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OCC Bulletin 2015-5 | January 22, 2015

Government Securities Act: New Comptroller's Handbook Booklet and Rescissions

To

Chief Executive Officers of All National Banks and Federal Savings Associations, Department and Division Heads, All Examining Personnel, and Other Interested Parties

Summary

The Office of the Comptroller of the Currency (OCC) issued today the “Government Securities Act” booklet of the Comptroller’s Handbook. This new booklet, part of the Securities Compliance series, consolidates certain guidance from the Comptroller’s Handbook for Compliance, “Securities Activities” booklet, issued in September 1991, and the Comptroller’s Handbook booklet “Investment Securities,” issued in March 1990. The new booklet also replaces section 563, “Government Securities Act,” issued in May 1998 as part of the Office of Thrift Supervision (OTS) Examination Handbook for the examination of federal savings associations (FSA).

Note for Community Banks

The risk management principles and regulations discussed in this booklet apply to the examination of all national banks and FSAs (collectively, banks) engaged in government securities dealer and non-dealer activities. Community banks should be familiar with the application of the Government Securities Act of 1986 (GSA) to their government securities activities.

Highlights

The “Government Securities Act” booklet

  • summarizes the GSA and provides guidance to OCC examiners for evaluating compliance with GSA regulations.
  • provides guidance to OCC examiners for evaluating compliance with the applicable sections of the record-keeping and confirmation requirements of 12 CFR 12 (for national banks) and 12 CFR 151 (for FSAs) and the government securities sales practices (suitability requirements) of 12 CFR 13.

Background

After a succession of highly publicized failures of government securities broker and dealers in the mid-1970s to the mid-1980s, Congress exercised its authority over the largely unregulated government securities market by passing the GSA (15 USC 78o-5). The GSA directed the Secretary of the Treasury to write regulations for the government securities market, and the OCC is statutorily required to enforce the regulations as they apply to OCC-supervised banks.

The GSA regulations apply to dealer banks, as well as banks with limited government securities activities (non-dealer banks). In particular, non-dealer banks are subject to GSA regulations related to hold-in-custody repurchase agreements, due bills, large position reporting, custodial holdings of government securities, and record-keeping requirements. Throughout the booklet, reference is made to the applicability of the GSA regulations to dealer banks and non-dealer banks. In addition, the booklet contains separate examination procedures for dealer banks and non-dealer banks.

The issuance of this booklet rescinds the following guidance:

  • The “Securities Activities” booklet of the Comptroller’s Handbook for Compliance.
  • Pages 37-41 of the “Investment Securities” booklet of the Comptroller’s Handbook. The remainder of this booklet will be rescinded when the updated “Investment Securities” booklet of the Comptroller’s Handbook is issued.
  • OTS Examination Handbook, section 563, “Government Securities Act” (and related program and appendix).
  • Advisory Letter 1997-5, “Treasury’s Large Position Record-Keeping and Reporting Rules” (May 15, 1997).

For further information, contact David Barfield, National Bank Examiner, Credit and Market Risk Division, at (202) 649-6360.

 

Jennifer C. Kelly
Senior Deputy Comptroller and Chief National Bank Examiner

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