Delay in Treasury Payments: Playbook & Discussion of Scenarios

This deck and related playbook represent work undertaken by SIFMA members along with key market infrastructure stakeholders to understand the operational aspects of a delay in payment on U.S. Treasury securities.

While any delay is unlikely, delays may be caused by any number of issues (including systems failures, natural disasters, terrorist acts or other reasons) and the group that developed this believed that it would be helpful to share as a resource for market participants. The assumptions in the deck will be reviewed from time to time and updated as necessary. The playbook has been included and outlines a schedule of industry-wide calls that will be held were there to be a potential or actual delay in a payment. The overarching purpose of these calls is to disseminate accurate and real-time information to market participants so that they can make appropriate decisions for their firms. This will also be revisited from time to time and updated as appropriate.

Questions? Please contact:

• Rob Toomey | 212.313.1124
• Tom Price | 212.313.1260
• Charles DeSimone | 212.313.1262

Overview of Potential Scenarios

There are three potential scenarios for the handling of government securities whose principal or coupon payments are disrupted:

Scenarios where instruments with delayed payments remain transferable on Fedwire

Scenario 1: Delay of Principal Payment

US Treasury delays principal payment and extend the maturity date of the instrument, resulting in a new operational maturity date on Fedwire for the payment of the principal

Scenario 2: Delay of Coupon Payment

US Treasury delays coupon payment on a security

Scenario where instrument is no longer transferable on Fedwire

Scenario 3: No extension of instrument’s maturity on Fedwire

US Treasury fails to make principal and coupon payment when due and maturity date on Fedwire remains unchanged, rendering the instrument non-transferable