Full text of Federal Reserve Bank of New York Circulars : 10582. Changes in Noncash Collection Services

View original document

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

FEDERAL RESERVE BANK
OF NEW YORK

[

Circular No. 10582
October 16, 1992

CHANGES IN NONCASH COLLECTION SERVICES
Revision of Operating Circular No. 6;
Third Supplement to Operating Circular No. 4
Effective O ctober 1, 1992

To All Depository Institutions, and Others
Concerned, in the Second Federal Reserve District:

On July 30, we notified you that, beginning October 1, 1992, this Bank would
no longer process for collection most non-security time and demand items, because
of the very small number of these items received for collection in recent years by
Federal Reserve Banks.
Accordingly, enclosed — for depository institutions in this District and those
who maintain sets of our operating circulars — is a copy of (a) our Operating
Circular No. 6, “Collection of Noncash Items,” revised October 1, 1992, and (b)
the Third Supplement, effective October 1, 1992, to our Operating Circular No.
4, “Collection of Cash Items and Returned Checks.” The enclosures reflect the
above changes. Additional, single copies can be obtained at this Bank (33 Liberty
Street) from the Issues Division on the first floor, or by calling our Circulars
Division (Tel. No. 212-720-5215 or 5216).
Questions on this matter should be directed to Stephen J. Bernatowicz, Chief,
Coupon and Safekeeping Division (Tel. No. 212-720-5081), or Christina H. Ryan,
Manager, Safekeeping Department (Tel. No. 212-720-7726).
E. G e r a l d C o r r ig a n ,
President.

Federal Reserve Bank
of New York
Operating Circular No. 6
Revised effective October 1, 1992

CO LLECTIO N O F NONCASH ITEM S
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:

CONTENTS
Topic

Paragraph No.

General ...........................................................................................
1-3
Items that we handle as noncash items ........................................
4-7
Preparation of cash letters and collection letters..........................
8-15
Coupons......................................................................................
8-11
Mixed coupon deposits...............................................................
12
Securities other than coupons....................................................
13-15
Availability of credit.......................................................................
16
Presentment of securities ...............................................................
17
Payment for securities.....................................................................
18
Direct routing to other Districts.....................................................
19
Claims and actions .........................................................................
20
Requesting wire advice.............................................................
21-22
P rotest.............................................................................................
23
Return of item s...............................................................................
24
Charges ..........................................................................................
25-26
Right to am end...............................................................................
27
Effect of this circular on previous circular ...................................
28
Appendix A — Payment for Coupons
Appendix A-1 — Account Holder Coupon Agreement
Appendix A-2 — Non-Account-Holder Coupon Agreement and Correspondent
Authorization
Appendix B — Collection of Time Items
Appendix B-l — Participant Agreement for Collection of Time Items
Appendix B-2 — Participant Agreement for Collection of Time Items and
Correspondent Authorization
|Enc. Cir. No. 10582|

General
1. Subpart A of Regulation J (“Regulation J”) of the Board of Governors
of the Federal Reserve System and this operating circular apply to the handling
of all noncash items that we accept for collection and all bank drafts and other
forms of payment that we receive for noncash items and that we elect to handle
as noncash items. Regulation J and our Operating Circular No. 4 apply to the
handling of bank drafts and other forms of payments that we receive for noncash
items and that we elect to handle as cash items. This circular is issued pursuant
to Sections 4, 13, 14(e), and 16 of the Federal Reserve Act and related statutes
in conformity with Regulation J. It is binding on each party interested in an item
we handle.
2. Each Reserve Bank that handles securities for collection as noncash
items has issued a circular substantially similar to this one. When a security
is sent to another Reserve Bank that handles securities as noncash items, that
Reserve Bank handles the item subject to its operating circular. We give credit
to the sender for the item in accordance with this circular. When we send or
present a noncash item direct to a bank (other than a Reserve Bank) or nonbank
payor in another Federal Reserve District, that bank or nonbank payor is gov
erned by this circular.
3. The definition of terms set forth or incorporated in Regulation J apply
in this circular. The term “bank” includes a depository institution as defined
in Section 19 of the Federal Reserve Act. Many terms used in this circular have
specialized meanings that have developed through law, custom, and commercial
usage. The term “security” includes a bond, debenture, coupon, or similar se
curity, but excludes an obligation — of the United States, of a U.S. agency or
instrumentality, or of certain international organizations — that a Reserve Bank
pays as fiscal agent of the obligor. Unless otherwise stated, all references to the
Bank include our Head Office and our Buffalo Branch.
Items that we handle as noncash items
4. A sender may send maturing securities to us for handling as noncash
items, unless otherwise provided in this circular. This Bank also gives credit,
subject to final payment, for coupons from obligations of the United States, its
agencies and instrumentalities, and of the International Bank for Reconstruction
and Development and the Inter-American Development Bank, as fiscal agent
of the obligor. This Bank is also willing to accept certain other time items de
scribed in, and governed by, Appendix B to this circular.
5. A sender should not send to us for handling as a noncash item a security
described in paragraph 4 of this circular, if:
(a) the security is payable by or through an office of the sender, unless
we elect otherwise; or

Federal Reserve Bank
of New York

Third Supplement to
Operating Circular No. 4
(Revised effective September 1, 1988)
Effective October 1, 1992

CO LLECTIO N OF CASH ITEM S
AND RETURN ED CH ECK S
Discontinuance of C ertain
Noncash Collection Services
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:

A sender should not send to us as a cash item an item that has been d is

honored tw o or m ore tim es, or a returned ch eck . We reserve the right to return
an item if it has been dishonored on ce, or if w e ju d g e that sp ecial con d ition s require
that it not be handled as a cash item . We reserve the right to return an item payable
by, at or through a bank that has b een reported clo sed .

3. The following two paragraphs have been added following paragraph 10:
IOA. T h is Bank g iv e s cred it, subject to final paym ent, for cou p on s from o b
ligation s o f the U n ited States and its a g en cies and in stru m entalities, and o f the In
ternational Bank for R econ stru ction and D evelop m en t and the Inter-A m erican D e
v elop m en t Bank, as fiscal agent o f the obligor,
IOB. T h is Bank d o es not gen erally co llect noncash item s other than se cu ri
ties (bon d s, debentures, cou p on s, and sim ilar secu rities) and certain tim e item s.
T h e co llectio n o f such noncash item s is govern ed by our O perating C ircular No.
6.

If a sender in this D istrict d esires that w e handle a noncash item (other than

a secu rity ), the send er m ust obtain the prior approval o f the M anager o f our S afe
k eep in g D epartm ent, and execu te an appropriate agreem ent w ith us.

G e r a l d C o r r ig a n ,

President.
[Enc. Cir. No. 10582]

(b) the security is not payable in a Federal Reserve District (“District”).1
6. We do not handle securities more than thirty (30) days prior to their
maturity.
7. We may refuse to handle securities deposited by a paying bank that has
refused to authorize payment for securities by a charge to an account on a Re
serve Bank’s books. We reserve the right to refuse to handle securities payable
by a paying bank (or nonbank payor) that has in the past failed to take all action
necessary for payment or return of securities within required times. We also
reserve the right to distinguish among classes of securities, and to require de
posits of classes of securities in separate collections letters, as we may deem
appropriate.
Preparation of cash letters and collection letters
Coupons

8. A sender shall enclose coupons in a separate sealed window envelope
for each issue, series, and maturity so that the face of a coupon is visible. En
velopes should conform to our specifications. The sender should list in the space
provided on the envelopes: (a) the sender’s and its depositor’s names, (b) the
sender’s collection number, and (c) a brief description of the coupons enclosed,
including the number of coupons, denomination value, and total dollar value.
A sender should list and describe each envelope by collection number on its to
taled letter and enclose a completed standard deposit ticket with each letter. In
surance that Reserve Banks obtain may be conditioned on verification by more
than one employee of a bank of the contents of window envelopes when the cou
p o n s a re e n c l o s e d , a n d o n th e b a n k ’s r e te n tio n o f a c o m p le t e d e s c r ip tio n o f th e

coupons, including serial numbers. We may charge back to the sender securities
lost in transit if the sender does not supply adequate records. We do not keep
any records of items that we handle in end-point-sorted cash letters.
9. A sender shall separate coupon envelopes into the following classes,
with a totaled separate letter and a completed standard deposit ticket for each
class and, as to matured coupons, for each maturity date:
(a) M atured C ity Coupon Cash Letter — Due or past due coupons payable
in New York City.
(b) Unmatured C ity Coupon C ash Letter — Coupons due in the future pay
able in New York City.
(c) M atured Country Coupon Cash Letter — Due or past due coupons pay
able outside New York City.
1 The Virgin Islands and Puerto Rico are deemed to be in the Second District, and Guam, Amer
ican Samoa, and the Northern Mariana Islands are deemed to be in the Twelfth District. Regulation
J, note 1.

(d)

Unmatured Country Coupon C ash Letter — Coupons

due in the future

payable outside New York City.
In this classification, maturity is determined with reference to the date of first
receipt by a Reserve Bank.
10. We handle coupons contained in sealed window envelopes on a “said
to contain” basis. We have no responsibility for verifying that the envelopes ac
tually contain the coupons listed and described in the sender’s collection letter
or on the envelopes.
11. Before sending a coupon to us, a sender should determine whether an
ownership certificate is required by law or by the issuer to be attached to the
coupon.
M ixed coupon deposits

12. We may return, at the sender’s expense, a coupon cash letter contain
ing a mixture of matured and unmatured coupons or of country and city cou
pons, or may handle it and defer credit for the longest period prescribed in our
time schedules for any item enclosed.
Securities other than coupons

13. A sender shall separate securities (other than coupons) that it sends
to us for collection into the following classes, with a totaled separate letter for
each class:
(a)

Country Collection Letter — Securities (other than coupons) payable
outside of New York City.

(b)

C ity C ollection Letter

— Securities (other than coupons) payable in

New York City.
We give credit for securities (other than coupons) in collection letters when we
receive payment in actually and finally collected funds, or, advice from another
Reserve Bank of such payment. This credit at once qualifies as reserve for pur
poses of Regulation D and is available for withdrawal or other use by the sender.
If payment is by bank draft or by check drawn on a bank other than the paying
bank, we give provisional credit, subject to payment in actually and finally col
lected funds, in accordance with our time schedules issued under our Operating
Circular No. 4, “Collection of Cash Items and Returned Checks.”1
4
14. Securities (other than coupons) should be (a) sorted according to is
sue, (b) accompanied by the same information as accompanies coupons, and
(c) listed and described on the sender’s totaled collection letter in the same man
ner as provided for coupons in paragraph 8 of this circular.

15. We urge senders to send securities (including coupons) that are pay
able by any of several paying agents direct to the Reserve Bank that both handles
such items and is located in the same District as the paying agent nearest the
sender.
Availability of credit
16. The credit we give for time items handled under Appendix B and for
coupons is provisional, subject to payment in actually and finally collected
funds, as provided in our time schedules. Credit qualifies as reserve for pur
poses of Regulation D and is available for withdrawal or other use as specified
in our time schedules. Because our time schedules do not show the time required
for collection in actually and finally collected funds, our advices cannot be con
sidered advices of final payment on the dates we make credit available. We re
serve the right to refuse to permit a sender to withdraw or otherwise use any
credit until we receive payment in actually and finally collected funds.
Presentment of securities
17. Neither we nor a subsequent collecting bank undertake to present se
curities on the maturity date unless we receive them sufficiently in advance of
the maturity date to permit timely presentment or sending for presentment, us
ing the means that we normally use for that purpose.
Payment for securities
18. Except as otherwise agreed between a Reserve Bank and a paying
bank (or nonbank payor), we or a subsequent collecting bank may present, or
send for presentment, to the paying bank (or nonbank payor) any security, with
the understanding that:
(a) payment may be deferred without dishonor pending reasonable exam
ination to determine whether the security is properly payable; but
(b) payment shall be made or the security returned in any event before the
close of the paying bank’s (or nonbank payor’s) business day next fol
lowing the day of maturity or presentment, whichever is later.
We assume no responsibility for determining whether a paying bank (or non
bank payor) has taken all action necessary for return of securities within appli
cable times.
Direct routing to other Districts
19. A sender that maintains or uses an account with us and that has se
curities payable in another District whose Reserve Bank handles such items,
may send the securities direct to the Reserve office of that District, under pro-

cedures we prescribe. Under Section 210.4 of Regulation J, items sent direct
are deemed to have been handled by us.
Claims and actions
20. We provide a statement of account to each bank maintaining an ac
count on our books. An account holder must promptly advise us in writing of
an objection to an entry in our statement of its account. Reserve Banks generally
keep records for only one year. An account holder that fails to advise us of its
objection within one calendar year from the date of the entry (and any sender,
collecting bank or paying bank that has used the account and has handled the item
to which the entry relates) is deemed to have approved the entry, and the statement
of account is deemed finally adjusted. This paragraph does not relieve an account
holder from the duty of using due diligence in examining statements of account
sent to it and of notifying us immediately on discovery of an error. Further, this
paragraph does not relieve a Reserve Bank from liability for breach of warranty
on an item to which an entry relates. Section 210.6(c) of Regulation J requires
that action on a claim against a Reserve Bank for failure to exercise ordinary care
or act in good faith be commenced within two years after the claim accrues.
Requesting wire advice
21. Except as provided in paragraph 22, we disregard special instructions
noted on or attached to a security or collection or cash letter.2
4
3
22. A sender that desires wire advice of credit or of nonpayment should
use the term “WIRE FATE.” A wire advice of credit message indicates that we
have posted a credit to the sender’s reserve or other account. With respect to
coupons, wire advice of credit does not necessarily mean that we have received
actually and finally collected funds. We assume no responsibility for any other
instruction given by a sender regarding wire advice of payment or nonpayment.
Protest
23. Reserve Banks shall not protest any returned noncash item, whether
or not drawn or payable at a place not within a State. Each Reserve Bank and
collecting bank shall disregard any special instructions or protest noted on a
cash or collection letter or otherwise transmitted with a noncash item.
Return of items
24. A subsequent collecting bank, paying bank, or nonbank payor may
not return to us for credit or refund a noncash item that has been finally paid,
but may return such an item to us only on a without-entry basis (that is, with
a request for credit or refund). We grant credit or refund to the subsequent col-

lecting bank, paying bank, or nonbank payor, and charge our sender, only if
the sender specifically authorizes us to do so.
Charges
25. Our schedule of charges shows the charges imposed for noncash item
collection services. We may make the charge to the account maintained or used
by the sender or other bank requesting the service.
26. A bank or nonbank payor may not assess a fee in connection with col
lecting or paying a bond, debenture, coupon or similar security received directly
or indirectly from a Reserve Bank.
Right to amend
27. We reserve the right to amend this circular at any time.
Effect of this circular on previous circular
28. This circular supersedes our Operating Circular No. 6 (including its
Appendices), revised effective October 1, 1987, and the First and Second Sup
plements thereto, dated August 1, 1988 and January 1, 1990, respectively. (Ap
pendices C and D of the superseded operating circular have become Appendices
A and B, respectively, of this operating circular.)

G e r a l d C o r r ig a n ,

President.

APPENDIX A

PAYMENT FOR COUPONS

1.
This Bank presents or forwards for presentment coupons payable under
Regulation J, our Operating Circular No. 6, and this Appendix A (“Appendix”).
As used in this Appendix, unless the context otherwise requires, “payor” means
a member bank, nonmember bank, or nonbank payor of a coupon.
Method of Payment
2.
A depository institution that maintains an account with this Bank
agrees to these terms by executing an Account Holder Coupon Agreement (Ap
pendix A-l). If the charge is not to be posted to the payor’s account on this
Bank’s books, but instead to the account of another depository institution (“Cor
respondent”), the payor and its Correspondent agree to these terms by executing
a Non-Account-Holder Coupon Agreement and Correspondent Authorization
(Appendix A-2). Under those agreements, we may charge to an account on our
books the amount of coupons presented or forwarded for presentment by us.
Alternatively, payors may pay by check. In addition, we will continue to accept
payment for coupons we send to the New York Clearing House Association
based on a due bill signed by members of the Association.
Time of payment
3.
A coupon shall be paid by the payor on the “payment date,” unless it
is presented with special payment instructions. A coupon presented with special
payment instructions shall be paid in accordance with those instructions. The
“payment date” is the later of the banking day following the banking day a cou
pon is presented to the payor or the banking day following the maturity date
of the coupon. For a coupon delivered though the mails, however, the payment
date is the third banking day following the banking day that the coupon was
mailed to the payor, subject to the modifications of the next two sentences. If
the coupon reaches the payor before its close of business hours two business
days prior to the payment date, the payor shall promptly telephone the Coupon
and Safekeeping Division at the Head Office, and we will designate a payment
date pursuant to the rule in the third sentence of this paragraph. If a coupon
reaches the payor after the close of business on the banking day prior to the
payment date, the payor will promptly telephone the Coupon and Safekeeping
Division at the Head Office to establish a new later payment date. We review
registered mail return receipts to ensure that payment is being made at the prop
er time.

Time for return
4. A payor may receive a refund for a charge made to its account on our
books by returning the coupon. We will give credit on the banking day we proc
ess the unpaid coupon.
Payment
5. On the payment date, we will charge to the payor’s or Correspondent’s
account on our books the amount of coupons payable on the payment date. We
will provide each payor and/or Correspondent with a daily advice of all debits,
credits, and adjustment entries made to its account on our books for coupons
presented to it. The payor or Correspondent should examine the advice prompt
ly, and notify us immediately of any discrepancies between the advice and its
records. We will then make any appropriate adjustments, including “as o f’ ad
justments for reserve accounting purposes, to the account charged.
Termination
6. We may revoke an authorization under this Appendix at any time by
prior written notification to a payor or its Correspondent. The revocation shall
be effective when received by the Correspondent or by the payor. A payor or
a Correspondent may revoke an authorization under this Appendix by prior
written notification. The revocation shall be effective when received by the
Coupon and Safekeeping Division at the Head Office. Termination shall not af
fect our right to make any charge or credit required by, or incidental to, any
transaction before the termination is effective.
Right to amend
7. We reserve the right to withdraw, add to, or amend any portion of this
Appendix upon seven calendar days’ prior notice to each payor or Correspon
dent that has agreed to its provisions.

APPENDIX A -l

ACCOUNT HOLDER COUPON AGREEMENT

[D a te ]

Federal Reserve Bank
of New York
33 Liberty Street
New York, New York 10045

Attention: Coupon and Safekeeping Division — Head Office
Gentlemen:
In order to expedite the payment of corporate and municipal coupons, we
agree to the terms of Appendix A to your Operating Circular No. 6, regarding
the payment of coupons. We authorize you to charge or credit our account on
your books and to make appropriate adjustments in connection with the pay
ment or return of coupons payable by us.

[N am e o f payor depository institution]

By:
[Authorized sign ature]

[T itle]

APPENDIX A-2
NON-ACCOUNT-HOLDER COUPON A G REEM ENT
AND CO RRESPO ND ENT AUTHORIZATION

A. Non-Account-Holder Agreement

[D a te ]

Federal Reserve Bank
of New York
33 Liberty Street
New York, New York 10045

Attention: Coupon and Safekeeping Division — Head Office
Gentlemen:
In order to expedite the payment of corporate and municipal coupons, we
agree to the terms of Appendix A to your Operating Circular No. 6, regarding
the payment of coupons. We designate.......................................................as
[N am e o f correspondent]

correspondent against whose account on your books credits, debits, and appro
priate adjustments may be entered for the payment or return of coupons payable
by us.

[N am e o f payor depository institution]

By:
[Authorized sign ature]

[T itle]

Correspondent Authorization

Gentlemen:
We authorize you to charge or credit our account on your books and to
make appropriate adjustments in connection with the payment or return of cou
pons payable by ......................................................................... in accordance
[N am e o f p ayor depository institution]

with Appendix A to your Operating Circular No. 6. You will provide advices
of any such entries to both the payor and us. If on any business day we cannot
accept any such charge, we will first give notice to the payor and then notify
you by telephone and immediately thereafter in writing on or before 2:00 p.m.
of the payment date.

[N am e o f correspondent]

By:
[Authorized signature]

[T itle]

APPENDIX B

COLLECTION OF TIME ITEMS

INTRODUCTION
The Federal Reserve Bank of New York collects certain time items in ac
cordance with the noncash collection rules of Regulation J, Operating Circular
No. 6, and this Appendix B (“Appendix”). In case of any inconsistency between
this Appendix and Operating Circular No. 6, this Appendix shall govern.
A depository institution in the Second Federal Reserve District that main
tains an account at this Bank agrees to these terms by executing a letter in the
form of Appendix B-l. A depository institution that uses the account at this
Bank of another depository institution (the “Correspondent”) agrees to these
terms by executing a letter in the form of Appendix B-2 that is also executed
by the Correspondent.
B.

Definition of terms
1.

In this Appendix:
a. “participant” means a depository institution that agrees to the terms
of this Appendix, a “sending participant” sends items to this Bank,
a “receiving participant” is the institution that receives items from
this Bank;
b. “authorized representative” means a person either (i) bearing a pass
or identification card with the person’s picture that is issued by the
participant that he purports to represent and whose signature has
been certified to us by the participant or (ii) identified in such other
manner as shall be satisfactory to the Federal Reserve Bank of New
York; and
c. the definition of terms set forth or incorporated in Regulation J and
Operating Circular No. 6 apply in this Appendix.

PARTICIPANT’S AGREEMENT
Eligibility of time items
2.
An evidence of indebtedness or order to pay that is not payable on de
mand is eligible for collection if it is: (i) commercial paper, (ii) a bankers’ ac
ceptance payable by, at, or through a participant, or (iii) a note, draft, or cer
tificate of deposit, and if we are willing to accept it as a noncash item.

Collection and presentment
3. Between the hours of 10:00 a.m. and 1:00 p.m. of each banking day,
a sending participant may deliver to a designated window of our Safekeeping
Department eligible time items for presentment by us to other depository in
stitutions for payment. We do not accept items except by hand delivery at the
designated window. An item may be delivered to us no earlier than one business
day prior to its payment date.
4. A sending participant delivering an item for handling shall stamp or
write a restrictive indorsement on the item. The indorsement shall contain the
date, the name of the sending participant and the ABA transit number (the
number to be shown at least twice), and the following words: “For collection.
Pay any bank.” In addition to its indorsement, the sending participant shall in
dicate clearly on the reverse of each item the telephone number to be called if
the receiving participant elects to return the item unpaid. The indication shall
be in substantially the following form: “If this item is to be returned unpaid,
please call (nam e) at (phone number)." If we receive an item without the sender’s
indorsement, we may (a) present or send the item as if it bore the sender’s in
dorsement, (b) place on the item the sender’s name and the date we received
it, or (c) return the item to the sender for proper indorsement.
5. The sending participant shall enclose items in sealed, transparent en
velopes approved as to form by us. Each envelope may contain items for only
a single receiving participant. The sending participant shall inscribe on each
envelope its name and ABA number, the total dollar amount of the items, and
the name and ABA number of the receiving participant.
6. When delivering times items to us for collection, the sending partic
ipant shall sort the sealed envelopes by the exchange to which the receiving par
ticipant belongs and submit three copies of a delivery sheet bearing the name
of the sending participant. The delivery sheet must be in a form approved by
us and list, opposite the name or ABA number of each receiving participant
to which an envelope is being presented, the number of envelopes being deliv
ered to the participant, the unique identifying number of each envelope, the total
dollar amount of items contained in each envelope, and the total dollar amount
of items to be presented to each participant. The delivery sheet must also show
the total number of envelopes delivered to us by the sending participant and the
total dollar amount of all the envelopes. We stamp one copy of the delivery sheet
as receipt for delivery and return the copy to the sending participant. By stamp
ing the delivery sheet, we do not indicate that we have verified the delivery
sheet, the dollar amounts of the items, or the number of items contained in the
envelopes. We verify that the number of envelopes listed on each delivery sheet
conforms to the number of envelopes received from the sending participant, that
the sum of the dollar amounts said to be contained in each package delivered
with the delivery sheet equals the total amount on the delivery sheet and that

the envelopes appear intact. We inform the authorized representative of the
sending participant of any discrepancies noted, and until the discrepancies are
corrected, we do not accept for collection any envelopes delivered with the de
livery sheet. We may, in our discretion, correct on behalf of the sending par
ticipant any errors on the delivery sheets in accordance with any instruction we
receive, either in writing or verbally, from the sending participant.
7. We may refuse to accept items from a depository institution that has
not agreed to these terms. We also may refuse to accept time items that are pay
able by, at, or through a depository institution that has not agreed to these terms.
We reserve the right to reject envelopes that are damaged or may have been tam
pered with or that appear to contain ineligible items.
8. We sort the envelopes and prepare appropriate transmittal sheets in du
plicate. The transmittal sheet lists each envelope to be presented to the receiving
participant, the dollar amount said to be contained in each, the total number of
envelopes, and the total dollar amount said to be contained in all the envelopes.
9. Around 5:00 p.m. on the day of receipt we deliver all envelopes for pre
sentment through the NYCHA 2:00 a.m. Time Items Exchange to the New York
Clearing House pursuant to the rules of the NYCHA. By noon of the day fol
lowing the day of receipt we deliver envelopes for presentment through the
NYCHA City Collection Department to the New York Clearing House pursuant
to the rules of the NYCHA. A receiving participant that does not receive its
items through the New York Clearing House shall arrange to have its authorized
representative call at the designated window in our Safekeeping Department
each banking day between 10:00 a.m. and 1:00 p.m. to receive items payable
by, at, or through the receiving participant’s main or any branch office and any
items to be returned to that receiving participant. Delivery of items to the au
thorized representative or making the items available for pickup by the author
ized representative shall constitute due presentment by the Reserve Bank of the
items to the receiving participant with the same force and effect as though the
items were presented by the Reserve Bank to the receiving participant for pay
ment at the receiving participant’s counter at the time of delivery. We reserve
the right to present time items, whether or not payable by a depository insti
tution that has agreed to the terms of this Appendix, in any other manner that
we deem appropriate.
10. Upon delivery of time items to the authorized representative of a re
ceiving participant, the authorized representative shall sign a copy of the trans
mittal sheet acknowledging receipt of the number of envelopes shown on the
transmittal sheet.
Debits and credits
11. We give provisional credit to a sending participant on the day of pre
sentment on the amount stated in the sending participant’s delivery sheet. We

charge the account maintained or used by the receiving participant on the day
of presentment based on the amounts stated on envelopes received from sending
participants.
Returns and missent items
12. Items presented through the New York Clearing House shall be re
turned pursuant to the NYCHA rules. For other items, if a receiving participant
decides to return an item unpaid for any reason, or receives a missent item, it
shall call the sending participant by 3:00 p.m. on the day of receipt and in all
cases either: (i) by 3:00 p.m. on the day of receipt, return the item by hand di
rectly to the sending participant at a location specified by the latter and arrange
directly with the sending participant for credit for the returned item; or (ii) by
4:30 p.m. on the day of receipt, return the item to us. Return items shall be
sealed in transparent envelopes, approved as to form by us, be marked as returns
and refer to the original presentment. For a timely return of an item handled
under this arrangement, we credit the account maintained or used by the receiv
ing participant, and revoke the provisional credit to the sending participant, on
the banking day following our receipt of the item. A receiving participant that
receives a missent envelope (an envelope addressed to another participant) shall
call this Bank by the day of receipt (on or before 3:00 p.m.) and make the en
velope available for pickup by our messenger.
Liability of this bank
13. We do not examine the contents of the envelopes handled under this
arrangement. We are not liable in any way for the contents of the envelopes,
for any purportedly lost or missing items, or for any claims arising from a dis
agreement as to the contents of the envelopes. We are not liable for any other
omission, action, or failure to act, except for our own negligence or failure to
exercise ordinary care. Each participant agrees to hold this Bank harmless from
(a) any losses or costs arising out of any delivery to an authorized representative
of the participant, and (b) any losses or costs arising out of the participant’s fail
ure to perform any of its obligations hereunder.
14. This arrangement shall remain in effect as to a participant or corre
spondent until this Bank receives notice from the participant or correspondent
terminating the arrangement. The notice shall not take effect, however, until
the time stated in the notice which may not be earlier than the time of receipt,
and the notice shall not affect rights accruing to this Bank or any obligations
incurred by the participant or correspondent for items received or presented by
this Bank prior to the time of termination.
CORRESPONDENT’S AUTHORIZATION
15. To implement the Participant’s Agreement for the collection of eligible

t im e ite m s , th e C o r r e s p o n d e n t a u t h o r iz e s th is B a n k to c h a r g e to th e C o r r e s p o n
d e n t’s a c c o u n t o n th is B a n k ’s b o o k s th e a m o u n t o f a ll it e m s p a y a b le by, at, o r
th r o u g h th e p a r tic ip a n t p r e s e n te d to it u n d e r th is a r r a n g e m e n t. T h e C o r r e s p o n
d e n t a ls o a u t h o r iz e s th is B a n k to m a k e a ll s u c h o th e r d e b it s a n d c r e d its a n d to
m a k e s u c h o t h e r a d ju s tm e n ts to th e C o r r e s p o n d e n t’s a c c o u n t a s m a y b e n e c e s
s a r y to g i v e e f f e c t to th e P a r tic ip a n t’s A g r e e m e n t . T h e C o r r e s p o n d e n t a g r e e s
to m a in ta in in its a c c o u n t o n th is B a n k ’s b o o k s , in a c t u a lly a n d f in a lly c o ll e c t e d
f u n d s , b a la n c e s s u f f ic ie n t to c o v e r a ll d e b it s to th a t a c c o u n t in c o n n e c t io n w ith
th is a r r a n g e m e n t. It is u n d e r s t o o d th at th is B a n k a s s u m e s n o r e s p o n s ib ilit y fo r
a n y o b lig a t io n s o f th e p a r tic ip a n t to th e C o r r e s p o n d e n t th a t m a y a r is e o u t o f
c h a r g e s to th e C o r r e s p o n d e n t’s a c c o u n t p u rsu a n t to th a t A g r e e m e n t o r th is A u
th o r iz a tio n .
16.

W e r e s e r v e th e r ig h t to a m e n d a n y p o r tio n o f th is A p p e n d ix o n s e v e n

c a le n d a r d a y s ’ p r io r n o t ic e to e a c h p a r tic ip a n t o r c o r r e s p o n d e n t th o u g h an
a m e n d m e n t t o th is circu la r.

APPENDIX B -l

PARTICIPANT AGREEMENT FOR COLLECTION OF
TIME ITEMS
[To be typed on participant’s letterhead]

[D a te ]

Federal Reserve Bank
of New York
33 Liberty Street
New York, New York 10045
Attention: Manager, Safekeeping Department
Gentlemen:
We agree to the terms of Appendix B to your Operating Circular No. 6
regarding the collection of certain time items. We authorize you to charge or
credit our account on your books and to make appropriate adjustments in con
nection with the payment or return of items payable by, at, or through us under
the terms of Appendix B.

[N am e o f p articip an t]

By:
[ Authorized sign ature]

[T itle]

APPENDIX B-2

PARTICIPANT AGREEMENT FOR COLLECTION OF
TIME ITEMS AND CORRESPONDENT AUTHORIZATION

[To be typed on participant’s letterhead]

Participant Agreement

[D a te ]

...............................as correspondent against whose account on your books
correspondent]

credits, debits, and appropriate adjustments may be entered in connection with
the payment or return of items payable by, at, or through us under the terms
of Appendix B.

[N am e o f p articip an t]

By:
[Authorized sign ature]

[T itle]

Correspondent Authorization

We authorize you to charge or credit our account on your books and to
make appropriate adjustments in connection with the payment or return of items
payable by, at, or through......................................................in accordance
[N am e o f p articip an t]

with the Correspondent Authorization in Appendix B to your Operating Circu
lar No. 6.

[N am e o f correspondent]

By:
[Authorized sign ature]

[T itle]

Federal Reserve Bank
of New York

Third Supplement to
Operating Circular No. 4
(Revised effective September 1, 1988)
Effective October 1, 1992

COLLECTION OF CASH ITEMS
AND RETURNED CHECKS
Discontinuance of Certain
Noncash Collection Services
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:

In connection with the discontinuance, effective October 1, 1992, of cer
tain noncash collection services, which are reflected in the accompanying re
vision of this Bank’s Operating Circular No. 6, our Operating Circular No. 4 has
also been amended, effective October 1, 1992, as follows:
1. Paragraph 7 has been amended by deleting the sentence that follows
subparagraph f.
2. Paragraph 8 has been amended to read as follows:
8 . A sender should not send to us as a cash item an item that has been d is
honored tw o or m ore tim es, or a returned ch eck . We reserve the right to return
an item if it has b een dishonored on ce, or if w e ju d g e that sp ecial con d ition s require
that it not be handled as a cash item . W e reserve the right to return an item payable
by, at or through a bank that has b een reported closed .

3. The following two paragraphs have been added following paragraph 10:
IOA. T h is Bank g iv e s credit, subject to final paym ent, for cou p on s from o b
ligation s o f the U n ited States and its agen cies and in stru m entalities, and o f the In
ternational Bank for R econ stru ction and D evelop m en t and the Inter-Am erican D e
velop m en t Bank, as fiscal agent o f the obligor,
IOB. T h is Bank d o es not gen erally co llect noncash item s other than se cu ri
ties (bon d s, debentures, cou p on s, and sim ilar secu rities) and certain tim e item s.
T h e co llectio n o f such noncash item s is govern ed by our O perating C ircular No.
6 . If a sender in this D istrict d esires that w e handle a noncash item (oth er than
a secu rity), the sender m ust obtain the prior approval o f the M anager o f our S afe
k eep in g D epartm ent, and execu te an appropriate agreem ent w ith us.

E G erald
.

C o r r ig a n ,

President.
[Enc. Cir. No. 10582]

Full text of Federal Reserve Bank of New York Circulars : 10582. Changes in Noncash Collection Services

FRASER