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June 29, 2005
js-2612
Treasury Issues Final Regulations on
State and Local Government Series Securities
The Treasury Department today released final regulations on State and Local Government Series (SLGS) securities. The regulations will be published in the Federal Register on June 30, 2005, and will be effective 45 days after publication. SLGS securities are non-marketable Treasury securities that are only available for purchase by issuers of tax-exempt securities.
The final regulations address certain aspects of the existing SLGS program that provide SLGS investors cost-free options or arbitrage opportunities that are not available in marketable securities. These features of the existing SLGS program are costly for taxpayers as they impose substantial costs on the federal government. The final regulations will make investments in SLGS securities more closely resemble investment opportunities available in Treasury marketable securities, while maintaining simplicity and flexibility for the users of the SLGS program.
The final regulations are substantially similar to proposed regulations that were published on September 30, 2004. In addition, the new regulations increase the interest rates on SLGS securities to rates 1 basis point below current Treasury borrowing rates. SLGS securities rates currently are 5 basis points below current Treasury borrowing rates.
The final regulations also will require the use of SLGSafe (http://www.publicdebt.treas.gov/spe/spe.htm), a web-based application, for all SLGS securities transactions.
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