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Federal R eserve Bank
OF DALLAS
W IL L IA M

H. WALLACE

f i r s t v ic e

DALLAS. TEXAS 75222

p r e s id e n t

AND CH IE F O PER ATING O FFICER

January 8, 1988
Circular 88-3

TO: The Daylight Overdraft Coordinator
or the Chief Executive Officer of
the financial institution addressed
SUBJECT
Implementation of recent changes in the Federal Reserve's daylight
overdraft program — reduction of sender net debit caps
DETAILS
On July 30, 1987, the Federal Reserve Board adopted several changes
in itsdaylight overdraft policy, one
of which concerned the reduction of
sender net debit caps. The text of these changes was provided to financial
institutions in our Circular 87-54, dated August 4, 1987. This circular gives
additional details about the upcoming cap reductions.
Reduction of Sender Net Debit Caps
The current levels of sender net debit caps will be reduced by 25
percent in two stages. An initial 15 percent reduction will become effective
January 14, 1988. The remaining reduction to a level 25 percent lower than
the original caps will become effective May 19, 1988.
The cap levels, set as multiples of adjusted primary capital, will be
as follows:
January 14, 1988 through May 18, 1988
Net Debit Cap
Cap Class

Two-Week Avg.

High
Above Avg.
Avg.
No Cap

1.70
1.275
0.85
0.0

Plus

Single-Day Avg.

0.0

2.55
2.125
1.275

For additional copies of any c ircu la r p lease c o n ta c t the Public A ffairs D ep artm en t at (214) 6 5 1 -6 2 8 9 . Banks and others are
encouraged to use the follow ing incom ing W A TS num bers in contacting this Bank (800) 4 4 2 -7 1 4 0 (intrastate) and (800)
5 2 7 -9 2 0 0 (interstate).

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

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2

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May 19, 1988 and After
Net Debit Cap
Cap Class

Two-Week Avg.

High
Above Avg.
Avg.
No Cap

Plus

1.50
1.125
0.75

Single-Day Avg,
2.25
1.875
1.125

0.0

0.0

An institution is expected to avoid incurring daylight overdrafts
that, on average over a two-week period, exceed the two-week average cap, and,
on any day, exceed the single-day cap. Since an institution establishes a cap
category (i.e., high, above average, average) based on a self-evaluation, it
will not be necessary to resubmit a board resolution in light of the cap
reductions. The cap reductions do not affect de minimis caps.
Other Matters
Other recent changes in the Federal Reserve's daylight overdraft
policy include a $50 million maximum transaction size limitation that will be
imposed on the par value of book-entry securities transfers over Fedwire.
Exceptions to the new policy include transactions where Reserve Banks act as
fiscal agents, e.g., the delivery of new issues, redemptions, requests to
change the form of a security, or to move a security to or from a pledged
account on a Reserve Bank's books. This change will take effect January 14,
1988. For more information, please contact one of the following individuals:
Dallas and El
Houston
San Antonio

Paso

Tyrone Gholson
Luke E. Richards
Tony G. Valencia

(214) 651-6263
(713) 659-4433
(512) 224-2141

MORE INFORMATION
For further questions concerning cap reductions, please contact
Assistant Vice President John R. Phillips at (214) 651-6265, Robert G. Feil,
Manager, at (214) 651-6690, or Paul T. Elzner, Daylight Overdraft Analyst, at
(214) 698-4439.
For general questions about the daylight overdraft program, please
contact any of the above individuals or Senior Vice President George C.
Cochran, III, (214) 651-6257, Senior Vice President James L. Stull, (214)
698-4286, Vice President Robert D. Hankins, (214) 651-6120, or Vice President
Larry M. Snell, (214) 651-6199.
Sincerely yours,


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102