Eligible Bills

Any Federal Reserve bank may purchase and sell in the open market bills of exchange of the kinds and maturities made eligible for rediscount by the Federal Reserve Act. (See Regulations following).

Regulations Of The Federal Reserve Board

General Conditions Of Eligibility

A bill of exchange or acceptance to be eligible for purchase by Federal Reserve banks, (1) must have been accepted by the drawee prior to purchase by a Federal Reserve bank unless it is accompanied and secured by shipping documents, or by a warehouse, terminal or other similar receipt conveying or securing title;

(2) May be secured by the pledge of goods, wares, merchandise or agricultural products, including live stock, provided it is otherwise eligible. Each bill of exchange and trade acceptance purchased must also, in addition to the above requirements, conform to the more specific requirements set forth in the following:

To be eligible for purchase, bills must have arisen out of an actual commercial transaction, domestic or foreign; that is, it must be a bill which has been issued or drawn for agricultural, industrial or commercial purposes, or the proceeds of which have been used or are to be used for the purpose of producing, purchasing, carrying or marketing goods in one or more of the steps of the process of production, manufacture or distribution, and must have a maturity at the time of purchase of not more than ninety days exclusive of days of grace.