Full text of District Notices (Federal Reserve Bank of Dallas) : Operating Circular 6 (Wire Transfers of Funds), Notice 91-98

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Federal R eserve Bank
OF DALLAS
T O N Y J . SA L V A G G IO
F IR S T V IC E P R E S ID E N T

December

2 7 , 1991

.

d a lla s te x a s

75222

Notice 91-98
TO:

The Operating Officer responsible for
transfers of funds at each financial
institution in the Eleventh Federal
Reserve District
SUBJECT
Operating Circular 6
(Wire Transfers of Funds)
DETAILS

As stated in Circular 90-92 and Circular 90-93, all the bulletins
issued by the Federal Reserve Bank of Dallas will be renamed and reissued as
Operating Circulars in order to conform to the language used in the Uniform
Commercial Code. Accordingly, Bulletin 6 is being reissued as Operating
Circular 6 (Wire Transfers of Funds).
ENCLOSURE
Enclosed is Operating Circular 6. Please file it in your Operating
Circulars (Bulletins) binder and discard the old version.
MORE INFORMATION
For more information regarding transfers of funds, please contact
the persons listed below at the Dallas Office:
Jonnie Miller

(214) 651-6290

or

(800)

333-4460, ext. 6290

Vinton Myers

(214) 698-4349

or

(800)

333-4460, ext. 4349

Larry Ripley

(214) 651-6118

or

(800)

333-4460, ext. 6118

For additional copies of this B a n k ’s notice or Operating Circular 6,
please contact the Public Affairs Department at (214) 651-6289.
Sincerely,

r

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas:
Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162,
Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

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

Operating Circular
F e d e r a l

R e s e r v e

B a n k

of

D a l l a s

Wire Transfers
of Funds

Scope
Subpart B of Regulation J of the Board of Governors of the Federal Reserve System (12 C.F.R. Part
210, Subpart B) and Operating Circular 6 apply to funds transfers through Fedwire and this Bank.
Operating Circular 6 is issued in conformity with Section 210.25(c) of Regulation J and is an
operating circular as referred to in Section 4A-107 of Article 4A of the Uniform Commercial
Code. It is binding on any sender that sends a payment order directly to this Bank, any receiving
bank that receives a payment order directly from this Bank, and any beneficiary that receives a
credit with respect to a payment order to an account maintained or used at this Bank. In addition,
it is binding on other parties to a funds transfer, any part of which is carried out through Fedwire,
to the same extent that Regulation J is binding on those parties.

F e d e ra l R e s e rv e B a n k of D allas

12-91

ttte o f Comeats t
WIRE TRANSFERS OF FUNDS
Paragraphs
G eneral...............................................................................................

1

Definitions..........................................................................................

2-5

Issuanc e of Payment O rders.............................................................

6

Security Procedures...........................................................................

7-8

Receipt, Acceptance, and Execution of Payment O rders............... 9-14
As-of Adjustm ents............................................................................

15

Cutoff H o u rs......................................................................................

16

Advices of Credit and Debit; Reporting of Errors.......................... 17-18
Charges...............................................................................................

19

Non-Value Messages........................................................................

20

Cancellation and Amendment of Payment O rders........................

21

Right to A m end..................................................................................

22

Appendix 1: Funds Transfer Security Procedures
Appendix 1-A: Funds Transfer Security Procedures Agreement
Appendix 2: Time Schedule for Funds Transfers Through Fedwire

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F e d e ra l R ese rve B a n k of D allas

Gen e r al
1. Each Federal Reserve Bank issues an operat­
ing circular substantially similar to this Operat­
ing Circular. When we issue a payment order to
another Federal Reserve Bank, that Reserve Bank
processes the payment order under its Operating
Circular.

D e f in it io n s
2. Unless otherwise stated in this Operating
Circular, all terms defined in Regulation J,
including terms defined in Article 4A of the
Uniform Commercial Code (UCC) to the extent
consistent with Regulation J, have the same
meanings in this Operating Circular.
3. The term “payment order,” for the purposes
of Subpart B of Regulation J and this Operating
Circular, covers only messages
A. designated as Type Code 10 (funds
transfer), 15 (foreign transfer), or 16
(settlement transaction); and
B. designated as Subtype Code 00 (struc­
tured funds transfer), 02 (reversal of
transfer), 08 (reversal of a prior-day
transfer), 20 (as-of adjustment), 32
(funds transfer honoring request for
funds), or 40 (structured funds
transfer).

Bank if the routing number becomes inaccurate
after the effective date of the publication, list, or
automated file.

SECURITY PROCEDURES
7. The security procedures we offer to verify the
authenticity of a payment order are described in
Appendix 1 to this Operating Circular. Before
issuing a payment order to or receiving a
payment order from this Bank, a sender or
receiving bank must execute an agreement with
this Bank in the form shown in Appendix 1-A. A
sender is deemed to agree to a security proce­
dure used in issuing a payment order to us.
8. Each sender and receiving bank shall prevent
any disclosure, except on a “need to know” basis,
of any aspects of the security procedures it agrees
to with this Bank. The sender or receiving bank
shall notify us immediately if the confidentiality
of these security procedures is compromised and
shall act to prevent the security procedures from
being further compromised.

R e c e ip t , A c c e p t a n c e , a n d
Ex e c u t io n o f Pa y m e n t O r d e r s
9. If an online sender does not receive an
acknowledgment of receipt of a payment order it
issues to us, the sender should notify us
promptly.

4. The term “online” refers to the transmission
of a payment order to or from this Bank by
electronic means, excluding transmission by
telephone orally.

10. If we notify a sender that a payment order
has been lost because of computer outage or
other reasons, the sender should be prepared to
resend the payment order to us.

5. Unless otherwise stated in this Operating
Circular, all references to “this Bank,” “we,”
“our,” and “us” are to our Dallas Office and our
El Paso, Houston, and San Antonio Branches.

11. We may record by audio recording device
any telephone call relating to a payment order.

ISSUANCE OF PAYMENT ORDERS
6. A payment order must be in the medium and
format we prescribe. This Bank is not bound by
instructions to us in a payment order other than
information required by our format specifica­
tions. This Bank is not responsible for the
accuracy of a routing num ber contained in and/
or verbally supplied from a publication, list, or
automated file issued or maintained by a Reserve

12-91

12. A receiving bank must manage its comm u­
nications connection so as to permit the bank to
receive, on a timely basis, payment orders sent to
it during its funds transfer business day.
13. A receiving bank, whether offline or online,
agrees to indemnify us for any loss we incur as a
result of its delay in receiving a payment order if
the delay results from the bank’s failure to be
able to receive payment orders from us during
our funds transfer business day.

F e d e ra l R eserve B a n k of D allas

14. We do not assume any responsibility for
completion of a funds transfer on the day
requested except as provided in Regulation J.

A s- o f A d ju s t m e n t s
15. We may make an as-of adjustment pursuant
to Section 210.32(b) of Regulation J as follows:
A. We will normally process and apply an
as-of adjustment to the reserve mainte­
nance period during which the transac­
tion giving rise to the obligation to pay
interest occurred so that there will be no
impact on aggregate reserves. If we
determine that procedure is not feasible,
in our sole discretion, we will process
and apply the as-of adjustment to the
current reserve period.
B. If an as-of adjustment would be applied
to one of the last three days of a reserve
maintenance period, we may apply it to
either the current or the future reserve
maintenance period.
C. If we delay execution of a payment order
(see Section 4A-305(a) of Article 4A of
the UCC), we may make an as-of credit
adjustment to the receiving bank’s ac­
count. If the sender was not debited at
the time, we will make an offsetting asof debit adjustment to the sender’s
account.
D. If we misdirect a payment order (see
Sections 4A-303(c) and 4A-305(b) of
Article 4A), we may make an as-of
credit adjustment to the account of the
bank that should have received the
order. If the bank that received the
misdirected order agrees, we will make
an offsetting as-of debit adjustment to
the receiving bank’s account.
E.

If we issue a payment order in an
am ount less than the amount that was
intended (see Sections 4A-303(b) and
4A-305(b) of Article 4A), we may make
an as-of credit adjustment to the
receiving bank’s account. If the sender
was not debited in the appropriate
amount, we will make an as-of debit
adjustment to the sender’s account.

F.

If we issue a duplicate payment order or
a payment order that is in an amount
more than was intended (see Sections
4A-303(a) and 4A-305(b) of Article 4A),
we may, if the sender’s account was not
debited in the appropriate amount,
make an as-of credit adjustment to the
sender’s account. If the bank that
received the order agrees, we will make
an as-of debit adjustment to the receiv­
ing bank’s account.

G. If we delay rejection of a payment order
(see Sections 4A-209(b) and 4A-210(b)
of Article 4A), we may make an as-of
credit adjustment to the sender’s
account.
H. We will apply offsetting as-of adjust­
ments to the same reserve maintenance
period to the extent feasible.

Cu t o f f H o urs
16. The time schedule in Appendix 2 to this
Operating Circular shows our funds transfer
business days and the latest hour on each funds
transfer business day (cutoff hour) by which we
will execute a payment order received on that
day. We may, in our discretion, extend our
cutoff hour or our funds transfer business day.
In the case of a payment order calling for an
inter-District funds transfer received during an
extended funds transfer business day, execution
of a corresponding payment order on that day is
also discretionary with the receiving bank’s
Federal Reserve Bank.

A d v ic e s o f C r e d it a n d D e b it ;
R e p o r t in g o f E r r o r s
17. We provide an advice of credit by electronic
data transmission to an online receiving bank
that receives a payment order or notice from us.
We provide an advice of credit by telephone to
an offline receiving bank that receives a payment
order or notice from us. We do not give tele­
phone advice of credit for a transfer identified as
a Type Code 16 settlement transaction to an
offline receiving bank unless the receiving bank
has notified us in writing that it maintains an
account for another bank or has otherwise
requested telephone advice for these transfers.
We also provide an advice of credit to a receiving

F e d e ra l R e s e rv e B a n k of D a lla s

12-91

Operating
bank and an advice of debit to a sender in its
account statement.
18. In addition to the requirement for prompt
notice under Section 210.28(c) of Regulation J
and Sections 4A-204 and 4A-304 of Article 4A of
the UCC, a sender or receiving bank shall notify
us immediately if it learns of or discovers, from
any source other than an advice of debit from
this Bank, the possibility of error or lack of
authority in the transmission or processing of a
payment order. A receiving bank must also
notify us immediately of any discrepancy
between a payment order or advice of credit we
send to the receiving bank by telephone or
electronic data transmission and an advice of
credit we subsequently mail or deliver to the
receiving bank. See also paragraph 10.

RIGHT TO AMEND

Circular

6

22. We reserve the right to amend this Operat­
ing Circular at any time.

Charges
19. The fees imposed for funds transfer services
are listed in this Bank’s fee schedule.
n o n -V alu e

M essages

20. We handle messages that do not result in
accounting entries— designated as Subtype Code
01 (request for reversal), 07 (request for reversal
of prior-day transfer), 31 (request for credit
transfer), 33 (refusal of request for funds), or 90
(service message). These messages are not
payment orders but are subject to our format
and media requirements, security procedures,
and time and fee schedules. This Operating
Circular does not impose any obligation on the
recipient to respond to a request for reversal or
credit transfer. A Federal Reserve Bank’s liability
for damage caused by its failure to exercise
ordinary care or act in good faith in processing a
non-value message may not exceed the amount
of any fee paid to a Reserve Bank for the
message.

C a n c e l l a t io n a n d A m e n d m e n t o f
Pa y m e n t O r d e r s
21. By requesting cancellation or amendment of
a payment order, the sender may be liable under
Section 4A-211 of Article 4A of the UCC unless
the request states “NO INDEMNITY.”

12-91

F e deral R eserve B a n k of D allas

3

A P P E N D IX 1
FUNDS TRANSFER SECURITY PROCEDURES

G

eneral

The follow ing security procedures are offered by the Federal Reserve Bank of Dallas to
each sender that is authorized to send a payment order to us and to each receiving bank that
receives a payment order from us, for the purpose of verifying the authenticity of a payment
order or a communication amending or canceling a payment order (collectively, a "paym ent
order"). The security procedures are not used to detect errors in the transmission or the content
of the payment order.
O

n l in e

S

e c u r it y

P rocedure

The Online Security Procedure is available to any bank that issues or receives a payment
order by means of an encrypted dedicated or dial-up communications line between its com­
puter and this Bank's computer, utilizing a hardware-software system certified by this Bank.
The Online Security Procedure is incorporated in the hardware and software associated
w ith the computer. In general, the procedure includes access controls, such as the identification
code and the confidential password that allow a customer to access this Bank's funds transfer
system, and also includes encryption of a payment order during the transmission process. The
procedure is more specifically described in the Computer Interface Protocol Specification (CIPS)
and the Fedline User's Guide, which are available from this Bank.
O

f f lin e

S

e c u r it y

P rocedure

The Offline Security Procedure is available to any bank that issues or receives a payment
order orally by telephone. It is also used when a bank that normally issues or receives a pay­
ment order by means of an encrypted dedicated or dial-up communications line, using the
Online Security Procedure, is unable to do so because of an equipment or communications
failure or other circumstances.
In general, when a payment order is issued, the Offline Security Procedure involves the
use of an identification code by an employee of the sender and may involve a callback or listenback procedure by us. When our customer is acting as a receiving bank, the security procedure
involves the use of an identification code provided by us to an employee of the customer, and
the customer is required to call us back to authenticate the payment order before making the
proceeds available to its customer or otherwise acting with respect to the payment order.
The names of the employees of the sender or receiving bank w ho are authorized to
authenticate or issue a payment order must be on a list of employees that the bank provides to
us.

12-91

F e d e ra l R ese rve B a n k of D allas

A P P E N D IX 1-A
FUNDS TRANSFER SECURITY PROCEDURES AGREEMENT
(Date)

Federal Reserve Bank of Dallas
Station K
Dallas, Texas 75222
Attention: Manager
Electronic Payments Department
We agree to the provisions of the Reserve Bank's Operating Circular 6, Wire Transfers o f Funds, and
its appendixes, as amended from tim e to time.
If we use an encrypted communications line with access controls for the transmission or receipt of a
payment order to or from the Reserve Bank, we choose the Online Security Procedure offered by you as
generally described in Appendix 1 to the circular, as such security procedure may be modified from time to
tim e by you. This security procedure w ill be used for the purpose of verifying that a payment order or a
communication amending or canceling a payment order (collectively, a "paym ent order") was issued or
received by us.
If we use the telephone to orally transm it or receive a payment order to or from the Reserve Bank, we
reject the Online Security Procedure offered by you and choose the Offline Security Procedure generally
described in Appendix 1 to the circular, as such security procedure may be modified from tim e to tim e by
you. This security procedure w ill be used for the purpose of verifying that a payment order was issued or
received by us. We understand that the Offline Security Procedure may be deemed commercially reason­
able pursuant to Section 4A-202(c) of Article 4A of the Uniform Commercial Code.
Whenever we use your Offline Security Procedure, we agree to be bound by any payment order,
whether or not authorized, issued in our name and accepted by you in compliance w ith such procedure.
We understand that the Online and Offline Security Procedures w ill not be used to detect errors in the
transmission or content of a payment order.
We also understand and agree that the security procedures established by this agreement may be
changed only by an amendment to Appendix 1 or other written agreement. This agreement may not be
changed by an oral agreement or by a course of dealing or custom.

Name of Sender/Receiving Bank/Agent

Nine-Digit Routing Number
By: ___________________________________________
Authorized Signature
Title: __________________________________________

12-91

#

A P P E N D IX 2
TIM E SCHEDULE FOR FUNDS TRANSFERS THROUGH FEDWIRE

O

H

p e n in g

our

We accept payment orders beginning at 7:30 a.m. Central Standard Time. In unusual
circumstances and in our discretion, we may accept payment orders before this time.
C

utoff

H

ours

We accept payment orders online until 5:00 p.m. Central tim e and accept payment orders
offline until 4:30 p.m. Central tim e each funds transfer business day.
We accept settlement payment orders from an online sender until 5:30 p.m. Central time
and from an offline sender until 5:00 p.m. Central time each funds transfer business day. A
settlement payment order sent during the settlement period must be designated by Type Code
16. A settlement payment order is a payment order in which both the originator and the benefi­
ciary are either (1) a bank subject to Federal Reserve reserve requirements (whether or not it
actually maintains reserves) or (2) a participant in a net settlement arrangement approved by a
Reserve Bank as an eligible originator or beneficiary of a settlement payment order sent during
the settlement period.
Funds T

ransfer

B u s in e s s D a y s

Our funds transfer business days are all days except the follow ing standard holidays that
are observed by Reserve Banks:1
All Saturdays
All Sundays
New Year's Day (January 1)
Martin Luther King, Jr. Day (third Monday in January)
Presidents Day (third Monday in February)
Memorial Day (last Monday in May)
Independence Day (July 4)
Labor Day (first Monday in September)
Columbus Day (second Monday in October)
Veterans Day (November 11)
Thanksgiving Day (fourth Thursday in November)
Christmas Day (December 25)
If January 1, July 4, November 11, or December 25 falls on a Sunday, the next follow ing
Monday is a standard Reserve Bank holiday.

1 The New Orleans Branch of the Federal Reserve Bank of Atlanta closes on Mardi Gras.

12-91

F e d e ra l R eserve B a n k of D allas

Operating
Circular

6