION: This final rule amends the general

regulations governing book-entry Treasury securities to require that,

when payments are made by the ACH method, prenotification messages be

sent by the Bureau of the Public Debt to the financial institution to

which such payments are to be directed, and to change the current

waiting period after a prenotification message is sent before live

dollar entries can be transmitted from 15 days to 10 days, to conform

with the standard practice of NACHA. Prior to this amendment, the

regulations provided for prenotification messages to be sent, but did

not specifically require such messages. Accordingly, Part 357 is

amended by changing Sec. 357.26(b)(3) to provide that prenotification

messages must be sent and to require a 10 day waiting period after the

prenotification message is sent before a live money transfer can be

made. Additionally, the provisions of 31 CFR 370.5 relating to the

sending of prenotification messages, which were formerly incorporated

by reference, are added to this regulation. Because the amended Part

357, governing the TREASURY DIRECT system, will contain some procedures

inconsistent with Part 370, which applies to payments made by the

Bureau of the Public Debt by the ACH method of payment, Part 370 is

amended to indicate that it applies except as otherwise provided.

Procedural Requirements

It has been determined that this final rule does not meet the

criteria for a ``significant regulatory action,'' as defined in

Executive Order 12866. Therefore, the regulatory review procedures

contained therein do not apply.

This rule relates to matters of public contract and procedures for

U.S. securities, as well as the borrowing power and fiscal authority of

the United States. Accordingly, pursuant to 5 U.S.C. 553(a)(2), the

notice, public comment and delayed effective date provisions of the

Administrative Procedure Act do not apply. As no notice of proposed

rulemaking is required, the provisions of the Regulatory Flexibility

Act (5 U.S.C. 601, et seq.) do not apply.

There are no new collections of information contained in this Final

Rule, and, therefore, the Paperwork Reduction Act (44 U.S.C. 3504(h))

does not apply.

List of Subjects in 31 CFR Parts 357 and 370

Banks, Banking, Bonds, Federal Reserve System, Government

securities, Electronic funds transfer, Government securities,

Securities.

Dated: January 11, 1996.

Gerald Murphy,

Fiscal Assistant Secretary.

For the reasons set out in the preamble, 31 CFR Parts 357 and 370

are amended as follows:

PART 357--GENERAL REGULATIONS GOVERNING BOOK-ENTRY TREASURY BONDS,

NOTES AND BILLS

1. The authority citation for Part 357 continues to read as

follows:

Authority: 31 U.S.C. Chapter 31, 5 U.S.C. 301 and 12 U.S.C. 391.

2. Section 357.26(b)(3) is revised to read as follows:

Sec. 357.26 Payments.

* * * * *

(b) * * *

(3) Prenotification. A prenotification message must be sent to the

financial

[[Page 6114]]

institution designated to receive ACH payments to confirm the accuracy

of the account information furnished by an owner, or other person or

entity entitled to make the designation, and to advise the financial

institution that such account has been so designated. Prenotification

messages may be sent at any time, but not less than 10 calendar days

prior to the first ACH payment. A prenotification message may also be

sent whenever there is a change in the payment instructions. The

prenotification message shall contain the ABA routing/transit number of

the financial institution to which payments with respect to a security

are to be made, as well as a depositor name reference, deposit account

number, and type or classification of account at the institution to

which such payments are to be credited. Responses to a prenotification

message will be received in accordance with the provisions in 31 CFR

370.5. Where the circumstances indicate that there is insufficient time

to effect the change received in response to the prenotification

message, payment will be made by check in accordance with paragraph (c)

of this section.

* * * * *

PART 370--REGULATIONS GOVERNING PAYMENTS BY THE AUTOMATED CLEARING

HOUSE METHOD ON ACCOUNT OF UNITED STATES SECURITIES

1. The authority citation for Part 370 continues to read as

follows:

Authority: 31 U.S.C. Chapter 31.

2. Section 370.0 is revised to read as follows:

Sec. 370.0 Applicability.

The regulations in this part apply to the Automated Clearing House

method of payment where employed by the Bureau of the Public Debt in

connection with United States securities, except as otherwise provided.

[FR Doc. 96-3168 Filed 2-15-96; 8:45 am]

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