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Federal reserve bank
OF DALLAS
WILLIAM H. WALLACE
DALLAS, TEXAS 7 5 2 2 2
FIRST VICE PRESIDENT
February 8,1985
Circular 85-20
TO:
The Chief Executive Officer of all
depository institutions in the Eleventh
Federal Reserve District
SUBJECT
Revised fee structures for the definitive securities safekeeping and
noncash collection service effective February 28, 1985.
DETAILS
The Board of Governors of the Federal Reserve System has approved the
revised fee structures for the definitive securities safekeeping and noncash
collection service. The Board's action results in the introduction of a
re-registration fee for registered securities and a return item fee for any
coupon deposit that is returned as uncollectible. With the implementation of
this new fee structure, effective February 28, the Dallas District is
expanding the mixed deposit program to all depository financial institutions.
ATTACHMENTS
Attached is the Board's press release, Federal Register document and
1985 fee schedules for the definitive securities safekeeping and noncash
collection service.
MORE INFORMATION
For further information, please contact Lynn Vick, (214) 651-6263 at
the Head Office; Robert W. Schultz, (915) 544-4730 at the El Paso Branch; Luke
E. Richards (713) 659-4433 at the Houston Branch; or Tony Valencia, (512)
224-2141 at the San Antonio Branch.
Sincerely yours
For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are
encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442r7140 (intrastate) and (800)
527-9200 (interstate).
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
For immediate release
January 29, 1985
The Federal Reserve Board today approved revised fee structures for
the definitive securities safekeeping and noncash collection service, effective
February 28.
The Board's action results in the introduction of a re-registration
for registered securities and permits Reserve Banks to charge a fee for main
taining coupon bearing securities.
The Board also approved several changes to the fee structure for noncash
collection.
A Reserve Bank may charge a fee to the depositor for any coupon
deposit that is returned as uncollectible.
Reserve Banks are given the option
of adopting a mixed deposit program, which will allow a depository institution the
opportunity to deposit all of its coupons in one mixed deposit.
The Reserve Banks
also have the option of charging a higher fee to recover the additional costs of
collecting noncash items payable at country endpoints.
The revised fee structures are attached.
-
Attachment
0-
FEDERAL RESERVE SYSTEM
(Docket No. R-0533)
FEE SCHEDULES FOR FEDERAL RESERVE BANK SERVICES
AGENCY:
Board of Governors of the Federal Reserve System.
ACTION:
1985
Fee
Schedules
for
the
Definitive
Securities
Safekeeping and Noncash Collection Service.
SUMMARY:
The Board has approved new
fee structures and fees
for the Federal Reserves 1 definitive securities safekeeping and
noncash collection service.
EFFECTIVE DATE:
February 28, 1985.
FOR FURTHER INFORMATION CONTACT:
(202/452-3954),
or
Donna
A.
Gerald D. Manypenny,
DeCorleto,
Senior
Manager
Analyst
(202/452-3956), Division of Federal Reserve Bank Operations? or
Daniel
L.
Rhoads,
Attorney
(202/452-3711),
Legal
Board of Governors of the Federal Reserve System,
D.C.
Washington,
20551.
SUPPLEMENTARY
INFORMATION:
approved
schedules
fee
safekeeping
and
(September 29,
matching
factor
The
Division,
of
noncash
1983).
costs,
("PSAF"),
Federal
In
for
the
Fees
were
excluding
recovered
the
1983,
definitive
collection
and revenues
Reserve
September
service.
established
private
the
Board
securities
48 F.R.
to
sector
44647
provide
adjustment
in the third quarter of
98 percent
of
the
a
costs
1984.
of
providing this service in the end of the third quarter of 1984
based on costs and revenues of approximately $4.7 million and
-
$4.6 million,
respectively.
2-
Preliminary data
for
the
fourth
quarter of 1984 indicates a recovery rate comparable to that of
the
third
match,
quarter.— ^
including
In
PSAF,
in
order
to
1985,
achieve
and
in
a
cost/revenue
view
of
changing
industry practices attributable to the Tax Equity and Fiscal
Responsibility Act,
the Board proposed several changes to the
fee structures in November
1984).
The proposed
safekeeping
1984.
revisions
fee structure
49 F.R. 46488
(November 26,
to the definitive
included:
(1)
the
securities
addition
of
a
reregistration fee by all Reserve Banks to recover the costs of
sending
a
registered
reregistration;
of a
security
bearing
securities.
securities
Proposed
the higher
as
revisions
activity fee structure included:
fee;
(2)
the
transfer
agent
for
(2) the introduction on a district option basis
fee to differentiate
coupon
to
costs
compared
to
(1)
the
of
with
safekeeping
registered
noncash
collection
an optional return item
the addition of a mixed deposit option on a permanent
2/
basis;—
and
(3)
the
option of
setting
different
city and
country collection fees for Reserve Banks not electing to offer
L'
Preliminary data for the year indicates that costs,
including
PSAF,
were
$21.7 million
with
revenue
of
$18.5 million.
1/
The
mixed
deposit
program
provides
depository
institutions
in participating districts the option of
submitting unsorted coupon envelopes.
-
a mixed deposit program.
3-
Fees were projected to increase by an
average of 21.5 percent.
Ten comments,
concerning
the
depository
objected
Board's
suggested
of
registered
the
were
that
increasing
to
pledging
proposals.
institutions
commenter
instead
six from Reserve
imposition
securities
kept
purposes.
reduction
One
of
at
Another
reregistration is a labor
Comments
generally
cost
fees.
Banks,
a
were
received
efforts
depository
Reserve
from
favorable.
Bank
commenter
continue
fee
for
solely
stated
intensive procedure
One
institution
reregistration
a
received
for
that
for which most
commercial banks charge and the proposed fee was in line with
commercial bank charges in that district.
This commenter also
stated that, although its local Reserve Bank was not exercising
the option to charge a
bearing
and
registered
necessary because
securities
would
the
fee to differentiate between coupon
securities,
declining
result
expressed concern about
such
number
an
option
was
of
coupon
bearing
in declining
costs.
the
in
increase
its
One
not
commenter
Reserve
Bank's
deposit and withdrawal fees.
A
review
of
the
Reserve
Banks'
cost
and
revenue
projections for 1985 indicates that the fee increases reflected
in the request for comment are necessary to ensure that the
System recovers
fully the cost,
including PSAF,
of providing
this
service
revisions
3/
1985.— 7
m
to the
safekeeping
The
Board
fee structure
activity are
also
believes
that
for the definitive securities
essential
to achieving
this
goal.
Reregistration of a registered security is labor intensive and
costly because the security must be withdrawn from safekeeping,
transported
to
safekeeping.
the
transfer
differentiate
registered
from
the
increases.
between
securities
need
Registered
and
returned
into
These costs have been increasing as the number of
registered securities
to
agent,
to
securities
coupon
reflects
clip
Similarly,
bearing
the
maturing
the optional
securities
increased costs
coupons
usually have
no
twice
coupons.
fee
and
resulting
yearly.
Generally,
costs related to coupon bearing securities do not decline as
rapidly as the number
because of
their
labor
of coupon bearing
intensive nature
securities declines
and
requirements
to
4/
maintain high security standards in this operation.—
With regard to the noncash
collection activity,
two
commenters supported the imposition of a return item fee on a
3/
Reserve Banks are continuing cost reduction efforts.
In
1984, cost for the service increased approximately 3 percent
due to significant volume increases and to the introduction of
float costing in 1984.
Excluding float, 1984 costs declined
1 percent compared to 1983.
Costs are projected to decline by
2.3 percent in 1985.
£/ Three Reserve Banks will adopt a par value fee for coupon
bearing securities to reflect this differential and another
Reserve Bank will alter its account maintenance fee.
-
5-
district option but expressed concern over
fee.
the
level of the
One commenter stated that a depository institution should
not be charged
the
return
item
fees
of
two
Reserve
received,
Reserve
Banks
handling returned out-of-district items.
In
light
of
the
comments
Banks
reviewed the costs associated with return item handling.
result of that review,
As a
ten of the Reserve Banks believed the
level of the fee was appropriate and the St. Louis Reserve Bank
decided not to exercise the option
5/
fee.— '
The
return
item
fee
will
to impose a return
be
assessed
only by
item
the
collecting Reserve Bank.
One commenter supported the mixed deposit
beneficial
to those depository institutions
option as
that do not have
sufficient volume of noncash items to justify the time involved
in sorting.
The Board believes that in light of the benefits
of the program
for
these depository
institutions,
the mixed
deposit program should be approved on a district option basis.
The Board also determined that Reserve Banks not offering the
mixed deposit program be given the option of adopting different
city and country collection fees.
After review of the comments received and analysis of
the issues raised,
the Board has decided to approve the revised
JL/ The Atlanta Reserve Bank had previously decided not
charge a return item fee.
to
fee schedules
for
the definitive securities
noncash collection service,
safekeeping and
to be effective February 28,
The revised fee schedules are attached.
1985.
The Board believes
that the revised fee schedules will provide for full recovery
of costs,
including PSAF,
in 1985 based on projected costs of
$21.2 million and projected revenue of $21.3 million.
By order
of the Board of Governors of
the Federal
Reserve System, January 29, 1985.
( s i g n e d ) W i l l i a m W. W i l e s
William W. Wiles
Secretary of the Board
Attachments
ATTACHMENT I
1985 PRICE SCHEDULE
DEFINITIVE SAFEKEEPING
RECEIPTS/ISSUES
1-400 1-400 400+
1984 1985 1984
400+
1985
PURCHASES
AND SALES
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
0.0050
15.00
15.00
15.00
15.00
1.50
1.95
1.00
1.45
20.00
20.00
15.00
ATLANTA
0.00
0.00
5.00
5.00
N/A
N/A
5.00
CHICAGO
11.00
15.00
11.00
5/
DETROIT “
11.00
11.00
ST. LOUIS
8.00
MINNEAPOLIS
DEPOSITS
1985
1984
WITHDRAWALS 1/
1984
1985
12.50
12.50
12.50
35.50
35.50
PHILADELPHIA
15.00
CLEVELAND
RICHMOND
BOSTON
NEW YORK
3/
4/
RE
REGISTRATIONS
1985 \J
PAR
VALUE
1985
* see below
* see below
15.00
3.00
3.50
2.75
2.75
19.00
21.00
15.00
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-$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 IN 1984/85.
5/
DETROIT PILOT 1-100 RECEIPTS PRICED AT @ $3.00 1984/85, OVER 100 RECEIPTS @ $2.25 IN 1984 AND $2.50 IN 1985
INCLUDING COLLECTION OF COUPONS.
THIS IS TO RECOGNIZE THE LOWER HANDLING COSTS
2/
n
i i
nunnuni
4
*
1985 PRICE SCHEDULE
NONCASH COLLECTION
(FOR BANKS NOT OFFERING A MIXED DEPOSIT PRODUCT)
ADD-ON FEE FOR
INTERDISTRICT
COUPONS
LOCAL COUPONS
RETURN
ITEMS
BOND REDEMPTIONS
AND SALES 2/
1985
1985
1984
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
.70/ 1. 00/
2.00
1.70
10.00
11.00
20.00
2.50
2.50
2.50
2.60
3.00
1.00
1.00
10.00
11.00
11.00
MINNEAPOLIS
2.50
2. 50
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 &
INSURANCE
LOCAL
CITY
COUNTRY
1984
1985
1985
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/
CHICAGO “
3. 50
DETROIT
\/
4/
(FOR BANKS OFFERING A MIXED DEPOSIT PRODUCT)
LOCAL COUPONS FROM
OUT-OF-DISTRICT DFI'S
LOCAL COUPONS FROM
IN-DISTRICT DFI'S
CITY
COUNTRY
INTER-DISTRICT
COUPONS
RETURN
ITEMS
BOND REDEMPTIOf
AND SALES 2,
COUNTRY
5/
1984 1985
1984
1985
1984
1985
1985
1984
1985
FINE SORT
MIXED
1984
1985
1984
1985
CITY
5/
1984
1985
CLEVELAND 2.25
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
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 2.00
3.25
2.00
3.25
2.00
3.25
2.00
3.25
2.75
3. 25
3.25
3.25
0.00
10.00
10.00
DAL U S
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
ATLANTA
1/
2.75
PER $1000.
2/ ACTUAL SHIPPING COSTS ADDITIONAL.
3/
CHICAGO - 1985 POSTAGE AND INSURANCE $1.00 PER $1000 LOCAL, $2.00 PER $1000 INTERDISTRICT.
4/ MINNEAPOLIS - 12TH DISTRICT COUPONS $4.00; BONDS $8.00.
5/
PLUS POSTAGE AND INSURANCE.
@FedFRASER