Operating Circular No. 7 - FRB Services
Federal Reserve BanksOperating Circular No. 7BOOK-ENTRY SECURITIES ACCOUNT MAINTENANCE AND TRANSFERSERVICESEffective October 29, 2017
FEDERAL RESERVE BANKSOPERATING CIRCULAR NO. 7Effective October 29, 2017BOOK-ENTRY SECURITIES ACCOUNT MAINTENANCE AND TRANSFERSERVICES(Click CTRL section or page number to go directly to the section)1.0PURPOSE, SCOPE AND EFFECT OF THIS CIRCULAR . 12.0GOVERNING REGULATIONS. 13.0DEFINITIONS . 14.0SECURITIES ACCOUNT MAINTENANCE . 34.1SECURITIES ACCOUNT LOCATION AND IDENTIFICATION OF THEADMINISTRATIVE RESERVE BANK . 34.2UNRESTRICTED SECURITIES ACCOUNTS . 34.3RESTRICTED SECURITIES ACCOUNTS . 45.0TERMS OF ACCESS . 56.0THE ROLES OF THE RESERVE BANKS IN A BOOK-ENTRY SECURITIESTRANSFER . 67.0EXECUTION OF TRANSFERS . 67.1DEBITS AND CREDITS . 67.2CONDITIONS OF ACCESS . 77.3FORMAT AND CONTENT OF TRANSFER MESSAGES . 88.0[RESERVED] . 89.0SETTLEMENT OF BOOK-ENTRY SECURITIES TRANSFERS; PRINCIPALAND INTEREST PAYMENTS . 89.1FINALITY . 89.2PRINCIPAL AND INTEREST PAYMENTS IN GENERAL. 9
9.3PRINCIPAL AND INTEREST PAYMENTS ON BOOK-ENTRY SECURITIES INRESTRICTED SECURITIES ACCOUNTS . 910.0LIMITATIONS ON TRANSFERS OF BOOK-ENTRY SECURITIES . 910.1 GENERAL RESTRICTIONS ON TRANSFERS . 910.2 AMOUNT LIMITATIONS ON TRANSFERS . 910.3 IMPROPER USE OF THE REVERSAL CODE.1011.0TRANSFER HOURS AND EXTENSIONS . 1012.0NOTICES . 1113.0[RESERVED] . 1214.0TRANSFER AND SECURITIES ACCOUNT MAINTENANCE FEES . 1214.1 FEES .1214.2 BILLING OF FEES .1215.0EMERGENCY CONDITIONS . 1215.1 FAILURE OF A PARTICIPANT’S EQUIPMENT .1215.2 FAILURE OF RESERVE BANK EQUIPMENT .1316.0LIMITATIONS ON LIABILITY . 1317.0MULTIPLE MASTER ACCOUNTS . 1418.0RIGHT TO AMEND . 1419.0EFFECT OF THIS CIRCULAR ON PREVIOUS CIRCULAR . 14APPENDIX A: APPLICABLE REGULATORY CITATIONS GOVERNING BOOKENTRY SECURITIES OF AGENCIES, INSTRUMENTALITIES, ANDESTABLISHMENTS OF THE UNITED STATES . 15APPENDIX B: FEDWIRE SECURITIES SERVICE OPERATING HOURS FOR BOOKENTRY SECURITIES TRANSFERS . 16APPENDIX C: CUSTODY AGREEMENT FOR BOOK-ENTRY SECURITIES . 17APPENDIX D: AUTOMATED CLAIM ADJUSTMENT FOR MORTGAGE-BACKEDSECURITIES: FAIL TRACKING, REPO TRACKING AND INTERIMACCOUNTING . 23
APPENDIX E: FEDPAYMENTS MANAGER FOR THE FEDWIRE SECURITIESSERVICE . 33
1.0 PURPOSE, SCOPE AND EFFECT OF THIS CIRCULAR1.1This Operating Circular (“Circular”) sets forth the terms under which the FederalReserve Bank of (City) maintains Securities Accounts and effects Transfers ofBook-Entry Securities for Participants. By maintaining a Securities Account, aParticipant agrees to all the provisions of this Circular, as amended from time totime. Capitalized terms are defined in Paragraph 3.1.2Each Reserve Bank has issued a Circular No. 7 identical to this one.2.0 GOVERNING REGULATIONS2.1This Circular incorporates by reference the current provisions of the regulationslisted in Appendix A as such regulations are amended from time to time.3.0 DEFINITIONS3.1For purposes of this Circular, the following definitions apply.3.2Administrative Reserve Bank with respect to a Participant means the ReserveBank in whose District the Participant is located.3.3Amortizing Book-Entry Security means a Book-Entry Security on whichprincipal, as well as interest, is paid periodically over the life of the Book-EntrySecurity (e.g., a mortgage-backed Book-Entry Security).3.4Board means the Board of Governors of the Federal Reserve System.3.5Book-Entry Security means a marketable security issued in electronic form bythe United States Government (the “Treasury”), any agency or instrumentalitythereof, certain international organizations, or others, that the Reserve Bankshave determined is eligible to be held in a Securities Account and is eligible forTransfer.3.6The Fedwire Securities Service means the electronic facility operated by theReserve Banks for maintaining Securities Accounts and for effecting Transfers.3.7Free Transfer means a Transfer that does not involve any credit or debit to aMaster Account other than a transaction fee.3.8Master Account means a “Master Account” (as defined in the Reserve Banks’Operating Circular 1, Account Relationships) on the books of a Reserve Bank. AMaster Account is a Funds Account for purposes of the regulations listed inAppendix A. A Master Account does not contain Book- Entry Securities.Operating Circular No. 7Effective October 29, 20171
3.9On-Line Access means a connection for the transmission of a TransferMessage directly to or from a Reserve Bank by electronic data transmission,excluding facsimile and oral transmission by telephone.3.10On-Line Participant means a Participant with On-Line Access.3.11Off-line Access means a connection other than On-Line Access for sending andreceiving Transfer Messages to or from a Reserve Bank such as by written,facsimile, or telephone voice instruction.3.12Off-line Participant means a Participant with Off-line Access.3.13Participant means an entity that maintains a Securities Account with a ReserveBank in the entity’s name. Subject to the Reserve Banks’ and the Board ofGovernor’s risk reduction policies, where applicable, entities authorized by law,regulation, policy, or agreement to be Participants include:(a) depository institutions as defined in Section 19(b)(1)(A) of the FederalReserve Act, as amended (12 U.S.C. §461(b)(1)(A));(b) agencies and branches of foreign banks as defined in Section 1(b) ofthe International Banking Act of 1978, as amended (12 U.S.C.§§3101(1) and (3));(c) member banks of the Federal Reserve System pursuant to RegulationH issued by the Board (12 C.F.R. Part 208);(d) the Treasury and any entity specifically authorized by Federal statuteto use the Reserve Banks as fiscal agents or depositories;(e) entities designated by the Secretary of the Treasury in accordancewith Section 15 of the Federal Reserve Act (12 U.S.C. §391);(f) foreign central banks, foreign monetary authorities, foreigngovernments, and certain international organizations;(g) entities authorized under Section 25, Paragraph 3, and Section 25A ofthe Federal Reserve Act (12 U.S.C. §§601 (Third), 611); and(h) any other entity authorized by a Reserve Bank to use the Fedwire Securities Service.3.14Receiver means the Participant receiving a Book-Entry Security as a result of aTransfer.3.15Reserve Bank means one of the 12 Federal Reserve Banks and its branches.3.16Restricted Securities Account means a Securities Account used for pledgingBook-Entry Securities to a pledgee on the books of a Reserve Bank inaccordance with this Circular.Operating Circular No. 7Effective October 29, 20172
3.17Securities Account means an account at a Reserve Bank containing BookEntry Securities.3.18Sender means the Participant sending a Transfer Message.3.19Transfer means the electronic movement over the Fedwire Securities Serviceof a par amount of Book-Entry Securities by debit to the designated SecuritiesAccount of the Sender and by credit to the designated Securities Account of theReceiver, or by debit to one Securities Account of a Participant and credit toanother Securities Account of that same Participant, in which case thatParticipant is both a Sender and a Receiver. A Transfer is either a Free Transferor a Transfer Against Payment.3.20Transfer Message means an instruction of a Participant to a Reserve Bank toeffect a Transfer.3.21Transfer Against Payment means a Transfer that is effected with a credit to theMaster Account of the Sender and a debit to the Master Account of the Receiver,for the amount of the payment.3.22Unrestricted Securities Account means a Securities Account used to maintainBook-Entry Securities for a Participant and does not include a RestrictedSecurities Account.4.0 SECURITIES ACCOUNT MAINTENANCE4.14.2SECURITIES ACCOUNT LOCATION AND IDENTIFICATION OF THEADMINISTRATIVE RESERVE BANK4.1.1A Participant may have one or more Securities Accounts at itsAdministrative Reserve Bank, subject to the terms required by theAdministrative Reserve Bank. Securities Accounts may be restricted orunrestricted.4.1.2A Participant’s Administrative Reserve Bank is the Reserve Bank inwhose district the Participant is located. For purposes of this Circular, aParticipant is located in the Federal Reserve District as determined underthe procedure described in 12 C.F.R. Part 204 even if the Participantwould not otherwise be subject to Part 204. A foreign central bankSender or Receiver is located in the Second Federal Reserve District.UNRESTRICTED SECURITIES ACCOUNTS4.2.1A Participant may hold Book-Entry Securities it owns, as well as BookEntry Securities it holds for the account of its customers, in one or moreUnrestricted Securities Accounts. Regardless of the combination ornumber of Unrestricted Securities Accounts maintained by a Participant,Operating Circular No. 7Effective October 29, 20173
all Book-Entry Securities held in an Unrestricted Securities Account areheld by a Reserve Bank for, and subject to, the sole order of theParticipant.4.34.2.2A Reserve Bank does not reflect in its records any interest of aParticipant’s customers in Book-Entry Securities held by the ReserveBank for the Participant in an Unrestricted Account, and is not responsiblefor the accuracy or content of the records of a Participant with respect toBook-Entry Securities held by the Participant for the account of itscustomers. A Participant shall not represent to its customers that theReserve Bank’s records reflect the interests of the Participant’scustomers.4.2.3Any name used by a Participant or a Reserve Bank to identify anUnrestricted Securities Account is for convenience only and does not alterthe Reserve Bank’s right to treat the Participant as exclusively entitled toexercise the rights and powers with respect to the Book-Entry Securitiesin such Securities Accounts.RESTRICTED SECURITIES ACCOUNTS4.3.1A Participant may hold Book-Entry Securities pledged as collateral in oneor more Restricted Securities Accounts. Credits of Book-Entry Securitiesto, and debits from, Restricted Securities Accounts may require theintervention of the Reserve Bank and may require the approval of thepledgee.4.3.2Restricted Securities Accounts include, but are not limited to, thefollowing:(a)Restricted Securities Accounts in which the Reserve Bank holdsBook-Entry Securities in its individual capacity:(i)(ii)(b)Operating Circular No. 7Effective October 29, 2017as collateral for advances (including extension of intra-daycredit) by the Reserve Bank to the Participant;as collateral to secure the exercise of trust powers within astate or deposits of funds of public entities (includingstates, municipalities, and other political subdivisions —see Appendix C);(iii)as collateral for bankruptcy funds on deposit with theParticipant pursuant to 11 U.S.C. §345; and(iv)for such other purposes as the Reserve Bank maydesignate; andRestricted Securities Accounts in which a Reserve Bank holdsBook-Entry Securities in its capacity as fiscal agent of the UnitedStates:4
(i)(ii)(iii)(iv)as collateral to secure balances held by the Participant inTreasury Tax and Loan accounts under 31 C.F.R. part203, as amended from time to time;as collateral for revenues and funds of the United States,and any funds the deposit of which is subject to the controlor regulation of the United States or any of its officers,agents, or employees pursuant to 31 C.F.R. part 202, asamended from time to time;as security in lieu of a surety on penal or other bonds,pursuant to 31 C.F.R. part 225, as amended from time totime; andfor such other purposes as the Secretary of the Treasurymay approve, subject to Treasury circulars or otherrelevant instructions.5.0 TERMS OF ACCESS5.1Each Participant is responsible for all access to, and all debits and credits to, itsSecurities Accounts and its Master Account. A Participant may use the servicesof a third-party service provider, as described in and subject to Paragraph 18 andAppendix C of Operating Circular 6 on Funds Transfers through the Fedwire Funds Service.5.2A Participant must maintain a Master Account at a Reserve Bank to be a Senderor a Receiver of Transfers Against Payment; the Administrative Reserve Bankreserves the right: (1) to require a Participant to maintain a balance in its MasterAccount or to pledge collateral sufficient at all times to cover Transfers AgainstPayment for which the Participant is the Receiver, (2) to limit a Receiver to FreeTransfers, or (3) to limit Transfers Against Payment or to reject TransferMessages.5.3A Participant that does not have or is not permitted to have a Master Account inits own name may only be a Sender or a Receiver of Free Transfers, and mustdesignate a correspondent (on a form provided by the Administrative ReserveBank) with a Master Account on a Reserve Bank’s books which shall be creditedfor principal and interest payments on Book-Entry Securities, and debited fortransaction fees as described in Paragraph 14; a Reserve Bank will rejectTransfer Messages for Transfers Against Payment to a Participant that does nothave a Master Account or that is only permitted to be a Receiver of FreeTransfers.Operating Circular No. 7Effective October 29, 20175
6.0 THE ROLES OF THE RESERVE BANKS IN A BOOKENTRY SECURITIES TRANSFER6.1A Participant’s Administrative Reserve Bank may instruct any other ReserveBank concerning the other Reserve Bank’s handling of a Transfer Messageaffecting the Participant’s Securities Account(s) and Master Account.7.0 EXECUTION OF TRANSFERS7.1DEBITS AND CREDITS7.1.17.1.27.1.3Book-Entry Securities are credited to a Participant’s Securities Account inaccordance with Reserve Bank policies and, when relevant, theregulations and policies of the issuers of the Book-Entry Securities,including whenever a Participant:(a)is a Receiver, or receives Book-Entry Securities moved from theLegacy Treasury Direct or the Treasury Direct Systems(described at 31 C.F.R. Part 357.20 et seq.) to its SecuritiesAccount;(b)purchases Book-Entry Securities on original issue; or(c)converts eligible definitive securities to book-entry form or fromone book-entry form to another book-entry form (e.g., strippingand reconstituting).Book-Entry Securities are debited to a Participant’s Securities Account inaccordance with Reserve Bank policies, and when relevant the instructionof the issuer, including whenever:(a)a Reserve Bank effects a Transfer for a Participant that is aSender, or a Participant requests that Book-Entry Securities bemoved into the Legacy Treasury Direct or the Treasury Direct Systems;(b)Book-Entry Securities held in a Securities Account mature, arecalled for redemption, or are otherwise paid off;(c)a Participant converts eligible Book-Entry Securities to bearer orregistered definitive securities or from one book-entry form toanother book-entry form (e.g., stripping and reconstituting).The Sender’s Master Account is credited and the Receiver’s MasterAccount is debited for the amount specified by the Sender in any TransferAgainst Payment sent by the Sender.Treasury Direct is a registered trademark of the U.S. Department of the Treasury.Operating Circular No. 7Effective October 29, 20176
7.27.1.4The Sender and the Receiver of a Transfer irrevocably authorize andinstruct the Reserve Bank(s) involved in the Transfer to debit theSender’s designated Securities Account and credit the Receiver’sdesignated Securities Account for the par amount of the Book-EntrySecurities, and to credit the Sender’s Master Account and debit theReceiver’s Master Account for the payment in the case of a TransferAgainst Payment.7.1.5If a Transfer is returned in accordance with this Circular, the Sender andthe Receiver of the Transfer irrevocably authorize and instruct theReserve Bank(s) involved in the Transfer to debit and credit the Sender’sand the Receiver’s Securities Accounts and their corresponding MasterAccounts in order to offset any debits or credits previously made inconnection with the Transfer.CONDITIONS OF ACCESS7.2.1The Reserve Banks provide Participants with On-line Access or Off-lineAccess but reserve the right to terminate a Participant’s access withoutprior notice.7.2.2The Reserve Banks may record by audio recording device any telephonecall relating to a Transfer.7.2.3A Participant, whether on-line or off-line, shall indemnify the ReserveBanks for any loss incurred by a Reserve Bank as a result of theParticipant’s delay in sending or receiving a Transfer, if the delay resultsfrom the Participant’s failure to be able to send or receive a Transfer to orfrom the Reserve Banks.7.2.4On-Line Access. By using the Fedwire Securities Service, an On-lineParticipant agrees to the terms of Appendix A to Operating Circular 5. AnOn-line Participant must manage its access in order to receive timelyacknowledgment of credits and debits to its Securities Accounts and itsMaster Account during the Fedwire Securities Service operating hours.If a Participant fails to manage its communications connection in such amanner, a Reserve Bank may limit any attempts to sendacknowledgments of credits and debits to the Participant’s computer. Insuch cases, the Participant should dial i
1.1 This Operating Circular (“Circular”) sets forth the terms under which the Federal Reserve Bank of (City) maintains Securities Accounts and effects Transfers of Book-Entry Securities for Participants. By maintaining a Securities Account, a Participant agrees to all the provisions of this Circular, as amended from time to time.
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API TYPE 6B FLANGE S L WITH RX GASKET STUD BOLT WITH NUTS POINT HEIGHT L API TYPE 6B FLANGE L S Figure 2.0-1 L API TYPE 6BX FLANGE NO STANDOFF AWHEM Recommendation For Stud Bolts and Tap End Studs For API Spec 6A 4 2.0 METHOD OF CALCULATING STUD BOLT LENGTHS FOR TYPE 6B AND 6BX FLANGES 2.0a CALCULATION. The following formula was
