February 26, 1988
Mr. C. Douglas Lyle
Vice President & Compliance Officer
1st American Bank
2000 RiverEdge Parkway NW
Atlanta, Georgia 30328
Dear Mr. Lyle:
This is in response to your letter of December 9, 1987, concerning the confirmation requirement of Section 403.5(d) of the Treasury Department's implementing regulations for the Government Securities Act of 1986 (52 FR 27910, July 24, 1987).
You have asked whether the following practice by 1st American Bank complies with Section 403.5(d) of the regulations. You state that in some cases customers will instruct 1st American Bank not to mail confirmations to them. You state that it is your position that the bank will not violate the regulations if it does not mail confirmations to these customers provided the bank retains evidence of each customer's instructions.
Section 403.5(d)(1)(ii) of the regulations states that a financial institution that retains custody of securities that are the subject of a repurchase transaction, as described in this section, shall confirm in writing the specific securities that are the subject of the repurchase transaction. The confirmation must be issued at the end of the day of initiation of the transaction and at the end of any other day during which other securities are substituted. Section 403.5(d)(2)(i) of the regulations specifies the information that must be included on the confirmation.
The regulations do not allow customers of financial institutions to waive the right to receive a confirmation except as authorized in Section 403.5(d)(2)(ii). That section states that a non-United States citizen residing outside the United States or a foreign corporation, partnership, or trust may waive, but only in writing, the right to receive the confirmation required by Section 405.3(d)(1)(ii). As discussed in the preamble to the implementing regulations (52 FR 27919), the confirmation required by Section 403.5(d) may not be waived by any other customer.
Consistent with Section 403.5(d), the same restriction applies to the confirmations that must be issued pursuant to Section 403.4(e) by a registered government securities broker or dealer that retains custody of securities that are the subject of a repurchase agreement. In addition, only a foreign customer is permitted to waive the confirmation or safekeeping receipt that must be issued pursuant to Section 450.4(b)(1) by a depository institution that holds government securities for the account of a customer.
Pursuant to 17 CFR 400.2(c)(7), your letter and this response will become available to the public thirty days from the date of this letter.
Charles O. Sethness
Currently Viewing: Confirmation Requirements (Subpage of: Government Securities Act (GSA) Regulations)
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