Proposed Rule2026-00598
Marketable Treasury Securities Redemption Operations
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Published
January 14, 2026
Issuing agencies
Treasury DepartmentFiscal Service
Abstract
The Department of the Treasury (Treasury) proposes to amend the terms and conditions for marketable Treasury securities redemption (buyback) operations. These proposed amendments reflect expanded direct offer submission eligibility, update the certification statements to participate in buyback operations, enhance clarity, and make conforming changes to several sections of the buyback regulations to reflect Treasury's current practices.
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<title>Federal Register, Volume 91 Issue 9 (Wednesday, January 14, 2026)</title>
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[Federal Register Volume 91, Number 9 (Wednesday, January 14, 2026)]
[Proposed Rules]
[Pages 1477-1481]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-00598]
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 375
[Docket No. FISCAL-2025-0001]
Marketable Treasury Securities Redemption Operations
AGENCY: Bureau of the Fiscal Service, Department of the Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Department of the Treasury (Treasury) proposes to amend
the terms and conditions for marketable Treasury securities redemption
(buyback) operations. These proposed amendments reflect expanded direct
offer submission eligibility, update the
[[Page 1478]]
certification statements to participate in buyback operations, enhance
clarity, and make conforming changes to several sections of the buyback
regulations to reflect Treasury's current practices.
DATES: Written comments should be received on or before February 13,
2026.
ADDRESSES: All comments must include the agency name (Bureau of the
Fiscal Service) and docket number (FISCAL-2025-0001) for this
rulemaking. Comments received, including attachments and other
supporting materials, are part of the public record and subject to
public disclosure. In general, comments will be published on
<a href="http://regulations.gov">regulations.gov</a> without change, including any business or personal
information provided. Do not include any information in your comment or
supporting materials that you consider confidential or inappropriate
for public disclosure. Due to mail processing delays, Fiscal Service
strongly encourages the electronic submission of comments. Comments may
be submitted as follows:
Electronic Submission: Fiscal Service strongly encourages all
comments to be submitted through the Federal eRulemaking Portal, which
provides the ability to comment on, search, and view rulemaking
materials, including comments received on rules. Please go to <a href="https://www.regulations.gov">https://www.regulations.gov</a> and follow the online instructions at that site for
submitting comments.
Paper Submission: Paper comments that duplicate an electronic
submission are not necessary and are discouraged. If you wish to mail a
paper comment in lieu of an electronic comment, it should be sent to:
Government Securities Regulations Staff, Room #7N103, Bureau of the
Fiscal Service, 3201 Pennsy Drive, Building E, Landover, MD 20785-1603.
FOR FURTHER INFORMATION CONTACT: Fred Pietrangeli, Director, Office of
Debt Management, at <a href="/cdn-cgi/l/email-protection#e185848395cf8c808f8086848c848f95a19593848092949398cf868e97"><span class="__cf_email__" data-cfemail="b3d7d6d1c79dded2ddd2d4d6ded6ddc7f3c7c1d6d2c0c6c1ca9dd4dcc5">[email protected]</span></a> for policy questions,
or Lori Santamorena, Government Securities Regulations Staff, at
<a href="/cdn-cgi/l/email-protection#afc8c0d9dccaccddcac8efc9c6dccccec381dbddcacedcdaddd681c8c0d9"><span class="__cf_email__" data-cfemail="593e362f2a3c3a2b3c3e193f302a3a3835772d2b3c382a2c2b20773e362f">[email protected]</span></a>, 202-504-3632, for technical questions.
SUPPLEMENTARY INFORMATION:
Background
Section 3111 of Title 31 of the United States Code authorizes the
Secretary of the Treasury to issue obligations under Chapter 31 of
Title 31 to ``buy, redeem, or refund, at or before maturity,
outstanding bonds, notes, certificates of indebtedness, Treasury bills,
or savings certificates of the United States government'' and, under
regulations of the Secretary of the Treasury, to use money received
from the sale of an obligation and other money in the general fund of
the Treasury in making such purchases, redemptions, or refunds. In
January 2000, Treasury issued regulations regarding Treasury buyback
operations.\1\ Buyback operation announcements also specify terms and
conditions for buyback operations. If anything in a buyback operation
announcement differs from the buyback regulations, the terms of the
announcement control.
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\1\ 65 FR 3116 (Jan. 19, 2000); see 31 CFR part 375.
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Treasury is proposing to update the buyback regulations for several
reasons.
First, certain typical buyback operation announcement terms differ
from, and supersede, the buyback regulations. Treasury is proposing
amendments that would reflect those typical buyback operation
announcement terms, to promote consistency between the buyback
regulations and buyback operation announcements and thereby mitigate
potential confusion.
Second, the proposed amendments would update the regulations to
expand the scope of entities eligible to submit offers directly to
Treasury in buyback operations.\2\ On July 30, 2025, Treasury announced
plans to expand direct offer submission eligibility to buyback
operations to a limited number of additional counterparties based on
their participation in Treasury auctions, to foster greater competition
in the buyback process and broaden access to liquidity support.\3\ On
September 19, 2025, Treasury published eligibility criteria for
expanded direct offer submission eligibility.\4\
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\2\ Expanded direct offer submitters would access buyback
operations via the Federal Reserve Bank of New York's trading system
(FedTrade).
\3\ Quarterly Refunding Statement of Deputy Assistant Secretary
for Federal Finance Brian Smith (July 2025). Available at <a href="https://home.treasury.gov/news/press-releases/sb0212">https://home.treasury.gov/news/press-releases/sb0212</a>.
\4\ See ``FAQs about Treasury Securities Buybacks,'' available
at <a href="https://treasurydirect.gov/help-center/faqs/buyback-faqs">https://treasurydirect.gov/help-center/faqs/buyback-faqs</a>. See
also ``Remarks by PDO Assistant Secretary McMaster Before the 2025
Annual Primary Dealer Meeting at the Federal Reserve Bank of New
York'' (Sept. 2025), available at <a href="https://home.treasury.gov/news/press-releases/sb0267">https://home.treasury.gov/news/press-releases/sb0267</a>.
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Third, the current buyback regulations do not expressly address the
extent to which buyback participants are permitted to use buyback
operation information from the Federal Reserve Bank of New York's
FedTrade system as the basis for a transaction. Treasury expects
buyback participants to maintain the highest standards in their market
practices and comply with all applicable laws and regulations. Treasury
is proposing to permit buyback participants to use buyback operation
information solely found in FedTrade as a basis for a transaction only
in the case of a hedging transaction. A hedging transaction should
reduce or mitigate a specific, identifiable risk related to the buyback
operation. This proposal aims to prevent potential misuse of
information found in FedTrade while preserving the ability of buyback
participants to appropriately hedge risk.
Discussion
For the reasons described above, Treasury is proposing the
following amendments to the buyback regulations:
1. Modify 31 CFR 375.0 to more closely reflect the statutory
language in 31 U.S.C. 3111.
2. Modify 31 CFR 375.2 to change the defined term ``Redemption
amount'' to ``Maximum redemption amount'' for additional clarity and
add a new defined term, ``FedTrade''.
3. Remove references to the term ``privately held amount'' from 31
CFR 375.2 and 375.21, because Treasury does not include the privately
held amount in buyback operation results.
4. Modify 31 CFR 375.11(a) to reflect the expanded direct buyback
offer submission eligibility, as described above.
5. Modify 31 CFR 375.13(b) to remove the discussion of the format
that submitters must use to specify offered prices.
6. Modify 31 CFR 375.13(c) to reflect, in accordance with typical
practice, that a buyback operation announcement may specify a maximum
number of offers per submitter per security.
7. Modify 31 CFR 375.14 to update the certification statements
related to submitters' permissible uses of information from FedTrade.
8. Modify 31 CFR 375.21 to more accurately reflect the information
that is typically contained in buyback operation results and to reflect
that Treasury announces buyback operation results through its website,
not necessarily through the issuance of press releases.
9. Modify 31 CFR 375.22(a) to state Treasury does not provide
confirmation of rejections of offers, in accordance with typical
Treasury practice.
10. Add a new 31 CFR 375.24 to inform the public that offers at the
highest accepted price for a particular security may be accepted on a
prorated basis.
11. Amend 31 CFR 375.31 to clarify that the enumerated actions that
Treasury may take if someone does not fully comply with the buyback
operation rules or fails to deliver
[[Page 1479]]
securities are not exclusive or mutually exclusive.
The proposed amendments also include certain nonsubstantive,
ministerial, or conforming changes to the buyback regulations.
Treasury invites comments on all aspects of this proposal,
including but not limited to (1) the proposed changes that would
clarify the existing regulations or conform the regulations more
closely to statutory language, (2) the scope of the proposed expansion
of eligible submitters in buyback operations, (3) the proposed
certification requirement, including whether the certification related
to using information from FedTrade (or a successor platform) should
instead permit types of transactions different than those described in
proposed 31 CFR 375.14, and (4) the proposed description of actions
Treasury may take if someone does not fully comply with the redemption
operation rules or fails to deliver securities, including whether such
remedies should be narrower or broader.
Procedural Requirements
Executive Order 12866. This proposed rule is not anticipated to be
a significant regulatory action pursuant to Executive Order 12866 as
amended.
Executive Order 14192. This proposed rule is anticipated to be an
E.O. 14192 deregulatory action.
Administrative Procedure Act (APA). The APA generally imposes
requirements on agency rulemakings related to notice, public comment,
and delayed effective dates, under 5 U.S.C. 553. However, 5 U.S.C.
553(a)(2) exempts matters relating to contracts from those
requirements. The buyback regulations relate to Treasury securities,
which are contracts between Treasury and the owner of the security.
Therefore, although we are issuing this rule in proposed form to
benefit from public comment, the notice, public comment, and delayed
effective date requirements of the APA do not apply to this proposal.
Regulatory Flexibility Act. The provisions of the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq., do not apply to this proposed
rule because, pursuant to 5 U.S.C. 553(a)(2), it is not required to be
issued with notice and opportunity for public comment.
Paperwork Reduction Act. This proposed rule does not involve a
collection of information. Therefore, the Paperwork Reduction Act, 44
U.S.C. 3501 et seq., does not apply.
Congressional Review Act (CRA). This proposed rule is not
anticipated to be a major rule under the CRA, 5 U.S.C. 801 et seq.
List of Subjects in 31 CFR Part 375
Bonds, Federal Reserve System, Government securities.
Text of Amendments
For the reasons set forth in the preamble, we propose to revise and
republish 31 CFR part 375 to read as follows:
PART 375--MARKETABLE TREASURY SECURITIES REDEMPTION OPERATIONS
Subpart A--General Information
375.0 What authority does the Treasury Department have to redeem its
securities?
375.1 Where are the rules for the redemption operation located?
375.2 What special definitions apply to this rule?
375.3 What is the role of the Federal Reserve Bank of New York in
this process?
Subpart B--Offering, Certifications, and Delivery
375.10 What is the purpose of the redemption operation announcement?
375.11 Who may participate in a redemption operation?
375.12 How do I submit an offer?
375.13 What requirements apply to offers?
375.14 Do I have to make any certifications?
375.15 Who is responsible for delivering securities?
Subpart C--Determination of Redemption Operation Results; Settlement
375.20 When will the Treasury Department decide which offers to
accept?
375.21 How will the Treasury Department announce the redemption
operation results?
375.22 Will I receive confirmations and, if I am submitting offers
for others, do I have to provide confirmations?
375.23 How does the securities delivery process work?
375.24 Does the Treasury Department prorate offers at the highest
accepted price for a particular security?
Subpart D--Miscellaneous Provisions
375.30 Does the Treasury Department have any discretion in this
process?
375.31 What could happen if someone does not fully comply with the
redemption operation rules or fails to deliver securities?
Authority: 5 U.S.C. 301; 31 U.S.C. 321; 31 U.S.C. 3111; 12
U.S.C. 391.
PART 375--MARKETABLE TREASURY SECURITIES REDEMPTION OPERATIONS
Subpart A--General Information
Sec. 375.0 What authority does the Treasury Department have to redeem
its securities?
Section 3111 of Title 31 of the United States Code authorizes the
Secretary of the Treasury to issue obligations under Chapter 31 of
Title 31 to buy, redeem, or refund, at or before maturity, outstanding
bonds, notes, certificates of indebtedness, Treasury bills, or savings
certificates of the U.S. government and, under regulations of the
Secretary of the Treasury, to use money received from the sale of an
obligation and other money in the general fund of the Treasury
Department in making such purchases, redemptions, or refunds.
Sec. 375.1 Where are the rules for the redemption operation located?
The provisions in this part and the redemption operation
announcement govern the redemption of marketable Treasury securities
under 31 U.S.C. 3111. (See Sec. 375.10.)
Sec. 375.2 What special definitions apply to this rule?
The definitions in 31 CFR part 356 govern this part except as
follows:
Accrued interest means an amount payable by the Treasury Department
as part of the settlement amount for the interest income earned between
the last interest payment date up to and including the settlement date.
Bank means the Federal Reserve Bank of New York.
Customer means a person or entity on whose behalf a submitter has
been directed to submit an offer of a specified amount of securities in
a specific redemption operation.
FedTrade means the Federal Reserve Bank of New York's proprietary
electronic trading platform used to conduct redemption operations.
Maximum redemption amount means the maximum par amount of
securities that we are planning to redeem through a redemption
operation. We will state the maximum redemption amount in the
redemption operation announcement.
Minimum offer amount means the smallest par amount of a security
that may be offered to the Treasury Department. We will state the
minimum offer amount in the redemption operation announcement.
Multiple means the smallest additional par amount of a security
that may be offered to the Treasury Department. We will state the
multiple
[[Page 1480]]
in the redemption operation announcement.
Offer means an offer to deliver for redemption a stated par amount
of a specific security to the Treasury Department at a stated price.
Price means the dollar amount to be paid for a security expressed
as a percent of its current par amount.
Redemption operation means a competitive process by which the
Treasury Department accepts offers of marketable Treasury securities
that by their terms are not immediately payable.
Security means an outstanding unmatured obligation of the United
States Government that the Secretary of the Treasury is authorized to
buy, redeem or refund under section 3111 of Title 31 of the United
States Code.
Settlement means full and complete delivery of and payment for
securities redeemed.
Settlement amount means the par amount of each security that we
redeem, multiplied by the price we accept in a redemption operation,
plus any accrued interest.
Settlement date means the date specified in the redemption
operation announcement on which you must deliver a security to the
Treasury Department for payment.
Submitter means an entity submitting offers directly to the
Treasury Department for its own account, for the account of others, or
both. (See Sec. 375.11(a)).
Tender means a computer transmission or document submitted in a
redemption operation that contains one or more offers.
We or us means the Secretary of the Treasury and his or her
delegates, including the Treasury Department, the Bureau of the Fiscal
Service, and their representatives. The term also includes the Federal
Reserve Bank of New York, acting as fiscal agent of the United States.
You means a prospective submitter in a redemption operation.
Sec. 375.3 What is the role of the Federal Reserve Bank of New York
in this process?
As fiscal agent of the United States, the Federal Reserve Bank of
New York performs various activities necessary to conduct a redemption
operation under this part. These activities may include but are not
limited to:
(a) Accepting and reviewing tenders;
(b) Calculating redemption operation results;
(c) Issuing notices of redemptions;
(d) Accepting deliveries of Treasury securities at settlement; and
(e) Processing the Treasury payment for securities delivered at
settlement.
Subpart B--Offering, Certifications, and Delivery
Sec. 375.10 What is the purpose of the redemption operation
announcement?
We provide public notice that we are redeeming Treasury securities
by issuing a redemption operation announcement. This announcement lists
the details of each proposed redemption operation, including the
maximum redemption amount, the range of maturities of eligible
securities, descriptions of the securities that fall within that
maturity range, and the redemption operation and settlement dates. The
redemption operation announcement and this part specify the terms and
conditions of a redemption operation. If anything in the redemption
operation announcement differs from anything in this part, the
redemption operation announcement will apply. Accordingly, you should
read the applicable redemption operation announcement along with this
part.
Sec. 375.11 Who may participate in a redemption operation?
(a) Submitters. To be a submitter, you must be (1) an institution
that the Federal Reserve Bank of New York has designated as a primary
dealer or (2) an entity approved by the Treasury Department to
participate directly in redemption operations.
(b) Others. A person or entity other than a submitter may
participate only if it arranges to have an offer or offers submitted on
its behalf by a submitter.
Sec. 375.12 How do I submit an offer?
As a submitter, you must submit an offer in a tender to the
Treasury Department via the Federal Reserve Bank of New York. You must
submit any tenders in an approved format and the Bank must receive them
prior to the closing time stated in the redemption operation
announcement. If we do not receive your tenders timely, we will reject
them. Your tenders are binding on you after the closing time specified
in the redemption operation announcement. You are responsible for
ensuring that we receive your tenders on time. We will not be
responsible in any way for any unauthorized tender submissions or for
any delays, errors, or omissions in submitting tenders.
Sec. 375.13 What requirements apply to offers?
(a) General. You may only submit competitive offers (specifying a
price). All offers must state the security description, par amount, and
price of each security offered. All offers must equal or exceed the
minimum offer amount, and be in the multiple, stated in the redemption
operation announcement.
(b) Price format. You must express offered prices in terms of price
per $100 of par amount.
(c) Maximum number of offers. We may specify a maximum number of
offers per security in the redemption operation announcement. There is
no limit on the number of eligible securities you may offer.
Sec. 375.14 Do I have to make any certifications?
By submitting a tender offering a security or securities for sale,
you are deemed to certify to us that:
(a) You are in compliance with this part and the redemption
operation announcement;
(b) You will not use any redemption operation information from
FedTrade (or any successor platform) as a basis for any transaction
unless:
(1) such information is available to you from another source at the
time of the transaction, or
(2) such transaction is solely for the purpose of hedging specific,
identifiable risks to you arising from the acceptance or rejection of
your offers in a Treasury redemption operation or unwinding hedges of
specific, identifiable risks to you arising from securities you redeem
in a Treasury redemption operation; and
(c) You will not convey any redemption operation information from
FedTrade (or any successor platform) to another person or entity except
for the purpose of effectuating a transaction permitted under paragraph
(b) of this section.
Sec. 375.15 Who is responsible for delivering securities?
As a submitter, you are responsible for delivering any securities
we accept in the redemption operation, including any securities for
which you submitted offers on behalf of others. (See Sec. 375.23.) All
securities you deliver must be free and clear of all liens, charges,
claims, and any other restrictions.
Subpart C--Determination of Redemption Operation Results;
Settlement
Sec. 375.20 When will the Treasury Department decide which offers to
accept?
We will determine which offers or portions of offers to accept
after the closing time for receipt of tenders. All such determinations
will be final.
Sec. 375.21 How will the Treasury Department announce the redemption
operation results?
We will make the redemption operation results available on our
[[Page 1481]]
website. For each security we redeem, the results generally will
include information such as the amounts offered and accepted and
pricing information.
Sec. 375.22 Will I receive confirmations and, if I am submitting
offers for others, do I have to provide confirmations?
(a) Confirmations to submitters. We will provide a confirmation of
acceptance in the form of a results message to submitters of offers by
the close of the business day of the redemption operation. We will not
provide confirmation of rejections of offers.
(b) Confirmation of customer offers. If you submit a successful
offer for a customer, you are responsible for notifying that customer
of the impending redemption.
Sec. 375.23 How does the securities delivery process work?
If any of the offers you submitted are accepted, you must transfer
the correct book-entry Treasury securities in the correct par amount
against the correct settlement amount on the settlement date. You must
deliver the securities to the account specified in the redemption
operation announcement.
Sec. 375.24 Does the Treasury Department prorate offers at the
highest accepted price for a particular security?
Offers at the highest accepted price for a particular security may
be accepted on a prorated basis.
Subpart D--Miscellaneous Provisions
Sec. 375.30 Does the Treasury Department have any discretion in this
process?
(a) We have the discretion to:
(1) Accept or reject any offers or tenders submitted in a
redemption operation;
(2) Redeem less than the maximum redemption amount specified in the
redemption operation announcement;
(3) Add to, change, or waive any provision of this part; or
(4) Change the terms and conditions of a redemption operation.
(b) Our decisions under this part are final. We will provide a
public notice if we change any redemption operation provision, term or
condition.
Sec. 375.31 What could happen if someone does not fully comply with
the redemption operation rules or fails to deliver securities?
(a) General. If a person or entity fails to comply with any of the
redemption operation rules in this part, we will consider the
circumstances and take what we deem to be appropriate action. This
could include, but is not limited to, barring the person or entity from
participating in future redemption operations under this part and
future auctions under 31 CFR part 356. We also may refer the matter to
an appropriate regulatory agency.
(b) Liquidated damages. In addition to other remedies available to
us, if you fail to deliver securities on time, we may require you to
pay liquidated damages of up to 1% of your projected settlement amount.
Gary Grippo,
Acting Fiscal Assistant Secretary.
[FR Doc. 2026-00598 Filed 1-13-26; 8:45 am]
BILLING CODE 4810-AS-P
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