94 Joint Custody Receipt Federal Reserve Bank of Kansas City
925 Grand Boulevard
Kansas City, Missouri 64198-0001
(816) 881-2000
FAX - (816) 881-2846
February 11, 1994
To the Treasurer or Trust Officer of the Public Entity Addressed:
Our records indicate that a financial institution(s) currently holds securities pledged to you in a joint
custody safekeeping account. This letter is to advise you that, effective July 1, 1994, the procedures
for releasing securities held in the joint custody account will be changed significantly. The
procedural changes are the result of the Federal Reserve System standardizing the services it provides to
public entities and financial institutions across the country. A copy of the Federal Reserve Bank's
Operating Letter No. 10, which outlines the safekeeping service, is enclosed for your information.
Currently, when a security is pledged to you, it is deposited into a joint custody safekeeping account.
A custody receipt is then issued and sent to your institution. This receipt should be retained until you are
ready to release the security to the financial institution, which you can do by signing and notarizing the
receipt, and returning it to the Federal Reserve Bank.
Beginning July 1, the Federal Reserve Bank will no longer issue the joint custody receipt or require
its use to release pledged securities~ Rather, securities will be released by written, facsimile, or
telephonic instruction from an authorized representative(s) of your institution. Included as Exhibit 1 of
the operating letter is a form release letter which may be used by you, on your letterhead, and forwarded
to the Federal Reserve via mail or facsimile. Please note that the written release does not require the
notarization currently required for the joint custody receipt.
Release requests made over the telephone should include the same information outlined in Exhibit 1
and will be confirmed by the Federal Reserve by contacting a second authorized employee. The second
person will be asked to provide release instructions matching those received from the first employee.
Facsimile releases will also require a telephone confirmation by another employee. Because written
release instructions signed by an authorized individual and received in the mail do not require any
further verification, you may wish to use this option for release in all but emergency situations.
You should designate on the enclosed "Pledgee Authorization Form" those employees you wish to
authorize to initiate and verify release requests. The form shonld be returned to the Federal Reserve,
at the address noted on the form, no later than Jnne 15, 1994, to ensure that release transactions can
be completed as necessary. New forms should be submitted to the Federal Reserve Bank as necessary
for staff turnover or as other changes occur. Additional forms may be obtained by contacting the
Securities Services staff of the Federal Reserve Bank at the phone numbers listed on the bottom of the
form.
After July 1, instead of mailing you a joint custody receipt, we will mail you a deposit advice with the
same infom~ation, on the day pledges are made. Also, existing green joint custody receipts may be used
to release securities after this time, providing the individual signing it is on the authorized list on file
with the Federal Reserve Bank. As with the letters, notarization will not be necessm'y. To assist you in
monitoring the status of pledged securities, a withdrawal advice will be mailed to you once the pledged
securities are actual(v released.
(over)
One final and important change to the joint custody process you should be aware of involves the action necessary
on the part of the pledging financial institution to move securities out of lhe joint custody safekeeping account.
Currently, when a properly executed joint custody receipt from you is received by the Federal Reserve, the
associated securities are automatically trva~sferred to a non-pledged account, unless the institution instructs us
otherwise. Beginning July l, specific account transfer instructions from the institution should be received by the
Federal Reserve within ten business days of receiving the pledgee's release authorization. If we do not receive
instructions from the institution, the securities will remain in a pledged status and it may be necessary to re-obtain
the release. Therefore, it is important for you and the financial institution to maintain close communication on the
status of pledged securities to avoid potentially negative financial impact on the institution and the inconvenience of
repeating release requests.
We recognize that these changes wi/1 likely necessitate operational changes for you, but we believe they will
enhance the security of these transactions and provide you with more options for affecting the release of pledged
securities. Financial institutions are being advised of these changes concurrently. Questions concerning changes
should be directed to any of the following individuals:
Lisa Ford, Assistant Supervisor (800) 333-1010 ext. 2423 or 881-2423
Debbie Bachtel, Supervisor (800) 333-10 l0 ext. 2045 or 881-2045
Kelley Courtright, Manager (800) 333-1010 ext. 2774 or 881-2774
John C. Vandermade, ,ir.
Vice President
Enclosures