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Public Debt Publishes Proposed "TRADES" Rules for Treasury Securities


April 1, 1996

Treasury's Bureau of the Public Debt announced the publication in today's Federal Register of proposed rules governing the $3.3 Trillion in Treasury bills, notes and bonds held in TRADES (Treasury/Reserve Automated Debt Entry System) also known as the Commercial Book-Entry System. Comments on these important proposed rules are requested to assist Treasury in issuing final regulations later this year. The 60-day comment period closes May 3, 1996.

The proposal incorporates recent and significant changes in commercial law that address the holdings of securities through financial intermediaries. The proposed rules would replace existing Treasury regulations which, though groundbreaking when they were issued, are based on outdated legal concepts.

The publication of the rules culminates a multi-year effort to create a comprehensive set of rules to provide more consistent treatment for holders of Treasury securities in the modern book-entry system. The proposal is based to the greatest extent possible on the newly revised Article 8 of the Uniform Commercial Code. Article 8 is the part of the Uniform Commercial Code that covers Investment Securities. This revised version of Article 8 has already been adopted by 13 states.

The proposal does not affect the $85 billion in Treasury bills, notes and bonds held by investors in TREASURY DIRECT which are governed by separate rules put in place in 1986.