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e-CFR data is current as of August 4, 2020

Title 31Subtitle BChapter IISubchapter APart 357Subpart B → §357.13


Title 31: Money and Finance: Treasury
PART 357—REGULATIONS GOVERNING BOOK-ENTRY TREASURY BONDS, NOTES AND BILLS HELD IN TREASURY/RESERVE AUTOMATED DEBT ENTRY SYSTEM (TRADES) AND LEGACY TREASURY DIRECT
Subpart B—Treasury/Reserve Automated Debt Entry System (TRADES)


§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 §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.

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