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Federal R eserve Bank OF DALLAS TO N Y J . SALVAGGIO DALLAS, TE X A S 7 5 2 6 5 -5 9 0 6 F I R S T V IC E P R E S ID E N T December 13, 1993 Notice 93-125 TO: The Chief Operating Officer of each financial institution in the Eleventh Federal Reserve District SUBJECT Operating C ircu la r 10 (Rules Regarding Cash Items) DETAILS The Federal Reserve Bank of Dallas has begun renaming and reissuing its Bulletins as Operating Circulars in order to conform to the language used in the Uniform Commercial Code. Accordingly, Bulletin 10 is being reissued as Operating Circular 10 (Rules Regarding Cash Items). In connection with this reissue, there are no substantial changes to the Operating Circular. ENCLOSURE Circulars Enclosed is Operating Circular 10. Please file it in your Operating (Bulletins) binder and discard the old version. M RE INFORMATION O For more information, please contact Terry Campbell at (214) 922-6603, at the Dallas Office; Eloise Guinn, (915) 521-8201, at the El Paso Branch; Luke Richards, (713) 652-1544, at the Houston Branch; or Herb Barbee, (210) 978-1402, at the San Antonio Branch. For additional copies of this B a n k ’s notice or Operating Circular 10, please contact the Public Affairs Department at (214) 922-5254. Sincerely, 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 Rules Regarding Cash Items Scope O p eratin g C ircular 10 sets fo rth certain rules u n d e r w hich credit for cash item s sent by d epository in stitu tio n s to this B ank for collection will be available in th e reserve o r clearing accounts o f the sending dep o sito ry in stitu tio n s o r th e ir co rresp o n d en ts. It also contains several rules regarding th e so rtin g a n d p rep a ra tio n o f cash letters sent to us. This O p eratin g C ircular, along w ith R egulation J o f th e B oard o f G overnors o f th e Federal Reserve System a n d certain o th e r O p eratin g C irculars o f this Bank, constitutes a p o rtio n o f th e c o n tract u n d e r w hich cash item s are h a n d le d for collection by us. F e d e ra l R e se rve B a n k of D allas 12-93 fefetoofC 5 ontn Operating rcula 10 RULES REGARDING CASH ITEMS Paragraphs D efin itio n s................................................................................................... Available and availability Day o f dispatch Day o f receipt D irect sending C onsolidated shipm ents Im m ediate a n d deferred credit item s N onm achineable item s O th er references 1-8 Im m ediate an d D eferred A vailability................................................... 9 -14 Im m ediate credit D eferred credit, availability co m p u tatio n D eferm ent o f one b anking day D eferm ent o f two banking days Conflicting holiday schedules Availability table Cash L e tte rs.................................................................................................. 15-20 Sorting M ixed cash letters Fine sort cash letters (package sort) Special deposits D escription D ating, identification, a n d contents Cash Letters to O th er Federal Reserve O ffic e s ......................................2 1 -2 3 C onsolidated shipm ents D irect sendings Availability on holidays Right to A m e n d .......................................................................................... 12-93 F e d e ra l R e s e rv e B ank of D allas 24 D e f in it io n s Available and Availability 1. “Available” and “availability” refer to the granting of credit by this Bank in the sender’s reserve or clearing account or in the account of its correspondent for cash items forwarded to us for collection or handled by direct sending. Day of Dispatch 2. “Day of dispatch” means the day a direct sending depository institution actually dispatches a direct sent cash item or such other day as we direct in paragraph 10 of this Operating Circular. Day of Receipt 3. “Day of receipt” means the day a cash item sent to us for collection is received, if received before the closing hour. For cash items received on our nonbanking days or after closing hours, the day of receipt is our next banking day. crumpled or (b) bearing faulty or inadequate MICR (magnetic ink character recognition) encoding. If a sender does not use high-speed automated check processing equipment, the term includes cash items that, by observation, are unqualified for high-speed automated check processing under the preceding criteria. Operating Circular 10 Other References 8. Several definitions, rules of construction, and other provisions applicable to this Operating Circular are found in our Operating Circular 1 (Bulletin 1), General Provisions, and are incorpo rated herein by reference. In addition, certain terms used in this Operating Circular are defined in Regulation I of the Board of Governors of the Federal Reserve System. IMM EDIATE AND DEFERRED A v a il a b il it y Immediate Credit 9. Cash items entitled to availability on the day of receipt are shown as immediate credit items in our fee schedule. Direct Sending 4. “Direct sending” refers to the sending of cash items direct to a Federal Reserve office other than that which normally serves the sender, as pro vided in paragraph 16 of Operating Circular 8. Consolidated Shipments 5. “Consolidated shipments” means other Federal Reserve territory items that have been sorted and packaged to a specific Federal Reserve Bank or Regional Check Processing Center (RCPC) and are combined with our cash letters and sent to the respective Federal Reserve office. Deferred Credit, Availability Computation 10. Availability for deferred credit items will be computed from the day of receipt or, in the case of direct sending, from the day of dispatch. In certain situations, we reserve the right to com pute availability from a day other than the day of receipt or dispatch. In the case of direct sending, if we direct that availability be computed from a day other than the day of dispatch, the desig nated day will be treated as the day of dispatch. Deferment of One Banking Day Immediate and Deferred Credit Items 6. “Immediate credit item” means a cash item entitled to availability on the day of receipt, as set out in paragraph 9 of this Operating Circular. “Deferred credit item” means any other cash item. Nonmachineable Items 7. As used in this Operating Circular, the term “nonmachineable cash items” means cash items that cannot be introduced into, or are rejected by, a sender’s high-speed automated check process ing equipment because of their physical condi tion, including items (a) mutilated, torn, or 12-93 11. Deferment of one banking day means that credit will be available on our first banking day after the day of receipt or, in the case of direct sending, after the day of dispatch. Such defer ment is given for deferred credit items (most of which bear the immediate credit routing symbol) collectible through designated Federal Reserve offices, a current list of which will be furnished on request. Deferment of Two Banking Days 12. Deferment of two banking days means that credit will be available on our second banking day after the day of receipt or, in the case of F e d e ra l R ese rve B a n k of D allas 1 D e f e r r e d A v a il a b il it y Day of Receipt or Day of Dispatch D a y T h a t C re d it If Deferred One Banking Day om es A v a ila b le If Deferred Two Banking Days Monday Tuesday Wednesday Tuesday Wednesday Thursday Wednesday Thursday Friday Thursday Friday Monday Friday Monday Tuesday Saturday Monday Tuesday Sunday Monday Tuesday direct sending, after the day of dispatch. Such deferment is available for all deferred credit items not covered in paragraphs 10 and 11. Conflicting Holiday Schedules 13. It should be noted that deferment of avail ability is based on this Bank’s banking days, or actual collection time if applicable, notwith standing the fact that payor banks may observe a different schedule of banking and nonbanking days. Availability Table 14. The above table illustrates typical deferred availability. However, it does not take into account holidays observed by us. C a s h L e tte r s in other Federal Reserve territories, U.S. Trea sury checks, postal money orders, and redeemed U.S. savings bonds. Credit for checks in mixed cash letters is based on availability as calculated by the local Federal Reserve office. An institution desiring to use this service should consult with its local Federal Reserve office for additional information and deposit forms. Fine Sort Cash Letters (Package Sort) 17. We will accept deposits of endpoint-sorted cash letters composed of sealed packages that are labeled with the sending and paying bank’s name and routing number, show the am ount of the cash letter, and are accompanied by the proper deposit forms. The required deposit forms will be supplied on request. Special Deposits Sorting 15. Except as provided in paragraph 16 of this Operating Circular, senders should sort items in separate cash letters for the various categories listed in our fee schedule. For unsorted cash letters that are subject to the sorting require ments of this paragraph, availability may be deferred for the longest period applicable to any item in the cash letter. Mixed Cash Letters 16. Mixed cash letters contain unsorted checks, which can be any mixture of city, country, and RCPC checks. These cash letters may also contain checks drawn on depository institutions 18. Computer-processed cash items deposited to take advantage of later closing hours must be prepared in accordance with stipulated sorts and conditions. Information and schedules will be supplied on request. Description 19. Cash items may be deposited with this Bank and other Federal Reserve Banks without description, except for a listing by individual amounts. However, each sender should maintain adequate records to enable it to identify its depositors or other indorsers in the event any such items are lost, destroyed, or otherwise uncollectible and nonreturnable. F e d e ra l R e se rve B a n k of D allas 12-93 Dating, Identification, and Contents Operating Circular 10 20. Each cash letter and tape listing should be dated and identified with the name and routing number (if any) of the sender. It would be helpful if no more than 300 items are listed on each machine tape. C a s h L e t te r s t o O t h e r F e d e r a l R eser ve O f fic e s Consolidated Shipments 21. Cash letters of items payable in other Federal Reserve cities and districts will be accepted by us for consolidated shipments to the applicable banks when appropriately packaged and ad dressed and when received before closing hour. Credit will be given according to current sched ules, which will be supplied on request. Direct Sendings 22. Banks may be authorized by us to send cash items direct to other Federal Reserve Banks and will be furnished a schedule of availability on direct sendings. Cash letters sent direct should be dispatched in sufficient time to be delivered before the closeout hour at the collecting Federal Reserve Bank or RCPC. Availability on Holidays 23. Availability for all inter-District direct sendings of cash items (city, country, and RCPC) will be passed to direct sending banks based on the holiday schedule of the receiving Federal Reserve offices. Reserve account allowances will be provided for direct sent cash letters where such availability would normally be due when we are closed but the receiving Federal Reserve office is open. Similarly, credit for cash letters sent direct in the reverse circumstances will be deferred. R ig h t t o A m e n d 24. We reserve the right to withdraw or amend this Operating Circular and any supplements to it at any time. 12-93 F e d eral R ese rve B a n k of D allas 3