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Pledges to Federal Reserve Banks

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If you are a depository institution maintaining a deposit account at a Federal Reserve Bank (FRB), you can make free pledges and release requests to the FRB. You must use the COLL function to pledge and release pledges to FRBs. FRBs have special requirements and procedural modifications to which DTC has agreed. DTC or an FRB may change these operating procedures no later than one day following receipt of written consent from the other. DTC or the FRB will notify DTC Participants in writing at least 10 business days before such changes become effective. However, if DTC consents to the FRB's request that such changes become effective immediately (according to DTC's Rules and applicable law), Participants will receive immediate notification in writing from the FRB of changes taking effect immediately.

Note- Pledges to FRBs are free of value.

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Pledgor Eligibility: All DTC bank Participants that are members of the Federal Reserve are automatically eligible to pledge securities to FRBs that are DTC pledgee banks using the Participant/non-participant pledge facility.

Non-Participant Eligibility: DTC allows non-participants to pledge collateral to FRBs through DTC bank Participants. Bank Participants and non-participants must provide their American Banking Association (ABA) number and the purpose of the loan.

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DTC-eligible securities are generally good for all services provided by DTC. However, the FRB must approve securities pledged to FRBs under the subheading Pledging Purposes. You should contact the appropriate FRB to determine whether the securities pledged are accepted and to inquire about particular instructions for indicating the purpose of the pledge.

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Any securities you pledge to the FRB through the Collateral Loan Program are deemed pledged to the FRB (as fiscal agents of the United States for its principal, the Treasury Department) when pledged for:

  • Treasury Tax and Loan: Collateral for Treasury Tax and Loan account balances under 31 C. F. R. Part 203 (Treasury Circular No. 92)
  • Public Purposes: Collateral for deposits of public money under 31 C. F. R. Part 202 (Treasury Circular No. 176).

 

Any securities you pledge to the FRB through the Collateral Loan Program are deemed pledged to the FRB as principal, as Collateral when pledged for:

  •  (i) discount window advances under 12 C. F. R. Part 201 (Regulation A of the Board of Governors of the Federal Reserve System) (“Discount”) or
  • (ii) daylight (funds) overdrafts on the books of the FRB (“Daylight Overdraft”)

Collateral pledged for either purpose may be credited to a single Pledgee Account of the FRB.

 

Note- An indication that a security is pledged for Discount, or Daylight Overdrafts is made when collateral is initially or primarily used for either purposes. However, in accordance with FRB agreements and operating circulars, such collateral so designated, regardless of such designation, shall serve as security for any obligation of the pledgor to the FRB.

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The FRB may not permit the pledging of certain securities that might be DTC-eligible. If a pledge is made in an issue not accepted by the FRB, the FRB will initiate the release of the pledge after receiving pledge notification.