FIL-23-98
February 26, 1998

TO:	CHIEF EXECUTIVE OFFICER
SUBJECT:	Electronic Confirmation of Transactions and Electronic Records Storage

The Department of the Treasury has issued the attached interpretive letter affecting certain banks wishing to use electronic mail for confirming specific transactions, and to store records electronically. Banks affected are those engaged in repurchase agreement transactions, registered as government securities brokers or dealers, or holding government securities for customers.

• The Treasury Department's interpretive letter permits banks to use electronic mail (e-mail) to transmit confirmations to overnight hold-in-custody repurchase agreement customers. This interpretation simplifies bank compliance with the Government Securities Act of 1986 (GSA) regulations requiring banks to send daily confirmations in writing to these customers (17 CFR 403.5(d)(1)(ii)).
• The interpretive letter also provides that banks that are registered government securities brokers or dealers may store records electronically. This interpretation simplifies compliance with GSA regulations for the storage of records by banks that have registered as government securities brokers or dealers (17 CFR 404.4). For state nonmember banks, the provisions of 12 CFR part 344 also apply.
• In addition, the interpretive letter permits banks that hold government securities as custodian for customers to transmit confirmations and safekeeping receipts electronically. The interpretation simplifies requirements under 17 CFR part 450.