1_-_FMB_Securities_Liquidation_Overview.pdf

Securities Liquidation Overview

October 24, 2018

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Securities Liquidation Overview

Treasury-Managed Trust Funds

• The Securities Liquidation function authorizes Treasury (delegated to the Bureau of the Fiscal Service) to liquidate securities (obligations) received by Federal Executive Branch Agencies.

This authority is provided to Treasury by 31 U.S.C.

§ 324.

• Through this re-delegation authority, the Securities Liquidation function is carried out by Fiscal Service’s Funds Management Branch (FMB).

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Types of Securities

Treasury-Managed Trust Funds

• The types of securities to be liquidated at any given time range from:

– Bonds

– Notes

– Other Securities acquired by the Secretary of the

Treasury for the U.S. Government

• Furthermore, these securities are delivered to the Secretary by a Federal Executive Agency

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• Internal Revenue Service (IRS) Levy

• Bankruptcy, Settlement or Other Litigation

• Donations to a Federal Executive Agency

How Securities are Acquired

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• Fiscal Service is required to receive proof of ownership and a letter of intent to sell from the customer agency

• The intent is to receive securities and sell them as soon as possible. However, there may be exceptions to the rule. FMB does not time the sale of securities to attempt to obtain a better price.

Acquisition and Sale of Securities

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• The goal is not to influence the market price. If FMB receives a large position of securities, the securities will likely be sold over a period of several days.

• FMB serves as a mediator between our customer agencies and our broker. The contract is with the Bureau of the Fiscal Service, limiting the access between broker and customer agency.

Acquisition and Sale of Securities

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Fine Assessment Fine payment includes security and is mailed to Executive Agency.

Executive Agency Agency collects / drafts required documentation for Fiscal Service:

legal proof of ownership, letter of intent, etc.

Broker Broker confirms the security is not restricted and that it is in ‘good delivery’ form.

Fiscal Service

Fiscal Service Processes documentation received from the agency:

legal proof of ownership, letter of intent, and approves sale for broker

Broker Broker liquidates the security and sends the proceeds to Executive Agency.

Executive Agency Agency receives the funds and records the appropriate transactions.

Securities Liquidation Process Flow

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Information on TreasuryDirect Website

• Information regarding the Securities Liquidation program can be found online at the following address:

https://www.treasurydirect.gov/govt/apps/tfp/tfp.htm https://www.treasurydirect.gov/govt/apps/tfp/tfp.htm

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Fiscal Year Securities Liquidated Gross Sales

2018 35 $ 20,405,822.86* 2017 6 $ 2,269,438.22 2016 6 $ 1,822,035.00 2015 26 $ 24,724,731.00 2014 79 $ 50,850,522.01 2013 75 $ 54,482,900.86 2012 65 $ 19,932,530.35 2011 35 $ 109,225,174.58

Securities Liquidation - Gross Sales FY 11 – FY 18

* Sales through August 31st 2018