Requirement Summary.pdf

SECURITIES LIQUIDATION

DEPARTMENT OF THE TREASURY, BUREAU OF THE PUBLIC DEBT (BPD)

REQUIREMENT SUMMARY

1.0 BACKGROUND

The mission of the Bureau of the Public Debt (BPD) is to borrow the money needed to operate the federal government, account for the resulting debt, and provide reimbursable support services to federal agencies.

When obligations are acquired by the Secretary of the Treasury for the Federal Government or delivered by an executive agency, it is the responsibility of the Secretary to liquidate those items pursuant to 31 U.S.C. § 324.

Obligations are usually the result of debt or liability collection efforts. Once executive agencies acquire these obligations, they are forwarded to BPD, Office of Public Debt Accounting (OPDA) for processing and transaction.

For example, many obligations are seized and forfeited by the Internal Revenue Service (IRS) in collection efforts under 26 CFR Part 403. First, IRS will attempt to liquidate the obligations in an administrative sale.

However, if an acceptable minimum bid is not received, the obligations are forwarded to OPDA for transaction.

Once OPDA receives the obligations, a qualified broker-dealer (herein referred to as “Contractor”) may be asked to sell or liquidate the obligations. Upon receipt of the confirmation of sale, the Contractor will electronically deposit the proceeds using the standard industry settlement methods. Proceeds from pending sales are to be held in a non-interest bearing account in the name of OPDA until the transaction is completed on the books of the contractor. OPDA will notify the agency of the date and amount of the sale and insure that the proper financial reporting has taken place.

2.0 SCOPE

The Contractor shall take control of, safe-keep, research, and liquidate securities for BPD/OPDA.

Obligations can be received by the Contractor in three (3) different ways.

1. Usually, an executive agency will initiate the transfer of obligations to the Contractor in electronic form.

The executive agency will follow the instructions given on OPDA's website at http://www.treasurydirect.gov/govt/apps/slp/slp.htm to complete the transfer correctly.

2. Occasionally, the executive agency will forward a physical obligation to the Contractor, which can be liquidated according to agreed upon procedures.

3. Sometimes, OPDA receives the physical obligations because the executive agency has failed to follow the instructions on the website. In this case, an OPDA employee will create three (3) signed certificates of authorization to go along with the physical obligations. If the physical obligations are received by the Contractor or if they are received first by OPDA, the Contractor shall record, segregate, and store the obligations in a vault upon receiving the physical obligations. The Contractor shall provide OPDA a signed receipt of securities immediately upon receiving the physical obligations.

When the instructions to sell are received by the Contractor from OPDA, the Contractor shall be authorized to sell the obligations. Once the obligations are sold, OPDA will receive a trade confirmation report from the Contractor that shows the amount of gross proceeds, commissions deducted, and net proceeds that will be wired back to the agency. Three (3) business days after the sale, OPDA shall receive a wire transfer notification from the contractor. Only after receiving the wire transfer notification will OPDA notify the agency of the date and amount of the sale of their obligations.

3.0 DEFINITIONS

3.1 Security. Any note, stock, treasury stock, security future, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, any put, call, straddle, option, and privilege on any domestic or foreign security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a “security”; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance or not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited.

3.2 Transaction Fee. A flat fee to be assessed for each transaction processed for the various services provided in the contract.

3.3 Safekeeping Fee. A flat fee charged to the Government for storing securities.

4.0 CONTRACTOR REQUIREMENTS

The following requirements must be met by the Contractor so that obligations assumed by OPDA can be liquidated and the appropriate financial reporting occurs. The Contractor must warrant the fulfillment of each of the following conditions at all times during the period of the contract and must notify the Government immediately if the Contractor may become or has become non-compliant.

a. Be in compliance with all applicable federal and state securities laws and regulations.

b. Be registered with each of the following:

(i) Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934

(ii) A Self-Regulatory Organization (SRO)

(iii) Applicable State Securities Commission(s)

c. Be in good standing with its SRO (i.e., not the subject of any enforcement action for violations of federal or state securities laws or regulations)

d. Certify that all securities professionals associated with the contractor (including branch managers and salespersons) are properly registered with the National Association of Securities Dealers (NASD), applicable SRO, and applicable State Securities Commission(s)

e. Have the regulatory authority under both federal and state securities laws to conduct transactions and safe keep a wide range of instruments, including but not limited to, government securities, equities, warrants, corporate bonds, municipal securities, and Rule 144a securities

f. Maintain sufficient capital to be in compliance with applicable federal securities regulations pertaining to financial responsibility

g. Be a member of the NYSE, Inc. Medallion Signature Program. The Contractor's medallion guarantee limit must be sufficient to handle projects with values up to $100 million

h. Submit the following documentation upon request:

(i) Most recent Financial and Operational Combined Uniform Single (FOCUS) report

(ii) Most recent audited annual report

(iii) Copies of all commission schedules, mark-up policy, and schedule listing all other fees (i.e., account maintenance fees, safekeeping fees, transfer fees, and any other fees related to the transaction services)