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FEDERAL RESERVE BANK OF NEW YORK [ Circular No. 10818 December 15, 1995 1 J 1996 RESERVE REQ UIREM ENT ADJUSTM ENTS To All Depository Institutions, and Others Concerned, in the Second Federal Reserve District: T h e fo llo w in g statem en t has b een issu ed by the B oard o f G overnors o f the F ed eral R eserve System : The Federal Reserve Board has announced a decrease from $54.0 million to $52.0 million in the net transaction accounts to which a 3 percent reserve requirement applies. The Board also increased from $4.2 million to $4.3 million the amount o f reservable liabilities of each depository institution that is subject to a reserve requirement o f zero percent. Additionally, the Board increased the deposit cutoff levels that are used in conjunction with the exemption level to determine the frequency and detail o f deposit reporting required for each institution from $55.4 million to $57.0 million for nonexempt depository institutions and from $45.1 million to $46.4 million for exempt depository institutions. E n clo sed — fo r d ep o sito ry in stitu tio n s an d others m aintaining sets o f B oard regulations — is a copy o f the tex t o f a S u p p lem en t to R eg u latio n D o f the B oard o f G o v ern o rs as p u b lished in th e Federal Register , regarding th ese actions, effectiv e D e cem b er 19, 1995. Q u estio n s regarding R eg u latio n D m ay be directed to the follow ing: Maintenance Requirements: V alerie I. R ainford, M anager, A cco unting D ep artm en t (Tel. N o. 2 1 2-720-5250) A n thony F ressola, C hief, A cco u n ting C ontrol D ivisio n (Tel. N o. 2 1 2 -720-5803) Reporting Requirements: Anthony Pietrangolare, S ta ff D irector, D eposit R eports D ivision (Tel. No. 2 1 2 -7 2 0 -8 5 9 1 ) Interpretation of Regulation D: Janice A. Oser, S u p erv isin g Exam iner, C o m p lian ce E x am inations D ep artm en t (Tel. N o. 212-720-8136) M ich ael Schussler, C o u n sel (Tel. N o. 212-720-2813) W il l ia m J. M cD onough, President. Federal Register / Vol. 60, No. 226 / Friday, November 24, 1995 / Rules and Regulations REGULATION D RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS Supplement effective December 19, 1995 57911 of zero percent. This action is required by section 19(b )(ll)(B ) of the Federal Reserve A ct, and the adjustment is known as the reservable liabilities exem ption adjustment. The Board is also increasing the deposit cutoff levels that are used in conjunction with the reservable liabilities exemption to determine the frequency of deposit reporting from $55.4 million to $57.0 million for nonexempt depository institutions and from $45.1 million to $ 46.4 million for exempt institutions. (Nonexempt institutions are those with total reservable liabilities exceeding the amount exem pted from reserve requirements while exempt institutions are those with total reservable liabilities not exceeding the amount exempted from reserve requirements.) Thus nonexem pt institutions with total deposits of $ 5 7 .0 million or more will be required to report weekly while nonexem pt institutions with total deposits less than $57.0 million may report quarterly, in both cases on form FR 2900. Similarly, exempt institutions with total deposits of $46.4 million or more will be required to report quarterly on form FR 2910q while exempt institutions with total deposits less than $ 46.4 million may report annually on form FR 2910a. DATES: E f f e c t i v e d a t e .: December 19, 1995. FEDERAL RESERVE SYSTEM 12CFR Part 204 [Regulation D; Docket No. R-0901] Reserve Requirements of Depository Institutions AGENCY: Board of Governors of the Federal Reserve System. ACTION: Final rule. [Enc. Cir. No. 10818] D-37/95 SUMMARY: The Board is amending Regulation D, Reserve Requirements of Depository Institutions, to decrease the amount of transaction accounts subject to a reserve requirement ratio of three percent, as required by section 19(b)(2)(C) of the Federal Reserve Act, from $ 54.0 million to $52.0 million of net transaction accounts. This adjustment is known as the low reserve tranche adjustment. The Board has increased from $4.2 million to $4.3 million the amount of reservable liabilities of each depository institution that is subject to a reserve requirement C o m p l i a n c e d a t e s . For depository institutions that report weekly, the low reserve tranche adjustment and the reservable liabilities exemption adjustment will apply to the reserve com putation period that begins Tuesday, December 1 9 ,1 9 9 5 , and on the corresponding reserve maintenance period that begins Thursday, December 21, 1995. For institutions that report quarterly, the low reserve tranche adjustment and the reservable liabilities exem ption adjustment will apply to the reserve computation period that begins Tuesday, December 1 9 ,1 9 9 5 , and on the corresponding reserve maintenance period that begins Thursday, January 18, 1996. For all depository institutions, the deposit cutoff levels will be used to screen institutions in the second quarter of 1996 to determine the reporting frequency for the twelve month period that begins in September 1996. FOR FURTHER INFORMATION CONTACT: J. Ericson Heyke III, Attorney (2 0 2 /4 5 2 3688), Legal Division, or June O’Brien, Econom ist (2 0 2 /4 5 2 -3 7 9 0 ), Division of Monetary Affairs; for users of the Telecom m unications Device for the Deaf (TDD), Dorothea Thompson (2 0 2 /4 5 2 3544); Board of Governors of the Federal Reserve System, Washington, DC 20551. 57912 Federal Register / Vol. 60, No. 226 / Friday, Novem ber 24, 1995 / Rules and Regulations SUPPLEMENTARY INFORMATION: Section 19(b)(2) of the Federal Reserve A ct ( 1 2 U.S.C. 461(b)(2)) requires each depository institution to maintain reserves against its transaction accounts and nonpersonal time deposits, as prescribed by Board regulations. The initial reserve requirements imposed under section 19(b)(2) were set at three percent for net transaction accounts of $25 million or less and at 12 percent on net transaction accounts above $25 million for each depository institution. Effective A pril,2 ,1 9 9 2 , the Board lowered the required reserve ratio applicable to transaction account balances exceeding the low reserve tranche from 1 2 percent to 1 0 percent. Section 19(b)(2) also provides that, before December 31 of each year, the Board shall issue a regulation adjusting for the next calendar year the total dollar amount of the transaction account tranche against which reserves must be maintained at a ratio of three percent. The adjustment in the tranche is to be 80 percent of the percentage increase or decrease in net transaction accounts at all depository institutions over the oneyear period that ends on the June 30 prior to the adjustment. Currently, the low reserve tranche on net transaction accounts is $54.0 million. The decrease in the net transaction accounts of all depository institutions from June 30, 1994, to June 3 0 ,1 9 9 5 , was 4.7 percent (from $828.1 billion to $789.3 billion). In accordance with section 19(b)(2), the Board is amending Regulation D ( 1 2 CFR Part 204) to decrease the low reserve tranche for transaction accounts for 1996 by $ 2.0 million to $52.0 million. Section 19(b )(ll)(A ) of the Federal Reserve A ct ( 1 2 U.S.C. 461 (b )(ll)(B )) provides that $ 2 million of reservable liabilities 1 of each depository institution shall be subject to a zero percent reserve requirement. Each depository institution may, in accordance with the rules and regulations of the Board, designate the reservable liabilities to which this reserve requirement exemption is to apply. However, if net transaction accounts are designated, only those that would otherwise be subject to a three percent reserve requirement (i.e., net transaction accounts within the low reserve requirement tranche) may be so designated. Section 19(b )(ll)(B ) of the Federal Reserve A ct provides that, before 1 Reservable liabilities include transaction accounts, nonpersonal time deposits, and Eurocurrency liabilities as defined in section 19(b)(5) of the Federal Reserve Act. The reserve ratio on nonpersonal time deposits and Eurocurrency liabilities is zero percent. beginning the following September. In December 31 of each year, the Board July of 1988 the Board set a single cutoff shall issue a regulation adjusting for the level for all depository institutions of next calendar year the dollar amount of $40 million plus an amount equal to 80 reservable liabilities exempt from percent of the annual rate of increase of reserve requirements. Unlike the total deposits . 3 In August of 1994, the adjustment for the low reserve tranche on net transaction accounts, which Board replaced the single deposit cutoff adjustment can result in a decrease as level that had applied to both well as an increase, the change in the nonexempt and exempt institutions exemption amount is to be made only if with separate cutoff levels. The cutoff the total reservable liabilities held at all level for nonexempt institutions, which depository institutions increases from determines whether they report (on FR 2900) quarterly or weekly, was raised one year to the next. The percentage from the indexed level of $44.8 million increase in the exemption is to be 80 to $55.0 million. The deposit cutoff percent of the increase in total level for exempt institutions, which reservable liabilities of all depository determines whether they report institutions as of the year ending June annually (on FR 2910a) or quarterly (on 30. Total reservable liabilities of all FR 2910q), remained at the indexed depository institutions from June 30, level of $44.8 million. 1994, to June 30, 1995, increased by 3.6 From June 3 0 ,1 9 9 4 , to June 30, 1995, percent (from $ 1 ,5 7 3 .9 billion to total deposits increased 3.7 percent, $1,631.0 billion). Consequently, the from $3,831.6 billion to $3,9 7 3 .6 billion. reservable liabilities exemption amount Accordingly, the nonexempt deposit for 1996 under section 19(b )(ll)(B ) will cutoff level will increase by $ 1 . 6 million be increased by $0.1 million to $4.3 to $57.0 million and the exempt deposit million . 2 The effect of the application of section cutoff level will increase by $1.3 million to $46.4 million. Based on the 19(b) of the Federal Reserve Act to the indexation of the reservable liabilities change in the total net transaction exemption, the cutoff level for total accounts and the change in the total deposits above which reports of reservable liabilities from June 3 0 ,1 9 9 4 , deposits must be filed will rise from to June 30, 1995, is to decrease the low $4.2 million to $4.3 million. Institutions reserve tranche to $52.0 million, to with total deposits below $4.3 million apply a zero percent reserve are excused from reporting if their requirement on the first $4.3 million of deposits can be estimated from other transaction accounts, and to apply a three percent reserve requirement on the data sources. The $57.0 million cutoff level for weekly versus quarterly FR remainder of the low reserve tranche. 2900 reporting for nonexempt The tranche adjustment and the institutions, the $46.4 million cutoff reservable liabilities exemption level for quarterly FR 291 Oq versus adjustment for weekly reporting annual FR 2910a reporting for exempt institutions will be effective on the institutions, and the $4.3 million level reserve computation period beginning Tuesday, December 1 9 ,1 9 9 5 , and on the threshold for reporting will be used in the second quarter 1996 deposits report corresponding reserve maintenance screening process, and the adjustments period beginning Thursday, December will be made when the new deposit 21, 1995. For institutions that report reporting panels are implemented in quarterly, the tranche adjustment and September 1996. the reservable liabilities exemption All U.S. branches and agencies of adjustment will be effective on the foreign banks and all Edge and computation period beginning Tuesday, agreement corporations, regardless of December 1 9 ,1 9 9 5 , and on the reserve size, are required to file weekly the maintenance period beginning Report of Transaction A ccounts, Other Thursday, January 18, 1995. In addition, Deposits and Vault Cash (FR 2900). all institutions currently submitting After the indexations become effective Form FR 2900 must continue to submit in 1996, all other institutions that have reports to the Federal Reserve under reservable liabilities in excess of the current reporting procedures. exemption level of $4.3 million In order to reduce the reporting prescribed by section 1 9 (b )(ll) of the burden for small institutions, the Board Federal Reserve Act (known as has established deposit reporting cutoff “nonexempt institutions”) and total levels to determine deposit reporting deposits at least equal to the nonexempt frequency. Institutions are screened during the second quarter of each year 3 “Total deposits” as used in determining the to determine reporting frequency cutoff level includes not only gross transaction deposits, savings accounts, and time deposits, but 2 Consistent with Board practice, the tranche and also reservable obligations of affiliates, ineligible acceptance liabilities, and net Eurocurrency exemption amounts have been rounded to the liabilities. nearest $0.1 million. Federal Register / Vol. 60, No. 226 / Friday, Novem ber 24, 1995 / Rules and Regulations deposit cutoff level ($57.0 million) will be required to file weekly the Report of Transaction Accounts, Other Deposits and Vault Cash (FR 2900) for the twelvemonth period starting September 1996. However, nonexempt institutions with total deposits less than the nonexempt deposit cutoff level ($57.0 million) may file the FR 2900 quarterly. Institutions that obtain funds from non-U.S. sources or that have foreign branches or international banking facilities are required to file the Report of Certain Eurocurrency Transactions (FR 2 950/ 2951) at the same frequency as they file the FR 2900. Institutions with reservable liabilities at or below the exemption level ($4.3 million) (known as exemptinstitutions) must file the Quarterly Report of Selected Deposits, Vault Cash, and Reservable Liabilities (FR 2910q) if their total deposits equal or exceed the exempt deposit cutoff level ($46.4 million). Exempt institutions with total deposits less than the exempt deposit cutoff level ($46.4 million) but at least equal to the exemption amount ($4.3 million) must file the Annual Report of Total Deposits and Reservable Liabilities (FR 2910a). Institutions that have total deposits less than the exemption amount ($4.3 million) are not required to file deposit reports if their deposits can be estimated from other data sources. Finally, the Board may require a depository institution to report on a weekly basis, regardless of the cutoff level, if the institution manipulates its total deposits and other reservable liabilities in order to qualify for quarterly reporting. Similarly, any depository institution that reports quarterly may be required to report weekly and to maintain appropriate reserve balances with its Reserve Bank if, during its computation period, it understates its usual reservable liabilities or it overstates the deductions allowed in computing required reserve balances. N o t i c e a n d p u b l i c p a r t i c i p a t i o n . The provisions of 5 U.S.C. 553(b) relating to notice and public participation have not been followed in connection with the adoption of these amendments because the amendments involve expected, ministerial adjustments prescribed by statute and by an interpretative statement reaffirming the Board’s policy concerning reporting practices. Moreover, the low reserve tranche adjustment and the reservable liabilities exemption adjustment are required to be effective for the next calendar year even though the data which they are required to reflect are only available late in the prior year. In addition, the reservable liabilities exemption adjustment and the increases for reporting purposes in the deposit cutoff levels reduce regulatory burdens on depository institutions, and the low reserve tranche adjustment will have a d e m i n i m i s effect on depository institutions with net transaction accounts exceeding $52 million. Accordingly, the Board finds good cause for determining, and so determines, that notice and public participation is unnecessary, impracticable, and contrary to the public interest. The provisions of 5 U.S.C. 553(d) relating to notice of the effective date of a rule have not been followed in connection with the adoption of these amendments because the low reserve tranche adjustment and the reservable liabilities adjustment are expected, ministerial amendments prescribed by statute. Moreover, they are required to be effective for the next calendar year even though the data which they are required to reflect are only available late in the prior year. In addition, the reservable liabilities adjustment and the increase in deposit cutoff levels for reporting purposes relieve a restriction on depository institutions, and the low reserve tranche will have a d e m i n i m i s effect on depository institutions with net transaction accounts exceeding $52 million. Accordingly, there is good cause to determine, and the Board so determines, that such notice is impracticable or unnecessary. List of Subjects in 12 CFR Part 204 Banks, banking, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Board is amending 12 CFR Part 204 as follows: PART 204— RESERVE R E Q U IR E M E N T S O F D E P O S IT O R Y IN S T IT U T IO N S (R E G U L A T IO N D ) 1. The authority citation for Part 204 continues to read as follows: Authority: 12 U.S.C. 248(a), 248(c), 371a, 461, 601, 611,and 3105. 2. In § 204.9 paragraph (a) is revised to read as follows: §204.9 Reserve requirem ent ratios. (a)(1) R e s e r v e p e r c e n t a g e s . The following reserve ratios are prescribed for all depository institutions, Edge and Agreement corporations, and United States branches and agencies of foreign banks: Category Net transaction ac counts: Reserve require m ent1 Category $0 to $52.0 million . over $52.0 million .. Nonpersonal time de posits. Eurocurrency liabil ities. 57913 Reserve require m ent1 3 percent of amount. $1,560,000 plus 10 percent of amount over $52.0 million. 0 percent. 0 percent. 1 Before deducting the adjustment to be made by the paragraph (a)(2) of this section. (2) E x e m p tio n fro m re s e rv e Each depository institution, Edge or agreement corporation, and U.S. branch or agency of a foreign bank is subject to a zero percent reserve requirement on an amount of its transaction accounts subject to the low reserve tranche in paragraph (a)(1) of this section not in excess of $4.3 million determined in accordance with § 204.3(a)(3). * * * * * req u irem en ts. By order of the Board of Governors of the Federal Reserve System, November 15,1995. William W. Wiles, S e c r e t a r y o f th e B o a rd . [FR Doc. 95-28522 Filed 11-22-95; 8:45 am] BILLING CODE 6210-01-P
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