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F E D E R A L R E S E R V E B A N K OF D A L L A S Station K, Dallas, Texas 7 5 2 2 2 C i r c u l a r No. 84-115 December 4, 1984 TO: All d e p o s i t o r y i n s t i t u t i o n s Reserve D i s t r i c t ATTENTION: Chief Executive O f f i c e r SUBJECT: Request for public comment on proposed revisions to the fee structures for the Federal Reserve's definitive securities safekeeping and noncash collection service SUMMARY: The Board o f Governors o f t he Federal Reserve System is r e q u e s t i n g p u b l i c comment on a proposal to r e v i s e the s t r u c t u r e o f fees charged by Federal Reserve Banks for th e ir d efin itiv e secu rities s afek eep i n g and noncash c o l l e c t i o n service. Complete d e t a i l s a re provided in t h e a t t a c h e d m a t e r i a l s . in t h e Eleventh Federal I n t e r e s t e d p a r t i e s a re i n v i t e d t o submit comments to William W Wiles, S e c r e t a r y , Board o f Governors o f t he . Federal Reserve System, 20th S t r e e t and C o n s t i t u t i o n Avenue, N.W., Washington, D.C. 20551. Comments must be re c ei v e d by December 28, 1984, and should r e f e r to Docket No. R-0533. ATTACHMENTS: B oard' s p r es s r e l e a s e and m a t e r i a l as p u b l i c a t i o n in t he Federal R e g i s t e r MORE INFORMATION: Lynn Vick, (214) 651-6263 a t t he Head O f f i c e ; Robert W S c h u l t z , (915) 544-4730 a t t h e El Paso . Branch; Andrew W Hogwood, . (713) 659-4433 Houston Branch; or Tony G. Val en ci a , (512) 224-2141 a t t h e San Antonio Branch ADDITIONAL COPIES: s ub mi tt ed for Public A f f a i r s Department, Ext ension 6289 Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank: 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) at FEDERAL RESERVE press release For immediate r e l e a s e November 21, 1984 The Federal Reserve Board t oday p u b l i s h ed f o r p u b l i c comment proposed r e v i s i o n s to th e s t r u c t u r e of fe es charged by t h e Federal Reserve Banks f o r t h e i r d e f i n i t i v e s e c u r i t i e s sa f e ke ep ing and noncash c o l l e c t i o n s e r v i c e . The Board r e q u e s t s comment by December 28, 1984. The Board proposed two changes in t h e fee s t r u c t u r e f o r d e f i n i t i v e s e c u r i t i e s sa f e k e e p in g . These changes i n c l u d e t h e i n t r o d u c t i o n of a r e r e g i s t r a t i o n f e e ( t o r ecove r t h e c o st of sending a r e g i s t e r e d s e c u r i t y t o a t r a n s f e r agent f o r r e r e g i s t r a t i o n ) and an a d d i t i o n a l fee f o r m a i n t a i n i n g coupon b e ari n g s e c u r i t i e s . The Board a l s o proposed t h r e e changes t o t h e fee s t r u c t u r e f o r noncash collection. A fe e would be charged t o t h e d e p o s i t o r f o r any coupon d e p o s i t t h a t i s r e tu r n e d as u n c o l l e c t i b l e . Reserve Banks would be given t h e o p t i on of a do pt ing a mixed d e p o s it program, which allows a d e p o s i t o ry i n s t i t u t i o n t h e o p p o rt u n i t y t o d e p o s i t a l l of i t s coupons in one mixed d e p o s i t . The Reserve Banks would a l s o have t h e option of c ha rging a hig he r fe e t o reco v er t h e a d d i t i o n a l c o s t s of c o l l e c t i n g noncash items payable a t c ountry e n d p o i n t s . The B oard's n o t i c e i s a t t a c h e d . -0- Attachment FEDERAL RESERVE SYSTEM (Docket No. R-053 3) FEE SCHEDULES FOR FEDERAL RESERVE BANK SERVICES AGENCY: Board of Governors of the Federal Reserve System. ACTION: Request for Comment. SUMMARY: on The Board of Governors proposed Reserve's revisions definitive to the is requesting public fee structures securities for safekeeping the and comment Federal noncash collection service. DATE: Comments must be received by December 28, ADDRESS: Comments, m a y be mailed Governors which should refer to Mr. of the Federal Constitution Avenue, to Room B-2223 William W. Reserve Wiles, 8:45 a.m. Docket and No. Secretary, System, N.W., Washington, between to 1984. 2 0th D.C. Board of Street 20551, 5:15 R - 0 5 3 3, p.m. and or delivered Cbmments received may be inspected at Room B-1122 between 8:45 a.m. 5:15 p.m., Rules except as Regarding the provided in Availability § 261.6(a) of of the Information, and Board's 12 C.F.R. § 261.6(a) . FOR FURTHER INFORMATION CONTACT: (202/452-3954) or Donna A. Gerald D. Manypenny, DeCbrleto, Senior Manager Analyst (2 02/452-3956), Division of Federal Reserve Bank Operations; or Gilbert T. Schwartz, Associate General or Daniel L. Attorney (2 02/452-3711), Rhoads, Counsel (202/452-362 5); Legal Division, - 2 - Board of Governors of the Federal Reserve System, Washington, D.C. 20551. SUPPLEMENTARY INFORMATION: approved schedules fee safekeeping and (September 29, matching Factor of of 1983). costs, ("PSAF"), 1984. for September the 1983, definitive collection excluding data However, the the Private 48 Sector indicate in order PSAF, and that F.R. 4467 revenues in Accordingly, the Board a Adjustment the third quarter this to achieve believes that certain changes in the current be necessary. Board securities service. and revenues by the end of including the The fees were established to provide Preliminary virtually met. costs, noncash In goal was a matching 1985 the of Board fee structure ma y proposes to adopt the following changes: Definitive Securities Safekeeping -- Two structural changes are proposed for the definitive securities safekeeping activity. The first reregistration fee, proposed change, introduction of a Reserve Banks to recover the cost of sending a registered security to a transfer agent for reregistration. would enable the Securities delivered to the Reserve Bank are generally registered in the name of the former owner and must be reregistered in the name of sending a security to a the new owner. transfer agent and The costs of related recordkeeping have been increasing as the number of registered securities increases. It is proposed that all Reserve Banks offering the service would institute a reregistration fee. - 3 - The definitive second proposed pricing securities optional basis, safekeeping is more bearing the securities. securities Safekeeping costly since maturing yearly. is of a fee to differentiate coupon registered safekeeping structure modification in Registered coupon do not on the higher as coupons must securities addition, cost of compared bearing be incur an with securities clipped these twice expenses because they generally have no coupons. This proposed fee would be based on the par value of the bearer securities value of coupon rather bearing than number of pieces. securities is appropriate measure for three reasons: closely approximates bearer municipal the number securities believed to be (1) par value of pieces involved are The par since most minimize (3) par value value pricing practice. option in its 1985 Bank account Reserve a basis for reconcilement costs sector Reserve as (Philadelphia) maintenance Banks providing to be Reserve (New York, this Therefore, fee would for depository institutions; appears Three assessing (2) their holdings in terms of par value rather than number of pieces. par pricing in £5,000 denominations; depository institutions typically keep track of using an consistent Banks Cleveland, proposes fee. At definitive not intend to adopt this option. propose and time securities private to adopt Dallas); to adopt this with a and this fourth it by altering the remaining safekeeping do - 4 - Proposed structural fees for modifications, 1985, and incorporating current fees the are proposed shown in Schedule 1. Noncash Collection — Three pricing structure changes proposed in noncash collection: fee; the addition of a mixed deposit option on a permanent (2) basis; and program, (1) an optional are return item (3) for Reserve Banks not choosing the mixed deposit the option of setting different city and country collection fees. The return item fee would be charged deposit that Noncash return security is costs separately for returned items are involved return parts of the country. to depositor costly due with items All the to handling parallels as for any coupon uncollectible. the high labor them. the and Charging practice in Reserve Banks except Atlanta most propose to adopt this option. The second proposed structure change would be to adopt the noncash mixed deposit mixed deposit program, program on an optional basis. The implemented by four Reserve Banks on a pilot basis, offers a depository institution the opportunity to deposit all of its coupons in one mixed the need for depositors to pre-sort coupons in-district Reserve Atlanta, versus Banks now items payable participating St. Louis, and Dallas) deposit. into This reduces items payable out-of-district. in the pilot The four (Cleveland, plan to adopt this option. - 5 - The final proposed structure change would give Reserve Banks not participating in the mixed deposit program the option of charging a higher fee collecting items payable additional costs to recover at reflect the additional country added expenses associated with these costs of endpoints. handling items. and These preparation At this time only the New York Reserve Bank plans to adopt this option. Proposed fees for 198 5, which incorporate the proposed revisions to the fee structure, and current fees are shown in Schedule II. The Board believes the definitive securities that the proposed modifications to safekeeping and noncash collection fee schedules will enable the Federal Reserve System to recover fully the costs of providing this service, 1985. Further, the Board believes including that the options PSAF, in provided Reserve Banks by these proposals wil permit the Reserve Banks greater flexibility in meeting the needs of depository institutions and responding to local market conditions. B y order Reserve System, of the Board November 20, of Governors of the Federal 1984. (sig n ed ) W illiam W. W iles William W. Wiles Secretary of the Board SCHEDULE I 1985 PRICE SCHEDULE DEFINITIVE SAFEKEEPING RECEIPTS/ISSUES PURCHASES RE- 1-400 1984 1-400 1985 400+ 1984 400+ 1985 A D SALES N 1984 1985 12.50 2.80 2.90 2.10 2.20 15.00 15.00 12.50 ---- 35.50 35.50 5.35 5.35 4.75 4.75 23.00 23.00 35.50 0.0050 16.00 15.00 16.00 3.00 3.25 2.00 2.25 19.00 20.00 20.00 15.00 15.00 15.00 15.00 2.25 2.00 1.75 1.50 25. 00 25.00 15.00 RICHM OND 4/ ATLANTA 15.00 15.00 15.00 15.00 1.50 1.95 1.00 1.45 20.00 20.00 15.00 0.00 0.00 5.00 5.00 N/A N/A 5.00 CHICAGO 11.00 11.00 11.00 5/ DETROIT “ 11.00 11.00 ST. LOUIS 8.00 MINNEAPOLIS DEPOSITS 1985 1984 W ITHDRAW ALS 1/ 1984 1985“ 12.50 12.50 12.50 35.50 35.50 PHILADELPHIA 15.00 CLEVELAND BOSTON N W Y RK E O REGISTRATIONS 1985 1/ VALUE 1985 ; 3/ 0.0050 * see below * see below 11.00 3.00 3. 50 2.75 2.75 19.00 21.00 11.00 ---- 11.00 11.00 2.00 2.25 1.75 2.00 N/A N/A 11.00 ---- 10.00 8.00 10.00 1.25 1.50 0.90 0.90 N/A N/A 10.00 ---- 8.00 8.00 8.00 8. 00 1.40 1.40 0.75 0.75 10.00 10.00 8. 00 KANSAS CITY 15.00 15.00 15.00 15.00 1.50 2.50 1.25 2.25 20.00 20.00 15.00 ---- DALLAS 10.00 10.00 10.00 10.00 2.75 2.25 2.50 2.00 26.50 26.50 10.00 0.0080 1/ ACTUAL SHIPPING COSTS ADDITIONAL. 2/ APPLIED TO COUPON BEARING SECURITIES ONLY; FEE PER $1,000 PAR VALUE. 3/ PHILADELPHIA IS PROPOSING A $2.25 FEE FOR ALL REGISTERED SECURITIES. OF REGISTERED SECURITIES VERSUS BEARER SECURITIES. 4/ ATLANTA 1-500 RECEIPTS @ $2.50 IN 1984/85, 500-1000 @ $2.00 IN 1984/85, AND 1000+ @ $1.50 5/ DETROIT PILOT 1-100 RECEIPTS PRICED AT @ $3.00 1984/85, OVER 100 RECEIPTS @ $2.25 IN 1984 AND $2.50 IN INCLUDING COLLECTION OF COUPONS. THIS IS TO RECOGNIZETHE LOWER HANDLING COSTS IN 1984/85. 198 SCHEDULE I I 198 5 PRICE SCHEDULE NONCASH COLLECTION (FOR BANKS NOT OFFERING A MIXED DEPOSIT PRODUCT) LOCAL COUPONS ADD-ON FEE FOR INTERDISTRICT COUPONS RETURN ITEMS BOND REDEMPTIONS AND SALES 1/ 198 5 1985 198 4 1985 1.00 1.00 3.00 12.50 12.50 2.75 0.50 0.75 10.00 35.50 35.50 2.55 2 .85 1.00 1.00 10.00 15.00 20.00 2.00 2.50 3.50 1.00 1.00 5.00 20.00 20.00 3.50 3.50 2.75 2.75 .7 0 / .7 0 / 1.70 1.70 10.00 11.00 11.00 2.50 2.50 2 .50 2.60 3.00 1.00 1.00 10.00 11.00 11.00 MINNEAPOLIS 2.50 2. 5 0 2 .50 2.70 3.00 0.60 0.60 10.00 8.00 8.00 KANSAS CITY 3.20 3.50 3.50 2.50 3.50 1.00 1.00 10.00 15.00 20.00 SAN FRANCISCO 4.00 5.00 5.00 N/A N/A 1.00 1.00 10.00 35.50 35.50 POSTAGE 4 INSURANCE LOCAL CITY 1 98 4 198 5 1 98 5 1984 1985 1984 BOSTON 2.00 2.00 2.00 2.55 2.75 NEW YORK 2.50 2.75 4.00 2.75 PHILADELPHIA 2.90 2.90 2.90 RICHMOND 2.00 2. 00 3.50 COUNTRY 2/ CHICAGO DETROIT 3/ (FOR BANKS OFFERING A MIXED DEPOSIT PRODUCT) LOCAL COUPONS FROM I N-DI STRICT D F T S CITY LOCAL COUPONS FROM OUT-OF-DISTRICT U F I ' S COUNTRY INTER-DISTRICT COUPONS FINE SORT MIXED RETURN ITEMS BOND REDEMPTIOf AND SALES 1/ COUNTRY 4/ 1984 198 5 1984 1985 1984 1985 1985 1984 198 5 1984 198 5 1 98 4 19 85 CITY 4/ 198 4 1985 CLEVELAND 2 . 2 5 2.75 2.75 3.00 3.00 3.25 3.00 3. 50 2.75 4.00 3.75 5.00 10.00 15.00 15.00 ATLANTA 1.75 1.75 2.50 2.50 1.40 2.40 1.40 3.15 2.75 2.75 3.75 3.75 0. 00 7.50 7.50 ST. LOUIS 2 . 0 0 3.25 2.00 3 .25 2.00 3.25 2 .00 3.25 2 . 75 3.25 3. 25 3.25 10.00 10.00 10.00 2.75 3.00 2.75 3.00 2.10 3.50 2. 10 3.50 2.75 3.25 3.75 4.50 10.00 15.00 20.00 DALLAS J ./ ACTUAL SHIPPING COSTS ADDITIONAL. 2/ CHICAGO - POSTAGE AND INSURANCE $ . 7 0 LOCAL, 3/ MINNEAPOLIS - 4/ PLUS POSTAGE AND INSURANCE. $ 1 . 7 0 INTERDISTRICT. 12TH DISTRICT COUPONS $ 4 . 0 0 ; BONDS $ 8 . 0 0 .