Circular
Treasury Opens Book-Entry Conversion Window for stripped U.S. Treasury Bearer Securities
March 10, 1998
Circular No. 11031

April 6 - October 9, 1998

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The Treasury's Bureau of the Public Debt has announced the opening of a 6-month window to allow holders of physically stripped U.S. Treasury bearer securities to convert them to book-entry. Called BECCS (BEarer Corpora Conversion System) the program offers holders of the principal portions, or "corpora" (singular = "corpus") of U.S. Treasury bearer securities that were stripped of some or all non-callable coupons an opportunity to convert their stripped corpora to book-entry form. The program will open April 6, 1998 and closes October 9,1998.

Bearer corpora that are not subject to call will be converted to zero coupon book-entry securities that are transferable within BECCS. Bearer corpora that are subject to call (therefore redeemable on call before maturity) and that are submitted with all associated callable coupons will also be converted to zero coupon book-entry securities that are transferable within BECCS. The associated callable coupons will be linked with the BECCS security and cannot be separately traded. If a callable bearer corpus is not submitted with all of its associated coupons, the corpus will be converted to a non-transferable zero coupon book-entry security within BECCS. Each individual callable coupon submitted will be converted to a non-transferable coupon within the existing CUBES program.

The Bureau of the Public Debt is also reopening the Coupons Under Book-Entry Safekeeping (CUBES) program during the same 6-month period. Participation in the BECCS program is not a prerequisite to using the CUBES program. CUBES provides holders of coupons previously stripped from bearer Treasury securities the opportunity to convert those coupons to book-entry form and makes them readily transferable.

Depository institutions wishing to participate in the BECCS or CUBES program should contact either Grace Jaiman or JoAnna Grever of our Fiscal Services Department as soon as possible to obtain an information package. Depository institutions that notify this Bank of their intention to participate will be able to convert the stripped coupons between April 6 and October 9 in accordance with appointments, beginning in April. Corpora and/or coupons may be mailed to this Bank (Attn: Fiscal Processing Division, BECCS or CUBES Program) or delivered to our windows every Monday, Wednesday and Friday between 9 a.m. and 1 p.m., as scheduled. Adherence to presentation procedures is essential. No trading of BECCS/CUBES balances will be permitted for the 12 business days following their deposit into the designated book-entry accounts; this will allow for the Treasury's verification and approval of the submission.

Entities or individuals other than depository institutions that hold stripped Treasury securities/coupons and wish to convert them to book-entry form under the BECCS or CUBES program must arrange for such conversion through a depository institution. Participating institutions will be charged a fee of $4.00 per piece (corpus or coupon) converted and will bear the full cost and risk associated with the delivery of the corpora or coupons to this Bank. Conversions under the BECCS and CUBES programs are subject to 31 CFR Part 358, as amended most recently on March 6, 1998.

Questions regarding the BECCS/CUBES programs may be directed to Robert G. Kraus, Fiscal Officer, Fiscal Services Department or Grace Jaiman of that Department.