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Federal Reserve Bank
OF DALLAS
W IL L IA M

H. W ALLACE

DALLAS. TEXAS 7 5 2 2 2

FIRST V IC E PR ES ID ENT
AND CHIEF O PER ATING O FFIC ER

December 1, 1988
Circular 88-82

TO:

All financial institutions in the
Eleventh Federal Reserve District
that receive ACH transactions
SUBJECT

New procedures fo r n o tify in g o rig in a tin g agencies of changes in
government ACH payments
DETAILS

Background: You may recall that in December 1987, in order to speed
up the process by which changes are made to individual government payments,
the U.S. Treasury's Financial Management Service (FMS) began converting the
Notification of Change (NOC) procedure for government ACH payments to the
commercial NOC process.
In this first phase, receivers of government payments
could change account number or routing transit number data included in these
payments by depositing automated NOCs with their Federal Reserve Bank in place
of sending marked-lip 1199A forms directly to originating agencies.
No fees
are imposed for deposit of automated NOCs.
New Option: The FMS has now announced Phase II of its new NOC
procedures.
Depository institutions without the capability to create and
deposit automated NOCs may now deposit government NOCs with their Reserve Bank
in paper form. The Reserve Banks will convert these paper NOCs to electronic
form and transmit them to originating agencies exactly as automated NOCs
deposited with Reserve Banks are transmitted.
The FMS and the Federal Reserve
Board have authorized Reserve Banks to charge depositors a $1.00 conversion
fee for each paper government NOC to partially defray handling costs and as an
incentive to DIs to automate these items.
Phase II will be implemented in the
Eleventh Federal Reserve District on January 3, 1989.
Benefits, requirements: The FMS and the Federal Reserve believe that
depositing institutions will notice a much faster response by originating
agencies to NOCs as a result of converting to the commercial NOC process.
Currently, originating agencies normally require 60 to 90 days to effect the
change presented to them on a marked-up 1199A form. Also, under the new NOC
procedures, originating government agencies will use more automated systems
and will have more stringent formatting requirements for NOCs than with the
old procedures.

For additional copies of any circular please contact the Public Affairs D ep artm en t at (214) 651 -6 2 8 9 . Banks and others are
encouraged to use the following incoming W A TS numbers in contacting this Bank (800) 4 4 2 -7 1 4 0 (intrastate) and (800)
5 2 7 -9 2 0 0 (interstate).

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

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Further Instructions: To assist you in meeting the agencies'
requirements, we are preparing detailed instructions for your use in
completing the paper NOC forms. We plan to distribute this information to you
by mid-December 1988.
Following these guidelines will result in a reduction
in rejected NOCs which will allow for faster updating of agencies' records.
The end result will be better service to your customers.
In Summary:
Beginning in January 1989, Eleventh District
institutions will have three options for providing government payment
notification of change:
* The old procedure whereby institutions send marked-up 1199A forms
directly to agencies
* The procedure effective December 1987 for depositing automated NOCs
* The new paper NOC procedure described above.
Automated methods of depositing NOCs offer your institution many
advantages.
No fees are assessed for deposit of automated NOCs, and the
Federal Reserve normally completes processing of automated NOCs in one day.
Therefore, I encourage you to use automated methods of depositing these items
whenever possible. Of course, you should consider the use of an electronic
connection in handling all ACH traffic as well as funds transfer and other
electronic services due to the speed, security, and low cost this technology
provides.

MORE INFORMATION
For more information on the FMS program and on the benefits of an
electronic connection, please contact:
Tracy Whitten or B. B. Sessions at the Dallas Office
Local: (214) 651-6403
Toll Free: TX (800) 442-7140, LA (800) 527-9200
Eloise Guinn or Connie Martinez at the El Paso Office
Local: (915) 544-4730
ToVf Free: TX (800) 592-1631, NM (800) 351-1012
Louis Moore or Lilia Hice at the Houston Office
Local: (713) 659-4433
Toll Free: (800) 392-4162
Kerry Perkins or Jennifer Pruitt at the San Antonio Office
Local: (512) 224-2141
Toll Free: (800) 292-5810
Sincerely yours

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