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Federal Register / Vol. 78, No. 237 / Tuesday, December 10, 2013 / Notices

FEDERAL RESERVE SYSTEM
[Docket No. OP–1472]

Federal Reserve Policy on Payment
System Risk; Procedures for
Measuring Daylight Overdrafts
Board of Governors of the
Federal Reserve System.
ACTION: Policy Statement; request for
comment.
AGENCY:

The Board of Governors of the
Federal Reserve System (Board) is
requesting comment on multiple
changes to part II of the Federal Reserve
Policy on Payment System Risk (PSR
policy) related to the procedures for
measuring balances intraday in
institutions’ accounts at the Federal
Reserve Banks (Reserve Banks). The
proposed changes relate to the Board’s
procedures for posting debit and credit
entries to institutions’ Federal Reserve
accounts for automated clearing house
(ACH) debit and commercial check
transactions. Elsewhere in the Federal
Register under Docket No. R–1473, the
Board is also proposing necessary
related changes to the Board’s
Regulation J regarding the timing of
when paying banks settle for check
transactions presented to them by the
Reserve Banks. Additionally, in this
notice, the Board is requesting comment
on a set of principles for establishing
future posting rules for the Reserve
Banks’ same-day ACH service. The
Board is also requesting comment on a
change in language in section II.G.3 of
the PSR policy intended to clarify the
Reserve Banks’ administration of the
policy for U.S. branches and agencies of
foreign banking organizations.
DATES: Comments on the proposed
changes must be received on or before
February 10, 2014.
ADDRESSES: You may submit comments,
identified by Docket No. OP–1472, by
any of the following methods:
Agency Web site: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
http://www.federalreserve.gov/apps/
foia/proposedregs.aspx.
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: regs.comments@
federalreserve.gov. Include docket
number in the subject line of the
message.
• FAX: (202) 452–3819 or (202) 452–
3102.
• Mail: Robert deV. Frierson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.

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SUMMARY:

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All public comments are available
from the Board’s Web site at http://
www.federalreserve.gov/apps/foia/
proposedregs.aspx as submitted, except
as necessary for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper in Room MP–500 of the Board’s
Martin Building (20th and C Streets
NW.) between 9:00 a.m. and 5:00 p.m.
on weekdays.
FOR FURTHER INFORMATION CONTACT:
Susan V. Foley, Senior Associate
Director (202) 452–3596, Jeffrey Walker,
Assistant Director (202) 721–4559, or
Michelle D. Olivier, Financial Services
Analyst (202) 452–2404, Division of
Reserve Bank Operations and Payment
Systems, Board of Governors of the
Federal Reserve System; for users of
Telecommunications Device for the Deaf
(TDD) only, contact (202) 263–4869.
SUPPLEMENTARY INFORMATION:
I. Background
Technology and processing
improvements have enabled payment
systems and institutions to achieve
significant efficiencies relative to twenty
years ago when the Board’s procedures
for measuring institutions’ intraday
Federal Reserve account balances were
established. Payment innovations have
enabled both the introduction of new
payment services and networks and the
enhancement of legacy payment systems
(such as checks and ACH). In particular,
interbank check-processing has
undergone a remarkable period of
change, from few checks being
exchanged electronically 10 years ago to
virtually 100 percent today. The ACH
system has also recently made progress
in defining same-day clearing and
settlement, and the Reserve Banks are
now offering a same-day service on a
limited basis.1
The Federal Reserve believes that
ongoing innovation is necessary to
ensure safe, efficient, and accessible
payment systems in a changing
economic environment. In support of
this broad objective, the Board is
currently working to align and
modernize the procedures for measuring
account balances associated with ACH
1 The Reserve Banks currently offer a same-day
ACH service that allows institutions to opt-in to
send and receive ACH credit or debit transactions
during the processing day in addition to the
overnight cycle. In section III of this notice, the
Board proposes a set of principles for establishing
future posting rules for the Reserve Banks’ sameday ACH service. The Board does not contemplate
that it would ordinarily request comment on
changes to the ACH posting rules that are consistent
with these principles.

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and check transactions to reflect
enhancements in technology and the
Reserve Banks’ current operations and
processing times. The Board’s PSR
policy establishes the procedures,
referred to as posting rules, for the
settlement of debits and credits to
institutions’ Federal Reserve accounts
for different payment types.2 The
application of these posting rules
determines an institution’s intraday
account balance and whether it has
incurred a negative balance (daylight
overdraft).
Under the current posting rules for
commercial and government ACH
transactions established in 1994, ACH
debit transactions post at 11:00 a.m.
Eastern time (ET), and ACH credit
transactions post at 8:30 a.m. ET.3 The
Board delayed the posting of ACH debit
transactions to allow receiving
institutions time to obtain funds after
the opening of the Reserve Banks’
Fedwire Funds Service, which at that
time opened at 8:30 a.m. Since then, the
Fedwire Funds Service opening has
been moved earlier, first in 1997 and
again in 2005, and the service now
opens at 9:00 p.m. the previous evening.
Continuing the practice of delaying the
settlement of ACH debit transactions
until 11:00 a.m. is no longer necessary
and may retard efforts by institutions to
expedite funds settlements.
In 2008, the Board requested
comment on moving the posting time of
ACH debit transactions from 11:00 a.m.
to 8:30 a.m. to coincide with the posting
of ACH credit transactions but decided
not to pursue the change because of
economic conditions at the time and the
additional costs and liquidity pressures
that could be placed on some
institutions.4 Commenters’ concerns
included the costs associated with
funding their accounts earlier in the
day, the loss of interest income from
holding higher overnight account
balances rather than investing in the
market, and the additional staffing costs
that might be incurred to manage
accounts before normal business hours,
particularly for small institutions
outside of the eastern time zone.5
2 The Board’s PSR policy is available at
www.federalreserve.gov/paymentsystems/psr_
policy.htm.
3 All times are eastern time unless otherwise
specified.
4 The request for comment and the subsequent
notice of the Board’s decision not to pursue the
proposed changes can be found, respectively, at 73
FR 12443 (Mar. 7, 2008) and 73 FR 79127 (Dec. 24,
2008).
5 Institutions have the option either to hold
higher balances overnight or to arrange for
sufficient funding before 8:30 a.m. for any
transactions that process overnight and post early
in the morning; eligible institutions may also incur
daylight overdrafts.

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Although it chose not to pursue the
simultaneous posting of ACH debit and
credit transactions in 2008, the Board
said that it would reconsider the
proposed posting rule change in the
future because it believed that the
simultaneous posting of ACH credit and
debit transactions at 8:30 a.m. would
enhance the efficiency of the payment
system in the long run. The Board also
recognized that the potential burden of
the posting rule change on institutions
would be reduced through the payment
of interest on Federal Reserve account
balances and the implementation of a
proposed (at that time) PSR policy
change that would allow institutions
eligible to incur intraday credit to
collateralize all or a portion of their
daylight overdrafts to reduce or
eliminate any daylight overdraft fees.6
Since the initial 2008 proposal, the
payment of interest on Federal Reserve
account balances and the proposed PSR
policy changes have been implemented,
and the economic climate has improved.
Interest on Federal Reserve account
balances reduces institutions’ costs of
holding higher account balances
overnight to fund an earlier posting of
ACH debits.7 The current PSR policy,
implemented in March 2011, allows
eligible institutions to collateralize their
daylight overdrafts to reduce or
eliminate any daylight overdraft fees
associated with the proposed posting
rule change. In addition, for each twoweek reserve maintenance period,
institutions receive a $150 fee waiver,
reducing the burden on institutions that
incur small amounts of uncollateralized
daylight overdrafts. Although these
changes alleviate the potential burden of
the proposed ACH posting rule change
for eligible institutions, for those
institutions whose account balances
may be adversely affected by the posting
rule change and are ineligible for
6 Edge and agreement corporations, bankers’
banks that have not waived their exemption from
reserve requirements, limited-purpose trust
companies, government-sponsored enterprises
including Federal Home Loan Banks (FHLBs), and
international organizations do not have regular
access to the discount window and are not
permitted to incur daylight overdrafts in their
Federal Reserve accounts. Voluntary
collateralization of daylight overdrafts and the $150
fee waiver are not available to these institutions.
7 Payment of interest on Federal Reserve account
balances was implemented in October 2008. FHLBs
are not eligible to earn interest on balances in
Federal Reserve accounts, but can act as passthrough correspondents. As set out in Regulation D
(12 CFR 204.10), in cases of balances maintained by
pass-through correspondents that are not interesteligible institutions, Reserve Banks shall pay
interest only on the balances maintained to satisfy
a reserve balance requirement of one or more
respondents, and the correspondents shall pass
back to its respondents interest paid on balances in
the correspondent’s account.

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intraday credit and interest on balances
in Federal Reserve accounts, the effect
of moving to an 8:30 a.m. posting time
for ACH debit transactions has not
changed since the Board’s proposal in
2008, and these institutions would need
to hold higher balances overnight or
manage their accounts before 8:30 a.m.
Currently, the Board’s posting rules
for commercial check transactions
reflect a presumption that banks
generally handle checks in paper form
and do not reflect banks’ widespread
use of electronic check-processing
methods.8 As a consequence, the
Board’s posting rules align with the
processing of less than one-tenth of 1
percent of checks that the Reserve Banks
handle. The Board believes that
settlement practices should reflect the
speed of clearing as well as the timing
of deposits and presentments, and that
its posting rules should be updated to
align with today’s electronic checkprocessing environment.
The Reserve Banks’ check-processing
is almost 100 percent electronic today.
Indeed, more than 99.9 percent of
checks that depositary banks sent to the
Reserve Banks are now sent
electronically, and more than 99.9
percent of checks the Reserve Banks
presented to paying banks are presented
electronically.9 The Board, however,
last revised its posting rules for
commercial check transactions in 2002,
before the effective date of the Check
Clearing for the 21st Century Act (Check
21 Act).10 In 2002, the Board was
8 Commercial check transactions include all nongovernment check transactions. Treasury checks,
postal money orders, local Federal Reserve Bank
checks, and savings bond redemptions in separately
sorted deposits already post at 8:30 a.m. and are not
affected by the posting rules proposed in today’s
Federal Register notice.
The posting rules reflect a paper-processing era
in which collecting banks, such as the Reserve
Banks, generally had multiple daily paper deposit
deadlines and in which banks used airplanes and
couriers specifically dedicated to delivering paper
checks. Today, by contrast, the Reserve Banks have
only one paper deposit deadline per day but
multiple electronic deadlines, and paper checks are
generally delivered to banks by U.S. mail or other
common carrier.
9 Statistics are for forward deposits and
presentments only. In September 2013, over 98
percent of returned checks were deposited
electronically, and over 96 percent of returned
checks were delivered electronically by the Reserve
Banks. A depositary bank is the bank into which a
check is deposited; a paying bank is the bank on
which a check is drawn.
10 In 2002, depositary banks sent virtually all
checks to the Reserve Banks in paper form, and the
Reserve Banks, in turn, delivered about 75 percent
of checks to paying banks in paper form. The
Reserve Banks presented less than 25 percent of
their check volume electronically by agreement
with the paying bank.
The Check 21 Act, which became effective in
October 2004, was designed to enhance payment
system efficiency by reducing legal impediments to

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interested in removing barriers that
might discourage institutions from
agreeing to accept electronic check
presentments. The posting rules were
modified to allow debits associated with
electronic check presentments to begin
posting at 1:00 p.m. local time rather
than 11:00 a.m. to ensure that
institutions would not be debited earlier
for electronic check presentments than
for paper check presentments.11
The posting rules for commercial
check presentments also allow for at
least a one-hour window between
presentment and posting of the
associated debits to allow institutions
time for limited verification of cash
letters (batches of checks).12 The Board
adopted the current one-hour window
between presentment and settlement in
1992 when the Reserve Banks presented
paper to paying banks. Electronic
delivery of checks and computerized
handling within institutions should
facilitate a paying institution’s ability to
verify the receipt of cash letters sooner
than when presentment was
predominately in paper form.
The Board also recognizes that there
may be certain Reserve Bank operational
processes that need modification to
eliminate exceptions to faster clearing
and settlement. In particular, the
Reserve Banks have worked with
institutions over the years to develop
processing checks electronically. The Check 21 Act
facilitated processing checks electronically by
creating a new type of paper instrument, called a
substitute check, which is the legal equivalent of
the original check for all purposes. As a result, a
collecting bank could receive an electronic file and
create substitute checks from check images in the
file to present to paying banks that did not accept
electronic check presentment.
11 Before the change, debits associated with all
commercial check transactions, whether paper or
electronic, were posted on the next clock hour that
was at least one hour after presentment, beginning
at 11:00 a.m. Because Reserve Banks generally
delivered electronic check presentment files early
in the morning, the corresponding debits would
occur at 11:00 a.m. for many institutions, earlier
than the posting times associated with paying banks
receiving paper check presentments. The Board was
concerned that this timing difference may have
created modest and undesirable incentives for
paying banks to continue to require that checks be
presented in paper form.
12 The one-hour window between presentment
and settlement is also specified in subpart A of
Regulation J. Elsewhere in the Federal Register, the
Board is proposing necessary related changes to this
and another provision in the Board’s Regulation J.
The one-hour window allowed the paying bank
to verify that the cash letter had been received, but
was not intended to allow the paying bank to
examine individual checks prior to settling for the
cash letter. Cash letters include a group of checks
packaged as paper items or electronic records that
are presented to the paying bank. A cash letter
includes physical documentation or electronic
records containing the depositor routing number, a
list detailing the amount of each check, and the
total amount and the number of all checks in the
cash letter.

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flexible electronic file presentment
schedules. These schedules covered the
timing and frequency of electronic
check presentments and were designed
to encourage banks to accept electronic
presentments. For some institutions, the
Reserve Banks have been creating a
single file that includes all of the
institution’s check activity for the day
that is presented late in the day (but
before 2:00 p.m. local time of the
institution).13 The Reserve Banks,
however, have taken a recent step in
advancing the speed of check clearing
that now will likely result in all
institutions receiving multiple
presentment files beginning January 2,
2014.14 Any posting rule change to align
settlement with today’s clearing
practices would also likely result in
multiple presentments, and such
presentments would begin early in the
day. If not, those institutions that
receive all check activity in a late day
presentment file would be able to gain
an intraday liquidity advantage by
delaying presentment and consequently
debits, while benefiting from the earlier
availability of credits from deposited
checks. To mitigate the effects of these
changes, institutions may choose for
business or other reasons not to access
presentment files made available until
specific times in the day, but the
Reserve Banks would still settle those
transactions based on presentment
having been made.15
II. Discussion of Proposed Changes

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1. Commercial and Government ACH
Debit Transactions
Consistent with its proposal in 2008,
the Board proposes to move the posting
times for ACH debit transactions
processed overnight to 8:30 a.m. from
11:00 a.m. to coincide with the posting
time for ACH credit transactions
processed overnight. Other types of
ACH transactions, including same-day
ACH and certain ACH return items,
13 For most institutions, the Reserve Banks make
available multiple electronic check presentments
beginning early in the morning.
14 On October 3, 2013, the Reserve Banks
announced a new product that will likely result in
institutions receiving an additional presentment
file. Specifically, the Reserve Banks will be adding
an additional FedReturn image cash letter deposit
deadline at 12:30 p.m. beginning on January 2,
2014. Any FedReturn file deposited with the
Reserve Banks before 12:30 p.m. will be delivered
to the depositary bank by 2:00 p.m. local time. For
more information, see http://www.frbservices.org/
files/communications/pdf/check/100313_deposit_
deadline.pdf.
15 The Reserve Banks send institutions
presentment notifications with the value of
presentments by FedMail or make them available
on FedLine Web. Institutions also have access to
information through Account Management
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would not be affected and would
continue to post at 5:00 p.m.
Posting ACH debit transactions
according to the proposed posting rules
would
• Simplify account management by
allowing institutions to fund the net of
all ACH activity at a single posting time,
rather than funding debit and credit
transactions separately
• Increase liquidity early in the day
for institutions that originate ACH debit
transactions over the FedACH network,
and for those institutions that originate
ACH debit transactions over the
Electronic Payments Network (EPN), the
other ACH operator, but have
transactions delivered to receiving
institutions over the FedACH network
(inter-operator transactions) 16
• Align the Reserve Banks’ FedACH
settlement times with those of the other
ACH operator, EPN
• Increase the efficiency of the ACH
by aligning the processing of ACH debit
transactions with settlement
The proposed ACH posting rules
would also better conform to the Board’s
principles for measuring daylight
overdrafts, which the Board developed
in the early 1990s to guide the
development of posting rules.
By posting ACH credit and debit
transactions simultaneously to Federal
Reserve accounts, institutions’ balances
would increase or decrease by only the
net amount of funds from daily ACH
settlements. Debits associated with the
receipt of ACH debit transactions could
be simultaneously offset by credits from
the receipt of ACH credit transactions,
and vice versa. Among other benefits,
the netting of ACH credit and debit
transactions would enhance the
efficiency of the payment system by
reducing the potential for intraday
liquidity demands from institutions
with a concentration of activity in
certain types of ACH transactions.
Additionally, simultaneously posting
the majority of ACH activity at 8:30 a.m.
would reduce the burden of separately
monitoring and funding net ACH credit
transactions and net ACH debit
transactions at 8:30 a.m. and 11:00 a.m.,
respectively.
As a consequence of the proposed
change, institutions that originate debit
transactions would benefit from the
earlier availability of credits associated
with ACH debit transactions. For
example, an institution that originates a
large value of ACH credit and debit
transactions may be net positive for
16 Liquidity refers to balances in Federal Reserve
accounts to make payments. An increase in
liquidity involves higher account balances, which
could result in fewer daylight overdrafts.

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daily ACH activity but under current
posting rules may require intraday
credit between 8:30 a.m. and 11:00 a.m.
to fund the earlier posting of ACH credit
transactions. Although only
approximately 2 percent of institutions,
or roughly 75 institutions, are net
receivers of funds from ACH debit
transactions, the impact on liquidity of
the later posting of ACH debit
transactions can be significant because
of the large value of debit transactions
that they originate.
The existing later settlement time of
ACH debit transactions also introduces
the possibility of a competitive disparity
between the Reserve Banks’ FedACH
service and EPN, because EPN’s practice
is to post both ACH credit and debit
transactions at 8:30 a.m., which may be
a more attractive service for large
originators. Aligning the settlement
times between FedACH and EPN would
remove any resulting competitive
disparities related to settlement times
between the two ACH operators.
Although most commenters in 2008
believed that FedACH’s disadvantage
relative to EPN was minimal, the
competitive landscape between the
operators continues to evolve, and the
Board is interested in ensuring that its
posting rules do not create a competitive
disadvantage for either operator.
When considering changes to the
posting rules, the Board evaluates
proposals against its principles for
measuring daylight overdrafts. These
principles were formalized in the early
1990s to guide the development of the
posting rules to measure daylight
overdrafts and continue to be relevant
today.
The four principles are:
(1) To the extent possible, the
measurement procedures should not
provide intraday float to participants.
(2) The measurement procedures
should reflect the times at which payor
institutions are obligated to pay for
transfers.
(3) The users of payment services
should be able to control their use of
intraday credit.
(4) The Reserve Banks should not
obtain any competitive advantage from
the measurement procedures.
In evaluating the proposed posting
rule change against its principles for
measuring daylight overdrafts, the
Board notes that neither the existing nor
the proposed posting rules provide
intraday float, because both the credit
and debit entries associated with each
type of ACH transaction post
simultaneously. However, the earlier
posting time of 8:30 a.m. for ACH debit
transactions would conform more
closely with the second principle that

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posting times should reflect the time at
which the payor institution is obligated
to pay. The purpose of the second
principle is to minimize as much as
possible the period between when the
payments are delivered to the
institution and when the payment is
settled. The Reserve Banks’ FedACH
processing day extends from 3:00 a.m.
to 2:59 a.m. on the next calendar day.
The FedACH payments settling on a
given processing day are usually
processed by 4:00 a.m., and payment
advices are sent to institutions by 6:00
a.m. By moving the posting time of ACH
debit transactions from 11:00 a.m. to
8:30 a.m., the posting rules would
reduce the window between when
receivers of ACH debit transactions
receive ACH debit files and when they
are obligated to settle these payments.
The third principle specifies that
institutions should be able to control
their use of intraday credit and monitor
their accounts to comply with limits
and other restrictions related to daylight
overdrafts. As discussed previously, this
principle motivated the later posting of
ACH debit transactions to allow
institutions time to fund their ACH
debit activity over Fedwire. Because the
Fedwire Funds Service now opens at
9:00 p.m. the previous calendar day,
institutions have the operational ability
to fund ACH debit activity before 8:30
a.m. Lastly, the proposed posting rules
for ACH debit transactions align with
the fourth principle that the Reserve
Banks should not obtain a competitive
advantage from the measurement
procedures, because the proposed
settlement time of 8:30 a.m. for ACH
debit transactions is within the
settlement window available to privatesector operators using the National
Settlement Service (NSS) service.17
Despite the benefits associated with
the earlier posting of ACH debit
transactions, because of the
concentration of ACH debit origination
activity, most institutions are receivers
of ACH debit transactions, and, as a
result, the Board recognizes that the
posting rule change would reduce, on
average, account balances between 8:30
and 10:59 a.m. for most FedACH
participants. Based on second-quarter
2013 payment data, 98 percent of
approximately 3,300 participants on
17 NSS is a multilateral settlement service owned
and operated by the Reserve Banks. The service is
offered to institutions that settle for participants in
clearinghouses, financial exchanges, and other
clearing and settlement groups. Settlement agents,
acting on behalf of those institutions in a settlement
arrangement, electronically submit settlement files
to the Reserve Banks. Files are processed upon
receipt, and entries are automatically posted to the
institutions’ Federal Reserve accounts. The NSS
operating hours are currently 8:30 a.m. to 5:00 p.m.

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average would experience lower
balances over the quarter.18 The average
change in balances on days with
affected payments for institutions
eligible and ineligible to receive
intraday credit would be $5 million and
$76 million, respectively.19 Out of those
institutions that would experience
lower balances, less than one-half of 1
percent, only 13 institutions, would
incur overdraft fees in any of the six
two-week reserve maintenance periods
(RMP) within the quarter analyzed.20
Nine of the 13 institutions that would
incur higher fees are eligible to incur
daylight overdrafts. The average
increase in fees over the quarter would
be $33 per RMP, and the largest average
fee increase per RMP for an institution
was estimated at $132.21 To avoid fee
increases, these institutions could
pledge on average $7 million of
(additional) collateral.22 Alternatively,
they could hold higher balances and
receive interest on their Federal Reserve
balances, or arrange early morning
funding.
Additionally, 4 of the 13 institutions
are ineligible to receive intraday credit
and would incur overdrafts under the
proposed rules. To avoid violating the
PSR policy and incurring fees, these
institutions would need to increase
funding in their accounts on average by
$33 million either overnight or through
18 Although

most institutions with master
accounts are involved in both ACH and commercial
check activity, approximately half of these
participants settle their activity to a correspondent
rather than their own master account.
Analysis in this notice is intended to be
illustrative only and reflect activity at the master
account level from the second quarter 2013. All
institutions should consider their own historical
payment activity when evaluating the effect of the
proposed posting rule changes.
19 Ninety-seven percent of these institutions are
community banks and credit unions with assets of
less than $10 billion. These data are similar to the
results for the proposed commercial check posting
rules discussed later in the notice.
The average balance calculation only includes
days in the second quarter of 2013 for which
institutions had ACH debit transactions. The
simulation of balances under the proposed posting
rules focuses only on balances held at 8:30 a.m.,
while the analysis of fees and collateral takes into
account balances held and collateral pledged over
the entire 21.5-hour Fedwire operating day.
20 In response to the Board’s 2008 proposal to
post ACH debit transactions at 8:30 a.m., several
commenters, although generally supportive of the
proposals, raised concerns about institutions
located in western time zones that would likely
incur costs associated with the proposed change.
Based on the current data analysis, the institutions
that would incur increased fees are not
disproportionally located in any single time zone.
These data are similar to the results for the
proposed commercial check posting rules discussed
later in the notice.
21 The average calculation includes all RMPs in
the quarter.
22 The average calculation only includes RMPs for
which institutions required (additional) collateral.

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early morning funding.23 These
institutions include bankers’ banks and
Federal Home Loan Banks, and not all
would be eligible to earn interest on
their Federal Reserve balances.
Overall, the Board believes that
accelerating the settlement of ACH
debits from 11:00 a.m. to 8:30 a.m.
promotes the efficiency of the ACH
network and strategically aligns the
payment system for future
advancements in the speed of clearing
and settlement. The Board also believes
that the reduction in potential liquidity
extensions by the Reserve Banks to large
originators, simplified account
management, the alignment of
settlement times between FedACH and
EPN, and the improvement gained in
measuring daylight overdrafts relative to
the Board’s principles provide benefits
that outweigh the increase in funding
costs or overdraft fees that may be
incurred by less than one-half of 1
percent of affected institutions.
Additionally, the Board believes that the
majority of these institutions could
avoid increased fees by pledging
(additional) collateral, and for most
institutions that choose to hold higher
balances, interest paid on balances in
Federal Reserve accounts would reduce
the costs associated with doing so.
Questions
In response to the Board’s proposal to
change the posting times for ACH debit
transactions, the Board requests
comment on the benefits and
drawbacks. In particular,
(1) What additional costs would
institutions expect to incur in order to
fund their Federal Reserve accounts by
8:30 a.m. for ACH debit transactions?
Are there significant differences in the
anticipated effect on those institutions
eligible and ineligible to receive
intraday credit or earn interest on
balances in Federal Reserve accounts?
(2) What are the expected benefits
from posting ACH debit transactions
earlier?
(3) Would the proposed changes affect
the availability of funds to institutions’
customers’ accounts? Would the
proposed changes affect the debiting of
funds from institutions’ customers’
accounts?
(4) What additional costs would
institutions expect to incur if ACH
credit and debit transactions were
posted between 6:00 a.m. and 8:30 a.m.?
If the Reserve Banks’ NSS operating
hours did not open before 8:30 a.m.
23 These institutions are not eligible to
collateralize daylight overdrafts. The average
additional funding relates only to RMPs for which
institutions required additional funds.

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would that create a competitive
disadvantage for private-sector
operators?
2. Commercial Check Transactions

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Under the current posting rules,
commercial check credits post
according to one of two options: (1) All
credits post at a single, float-weighted
posting time, or (2) fractional credits
post between the hours of 11:00 a.m.
and 6:00 p.m., depending on the
institution’s preference.24 Both crediting
options are based on surveys of check
presentment times and vary across time
zones. Commercial check debits are
posted on the next clock hour at least
one hour after presentment beginning at
11:00 a.m. for paper checks and 1:00
p.m. local time for electronic checks,
and ending at 3:00 p.m. local time.
In order to reflect today’s electronic
check-processing environment, the
Board proposes to post commercial
check transactions, both credits and
debits, at 8:30 a.m., 1:00 p.m., and 5:30
p.m., with the specific posting time
depending on when the check was
deposited with the Reserve Banks (for
credits) or presented by the Reserve
Banks (for debits).25 Credits associated
with any commercial checks received by
the Reserve Banks’ deposit deadlines
would post on a rolling basis at the next
available posting time at least 30
minutes after receipt by the Reserve
Banks.26 Currently, the Reserve Banks’
electronic check deposit deadlines are
9:00 p.m. on the previous business day,
and 1:00 a.m., 5:00 a.m. and 10:00 a.m.
on the settlement day. The paper check
deposit deadline is 7:00 p.m. on the
previous business day. As a result,
24 The first option allows an institution to receive
all of its check credits at a single time for each type
of cash letter. This time may not necessarily fall on
the clock hour. The second option lets the
institution receive a portion of its available check
credits on the clock hours between 11:00 a.m. and
6:00 p.m. The option selected applies to all check
deposits posted to an institution’s account. Reserve
Banks calculate crediting fractions and floatweighted posting times for each time zone based on
surveys.
25 Foreign checks are not affected by the proposed
posting rules for commercial check transactions,
and credits for foreign checks deposited and debits
to subsequent collecting banks into which the
Reserve Banks deposit would continue to post after
the close of Fedwire. Additionally, as is the case
today, credit to institutions for foreign checks
deposited may be delayed until these checks clear
depending on the value and point of origination of
the check. To clarify treatment of foreign checks,
the posting rule for transactions that post after the
close of the Fedwire Funds Service has been
updated to include a reference to foreign checks.
26 Immediate credit would not be passed for
deferred-availability deposit products. Customer
availability for files deposited for these services
would be the same as if the file were received at
a deposit deadline before 8:00 a.m. the next
business day.

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depositary banks could expect credit for
all electronic items deposited for the
9:00 p.m., 1:00 a.m., and 5:00 a.m.
deposit deadlines to post at 8:30 a.m.,
and credit for electronic items deposited
for the 10:00 a.m. deadline to post at
1:00 p.m. Paper items deposited by 7:00
p.m. on the previous day would post at
8:30 a.m.
Similarly, debits associated with
electronic check transactions would
post on a rolling basis at the next
available posting time that is at least 30
minutes after presentment to the paying
bank. Paper presentments are made to
institutions by mail or courier, and
delivered one to two business days after
leaving the Reserve Banks, usually
before 2:00 p.m. local time. To
accommodate the extra time required to
make paper presentments, the few
remaining paper commercial check
debit transactions, which account for
less than one-tenth of 1 percent of
checks processed by the Reserve Banks,
would post at the final posting time of
5:30 p.m. on the day the paper check is
presented to the paying bank.27
Under the current posting rules and
Regulation J, at least one hour (versus
the proposed 30 minutes) must elapse
between presentment and posting to
allow limited verification of cash letters.
In September 2013, almost 100 percent
of checks were presented electronically
by the Reserve Banks, and 98 percent of
routing numbers received forward check
presentments electronically.28 As a
result of the widespread use of
electronic check-handling methods and
the extremely small value of paper
presentments, the Board believes 30
minutes is now sufficient for
institutions to verify cash letters.29
The Reserve Banks would present
multiple electronic files per day to
institutions that receive electronic
presentments, with the first presentment
27 The posting of electronic presentments earlier
than paper check presentments may contribute
marginally to a given paying bank’s incentive to
require that checks be presented to it in paper form.
Electronic check presentment is now pervasive,
however, and the Board does not believe that a
paying bank that receives presentments
electronically would be swayed by the later posting
time to return to paper presentment.
Credits for checks presented in paper form would
not be delayed to accommodate the extra time
required for presentment, and would post at the
next available posting time at least 30 minutes after
receipt by the Reserve Banks.
28 Although some participants only have one
routing number, other participants may have
multiple (in some cases more than 100) routing
numbers to facilitate their payments processing.
29 The Board is also issuing a separate notice
requesting comment on proposed changes to
Regulation J, under which a paying bank would be
required to settle for an item by as early as 8:30 a.m.
and as soon as one half-hour after it receives the
item from the Reserve Banks.

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by 8:00 a.m. for settlement at 8:30 a.m.
and subsequent presentment files made
based on an institution’s check activity
for the day.30 Although checks are
available for presentment today by 8:00
a.m., as discussed earlier, the Reserve
Banks have been holding back
presentment for some institutions until
later in the day to accumulate all check
activity into one presentment file. That
file is often made available after 12:00
p.m. local time. The proposed posting
rules would likely result in the first
presentment file received by institutions
to be by 8:00 a.m. Other changes already
announced by the Reserve Banks will
likely result in institutions receiving
multiple files per day and would
eliminate the exception arrangements of
only one presentment file. For business,
technology, or other reasons,
institutions may choose not to access
these presentment files until a specific
time in the day. The Reserve Banks,
however, would continue to settle those
transactions based on presentment
having been made, and institutions
would need to manage their Federal
Reserve accounts accordingly.
The Board is also proposing to revise
the posting rules for large-value check
corrections and adjustments. Currently,
corrections and credit adjustments
amounting to $1 million or more post at
11:00 a.m. and hourly thereafter,
coinciding with the current posting
rules for commercial checks, while
large-value debit adjustments post after
the close of the Fedwire Funds Service.
In alignment with the proposed posting
times for commercial check
transactions, the Board proposes to
move the settlement of large-value
credit corrections and adjustments to
begin at 8:30 a.m. and hourly thereafter
on the half-hour. Moving the settlement
of large-value credit corrections and
adjustments to 8:30 a.m. in combination
with the earlier posting of commercial
check transactions would ensure
prompt credit for any discrepancies
detected by the Reserve Banks or an
institution. The Board also proposes to
post large-value debit corrections at the
same time as large-value debit
adjustments after the close of the
Fedwire Funds Service. Posting debit
corrections after the close of Fedwire
Funds would ensure that institutions
would only benefit intraday from
detected processing errors and that an
institution would not receive a largevalue debit correction before the
associated check transaction posted.
30 The timing and frequency of presentments is
subject to change by the Reserve Banks to align
better with processing advancements and product
type.

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Federal Register / Vol. 78, No. 237 / Tuesday, December 10, 2013 / Notices
The magnitude of the proposed change
would be minimal because of the
limited occurrences of large-value check
corrections in Reserve Bank processing.
For example, in June 2013, 7 large-value
debit corrections were initiated for a
total value of $4.5 million.
Posting commercial check
transactions according to the proposed
posting rules would:
• Give earlier availability for items
deposited with the Reserve Banks based
on an institution’s deposit behavior as
well as provide earlier credit for
adjustments and corrections identified
• simplify the posting rules structure
and, as a result, reduce its
administrative burden to institutions
and Reserve Banks
• reduce the amount of intraday float
currently provided by the Reserve Banks
based on posting rules that do not
reflect current processing
• align the posting rules with the
significant shift over the past decade to
electronic check clearing
The commercial check posting rules
would also better conform to the Board’s
principles for measuring daylight
overdrafts, which the Board uses to
guide the development of posting rules.
Under the proposed posting rules,
institutions would benefit from the
prompt availability of credits from
check activity. The availability of funds
from checks also would reflect
individual institutions’ deposit
behavior. According to recent data on
deposits received by the Reserve Banks,
almost all check credits would post at
the 8:30 a.m. posting time.
By posting credits and debits at the
next available posting time at least 30
minutes after deposit or presentment,
commercial check posting rules would
be conceptually much simpler and
would allow institutions to identify
more easily the value and posting time
of check credits and debits. All check
credits and debits would post at one of
the three set posting times regardless of
time zone, with the vast majority
posting at 8:30 a.m., reflecting actual
deposit and processing activity. An
institution could easily determine the
time at which funds associated with
commercial check transactions would
be made available, either 8:30 a.m. or
1:00 p.m., based on current deposit
deadlines. Additionally, the proposed
rules would be operationally less
burdensome because the Reserve Banks
would not need to survey periodically
check presentment times to determine
when check credits would post, and any
evolution in typical deposit behavior by
institutions or presentment cycles at the
Reserve Banks would be automatically
accounted for by the proposed rules.

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As with all posting rule changes, the
Board evaluated this posting rule
proposal against its principles for
measuring daylight overdrafts. With
regard to the first principle that the
measurement procedures do not provide
intraday float, under the current posting
rules, check credits and paper check
debits begin posting at 11:00 a.m.,
whereas electronic check debits begin
posting at 1:00 p.m. local time. As a
result, the current measurement
procedures provide intraday float
during the day, which has increased
over time as electronic deposits and
presentments have expanded. Under the
proposed posting rules, the likelihood of
intraday float would be minimized by
facilitating the prompt, largely
simultaneous settlement of both check
credits and debit entries at each posting
time. Minimal intraday float may be
generated because of operational delays
in presentments. Additionally, the
Board estimates that the Reserve Banks
would incur a de minimis amount of
overnight float per day, representing
about 0.3 percent of the value of checks
that the Reserve Banks process each
day, because of paper presentments,
presentments to regions over the
International Date Line, and priced
presentment products offered by the
Reserve Banks.31
With respect to the Board’s second
principle, the proposal would, overall,
decrease the time between presentment
of checks and the paying bank’s
obligation to settle. The current posting
rules for commercial check continue to
reflect the time required to physically
process and present checks, and do not
take into consideration the efficiencies
gained from electronic processing and
presentment. Furthermore, the rules
allow for relatively long lags between
when checks are processed and when
the associated transactions settle,
including the delayed 1:00 p.m. local
time posting of electronic debits and a
minimum one-hour window between
presentment and posting of debits. On
average, over 90 percent of the value of
forward electronic checks is available to
be presented by 8:00 a.m., but the
associated debits do not begin to settle
until 1:00 p.m. local time.32 Likewise,
31 For example, an institution that provides
corporate cash management services may opt for a
premium presentment service that allows the
institution to establish a morning cutoff time for its
presentments. All presentments to be made to the
institution after the cutoff time would be held and
presented to the institution on the following
business day. Credit to the depositary bank,
however, would be passed on the current business
day. The Board expects that very few checks would
be held over as a result of such services.
32 Actual value of check presentments made by
8:00 a.m. is approximately 82 percent because some

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74135

check credits associated with these
transactions do not begin posting until
11:00 a.m. By crediting and debiting
institutions at 8:30 a.m. for the bulk of
daily check activity and reducing the
window between presentment and
posting to 30 minutes, the proposed
posting rules would align much more
closely with when the Reserve Banks
are able to process and present
commercial checks to paying banks.
Both the current and proposed
posting rules conform to the third
principal that users of intraday credit
should be able to manage their usage of
intraday credit by establishing set
posting times when institutions can
expect to be credited or debited. Under
the proposed rules, institutions would
have the ability to determine when they
would receive credits by choosing to
deposit at an earlier or later deposit
deadline. Institutions could readily
calculate the value of credits or debits
that would post to their Federal Reserve
accounts at each of the three posting
times by the value of check deposits
made or presentments received at least
30 minutes before the next posting time.
Similar to the earlier proposed posting
time for ACH debit transactions,
institutions may need to adjust their
account management due to the earlier
posting of check transactions. To
estimate their potential liquidity need at
8:30 a.m. and throughout the day,
institutions could consider their
historical deposit patterns and
presentment times.33 Ultimately, some
institutions may need to hold higher
balances overnight, arrange early
morning funding, or incur daylight
overdrafts, if eligible, to fund the earlier
posting of check transactions.
Lastly, the fourth principle requires
that Reserve Banks do not obtain a
competitive advantage from the
measurement procedures. Under
Regulation J, the Reserve Banks have the
legal and operational ability to debit
paying banks for paper presentments of
checks earlier in the day than privatesector collecting banks and, in turn,
pass credits for deposited checks earlier
in the day without incurring significant
intraday float. In March 1998, the Board
requested comment on whether these
legal differences between the Reserve
Banks and the private sector provided
the Reserve Banks with a competitive
advantage and, if so, whether these legal
differences should be reduced or
institutions do not have presentment arrangements
before 8:00 a.m.
33 In assessing the effect of the proposed posting
rules, institutions receiving only one presentment
file per day today would need to adjust their
current presentment times to reflect the earlier
posting time and receipt of multiple files.

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eliminated. Based on the analysis of the
comments received, the Board
concluded then and continues to believe
that these legal disparities do not
materially affect the efficiency of or
competition in the check-collection
system. Furthermore, the vast majority
of check activity is now electronic, and
banks have the ability to directly
exchange checks electronically with
banks with which they have agreements
to do so. As part of these agreements,
depositary and paying banks may
determine the timing and method of
settlement. Additionally, private-sector
check clearinghouses have the option to
use NSS to effect settlement of checks
or may settle by directing their members
to initiate funds transfers over the
Reserve Banks’ Fedwire Funds Service.
NSS’s operating hours extend from 8:30
a.m. to 5:00 p.m.; Fedwire Funds
operating hours begin at 9:00 p.m. the
previous calendar day and end at 6:30
p.m. The Reserve Banks today settle
commercial check transactions
(including corrections and adjustments)
from 11:00 a.m. to 6:30 p.m. within the
Fedwire Funds operating day. From a
payment system risk perspective, the
Board has traditionally encouraged the
use of NSS for multilateral settlement
arrangements and is seeking comment
on whether the Reserve Banks should
consider extending NSS hours to
accommodate a somewhat later
settlement time by private-sector
clearinghouses. Lastly, the earlier
posting of check credits and debits may
be viewed as more or less advantageous
depending on an institution’s net check
activity for the day, but it is unlikely to
be a material consideration because of
its minimal effect on Federal Reserve
account balances and variability over
time. As a result, the Board believes the
fourth principle would continue to be
met.
By posting check debits and credits
according to the proposed posting rules,
most institutions could expect that the
value of checks credited and debited at
8:30 a.m. would largely reflect their net
daily check activity. For approximately
36 percent of the 3,100 check
participants, account balances at 8:30
a.m. would be higher on average under
the proposed rules due to the earlier
availability of funds received from
checks.34 For the 64 percent of
34 The

average balance calculation only includes
days in the second quarter of 2013 for which
institutions had commercial check payment
activity. The simulation of balances under the
proposed posting rules focuses only on balances
held at 8:30 a.m., while the analysis of fees and
collateral takes into account balances held and
collateral pledged over the entire 21.5-hour Fedwire
Funds operating day.

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participants with lower average
balances at 8:30 a.m. under the
proposed rules, the average change in
balances for institutions eligible and
ineligible to receive intraday credit
would be $5 million and $21 million,
respectively. Only 22 institutions,
however, would incur overdraft fees in
any of the six RMPs within the quarter
analyzed.
Twenty-one of the 22 institutions that
would incur higher fees are eligible to
incur daylight overdrafts. The average
increase in fees over the quarter would
be $104 per RMP; these data include
one institution whose average RMP fee
increase was estimated at $1,027, $756
higher than the institution with the next
largest average RMP fee increase.35 To
avoid fee increases, these institutions
could pledge on average $14 million of
(additional) collateral.36 Alternatively,
they could hold higher balances and
receive interest on Federal Reserve
account balances, or arrange for early
morning funding.
Additionally, 1 of the 22 institutions
is ineligible to receive intraday credit
and would incur overdrafts under the
proposed rules. To avoid violating the
PSR policy and incurring fees, the
institution would need to increase
funding in its account on average by $24
million either overnight or through early
morning funding.37 This institution
would be eligible to receive interest on
Federal Reserve account balances.
Overall, the Board believes that the
proposed posting rules for check
transactions are necessary to reflect the
speed of electronic check-processing
and to remove antiquated provisions
based on the previous environment of
paper processing. Furthermore, the
proposed posting rules will position the
Reserve Banks to make further
enhancements to the speed of
processing by aligning the clearance and
settlement of check payments. In
addition, the posting rules would
benefit participants by providing earlier
availability of funds that reflect their
deposit behavior and reduce the
administrative burden of the current
regime. The Board believes these
benefits outweigh the increase in
funding costs or overdraft fees that may
be incurred by less than three-quarters
of 1 percent of affected institutions.
35 The average calculation includes all RMPs in
the quarter. The average increase in fees over the
quarter would be $58 per RMP if the data excluded
that one institution.
36 The average calculation only includes RMPs for
which institutions required (additional) collateral.
37 This institution is not eligible to collateralize
daylight overdrafts. The average additional funding
relates only to RMPs for which the institution
required additional funds.

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Additionally, the Board believes that
these institutions could avoid increased
fees by pledging (additional) collateral
or holding higher balances, which
would receive interest on Federal
Reserve account balances.
Questions
In response to the Board’s proposals
to change the posting times for
commercial check transactions and
large-value corrections and credit
adjustments, the Board requests
comment on the benefits and
drawbacks. In particular,
(1) What additional costs would
institutions expect to incur in order to
fund their Federal Reserve accounts by
8:30 a.m. for commercial check
transactions? Are there significant
differences in the anticipated effect on
those institutions eligible and ineligible
to receive intraday credit or earn
interest on balances in Federal Reserve
accounts?
(2) What are the expected benefits
from posting commercial check
transactions earlier?
(3) Would the proposed changes affect
the availability of funds to institutions’
customers’ accounts? Would the
proposed changes impact the debiting of
funds from institutions’ customers’
accounts?
(4) Would posting check debits at 5:30
p.m., after the current close of NSS, give
the Reserve Banks a material
competitive advantage relative to
private-sector clearinghouses? Should
the Reserve Banks consider expanding
the operating hours of NSS to 5:30 p.m.
to support the needs of private-sector
clearinghouses or collecting banks?
(5) For those institutions receiving
paper presentments, would a posting
time after the close of the Fedwire
Funds Service be better than 5:30
p.m.? 38 What are the reasons?
(6) What additional costs would
institutions expect to incur if
commercial check transactions posted
between 6:00 a.m. and 8:30 a.m.? Would
NSS hours need to expand to ensure
that the earlier posting would not result
in a material competitive disparity
38 Because of operational limitations and for
account management reasons, the operating hours
for NSS could not be extended to 6:30 p.m. for a
comparable settlement option. The operating hours
for NSS would need to close sufficiently before 6:00
p.m. to ensure that the Fedwire Funds 6:00 p.m.
third-party close and the Fedwire Funds 6:30 p.m.
settlement close would not be delayed. In addition,
historically, NSS has closed well before the Fedwire
Funds third-party close to allow for contingency
settlement on Fedwire Funds in the event that
normal settlement procedures on NSS were
unsuccessful. Posting debits for paper presentments
after the close of Fedwire would be consistent with
the posting of foreign checks, which is a paperbased process.

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Federal Register / Vol. 78, No. 237 / Tuesday, December 10, 2013 / Notices
between the Reserve Banks and privatesector operators?
(7) Although Reserve Banks are
already making changes that will result
in paying banks receiving at least two
presentment files per day, would adding
one, two, three, or more additional
presentment files increase costs
materially?
(8) Would 15 minutes, rather than the
30 minutes proposed for limited
verification of cash letters, be sufficient
time given that most cash letters are
processed electronically? For
consistency, should the Reserve Banks
establish in their Operating Circular a
minimum 15- or 30-minute window

between established distribution times
for ACH debit transaction files and
posting to ensure institutions can view
the amount settling in their accounts
before it is debited? 39
(9) Would the earlier posting of
electronic presentments materially
incent institutions to accept only paper
presentments?
Combined Effect of Proposed Posting
Rules for ACH Debit and Commercial
Check Transactions
The Board assessed the combined
effect of the changes to both the ACH
debit and commercial check transaction
posting rules on institutions’ account
balances and daylight overdraft fees.

74137

Most institutions would experience an
increase in settlement activity at 8:30
a.m. Overall, the combined posting rule
proposals would reduce, on average,
account balances held in Federal
Reserve accounts at 8:30 a.m. for most
institutions, but the vast majority of
those institutions would not incur
daylight overdraft fees as a result. The
low incidence of fees can be attributed
to the current levels of pledged
collateral and collateralized daylight
overdrafts receiving a zero fee, the $150
fee waiver covering modest amounts of
uncollateralized overdrafts, and the
historically high balances held in
Federal Reserve accounts.

TABLE—COMBINED EFFECT OF PROPOSALS ON INSTITUTIONS’ BALANCES 40
Change in balances at 8:30 a.m.

Eligible to incur daylight overdrafts ...........................

Higher .......................................................................
Lower .......................................................................
Daylight overdrafts incurred .....................................
Higher .......................................................................
Lower .......................................................................
Daylight overdrafts incurred .....................................

Ineligible to incur daylight overdrafts ........................

As indicated in the table,
approximately 200 institutions (6
percent) would incur an increase in
available cash balances in their Federal
Reserve accounts at 8:30 a.m. from the
combined posting rule changes. The
earlier credit for commercial check
transactions is a large contributor to the
higher balances at 8:30 a.m. for most of
these institutions; large originators of
ACH debit transactions also benefit (on
average balances increase approximately
$163 million) from the earlier posting of
these transactions. At the same time,
almost 3,300 institutions (94 percent) of
the approximate 3,500 participants in
ACH and commercial check on average
would experience lower balances at 8:30
a.m.41 The primary driver for this
reduction is that the vast majority of

maindgalligan on DSK5TPTVN1PROD with NOTICES

Number of
institutions

Institution type

39 Operating Circular 4 applies to the clearing and
settlement of commercial ACH credit and debit
transactions for the Reserve Banks’ ACH service.
40 All data presented are based on the second
quarter 2013. The balances for one institution
eligible to incur daylight overdrafts were
unchanged at 8:30 a.m. between the current and
proposed posting rules.

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200
3,251
919
4
23
5

Average change
(millions)
55
¥7
¥10
1,611
¥81
¥102

these institutions are community banks
or credit unions with assets of less than
$10 billion that receive rather than
originate most ACH debit transactions.42
Those institutions’ accounts would be
debited earlier in the day than the
current posting rules. The average
change in balances for institutions with
lower balances at 8:30 a.m. would be $7
million for institutions eligible to
receive intraday credit and $81 million
for ineligible institutions.
Of the 23 institutions that would
incur lower balances and are ineligible
to receive intraday credit, only 5 would
incur daylight overdrafts under the
proposed posting rules. On average
these 5 institutions would incur
daylight overdrafts in four of the six
RMPs in the quarter analyzed. These 5
institutions would need to make

account management changes to either
increase funding held in their Federal
Reserve accounts overnight or arrange
for early morning funding. Some, but
not all, of these institutions would be
eligible to earn interest on Federal
Reserve balances for higher balances
held overnight.
In addition, of the 3,250 institutions
that would experience lower balances
and are eligible to incur daylight
overdrafts, approximately 919 would
also incur daylight overdrafts or incur
them at higher levels. At the same time,
less than 1 percent, only 28 institutions,
would incur any daylight overdraft fees
associated with the proposed posting
rules in any of the six RMPs within the
quarter.

41 The average balance calculation only includes
days in the second quarter of 2013 for which
institutions had ACH debit or commercial check
payment activity. The simulation of balances under
the proposed posting rules focuses only on balances
held at 8:30 a.m., while the analysis of fees and
collateral takes into account balances held and

collateral pledged over the entire 21.5-hour Fedwire
Funds operating day.
42 Of these institutions with lower balances, 97
percent are small banking organizations (assets of
$500 million or less) or community banks or credit
unions with assets between $500 million and $10
billion.

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As illustrated in the figure, 3,423
institutions that are eligible to incur
daylight overdrafts would not incur an
increase in fees charged, while 28
institutions would incur higher fees.
These 28 institutions would incur
increased fees on average in three of the
six RMPs in the quarter analyzed. The
average increase in fees over the quarter
would be $103 per RMP (the difference
between the current and potential
average fees); these data include one
institution whose average RMP fee
increase was estimated at $1,035, $764
higher than the institution with the next
largest average RMP fee increase.44 The
average increase in fees over the quarter
would be $68 per RMP if the data
excluded that one institution. Some of
these institutions (about 43 percent) are
already incurring fees under the current
posting rules. In addition, almost all of
these institutions have a de minimis or
self-assessed net debit cap, permitting
these institutions to incur daylight
overdrafts up to 40 percent of their
capital if de minimis or multiples of
their capital if self-assessed.45 Only one
43 Different

institutions incurred the highest
average fees per RMP under the current and
proposed posting rules.
44 The average calculation includes all RMPs in
the quarter.
45 The PSR policy establishes a limit on the
amount of intraday credit that an institution may

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institution has an exempt cap, which is
the lowest level of daylight overdraft
capacity available to institutions. Of the
28 institutions that would incur higher
fees, 23 are community banks and credit
unions with assets between $500
million and $10 billion, and 3 are small
banking organizations with assets of
$500 million or less. To avoid fee
increases, these 28 institutions could
pledge on average $15 million of
(additional) collateral.46 Alternatively,
they could hold higher balances and
receive interest on Federal Reserve
account balances, or arrange for early
morning funding.
Institutions that would incur higher
fees are evenly distributed across time
zones, including the Pacific time zone.
In an earlier proposal, commenters
raised concerns that institutions located
in western time zones might incur
disproportional higher costs associated
with earlier posting times. Of the 28
institutions with higher fees, the
greatest concentration is located in the
Eastern time zone.
The Board recognizes that a limited
number of institutions would need to
take proactive steps to manage their
Federal Reserve accounts to minimize

increased fees or to avoid daylight
overdrafts (if ineligible for intraday
credit). These institutions might incur
increased costs related to managing
their Federal Reserve accounts under
the proposed posting rules. Most of
these institutions, however, would be
able to take actions to avoid increased
fees through posting (additional)
collateral or holding higher balances,
and interest on balances in Federal
Reserve accounts would help
compensate most institutions (91
percent) that choose to increase
balances held overnight in their Federal
Reserve accounts. Three institutions
would be the most adversely affected as
they are not eligible for intraday credit
or interest on balances in Federal
Reserve accounts. Ultimately, the Board
believes that it is no longer appropriate
to maintain posting rules that reflect
outdated practices and do not
strategically position the payment
system for the future of faster clearing
and settlement. The Board believes
these changes are necessary for the longrun efficiency of the payment system.

incur during any given day; this limit is called a
net debit cap.
46 The average calculation only includes RMPs for
which institutions required (additional) collateral.

Adoption of an earlier posting time
for ACH debit transactions and check
transactions could be implemented

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Implementation of Proposed Posting
Rules for ACH Debit and Commercial
Check Transactions

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relatively quickly by the Reserve Banks.
The Board, however, understands that a
small number of institutions might need
to make account management changes
to arrange for sufficient funding or to
pledge (additional) collateral, if eligible.
The Board proposes an effective date six
months from the final rule to give
institutions sufficient time to make any
necessary changes.
Questions
In response to the Board’s proposals
to implement changes to the PSR policy
related to the procedures for posting
debit and credit entries for ACH debit
and commercial check transactions, the
Board requests comment on the
collective benefits and drawbacks. In
particular,
(1) Are there any additional costs as
a result of the combined effect of the
ACH debit and commercial check
posting rule proposals that institutions
would expect to incur in order to fund
their Federal Reserve accounts by 8:30
a.m.?
(2) Are there any additional expected
benefits from the combined effect of the
ACH debit and commercial check
posting rule proposals?
(3) What additional costs as a result
of the combined effect of the ACH debit
and commercial check posting rule
proposals would institutions expect to
incur if both ACH and commercial
check transactions posted between 6:00
a.m. and 8:30 a.m.?
(4) Is six months sufficient lead time
for implementation? If not, why not?
What lead time would be needed if
greater than six months? Alternatively,
is less implementation time, such as
three months, sufficient?
(5) Are there any additional posting
rules in the PSR policy that would
benefit from changes or that need
clarification?
III. Other Revisions to the PSR Policy

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Principles for Future Posting Rules for
the Reserve Banks’ Same-Day ACH
Service
Advancements in technology and
business processes will continue to
enable improvements in the ACH
system and institutions’ back-end
processing capabilities and
infrastructures. The ACH system has
already begun to see changes, albeit on
a limited basis, in faster clearing and
settlement. In 2010, the Reserve Banks
began offering a limited, voluntary,
same-day service for certain ACH debit
transactions and recently expanded that
service to allow for almost all credit and

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debit transaction types.47 The Board
expects that this service will evolve over
time, with the potential establishment of
additional processing cycles that require
new posting times for settlement.48
The Board proposes to establish a set
of principles that would be applied to
any new same-day ACH posting rules.
The Board does not contemplate that it
would ordinarily request public
comment on changes to the posting
rules that conform to such principles,
but would request comment should it
consider implementing posting rules
that deviate from the principles. Such
principles would apply to the Reserve
Banks’ voluntary (opt-in), same-day
ACH service and to any future same-day
ACH service, such as a universal sameday ACH service that may be
incorporated into NACHA rules.49
These proposed principles, which
would apply in addition to the current
four posting-rules principles formulated
in the 1990s, are as follows: 50
(1) For each same-day ACH
transmission deadline, the Reserve
Banks will establish expected
distribution times for the same-day ACH
files.
a. The Reserve Banks will post
settlement for same-day ACH debit
transactions no earlier than 15 minutes
after the Reserve Banks’ expected
distribution times for the associated
same-day ACH file.
b. The Reserve Banks will post
settlement for ACH credit and debit
transactions associated with a particular
same-day ACH file distribution time at
the same time.
(2) The Reserve Banks will not post
settlement for same-day ACH
47 The Reserve Banks’ service is voluntary in the
sense that both the sending institution and the
receiving institution must have ‘‘opted in’’ to the
Reserve Banks’ service in order for the Reserve
Banks to treat an eligible ACH transaction as a
same-day transaction. The same-day ACH service
includes all types of ACH credit and debit
transactions with the exception of international
ACH transactions and certain check truncation
transactions.
48 The current processing schedule has a 2:00
p.m. deadline for submitting same-day, forward
transactions for settlement at 5:00 p.m. Return
transactions post at 5:30 p.m.
49 NACHA is a not-for-profit association that
manages the development, administration, and
governance of the ACH network for participating
depository institutions. In 2011, NACHA proposed
amendments to its operating rules to enable ACH
debit and credit transfers to be cleared and settled
on the same day that they are originated. The
expedited service would require the participation of
all receiving institutions in the ACH network, going
beyond the Reserve Banks’ voluntary service.
Although the majority of NACHA’s voting members
were in favor of the proposal, NACHA did not
receive the 75 percent positive vote required for
passage.
50 These four posting-rule principles are outlined
earlier in this notice.

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transactions between 6:30 p.m. and 8:30
a.m. the next processing day.
(3) The Reserve Banks will post
settlement for same-day ACH
transactions exchanged with another
operator to support universal same-day
ACH during the operating hours for the
Reserve Banks’ NSS.
The first principle is intended to
ensure that institutions have sufficient
time to view the amount settling in their
Federal Reserve accounts for ACH debit
transactions before their account is
debited. The principle does not address
ACH credit transactions because the
originating depository financial
institution, whose Federal Reserve
account is debited, has full information
about the amount and timing of
settlement when they initiate the
transaction. The principle would also
ensure that credit and debit transactions
post simultaneously, offsetting the
liquidity needed to settle for those
same-day ACH transactions.51 This
principle conforms to the Board’s
current measurement principles that
posting rules should reflect the times at
which payor institutions are obligated to
pay for transfers.
The second principle requires that the
same-day ACH posting rules fall within
certain business hours, mitigating the
potential burden of institutions,
especially smaller, West Coast
institutions, related to monitoring and
funding their account balances outside
of these hours. This principle is
consistent with the Board’s current
principle that users of payment services
should be able to control their use of
intraday credit.
The third principle applies to a
potential future state when multiple
operators provide same-day ACH
services and need to exchange items to
support universal same-day ACH.52 To
ensure competitive equality between
these operators, the private-sector
operator(s) should have the ability to
settle for same-day ACH transactions,
using the Reserve Banks’ NSS, at the
same times the Reserve Banks post such
transactions.53 Because the Reserve
Banks are the only provider of a same51 Same-day ACH credit transactions have
immediate finality consistent with the Reserve
Banks’ current treatment of ACH credit transfers.
See section 11.2 of the Reserve Banks’ Operating
Circular 4, Automated Clearing House Items,
available at www.frbservices.org/files/regulations/
pdf/operating_circular_4_07122012.pdf.
52 The principle would not apply if a privatesector operator introduced a same-day ACH service
where it did not intend the items to be exchanged
with the Reserve Banks as another ACH operator.
53 Currently, the Reserve Banks’ NSS is used by
EPN to settle intra-EPN transactions (i.e., ACH
transactions that do not involve the Reserve Banks’
FedACH service).

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day ACH service at this time, the
principle is not currently applicable. If
in the future the Reserve Banks
exchanged same-day ACH transactions
with a private-sector operator, the
Reserve Banks’ same-day ACH service
would need to conform to the third
principle by either modifying the
posting rules to meet this requirement
or expanding NSS’s operating hours to
incorporate the posting times for sameday ACH.54 This principle conforms to
the Board’s current principle that
Reserve Banks should not obtain a
competitive advantage from the
measurement procedures.
The Board proposes that the
principles for future posting rules for
the Reserve Banks’ same-day ACH
service would be effective on final
approval.
Questions
In response to the Board’s proposals
to implement principles for establishing
future posting rules for the Reserve
Banks’ same-day ACH service, the Board
requests comment on the proposed
principles. In particular,
(1) Are there additional principles
that the Board should consider?
(2) Are all the proposed principles
necessary?
(3) Should the window between
established distribution times and
posting be standard for check, ACH
debit transactions, and same-day ACH
debit transactions? If so, should that
standard be 15 minutes, 30 minutes, or
some other time?

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Language Clarification in Section II.G.3
The Board is requesting comment on
a proposed language clarification in part
II of the PSR policy regarding
operational changes in the
administration of the policy as it relates
to U.S. branches and agencies of foreign
banking organizations (FBOs). The new
language clarifies that U.S. branches and
agencies of the same foreign bank (also
referred to as an FBO family) are
expected to manage their accounts so
that the daylight overdraft position in
each account does not exceed the
capacity allocated to this account from
the FBO family’s net debit cap.55 An
FBO family, unlike most domestic
54 The Reserve Banks currently settle same-day
ACH return transactions at 5:30 p.m., which is a
half-hour after the close of NSS’s operating hours
of 8:30 a.m. to 5:00 p.m.
55 The previous language in the PSR policy that
related to the administration of multiple master
accounts was somewhat ambiguous and could have
been interpreted to allow the Federal Reserve to
administer these accounts as is the current practice
(separate administration for the multiple master
accounts) or the previous practice (consolidated
administration).

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institutions, may have multiple master
accounts across Reserve Bank Districts
and may request that all or part of its net
debit cap be allocated across the Reserve
Bank Districts. In the past, the Reserve
Banks monitored the master accounts of
FBO families on a consolidated basis
rather than requiring an FBO family to
allocate its net debit cap if it wanted to
incur daylight overdrafts in more than
one account across Reserve Bank
Districts.
The impetus for this administration
change stemmed from the 2011 revision
to the PSR policy that allowed healthy
institutions eligible for intraday credit
to eliminate or reduce daylight overdraft
fees through the voluntary pledge of
collateral.56 FBO families often only
pledged collateral to one Reserve Bank,
and state laws governing the resolution
of foreign bank branches may limit (or
‘‘ring-fence’’) the assets of a branch
located in that state, thereby increasing
the risk that a Reserve Bank may not be
able to rely on collateral held by another
Reserve Bank. In 2012, the Reserve
Banks changed their operational
practices to address this risk such that
an FBO family’s master accounts are
treated as separate accounts for the
purposes of pricing and monitoring net
debit cap compliance.57
The effective date for the proposed
language change intended to clarify the
Reserve Banks’ administration of the
policy for U.S. branches and agencies of
FBOs would be effective on final
approval.
IV. Competitive Impact Analysis
The Board conducts a competitive
impact analysis when it considers a rule
or policy change that may have a
substantial effect on payment system
participants, such as that being
proposed for the posting of ACH debit
and commercial check transactions.
Specifically, the Board determines
whether there would be a direct or
material adverse effect on the ability of
other service providers to compete with
the Federal Reserve due to differing
legal powers or due to the Federal
Reserve’s dominant market position
deriving such legal differences.58 The
Board believes that there are no adverse
effects resulting from the proposed
changes due to legal differences.
56 The fee for collateralized daylight overdrafts is
zero because the collateral mitigates the Reserve
Banks’ exposure.
57 As announced by the Reserve Banks in a
February 2012 letter, effective April 19, 2012, the
Reserve Banks would no longer consolidate the
accounts of FBO families across Reserve Bank
Districts for the purposes of pricing and ex-post
monitoring of cap compliance.
58 Federal Reserve Regulatory Service, 7–145.2.

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Shifting the posting of ACH debit
transactions to 8:30 a.m. would serve to
bring the settlement of ACH debit
transactions processed by the Reserve
Banks’ FedACH service in line with the
private-sector operator and reduce any
potential competitive disadvantage to
the Reserve Banks. The proposed
posting-rule change would benefit not
only FedACH participants that originate
debit transactions but also EPN
customers that originate debit
transactions sent to FedACH, which
settle according to the Board’s posting
rules.
Under Regulation J, the Reserve Banks
have the legal and operational ability to
debit paying banks for paper
presentments of checks earlier in the
day than private-sector collecting banks
and, in turn, can pass credits for
deposited checks earlier in the day
without incurring significant intraday
float. To obtain settlement from paying
banks for paper checks presented,
Regulation J permits the Reserve Banks
to debit directly the account of the
paying bank or its designated
correspondent.59 In contrast, a paying
bank settles for checks presented by a
private-sector bank for same-day
settlement by sending a Fedwire Funds
transaction to the presenting bank or by
another agreed upon method.60 In
addition, the Reserve Banks have the
right to debit the account of the paying
bank for settlement of checks on the
next clock hour that is at least one hour
after presentment, whereas a privatesector collecting bank may not receive
settlement until the close of Fedwire on
the day of presentment.61
In March 1998, the Board requested
comment on whether these legal
differences between the Reserve Banks
and the private sector provided the
Reserve Banks with a competitive
advantage. Most commenters
acknowledged that the regulation
governing the timing and settlement
favor Reserve Banks over private-sector
collecting banks. None of the
commenters, however, suggested an
alternative that eliminated the disparity
while maintaining a balance between
the needs of both the paying bank and
collecting banks to control some part of
the settlement process.62
Additionally, under Regulation J,
Reserve Banks can obtain same-day
settlement for checks presented to a
paying bank before the paying bank’s
59 12

CFR 210.9(b)(5).
CFR 229.36(f)(2).
61 12 CFR 210.9(b)(2); 12 CFR 229.36(f)(2).
62 The request for comment and the subsequent
notice of the Board’s decision can be found,
respectively, at 63 FR 12700 (March 16, 1998) and
63 FR 68701 (December 14, 1998).
60 12

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Federal Register / Vol. 78, No. 237 / Tuesday, December 10, 2013 / Notices
cutoff hour, generally 2:00 p.m. local
time or later.63 The same-day settlement
rule for private-sector banks, however,
requires that they make their
presentments by 8:00 a.m. local time to
ensure that they receive same-day
settlement by Fedwire Funds without
being assessed presentment fees. In
March 1998, the Board also requested
comment on the effect of the difference
in presentment deadlines for Reserve
Banks and private-sector banks. Most
commenters did not believe that the sixhour difference in presentment
deadlines was a significant impediment
to the ability of private-sector banks to
compete with the Reserve Banks.
Based on the analysis of the
comments received, the Board
concluded then and continues to believe
that these legal disparities do not
materially affect the efficiency of or
competition in the check collection
system. The costs to paying banks and
their customers associated with
reducing any remaining legal disparities
would outweigh any payment system
efficiency gains.
In addition, the Check 21 Act, by
authorizing the creation of substitute
checks, enabled banks to send checks
electronically, rather than in paper
form, to banks with which they have
agreements to do so, and the vast
majority of check activity is cleared
electronically today. As a result, banks
may determine, as part of the agreement
between a depositary and paying bank,
the time at which settlement for checks
is required to be funded as well as the
presentment deadlines. Furthermore, for
depositary and paying banks that opt to
use a check clearinghouse rather than
directly exchange paper or electronic
checks, private-sector clearinghouses
have the option to use NSS to effect
settlement of checks or may settle by
directing their members to initiate funds
transfers over the Reserve Banks’
Fedwire Funds Service. NSS’s operating
hours extend from 8:30 a.m. to 5:00
p.m., while Fedwire Funds operating
hours begin at 9:00 p.m. the previous
calendar day and end at 6:30 p.m. The
Reserve Banks today settle commercial
check transactions (including
corrections and adjustments) from 11:00
a.m. to 6:30 p.m. From a payment
system risk perspective, the Board has
traditionally encouraged the use of NSS
for multilateral settlement arrangements
and is seeking comment on whether the
Reserve Banks should consider
extending NSS hours to accommodate a
specific later settlement time by privatesector clearinghouses.
63 12

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Under the proposed posting rules, the
bulk of the Reserve Banks’ postings of
credits to depositing banks and debits to
paying banks for commercial check
transactions may shift to earlier in the
day. Depending on the number of
checks a bank sends to the Reserve
Banks and that it receives from the
Reserve Banks, the bank may receive
either a ‘‘net credit’’ or a ‘‘net debit’’
earlier in the day. As a result, the earlier
posting of commercial check
transactions may be viewed as more or
less attractive, depending on changes to
balances. Further, private-sector banks
can achieve improvements similar to
those provided by the proposed changes
through private agreements among
participants, as well as the use of the
NSS.
Given the factors discussed above, the
Board does not believe that the
proposed changes to the posting rules
would have any direct adverse effect on
other service providers to compete
effectively with Reserve Banks in
providing similar services.
V. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3506;
5 CFR part 1320 appendix A.1), the
Board reviewed the PSR policy changes
it is considering under the authority
delegated to the Board by the Office of
Management and Budget. No collection
of information pursuant to the
Paperwork Reduction Act are contained
in the policy statement.
VI. Federal Reserve Policy on Payment
System Risk
Changes to the Posting Rules
If the Board adopts the proposed
posting changes for ACH debit and
commercial check transactions, it would
amend the ‘‘Federal Reserve Policy on
Payment System Risk’’ section II.A.
under the subheading ‘‘Procedures for
Measuring Daylight Overdrafts’’ as
follows in italics.64
Procedures for measuring daylight
overdrafts 65
Post at 8:30 a.m. Eastern time:
+/¥ Term deposit maturities and
accrued interest
64 In addition to the italicized changes to the
‘‘Post After the Close of Fedwire Funds Service’’
posting rule, the list of transactions posted at that
time has been reordered.
65 This schedule of posting rules does not affect
the overdraft restrictions and overdraftmeasurement provisions for nonbank banks
established by the Competitive Equality Banking
Act of 1987 and the Board’s Regulation Y (12 CFR
225.52).

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+/¥ Government and commercial ACH
transactions 66
+/¥ Commercial check transactions,
including returned checks 67
+ Treasury checks, postal money
orders, local Federal Reserve Bank
checks, and savings bond
redemptions in separately sorted
deposits; these items must be
deposited by 12:01 a.m. local time or
the local deposit deadline, whichever
is later
+ Advance-notice Treasury investments
¥ Penalty assessments for tax
payments from the Treasury
Investment Program (TIP).68
Post at 8:30 a.m. Eastern time and
hourly, on the half-hour, thereafter:
+/¥ Main account administrative
investment or withdrawal from TIP
+/¥ Special Direct Investment (SDI)
administrative investment or
withdrawal from TIP
+ 31 CFR part 202 account deposits
from TIP
+ Credit corrections amounting to $1
million or more 69
+ Credit adjustments amounting to $1
million or more70
¥ Uninvested paper tax (PATAX)
deposits from TIP
¥ Main account balance limit
withdrawals from TIP
¥ Collateral deficiency withdrawals
from TIP
¥ 31 CFR part 202 deficiency
withdrawals from TIP
66 Institutions that are monitored in real time
must fund the total amount of their commercial
ACH credit originations in order for the transactions
to be processed. If the Federal Reserve receives
commercial ACH credit transactions from
institutions monitored in real time after the
scheduled close of the Fedwire Funds Service,
these transactions will be processed at 12:30 a.m.
the next business day, or by the ACH deposit
deadline, whichever is earlier. The Account
Balance Monitoring System provides intraday
account information to the Reserve Banks and
institutions and is used primarily to give authorized
Reserve Bank personnel a mechanism to control
and monitor account activity for selected
institutions. For more information on ACH
transaction processing, refer to the ACH Settlement
Day Finality Guide available through the Federal
Reserve Financial Services Web site at http://
www.frbservices.org.
67 For the three commercial check transaction
posting times, the Reserve Banks will post credits
and debits to institutions’ accounts for checks
deposited and presented, respectively, at least 30
minutes before the posting time.
68 The Reserve Banks will identify and notify
institutions with Treasury-authorized penalties on
Thursdays. In the event that Thursday is a holiday,
the Reserve Banks will identify and notify
institutions with Treasury-authorized penalties on
the following business day. Penalties will then be
posted on the business day following notification.
69 Corrections are account entries made to correct
discrepancies detected by a Reserve Bank during
the initial processing of checks.
70 Adjustments are account entries made to
correct discrepancies detected by an institution
after entries have posted to its account and are
made at the request of the institution.

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Post by 1:00 p.m. Eastern time:
+/¥ Commercial check transactions,
including returned checks
+ Same-day Treasury investments.
Post at 5:30 p.m. Eastern time:
+/¥ FedACH SameDay Service return
transactions.
+/¥ Commercial check transactions,
including returned checks
Post After the Close of Fedwire Funds
Service:
+/¥ All other transactions. These
transactions include the following:
currency and coin shipments;
noncash collection; term-deposit
settlements; Federal Reserve Bank
checks presented after 3:00 p.m.
Eastern time but before 3:00 p.m. local
time; foreign check transactions;
small-dollar credit adjustments; and
all debit adjustments and corrections.
Discount-window loans and
repayments are normally posted after
the close of Fedwire as well; however,
in unusual circumstances a discount
window loan may be posted earlier in
the day with repayment 24 hours
later, or a loan may be repaid before
it would otherwise become due.

U.S. operations and with Reserve Banks in
whose territory other U.S. agencies or
branches of the same foreign bank are
located, may recommend that these agencies
and branches not be permitted to incur
overdrafts in Federal Reserve accounts.
Alternatively, the administrative Reserve
Bank, after similar consultation, may
recommend that all or part of the foreign
family’s net debit cap be allocated to the
Federal Reserve accounts of agencies or
branches that are located outside of the
administrative Reserve Bank’s District; in this
case, the Reserve Bank in whose Districts
those agencies or branches are located will be
responsible for administering all or part of
this policy.72

Revisions to Section II.G.3 of the PSR
Policy
The Board proposes to revise section
II.G.3 of the Federal Reserve Policy on
Payment System Risk as follows:

TIME AND DATE:

3. Multi-District Institutions
An institution maintaining mergertransition accounts or an Edge or agreement
corporation that accesses Fedwire through
master accounts in more than one Federal
Reserve District is expected to manage its
accounts so that the total daylight overdraft
position across all accounts does not exceed
the institution’s net debit cap. One Reserve
Bank will act as the administrative Reserve
Bank and will have overall risk-management
responsibilities for an institution maintaining
master accounts in more than one Federal
Reserve District. For domestic institutions
that have branches in multiple Federal
Reserve Districts, the administrative Reserve
Bank generally will be the Reserve Bank
where the head office of the bank is located.
U.S. branches and agencies of the same
foreign bank (also referred to as an FBO
family) are assigned one net debit cap per
FBO family. FBO families that access Fedwire
through master accounts in more than one
Federal Reserve District are expected to
manage their accounts so that the daylight
overdraft position in each account does not
exceed the capacity allocated to this account
from the FBO family’s net debit cap. The
administrative Reserve Bank generally is the
Reserve Bank that exercises the Federal
Reserve’s oversight responsibilities under the
International Banking Act.71 The
administrative Reserve Bank, in consultation
with the management of the foreign bank’s
71 12

U.S.C. 3101–3108.

VerDate Mar<15>2010

19:49 Dec 09, 2013

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*

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By order of the Board of Governors of the
Federal Reserve System, November 25, 2013.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2013–28745 Filed 12–9–13; 8:45 am]
BILLING CODE P

FEDERAL RETIREMENT THRIFT
INVESTMENT BOARD
Sunshine Act; Notice of Meeting
9:00 a.m. December 16,

2013.
10th Floor Board Meeting Room,
77 K Street NE., Washington, DC 20002.
STATUS: Parts will be open to the public
and parts closed to the public.
MATTERS TO BE CONSIDERED:
PLACE:

Parts Open to the Public
1. Approval of the Minutes of the
November 25, 2013 Board Member
Meeting
2. Thrift Savings Plan Activity Reports
by the Executive Director
a. Monthly Participant Activity Report
b. Monthly Investment Policy Report
c. Legislative Report
3. L Fund Default
4. OPOP Report
5. Financial Auditor Contract
6. OGC Report
7. 2014 Board Calendar
Parts Closed to the Public
1. Litigation Update
2. Personnel
72 As in the case of Edge and agreement
corporations and their branches, with the approval
of the designated administrative Reserve Bank, a
second Reserve Bank may assume the responsibility
for administering this policy regarding particular
foreign branch and agency families. This would
often be the case when the payments activity and
national administrative office of the foreign branch
and agency family is located in one District, while
the oversight responsibility under the International
Banking Act is in another District. If a second
Reserve Bank assumes management responsibility,
monitoring data will be forwarded to the designated
administrator for use in the supervisory process.

PO 00000

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CONTACT PERSON FOR MORE INFORMATION:

Kimberly Weaver, Director, Office of
External Affairs, (202) 942–1640.
Dated: December 6, 2013.
James B. Petrick,
Secretary, Federal Retirement Thrift
Investment Board.
[FR Doc. 2013–29552 Filed 12–6–13; 4:15 pm]
BILLING CODE 6760–01–P

FEDERAL TRADE COMMISSION
Agency Information Collection
Activities; Proposed Collection;
Comment Request
Federal Trade Commission
(FTC or Commission).
ACTION: Notice.
AGENCY:

The information collection
requirements described below will be
submitted to the Office of Management
and Budget (OMB) for review, as
required by the Paperwork Reduction
Act (PRA). The FTC seeks public
comments on its proposal to extend
through March 31, 2017, the current
PRA clearance for information
collection requirements contained in its
Informal Dispute Settlement Procedures
Rule. That clearance expires on March
31, 2014.
DATES: Comments must be received on
or before February 10, 2014.
ADDRESSES: Interested parties may file a
comment online or on paper by
following the instructions in the
Request for Comments part of the
SUPPLEMENTARY INFORMATION section
below.
FOR FURTHER INFORMATION CONTACT:
Requests for copies of the collection of
information and supporting
documentation should be addressed to
Svetlana Gans, Attorney, Division of
Marketing Practices, Bureau of
Consumer Protection, Federal Trade
Commission, Room H–286, 600
Pennsylvania Ave. NW., Washington,
DC 20580, (202) 326–3708.
SUPPLEMENTARY INFORMATION:
SUMMARY:

Proposed Information Collection
Activities
Under the Paperwork Reduction Act
(PRA), 44 U.S.C. 3501–3520, federal
agencies must get OMB approval for
each collection of information they
conduct, sponsor, or require.
‘‘Collection of information’’ means
agency requests or requirements to
submit reports, keep records, or provide
information to a third party. 44 U.S.C.
3502(3); 5 CFR 1320.3(c). As required by
section 3506(c)(2)(A) of the PRA, the
FTC is providing this opportunity for

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