View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

F

ederal

R

eserve

B ank

OF DALLAS
TO N Y J . SALVA G G IO
f i r s t v ic e

D ALLA S, T E X A S

p re s id e n t

August 30, 1993

75222

Notice 93-91
TO:

The Chief Operating O f ficer of
each f i n a n c i a l i n s t i t u t i o n in the
Eleventh Federal Reserve D i s t r i c t

SUBJECT
Operating Circular 4
(Reserves of Depository Institutions)
DETAILS
The Federal Reserve Bank of Dallas has begun renaming and r e i s s u in g
i t s B u l l e t i n s as Operating C ir cu lar s in order to conform to th e language used
in the Uniform Commercial Code. Accordingly, B u lleti n 4 is being reis s ued as
Operating C ir c u la r 4 (Reserves of Depository I n s t i t u t i o n s ) . There are no
s u b s t a n t i a l changes.

ENCLOSURE
Enclosed i s Operating C ir c u la r 4. Please f i l e i t in your Operating
C i r c u la r s ( B u l l e t i n s ) binder and di sc ard the old ver sion.

MORE INFORMATION
For more information, please contact the Reserves and Risk Manage­
ment Division a t (214) 922-5646, at the Dallas Office . Depository i n s t i t u ­
t i o n s in the El Paso t e r r i t o r y should co ntact the Reserve Maintenance Division
a t (915) 521-8212; in the Houston t e r r i t o r y , (713) 652-1538, and in the San
Antonio t e r r i t o r y , (210) 224-2141.
For additional copies of t h i s Bank’ s not ice or Operating C ir c u l a r 4,
please co ntact the Public A f fa ir s Department a t (214) 922-5254.
Sin ce re ly,

r

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

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

Operating Circular
F e d e r a l

R e s e r v e

B a n k

o f

D a l l a s

Reserves of
Depository Institutions

Scope
Operating Circular 4 sets forth general information pertaining to reserve balances that depository
institutions are required by Section 19 of the Federal Reserve Act and Regulation D o f the Board
o f Governors o f the Federal Reserve System to maintain with this Bank.

F ed e ra l R ese rve B ank of D allas

08-93

Operating
cul

ijjllH O W ln te ,5s
f
4
RESERVES OF DEPOSITORY INSTITUTIONS
Paragraphs
D efin itio n s...................................................................................................

1-7

FR 2900 Report
Contem poraneous reserve requirements
Computation period
M aintenance period
Reference to Operating Circular 1 (Bulletin 1)
T erm s........................................................................................................

8

FR 2900 R e p o rt......................................................................................
Submission of FR 2900 Report
Required reserves determined by FR 2900 Reports
Determination of balances at close of the banking day
Correct completion of FR 2900 Report

9-12

Reserve C o m p u tatio n ........................................................................... 13-15
How to compute reserves
Period to which computation applies
Reserve balance
C harges..................................................................................................... 16-19
Charges for reserve deficiencies
Assessment of charges
Charge rate
Waiver of charges
Pass-Through Reserve Balances...........................................................20-31
General
Designation
Maintenance of reserves
Termination of Pass-Through Agreement
Right to A m en d ......................................................................................
Exhibit 1: Pass-Through Agreement

08-93

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

32

D e f in it io n s

in the corresponding maintenance
period. (See Supplement A for the
current schedule.)

FR 2900 Report
1. “FR 2900 Report” means the “Report of
Transaction Accounts, Other Deposits and Vault
Cash” (Form FR 2900), sufficient copies of
which are supplied annually to depository
institutions and extra copies of which may be
obtained from this Bank as needed.

Contemporaneous Reserve Requirements
2. Effective February 2, 1984, weekly reporting
institutions are required to maintain reserves on
their transaction account balances “contempora­
neously”— that is, with a two-day lag—while
reserve requirements on nontransaction liabili­
ties continue to be met on a lagged basis. It is
important to note that contemporaneous reserve
requirements (CRR) place a greater responsibil­
ity on depository institutions to project their
own reserve requirements in advance of the
maintenance period.

Computation Period
3. “Computation period for weekly report­
ers”— a two-week period beginning on a Tues­
day and ending on the second Monday there­
after, which consists of two reporting periods.
Data from two separate computation periods are
needed to calculate the total reserve requirement
to be maintained during a given maintenance
period, as follows:

Operating
Circular

4

4. “Computation period for quarterly report­
ers”— a one-week period beginning on the third
Tuesday of March, June, September, and De­
cember and ending the following Monday, which
corresponds to a reporting period. (See Supple­
ment B for the current schedule.)

Maintenance Period
5. “Maintenance period for weekly reporters”
means the two-week— 14-day—reserve period
starting on a Thursday and ending on the second
Wednesday thereafter. In other words, the
maintenance period will end only two days after
the end of its corresponding contemporaneous
computation period but 16 days after the end
of its corresponding lagged computation
period. Settlement day will then be every other
Wednesday.
6. “Maintenance period for quarterly report­
ers” means the 13 one-week periods that begin
on the fourth Thursday after the end of the
March, June, September, and December compu­
tation periods, during which a depository
institution holds reserve and clearing balances to
satisfy its total balance requirement. A given
maintenance cycle for quarterly reporters ends
on the fourth Wednesday after the close of the
institution’s next computation period.

Reference to Operating Circular 1 (Bulletin 1)
A. Computation period for transaction
accounts for weekly reporters— a twoweek period that begins on a Tuesday,
two days before the beginning of the
corresponding maintenance period; also
called the contemporaneous computation
period. The reserve requirement on
transaction accounts is calculated on the
basis of data drawn from this period.
(See Supplement A for the current
schedule.)
B. Computation period for nonpersonal
time and savings deposits, Eurocurrency
liabilities, and vault cash for weekly
reporters— a two-week period that ends
on a Monday, two days before the
beginning of the corresponding mainte­
nance period; also called lagged compu­
tation period. Vault cash for the period
is used to satisfy all reserve requirements
08-93

7. Several definitions, rules of construction,
and other provisions applicable to this Operating
Circular are found in our Operating Circular 1,
General Provisions, and are incorporated herein
by reference.

Term s
8. Terms used in this Operating Circular will
have the same meanings given them in the
Monetary Control Act of 1980 and in Regulation
D of the Board of Governors of the Federal
Reserve System, unless otherwise indicated.

FR 2 9 0 0 REPORT
Submission ofFR 2900 Report
9. Each weekly and quarterly reporting deposi­
tory institution shall send this Bank a weekly or

F e d e ra l R e s e rv e B ank of D allas

1

quarterly FR 2900 Report. This report should be
completed and mailed in time to reach this Bank
by the Wednesday after the Monday report
period ending date. Depository institutions
transmitting their data through the Federal
Reserve Bank of Dallas RESPONSE network via
the Remote Edited Deposits System (REDSYS)
should do so by no later than 2:30 p.m. on the
Tuesday after the Monday report period ending
date.

Required Reserves Determined
by FR 2900 Reports
10. The FR 2900 Report of a depository institu­
tion will determine the amount of reserves
required to be maintained in its reserve balance
for the maintenance period. As provided in
Sections 204.3(c) and 204.3(d) of Regulation D,
the reserve requirements of depository institu­
tions are determined on the basis of average daily
deposit balances and average daily vault cash
during the computation period, as set out in the
FR 2900 Reports for that period.

Period to Which Computation Applies
14. For weekly reporters, the reserve computa­
tion made by a depository institution represents
the reserves required to be maintained during the
maintenance period, which ends only two days
after the end of its corresponding contempo­
raneous computation period but 16 days after
the end of its corresponding lagged computation
period. For quarterly reporters, the related sevenday maintenance periods begin on the fourth
Thursday after the end of the March, June,
September, and December computation periods
and end on the fourth Wednesday after the close
of the institution’s next computation period.

Reserve Balance
15. The reserve balance of a depository institu­
tion shall consist of the depository institution’s
average daily balance with this Bank at the end of
each day during the related maintenance period.

Charges
Charges for Reserve Deficiencies

Determination o f Balances at Close
o f the Banking Day
11. The balance for each day should reflect the
balance at the close of business that day. The
balance for a nonbanking day will be identical
with the balance for the immediately preceding
banking day. Each depository institution’s
balance with the Federal Reserve Bank is com­
puted at the end of each day.

Correct Completion ofFR 2900 Report
12. Detailed instructions for the preparation of
the FR 2900 Report, including a glossary of
related terms, are furnished to all reporting
depository institutions.

16. Depository institutions will be notified in
writing of any reserve deficiency. Any excess or
deficiency of a depository institution’s required
reserves will be carried forward to the following
reserve maintenance period to the extent that
such excess or deficiency does not exceed 4
percent of the total reserves required in the
maintenance period in which the excess or
deficiency occurred. Any excess or deficiency
greater than 4 percent will not be carried for­
ward. Any portion of the 4 percent allowable
excess or deficiency not offset in the following
reserve maintenance period may not be carried
forward to subsequent maintenance periods.

Assessment o f Charges
Reser v e C o m p u t a t io n
How to Compute Reserves
13. Work sheets are provided by the local
Federal Reserve Bank for determining the
amount of reserves a depository institution must
maintain with us. Depository institutions are
encouraged to maintain current computations of
their required reserves so that they will be aware
of their required reserve position and be able to
verify the data shown on the “Report of Required
Reserves.” Copies of the work sheets are available
upon request.

17. A deficiency charge will be assessed on the
25th day of the month, two months after the
month in which the deficiency is incurred. If the
25th day of the month is on a nonbanking day,
the charge will be assessed on the first banking
day after the 25th.

Charge Rate
18. Charges are assessed at a rate of 2 percent
per annum greater than the lowest rate in effect
for borrowings from this Bank on the first day of
the calendar month in which the deficiency or

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

08-93

deficiencies occurred, as specified in Supplement
A to Operating Circular 2 (Bulletin 2), Loans.

Waiver o f Charges
19. This Bank has discretionary power to waive
charges for deficiencies, and such power shall be
exercised on a case-by-case basis, with particular
attention given to instances in which the charge
would be nominal and the depository institution
is making appropriate efforts to maintain
adequate reserves.

P a s s -T h r o u g h R e s e r v e B a l a n c e s
General
20. This section sets forth the terms for pass­
through reserve balances maintained by “pass­
through correspondents”— including depository
institutions that maintain required reserves at
this Bank, Federal Home Loan Banks, the
Central Liquidity Facility of the National Credit
Union Administration, head or branch offices of
Edge Act or agreement corporations, United
States branches and agencies of foreign banks, or
other authorized institutions— for respondents
located in this Federal Reserve District, as
provided in Section 204.3(i) of Regulation D.

designation of a pass-through correspondent will
become effective on the date specified by us in
letters to the pass-through correspondent and
the respondent that acknowledge receipt of the
agreement.
23. If the pass-through correspondent is located
in the Eleventh Federal Reserve District, it may
elect to include its respondents’ pass-through
reserve balances in its reserve account or may
elect to establish at the office where it maintains
its reserve account a separate “pass-through
account” with this Bank in which to hold all
reserve balances of only its respondents located
in this District, in each case subject to the terms
of this Operating Circular. If the pass-through
correspondent is located in another Federal
Reserve District, it must establish a pass-through
account on this Bank’s books.
24. The reserve balances of respondents will be
commingled in either the pass-through
correspondent’s reserve account or its pass­
through account. The balances in the reserve
account or pass-through account shall be
deemed to be the property of the pass-through
correspondent and shall be subject to its sole
order.

Maintenance o f Reserves
21. A depository institution desiring to serve as a
pass-through correspondent for an institution
located in another Federal Reserve District (a
depository institution, a branch or agency of a
foreign bank, or a head or branch office of an
Edge or agreement corporation) should contact
the Federal Reserve Bank of the District in which
the proposed respondent is located. This Operat­
ing Circular does not apply to pass-through
arrangements involving respondents located in
other Federal Reserve Districts.

Designation
22. A nonmember depository institution (an
institution that is not a member of the Federal
Reserve System), a branch or agency of a foreign
bank, or a head or branch office of an Edge or
agreement corporation located in the Eleventh
Federal Reserve District (“respondent”) may
elect to maintain its required reserve balances
with this Bank or through a pass-through
correspondent in a “Pass-Through Agreement”
letter in the form set forth in Exhibit 1 of this
Operating Circular. The pass-through corre­
spondent designated in such a letter must also
execute the letter and forward it to us. The
08-93

25. At the end of each maintenance period, this
Bank will issue to each Eleventh Federal Reserve
District depository institution a detailed state­
ment indicating its reserve requirement for the
maintenance period. At the same time, the pass­
through correspondent will be furnished a
summary of the total reserve requirements for its
respondents located in the Eleventh District for
the maintenance period. Any charge for defi­
ciency in reserve balances for the maintenance
period will be imposed by this Bank on the pass­
through correspondent by a debit to the reserve
account, or pass-through account, in which
the deficiency occurred. The pass-through
correspondent may recoup any such charge from
a respondent in accordance with any agreement
between them.
26. The pass-through correspondent shall
maintain and retain, for a period of at least five
years, records showing all transactions affect­
ing the maintenance of reserve balances by each
of its respondents.
27. A pass-through correspondent may use a
pass-through account to settle the transactions of

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

its respondents. A correspondent may maintain
balances for weekly respondents only, for
quarterly respondents only, or for both weekly
and quarterly respondents. Because quarterly
reporters maintain reserves on a weekly basis, a
pass-through correspondent that is a weekly
reporter must maintain sufficient balances in the
account for each week of the two-week mainte­
nance period to satisfy the total balance require­
ments of the quarterly reporters. If the m ain­
tained balance in each week does not satisfy the
total balance requirements for each week for
quarterly reporters, a charge may be imposed on
the pass-through correspondent.
28. Inquiries about the provision of services by
this Bank directly to a respondent, involving the
use of the reserve account or the pass-through
account of its pass-through correspondent,
should be addressed to the appropriate operating
area of this Bank. A respondent that maintains
reserves with a pass-through correspondent and
desires direct access to this Bank’s services may,
with our prior approval, open a clearing account
with us for that purpose.

respondent immediately upon termination of the
Pass-Through Agreement unless a new PassThrough Agreement has been established in
accordance with the provisions of paragraphs
22-24.
31. This Bank may terminate a Pass-Through
Agreement by issuing written notice of termina­
tion to the respondent and to the pass-through
correspondent. Such termination shall be
effective when received by the respondent or at
such later date as is specified in the notice.

R ig h t t o A m e n d
32. We reserve the right to amend this Operat­
ing Circular and any appendix, exhibit, or
supplement to it at any time without notice.

29. All wire transfers of funds or payments for
wire transfers of securities from the reserve
account or the pass-through account must be
made by the pass-through correspondent and
may not be made by a respondent. All wire
transfers of funds or securities to a respondent
not maintaining a clearing account with this
Bank must be for the account of the pass­
through correspondent or other correspondent
maintaining an account with this Bank and may
designate that the transaction is for the benefit of
the respondent in the description portion of the
transfer message.

Termination o f Pass-Through Agreement
30. A respondent may terminate a Pass-Through
Agreement by delivering written notice of
termination to its local Reserve Bank and to the
pass-through correspondent. A pass-through
correspondent may terminate its agreement by
delivering written notice of termination to the
local Reserve Bank and to the respondent. Unless
otherwise specifically agreed to by this Bank,
termination by either a respondent or a pass­
through correspondent will be effective at our
close of business on the final day of the mainte­
nance period that ends 14 days after the mainte­
nance period in which the notice is received by
this Bank. This Bank will establish a reserve
account on its books in the name of the former
F e d e ra l R e s e rv e B a n k o f D allas

08-93

E X H IB IT 1
PASS-THROUGH AGREEMENT1
To:

Federal Reserve Bank of Dallas at
□

Dallas

□

El Paso

□

Houston

□

San Antonio

The undersigned respondent and correspondent agree as follows:
1. Respondent hereby selects correspondent to pass through respondent's required reserves to
the Reserve Bank.
2.

Respondent shall maintain its reserves in an account at correspondent, and correspondent shall
pass through such reserves to the Reserve Bank for an account established pursuant to
□

Section 204.3(i)(3)(i)(a) or

□

Section 204.3(i)(3)(i)(b) or

□

Section 204.3(i)(3)(iii)

of Regulation D of the Board of Governors of the Federal Reserve System.
3.

Regulation D (12 C.F.R. Part 204) and the Reserve Bank's Operating Circular 4, as they now exist
or are hereafter amended, provide additional terms and conditions as to this agreement, and
the parties agree to comply therewith.

4. This agreement may be terminated only in accordance with Operating Circular 4.
5. Effective date (to be supplied by the Reserve Bank):________________________________________

Respondent

Correspondent

Mailing Address

Mailing Address

City

State

ZIP

City

Name

Title

Date

ZIP

Name

Title

State

Date

ACCEPTED AND AGREED TO:
FEDERAL RESERVE BANK OF DALLAS
Name
Title
Date
Prepare in triplicate. A fter execution by both respondent and correspondent, forward all copies to the Reserve Bank for acceptance.
Upon acceptance, the Reserve Bank w ill supply an effective date and return copies to respondent and correspondent.

08-93

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