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Federal R eserve Bank
OF DALLAS
HELEN E. H OLCOM B
DALLAS, TEXAS
75265-5906
F I R S T V I C E P R E S I D E N T AN D
C H IE F O P E R A T I N G O F F I C E R
October 8, 1996
Notice 96-96
TO:
The Chief Operating Officer of each
financial institution and foreign agency
in the Eleventh Federal Reserve District
SUBJECT
Fedwire Third-Party Access Policy
DETAILS
Effective February 2, 1996, the Board of Governors of the Federal Reserve
System approved modifications to its Fedwire Third-Party Access Policy. The policy
establishes requirements for third-party access arrangements involving a service provider
located outside the United States (Foreign Service Provider).
ENCLOSURE
Enclosed is a copy of Appendix 3 to Operating Circular 6, Wire Transfers o f
Funds.
MORE INFORMATION
For more information, please contact Jane Anne Schmoker at (214) 922-5101.
For additional copies of this Bank’ notice and Appendix 3 to Operating Circular 6,
s
please contact the Public Affairs Department at (214) 922-5254.
Sincerely,
For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333 -4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston
Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
APPENDIX 3
WIRE TRANSFERS OF FUNDS AND/OR
BOOK-ENTRY SECURITIES
F e d w ir e T h i r d - P a r t y A c c e s s A r r a n g e m e n t s
Statem ent
of
A
greement
1. This Appendix establishes the terms of the agreement under which a depository institution
(Participant) holding an account w ith the Federal Reserve Bank of Dallas (Reserve Bank) may
designate a Service Provider (and Pass-Through Service Provider, if applicable, collectively
referred to as Service Provider) to perform one or more of the follow ing functions: origination,
transmission, and receipt of a funds transfer, to or from the Participant's account, and/or a
securities transfer to or from the Participant's securities account. A debit/credit related to the
transfer is posted to the account and/or securities account, as the case may be. A Participant or
Service Provider engaged in activities covered by this Appendix shall com ply with the Policy
Statement on Payments System Risk of the Board of Governors of the Federal Reserve System
(Board).
D e f in it io n s
2.
In this Appendix, the follow ing definitions apply unless the context requires otherwise:
A.
"A ccount" means the reserve and/or clearing account maintained by the Participant at
the Reserve Bank.
B. "A ffilia ted " means that (1) at least 80 percent of the voting stock of both the Participant
and its Service Provider is com m only owned, or (2) either the Participant or its Service
Provider owns at least 80 percent of the voting stock of the other.
C. "Credit lim it" means (1) an individual customer transfer lim it established fo r a cus
tom er by the Participant and/or (2) a transfer lim it established by the Participant fo r the
Participant's own transfers (bank-to-bank transfers).
D. "Fedw ire" is the system operated by the 12 Federal Reserve Banks for the electronic
transfer of funds and book-entry securities.
E. "Funds transfer(s)" means a payment order or non-value message originated or
received over Fedwire.
F. "G atew ay" is an electronic connection used to access electronic services in multiple
Federal Reserve districts using one physical connection.
G. "Gateway Reserve Bank" is the Reserve Bank that maintains the physical Gateway
connection w ith the Service Provider.
H. "Securities account" means a book-entry securities account maintained by the Partici
pant at a Reserve Bank.
I.
"Securities transfer" means a transfer of book-entry securities over Fedwire.
J. "Settling Reserve Bank," fo r purposes of a Gateway arrangement, is the Federal
Reserve Bank at which the Participant maintains the account and securities account.
K. "Transfer" means a funds transfer or a securities transfer.
0 9 -96
F e d e ra l R e s e rve B a n k of D a lla s
Operating
Circular
6
APPENDIX 3 (continued)
G eneral
3.
The Participant shall provide to its Reserve Bank a Letter of Authorization containing the
inform ation described in Exhibit 1 or Exhibit 1A (Foreign Service Providers) to this Appendix
before participating in a third-party access arrangement covered by this Appendix.
4.
The Participant may authorize a Service Provider to act as the Participant's agent for
initiating, transm itting, and/or receiving a funds transfer of which the Participant is the
transferor or transferee. Any such funds transfer sent by the Service Provider is an authentic
and fully authorized funds transfer, as if it were sent in w riting and signed by a duly authorized
officer of the Participant. Notwithstanding the operational routing of any such funds transfer
through the Service Provider, the Reserve Bank w ill make any debit or credit entry relating to
the funds transfer to the account. Fedwire funds transfers are subject to the requirements of the
Board's Regulation J (12 C.F.R. Part 210, Subpart B) and Operating Circular 6 {Wire Transfers o f
Funds) and Operating Circular 16 (Electronic Access). Terms defined in Subpart B of Regulation
J have the same meaning when used in this Appendix.
5.
The Participant may also authorize the Service Provider to act as the Participant's agent for
initiating, transm itting, and/or receiving a securities transfer to or from the securities account, if
the requirements of this Appendix have been complied with. Any debit or credit w ith respect to
a securities transfer w ill be made to the account. Any securities transferred from or received for
the Participant w ill be debited or credited, as the case may be, to the securities account. The
provisions of Operating Circular 14 (Book-Entry Securities Account Maintenance and Transfer
Services) apply to securities transfer third-party access arrangements.
Re s p o n s ib il it ie s
of the
Pa r t ic ip a n t
6.
The Participant shall ensure that the Service Provider complies w ith the provisions of this
Appendix and any other relevant operating circular(s) of the Reserve Bank, as well as any policy
or regulation of the Board with respect to the wire transfer of funds, book-entry securities,
electronic access, and payments system risk. However, the use of a third-party access arrange
ment, and the provision of these services by the Service Provider to the Participant, shall in no
way affect or diminish any obligation or duty of the Participant to the Reserve Bank.
7.
The Participant shall retain full responsibility for management of its account with respect
to both its intraday and overnight positions. Any overdraft incurred is a binding obligation of
the Participant to the Reserve Bank. During the business day, the Participant shall tim e ly m oni
to r funds and/or securities transfer activity handled for it by a Service Provider.
8.
The Participant shall maintain an adequate audit program to review any third-party access
arrangement at least annually. The audit program should include a review of and a determina
tion whether the transactions handled by a Service Provider meet the requirements set forth in
this Appendix.
9.
The Participant shall maintain adequate backup facilities and procedures to process
transfers in case of an operating outage or other development affecting the adequacy of the
service. The contingency backup requirement can be met through backup procedures and
facilities provided either by the Service Provider or the Participant. The Participant is not re
lieved of this responsibility because it contracts w ith a Service Provider.
10. If the Service Provider is not affiliated with the Participant, the Participant must be able to
process transfers if the Participant is unable to continue operating under the third-party access
arrangement (for example, if the Reserve Bank or the Participant's prim ary supervisor term i
nates the third-party access arrangement). This backup requirement can be satisfied (a) by
retaining the capability to perform the functions internally that have been delegated to the
Service Provider; (b) by making arrangements w ith an alternate Service Provider to take over
F e d e ra l R e s e rv e B a n k of D a lla s
0 9 -9 6
APPENDIX 3 (continued)
I these functions in the event that the arrangement must be terminated; or (c) by another means
acceptable to the Reserve Bank.
11. If a backup arrangement involves a Substitute Service Provider, that Substitute Service
Provider must have agreed to the terms of this Appendix.
A
pproval of
In d iv id u a l T r a n s f e r s / C r e d it L im it s
12. A transfer sent by the Service Provider on behalf of the Participant shall either (a) be
individually authorized and approved by the Participant or (b) be sent by the Service Provider
against a credit lim it that has been approved by the Participant and communicated to the
Service Provider. The Participant shall periodically review the appropriateness of the estab
lished credit limits.
13. Where the Participant uses a Service Provider but does not individually authorize and
approve each transfer, the Service Provider must have procedures in place and the operational
capability to ensure that a funds transfer that w ould exceed the established credit lim it is not
permitted w ith ou t first obtaining the Participant's specific authorization. In the case of a securi
ties transfer, the Service Provider must have the operational capability and procedures in place
to reverse an incoming securities transfer that exceeds an established credit lim it, unless the
Service Provider notifies the Participant of the incoming securities transfer and the Participant
expressly directs the Service Provider not to reverse the securities transfer.
A
u t h o r iz a t io n fo r
T h ir d -P a r t y A
ccess
A
rrangement
14. The Participant's board of directors shall authorize the role and responsibilities of an
unaffiliated Service Provider (see Exhibit 2 to this Appendix for an acceptable model). In thirdparty access arrangements using credit limits, the Participant's board of directors shall approve
(a) the intraday overdraft lim it for the activity to be processed by the Service Provider (see the
Federal Reserve's Guide to the Payment System Risk Policy fo r acceptable models) and (b) the
credit lim its fo r any inter-affiliate funds transfer (see Exhibit 3 to this Appendix fo r an accept
able model).
15. If the Participant is a U.S. branch of a foreign bank whose board of directors has a more
limited role in the bank's management than a U.S. board, the role and responsibilities of the
Service Provider should be reviewed by senior management at the foreign bank's head office
that exercises authority over the foreign bank equivalent to the authority exercised by a board
of directors over a U.S. depository institution. Senior management of this head office should
make the approvals required by paragraph 14.
16. The third-party access arrangement must be consistent with the principles of corporate
separateness and must not violate any state or federal law restrictions on branching.
Gatew ay A
rrangement
17. In any Gateway arrangement, the Gateway Reserve Bank shall establish procedures for
maintenance of the Gateway connection. The Gateway Reserve Bank's procedures shall be
provided to each Service Provider and Participant using the Gateway arrangement. The Service
Provider shall com ply w ith the Gateway Reserve Bank's procedures governing maintenance of
the Gateway connection. The Participant and Service Provider shall com ply with the settling
Reserve Bank's requirements related to any other matters involving the third-party access
arrangement.
18. The law of the state in which the settling Reserve Bank is located shall apply to a Gateway
arrangement.
0 9 -96
F e d e ra l R ese rve B a n k of D allas
Operating
Circular
6
APPENDIX 3 (continued)
M
is c e l l a n e o u s
P r o v is io n s
19. The Service Provider must demonstrate the capability to separate transfers sent or re
ceived by the Service Provider as the Participant's agent from other transfers sent or received
by the Service Provider fo r itself or fo r any other Participant.
20. The initiation, transmission, or receipt of a transfer by the Service Provider constitutes the
initiation, transmission, or receipt of the transfer by the Participant fo r purposes of authorizing
the Reserve Bank to debit or credit the account or securities account, as the case may be.
21. A Service Provider participating in an arrangement subject to this Appendix shall be
subject to examination by the appropriate federal depository institution regulatory agency(ies).
22. If the Participant and the Service Provider are not affiliates and the Service Provider is
located w ithin the United States, the Participant and the Service Provider each warrant that the
Service Provider is (a) a depository institution or (b) an independent company subject to exam i
nation pursuant to the Bank Service Corporation Act (12 U.S.C. § 1876), by virtue of providing
bank services.
23. The Participant shall obtain and upon request subm it to the Reserve Bank a w ritten affir
mation from its prim ary supervisor(s) that the supervisor(s) does not object to the third-party
access arrangement.
24. A Service Provider, w hether or not affiliated with the Participant, shall
A.
initiate, transm it, and receive a transfer w ith ou t altering the terms of the transfer,
unless the alteration was previously approved by the Participant;
B. verify the completeness and acceptability of each transfer instruction; and
C.
A
initiate or input and release each transfer instruction as directed by the Participant.
d d it io n a l
25.
R e q u ir e m e n t s
for
A
rrangem ents
I n v o l v i n g F o r e ig n S e r v ic e P r o v id e r s
In addition to all other relevant terms stated in this Appendix:
A. A Participant that wants to establish an arrangement involving a Service Provider
located outside the United States ("Foreign Service Provider") shall com ply w ith the
additional terms listed in paragraphs 25B through 25E.
B. The Participant and the Foreign Service Provider shall maintain an adequate audit
program that addresses Fedwire operations. Such program shall assess, at least on an
annual basis, the sufficiency of internal and data security controls, credit-granting
processes, operational procedures, contingency arrangements, and compliance with
applicable laws and regulations. Audit reports shall be available, in English, to the
Reserve Bank and the Participant's prim ary U.S. supervisor(s).
C. The Participant and the Foreign Service Provider shall make all policies, procedures,
and other documentation relating to Fedwire operations, including those related to
internal controls and data security requirements, available to the Reserve Bank and the
Participant's prim ary U.S. supervisor(s) in English.
D. The Foreign Service Provider shall be subject to the supervision of a home/host coun
try bank supervisor.
F e d e ra l R e s e rv e B a n k o f D allas
0 9 -9 6
APPENDIX 3 (continued)
E. The Participant and the Foreign Service Provider shall permit the Participant's primary
U.S. supervisor(s) to conduct an on-site review of the Fedwire operations at the For
eign Service Provider at any tim e upon reasonable notice.
In d e m n i f i c a t i o n
26. The Participant and the Service Provider shall defend, indemnify, and hold this Bank
harmless against any claim, loss, cost, or expense— including, but not limited to, attorneys' fees
and expenses of litigation— resulting from the third-party access arrangement or the acts or
omissions of either the Participant or the Service Provider or their agents, except for any claim,
loss, cost, or expense arising solely out of the Reserve Bank's failure to exercise ordinary care.
T e r m in a t io n
27. The Service Provider may terminate its participation in a third-party access arrangement by
giving 30 days' prior written notice to the Reserve Bank and the other party(ies). The Participant
may terminate its participation in a third-party access arrangement at any time, provided the
Participant has an alternative processing arrangement in place and prior written notice is given
to the Reserve Bank and the other party(ies). The Reserve Bank reserves the right, w ith ou t prior
notice, to terminate any arrangement covered by this Appendix.
G o v e r n i n g La w
28. Except as otherwise provided in paragraph 17 relating to a Gateway arrangement, the
terms of this Appendix shall be construed according to and governed by federal law, and the
law of the state of Texas to the extent such law is not inconsistent w ith federal law.
29. The provisions of this Appendix are binding on the legal representatives, successors, and
assigns of the parties to a third-party access arrangement.
A
mendment
30. The Reserve Bank reserves the right to amend the provisions of this Appendix at any tim e
w ith ou t notice. However, the Reserve Bank w ill attempt to give at least 30 calendar days' prior
notice of any amendment.
0 9-96
F e d e ra l R e se rv e B a n k of D a lla s
Operating
Circular
6
EXHIBIT I 1
LETTER OF AUTHORIZATION
(Date)
Federal Reserve Bank of Dallas
2200 North Pearl Street
Dallas, Texas 75201
Attention: Manager
[ Transfer o f Funds Division, Securities Department
and/or Securities Division, Securities Department]
We agree to the terms in Appendix 3 to the Reserve Bank's Operating Circular 6 and have complied
with all of its prerequisites to establish a third-party access arrangement with respect to [wire transfers o f
funds and/or book-entry securities transfers]. The third-party access arrangement is more fully described as
follows: [Describe h o w transfers w ill be handled for the Participant b y each Service Provider, including
procedures to ensure that a Service Provider cannot perm it or initiate a transfer that w o uld exceed an
individual customer credit lim it w ith ou t first obtaining the Participant's permission; a description o f the
Service Provider's operational capability to ensure that the aggregate transfer activity o f the Participant
does not result in a daylight overdraft over the Participant's cap; procedures and backup facilities adequate
to cover equipm ent failure or termination o f the Service Provider arrangement; and procedures by which
the Participant w ill m o n ito r transfers being made on its behalf].
[Name o f Service Provider and Substitute o r Pass-through Service Provider], the Service Provider(s),
[is(are)/is not(are not)] an affiliate of this depository institution, as defined in Appendix 3 to Operating
Circular 6.2 [ If the Service P ro vid e rs) is(are) not affiliated with the Participant, note the date on which
Participant's board o f directors approved the role and responsibilities o f the Service Provider with respect to
this third-party access arrangement.] [ I f the third-party access arrangement involves the use o f credit lim its
and board o f director approval is required pursuant to paragraph 14 o f A ppendix 3, note the date on which
the Participant's board o f directors approved the credit limit(s).]
The Service Provider(s) shall act as the Participant's agent(s) for the purpose of initiating, transm itting,
and receiving transfers where the Participant is the transferor or transferee. Any such transfer constitutes an
authentic and fully authorized transfer, as if it were sent in w riting and signed by a duly authorized officer of
the Participant.
This third-party access arrangement w ill allow [name o f Participant] to com ply with all applicable state
and federal laws and regulations governing the arrangement, including retaining and making accessible
records in accordance with the regulations adopted under the Bank Secrecy Act.
This third-party access arrangement is consistent with the principles of corporate separateness and
does not violate any state or federal law restrictions on branching.
The Service Provider may terminate this Agreement by giving 30 days' prior written or telegraphic
notice to the Participant and the manager of the Reserve Bank's Transfer of Funds Division, and/or Securi
ties Division if book-entry securities transfers are conducted under this arrangement. The Participant may
terminate this Agreement at any tim e by w ritten or telegraphic notice to the Service Provider and to the
manager of the Reserve Bank's Transfer of Funds Division, and/or Securities Division, if applicable, which
notice shall be effective as soon as an alternative processing arrangement is in place.
’ To be typed on the letterhead o f the depository institution holding the account.
2Specify here whether each Service Provider is or is not an affiliate o f the institution.
EXHIBIT 1 (continued)
[Name o f Participant]
[Name o f Service Provider]
B y :_________________________________
B y :_____________________
T itle :________________________________
T itle :.
Date:_______________________________
Date:
[Name o f Pass-through Service Provider]
[Name o f Substitute Service Provider]
B y :_________________________________
B y :______________________________
T itle :________________________________
T itle :_____________________________
Date:_______________________________
Date:_____________________________
0 9 -9 6
EXHIBIT 1A1
[For use in arrangements involving a Service Provider
located outside the United States]
LETTER OF AUTHORIZATION
(Date)
Federal Reserve Bank of Dallas
2200 North Pearl Street
Dallas, Texas 75201
Attention: Manager
[Transfer o f Funds Division, Securities Department
and/or Securities Division, Securities Department]
We agree to the terms in Appendix 3 to your Operating Circular 6 and have complied with all of its
prerequisites to establish a third-party access arrangement with respect to [wire transfers o f funds and/or
book-entry securities transfers]. The third-party access arrangement is more fully described as follows:
[Describe h o w transfers w ill be handled fo r the Participant by each Service Provider, including procedures
to ensure that a Service Provider cannot p e rm it or initiate a transfer that w ould exceed an individual cus
tom er credit lim it w ith ou t first obtaining the Participant's permission; a description o f the Service Provider's
operational capability to ensure that the aggregate transfer activity o f the Participant does not result in a
daylight overdraft over the Participant's cap; procedures and backup facilities adequate to cover equipment
failure o r termination o f the Service Provider arrangement; and procedures b y which the Participant w ill
m o n ito r transfers being made on its behalf].
[Insert name o f Service Provider and Substitute or Pass-through Service Provider], the Service
Provider(s), [is (are)/is not (are not) an affiliate o f this depository institution, as defined in Appendix 3 to
Operating Circular 6],2 [If the Service Provider(s) is (are) n o t affiliated with the Participant, note the date on
which Participant's board o f directors approved the role and responsibilities o f the Service Provider with
respect to this third-party access arrangement.3 [ I f the third-party access arrangement involves the use o f
credit lim its and board o f director approval is required pursuant to Paragraph 14 o f the Appendix, note the
date on which the Participant's board o f directors approved the credit limit(s).]
[Insert name o f Service Provider and Substitute or Pass-through Service Provider], is (are) located in
[insert name o f the country in which the Service Provider is located] and organized under the laws of [insert
name o f the country where Service Provider is incorporated or organized]. [Service Provider] is subject to
supervision by [name o f banking institution or organization which is responsible for the supervision and
regulation o f the Service Provider.] We understand that approval of this third-party access arrangement is
contingent upon a determination by the Reserve Bank and the Board of Governors of the Federal Reserve
System that the [Service P ro v id e r's home/host country supervision is sufficiently comprehensive.
The Service Provider(s) shall act as the Participant's agent(s) fo r the purpose of initiating, transm itting,
and receiving transfers where the Participant is the transferor or transferee. Any such transfer constitutes an
authentic and fully authorized transfer as if it were sent in a w riting signed by a duly authorized officer of
the Participant.
1To be typed on the letterhead of the depository institution holding the account.
in c lu d e here inform ation concerning whether each Service Provider is or is not an affiliate of the institution.
3ln cases where a U.S. branch of a foreign bank wishes to be a Participant and its board of directors has a more lim ited
role in the bank's m anagem ent than a U.S. board, the roles and responsibilities o f the Service Provider should be
reviewed by senior managem ent at the foreign bank's head office that exercises authority over the foreign bank
equivalent to the au thority exercised by a board o f directors over a U.S. depository institution.
EXHIBIT 1A (continued)
This third-party access arrangement w ill allow [name of Participant] to com ply w ith all applicable
State and Federal laws and regulations governing it, including retaining and making accessible records in
accordance w ith the Bank Secrecy Act and the regulations promulgated thereunder. We agree to make
available to you and [name o f Participant's prim a ry U.S. supervisor], in English, all policies, procedures, and
other documentation relating to Fedwire operations, including those related to internal controls and data
security requirements. We further agree to perm it [name o f Participant's p rim a ry U.S. supervisor] to con
duct on-site reviews of the Fedwire operations at [name o f Service Provider]. We understand that approval
of this third-party access arrangement is also conditioned upon your review of both [P articipant's and
[Service P ro v id e r's Fedwire policies and procedures, as well as [Service P ro vid e r's Fedwire-related opera
tions.
This third-party access arrangement is consistent w ith the principles of corporate separateness and
does not violate any State or Federal law restrictions on branching.
The Service Provider(s) may terminate the Agreement by written or telegraphic notice to the Partici
pant and to the Manager of your Funds Transfer Department and/or your Securities Department if bookentry securities transfers are conducted under this arrangement, which notice shall be effective th irty (30)
days after receipt. The Participant may terminate the Agreement at any tim e by written or telegraphic notice
to the Service Provider(s) and to the Manager of your Funds Transfer Department and/or your Securities
Department if book-entry securities transfers are conducted under this arrangement, which notice shall be
effective as soon as an alternative processing arrangement is in place.
[Name o f Participant]
[Name o f Service Provider]
B y :________________
T itle :______________
Title:
D ate:______________________________________
Date:
[Name o f Pass-through Service Provider]
[Name o f Substitute Service Provider]
B y :_________________________________
B y :______________________________
T itle :________________________________
T itle :_____________________________
D ate:_______________________________
Date:_____________________________
09 -9 6
EXHIBIT 2
MODEL RESOLUTION
AUTHORIZING OPERATIONAL RELOCATION OF
WIRE TRANSFER OF FUNDS AND/OR
BOOK-ENTRY SECURITIES ACTIVITY
TO A SERVICE PROVIDER
The follow ing resolutions were duly adopted at a meeting of the [type o f governing body, e.g., board o f
directors] of the [official name o f institution] (Participant), duly authorized and existing under the laws of
-------------------------------- , which meeting was duly called and held on t h e ______ day o f________________ ,
19------- , at which meeting a quorum was present, and that these resolutions are now in full force and effect
and are not in conflict with any provisions in the certificate of incorporation or bylaws of the Participant, or
w ith applicable law.
1. RESOLVED, that [title o f authorized officers] of the Participant, and their successors in office, be, and
any [appropriate number] of them, is/are authorized to enter into an arrangement with [name o f Service
Provider and Pass-through Service Provider, as applicable] (Service Provider(s)) and the Federal Reserve
Bank of Dallas (Reserve Bank), by which the Service Provider(s) may on behalf of the Participant [originate
and/or receive a funds transfer from o r to the Participant's reserve and/or clearing account] and/or [order
the transfer o f book-entry securities held in the Participant's book-entry securities accounts and/or accept
delivery o f book-entry securities into the Participant's book-entry securities accounts],
2. RESOLVED, that the Participant shall defend, indemnify, and hold the Reserve Bank harmless from any
claim, loss, or expense (including, but not limited to, attorney's fees and litigation costs) arising out of or
resulting from the Reserve Bank's handling of funds and/or securities transfers under this arrangement,
other than loss or expense caused solely by the failure of the Reserve Bank to exercise ordinary care.
3. RESOLVED, that the Reserve Bank is authorized to debit/credit the Participant's reserve and/or clearing
account at the Reserve Bank according to instructions received from the Service Provider(s), even if a debit
associated with a transfer of [funds o r book-entry securities] results in an overdraft in the Participant's
reserve and/or clearing account. Should any debit to the Participant's reserve and/or clearing account result
in an overdraft, the Participant is hereby authorized to incur the indebtedness and shall be indebted to the
Reserve Bank for the overdraft.
4. RESOLVED, that as a part of this arrangement, the Service Provider(s) must agree that [it(they) w ill not
send to the Reserve Bank any transfer o f funds or book-entry securities that has not been individually
authorized and approved by the Participant] or [it(they) w ill not send to the Reserve Bank any transfer that
w ould exceed the lim its adopted b y the Participant from time to time and communicated to the Service
Provider(s)].2
5. RESOLVED, that these resolutions and all of the powers and authorizations hereby granted or con
firm ed shall continue in full force and effect until written notice of their revocation is given to and received
by the Reserve Bank.
1This exhibit provides an example of board of director approval that w ould satisfy the approval requirem ent set forth
in Paragraph 14. A Participant is not required to subm it this resolution nor is a Participant required to use this
2
resolution to obtain board of director approval.
The lim its referred to include the sender net debit cap and specific lim its on transfers to affiliates, and the specific
customer credit limits. The sender net debit caps and lim its on transfers to affiliates m ust be approved by the board of
directors in other resolutions. The customer credit lim its may be adopted by the board or may be established under
the institution's ordinary procedures for establishing credit limits.
EXHIBIT 2 (continued)
IN WITNESS WHEREOF, I have hereunder subscribed my name.
DATED:_______________________ 19________
[Signature of certifying official]
[Name and title ]3
3
Cashier/comptroller/secretary.
EXHIBIT 3 1
MODEL RESOLUTION—INTER-AFFILIATE TRANSFERS
The follow ing resolutions were duly adopted at a meeting of the [type o f governing body, e.g., board o f
directors or trustees] of the [official name o f Participant] (Participant), duly authorized and existing under
the laws o f ----------------------------------- , which meeting was held on t h e _______day o f ________________ ,
19------- , and that these resolutions are now in full force and effect and are not in conflict w ith any provi
sions in the certificate of incorporation or bylaws of the Participant, or w ith applicable law.
RESOLVED, that whenever, during the business day of the Federal Reserve Bank of Dallas (Reserve
Bank), the Participant fails to maintain a balance of funds in its account at the Reserve Bank sufficient to
cover the amounts of funds transfers, or other debits charged to that deposit account, the Participant shall
be indebted to the Reserve Bank to the extent that the balance of such account is negative, and that the
Participant is hereby authorized to incur such indebtedness.
RESOLVED, that the Participant is authorized to extend credit during the day to [name o f affiliate] by
transferring to [name o f affiliate]' s account at the Reserve Bank. The aggregate am ount of the credit that
may be extended to [name o f affiliate] on any day shall not exceed an am ount equal to the entire balance of
funds in the Participant's account at the Reserve Bank, plus an amount that is not greater than the
Participant's net debit cap adopted by the Participant and approved by the Reserve Bank under the policy
regarding risks on payment systems adopted by the Board of Governors of the Federal Reserve System,
and reduced by the amount of any outstanding indebtedness of the Participant to the Reserve Bank.
RESOLVED, that these resolutions and all of the powers and authorizations hereby granted or confirmed
shall continue in full force and effect until written notice of their revocation is given to and received by the
Reserve Bank or fo r one year, whichever occurs earlier.
IN WITNESS WHEREOF, I have hereunder subscribed my name.
DATED:______________________ , 19-------------
[Signature of certifying official]
[Name and title]
1This exhibit provides an exam ple of board of director approval that w ould satisfy the approval requirem ent set forth
in Paragraph 14. A Participant is not required to subm it this resolution nor is a Participant required to use this
resolution to obtain board of director approval.
@FedFRASER