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FEDERAL RESERVE BANK OF N E W YORK [ Circular No. 5 5 4 5 ~1 September 1, 1964 J COLLECTION OF CASH ITEMS AND NONCASH ITEMS Amendments to Regulations J and G Revisions of Operating Circulars Nos. 4 and 8 To the Member and Nonmember Clearing Banks of the Second Federal Reserve District: Enclosed are copies of the following documents, all effective September 1, 1964: Amendment to Regulation J of the Board o f Governors o f the Federal Reserve System, on Check Clearing and Collection Amendment to Regulation G of the Board of Governors of the Federal Reserve System, on Collection of Noncash Items Operating Circular No. 4 of this Bank, on Collection of Cash Items Operating Circular No. 8 of this Bank, on Collection of Noncash Items The amendments to the Regulations provide that (1) Federal Reserve Banks, as collect ing banks, shall receive the same warranties from sending banks located in jurisdictions in which the Uniform Commercial Code is not in effect as Federal Reserve Banks located in jurisdictions in which the Code is in effect give to banks to which they forward items, and (2) a Federal Reserve Bank that sends items to another Federal Reserve Bank makes the same warranties and agreements as are made by a member or nonmember bank that sends items to a Federal Reserve Bank. Conforming changes appear in paragraph 10 (form erly 8) of Operating Circular No. 4, and in paragraph 8 of Operating Circular No. 8. The revised Operating Circulars Nos. 4 and 8 also incorporate the outstanding supple ments to the superseded editions of such circulars and, in addition to editorial changes, contain the following changes: Operating Circular No. 4 Paragraph 7, which is new, provides that items drawn on one office of a bank will not be accepted from another office o f the same bank for collection as either cash items or noncash items. Paragraph 14 (form erly 12) contains an additional provision that all cash letters and accom pany ing tape listings sent to us, or to another Federal Reserve Bank direct fo r our account, should be dated and identified with the name and A .B .A . transit number of the sending bank. 19 14 ( over) FIFTIETH ANNIVERSARY 19 6 4 Paragraphs 26 and 29 (form erly 24 and 27) provide that this Bank may recover or revoke any refund, deduction, or credit made, allowed, or given by it fo r any item returned after the time allowed by Regulation J unless we are instructed not to do so by our sending bank. Form erly, the paragraphs provided that such recovery or revocation could be effected only if the late return was not ‘ ‘ acquiesced in ” by the sending bank. Paragraph 27 (form erly 25) contains an additional provision indicating that we have available a return item cash letter form (F orm R&R 82) fo r use by member and nonmember clearing banks that return unpaid items listed on a separate cash letter for credit on our books. Paragraph 32 (form erly 30), which form erly provided, among other things, fo r reimbursement of transportation costs on all items sent direct to an office of this Bank other than the one at which the sending bank’s reserve account is carried, has been amended to limit such reimbursement to direct sendings o f items payable in Buffalo or New Y ork City. The revised paragraph also states that banks that by arrangement deliver cash items payable in other Federal Reserve Districts to this Bank for consolidated shipment should not deviate from the arrangement except upon prior approval o f this Bank. Paragraph 35, which is new, contains provisions designed to protect this Bank from liability for any delay resulting from either (1 ) its forw arding any cash item to its destination on the basis of the inscribed routing symbol and A .B .A . transit number o f the payor bank appearing on the item, or on the basis of the name of the payor bank appearing thereon, or (2) its inscribing the routing symbol and A .B .A . transit number of the payor bank on a cash item that lacks any such symbol or number, and forw arding the item accordingly. Operating Circular No. 8 Paragraph 16 provides that immediate credit will be given fo r due or past due coupons paid or redeemed by us and listed in a separate totaled letter, if received by 3 p.m. (instead of 10:30 a.m.) on any business day. Paragraph 25 provides for credit to be given for maturing certificates of deposit on the same basis as maturing bankers’ acceptances. Additional copies of the enclosures will be furnished upon request. A lfred H ayes, President. CHECK CLEARING AND COLLECTION AMENDMENTS TO REGULATION J (12 CFR Part 210) I ssu ed by th e B oard of G overnors of th e F ederal R eserve Sy stem Effective September 1, 1964, the presently undesignated first paragraph of §210.5 is designated as paragraph (a ), the present paragraphs (a) through (i) of § 210.5 are redesignated as para graphs (b) through ( j) , respectively, and the presently undesignated first paragraph of § 210.5 and the present paragraph (a) of such sec tion are revised to read as follows: S E C T IO N 210.5— T E E M S OF C O L L E C T IO N (a) The Board of Governors of the Federal Reserve System hereby authorizes the Federal Reserve banks to handle such checks subject to the following terms and conditions; and each member and non member clearing bank and each Federal Reserve bank which sends checks to a Federal Reserve bank for deposit or collection shall by such action be deemed: (1) to authorize the Federal Reserve banks to handle such cheeks subject to the following terms and conditions; (2) to warrant its own authority to give the Federal Reserve banks such authority; (3) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses of litigation) resulting from the failure of such sending bank to have such authority, or resulting from such Federal Reserve bank’s guaranty of prior endorsements, or resulting from any action taken by the Federal Reserve bank within the scope of its authority for the purpose of collecting such checks, or result ing from any and all warranties by the Federal Reserve bank, in respect of such checks, under the law o f any State applicable to the Federal Reserve bank as a collecting bank; (4) to guarantee all prior endorsements on such checks whether or not a specific guaranty is incorporated in an endorsement of the sending bank; and (5) to warrant to the Federal Reserve bank, in respect of such checks, all such matters and things as the Federal Reserve bank shall warrant in respect thereof under the law of any State applicable to the Federal Reserve bank as a collecting bank; provided, that nothing herein contained shall, or shall be deemed to, constitute a limitation upon the effect of any warranty by such sending bank arising under the law of any State applicable to such sending bank as a collecting bank. (b) A Federal Reserve bank will act only as agent of the bank from which it receives such checks and will assume no liability except for its own negligence, its guaranty of prior endorsements and its warranties under the law of any State applicable to it as a collecting bank. P R IN T E D IN N E W YORK COLLECTION OF NONCASH ITEMS AMENDMENTS TO REGULATION G (12 CFR Part 207) Issued by th e B oard of G overnors of th e F ederal R eserve S ystem Effective September 1, 1964, paragraphs (a) and (b) of Section 207.3 are revised to read as follows: S E C T IO N 207.3— T E E M S OF C O L L E C T IO N (a) Agreement of sending bank.— Each member and nonmember clearing bank and each Federal Reserve bank which sends noncash items to a Federal Reserve bank for collection shall by such action be deemed: (1) to authorize the Federal Reserve banks to handle such items subject to the terms and conditions of this part; (2) to warrant its own authority to give the Federal Reserve banks such authority; (3) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses of litigation) resulting from the failure of such sending bank to have such authority, or resulting from such Federal Reserve bank’s guaranty of prior endorsements, or resulting from any action taken by the Federal Reserve bank within the scope of its authority for the purpose of collecting such noncash items, or result ing from any and all warranties given by the Federal Reserve bank, in respect of such items, under the law of any State applicable to the Federal Reserve bank as a collecting bank; (4) to guarantee all prior endorsements on such items whether or not a specific guaranty is incorporated in an endorsement of the sending bank; and (5) to warrant to the Federal Reserve bank, in respect of such items, all such matters and things as the Federal Reserve bank shall warrant in respect thereof under the law of any State applicable to the Federal Reserve bank as a collecting bank; provided, that nothing herein contained shall, or shall be deemed to, constitute a limitation upon the effect of any warranty by such sending bank arising under the law of any State applicable to such sending bank as a collecting bank. (&) Federal Reserve bank as agent.— A Federal Reserve bank will act only as agent o f the bank from which it receives such noncash items and will assume no liability except for its own negligence, its guaranty of prior endorsements and its warranties under the law of any State applicable to it as a collecting bank. P R IN TE D IN N E W YORK F R ederal of N eserve ew Y Bank ork Operating Circular No. 4 Revised effective September 1, 1964 E C O L L E C T IO N O F C A S H IT E M S To the Member and Nonmember Clearing Banks of the Second Federal Reserve District ; i Regulation J of the Board of Governors of the Federal Reserve System, this circular, and our time schedules prescribe the terms and conditions upon which we will receive and handle cash items for collec tion. Section 210.6 of Regulation J provides that each Federal Reserve Bank may promulgate rules not inconsistent with the terms of the law or of Regulation J, governing the details of its operations in clearing and collecting checks and other cash items, and that such rules shall be binding upon any member or nonmember clearing bank which sends any check or other cash item to such Federal Reserve Bank for collection or to any other Federal Reserve Bank for the account of such Federal Reserve Bank for collection. This circular and our time schedules are issued pursuant to this provision of Regulation J. Ite m s w h ic h w ill b e a cce p te d as ca sh ite m s 1. The following will be accepted for collection as cash items: ( 1 ) Checks draw n on banks or ban kin g institutions (includ ing p ri vate ban kers) located in an y F edera l R eserve D istrict2 which are collectible at p a r in fu n d s acceptable to the collecting F edera l Reserve B a n k . The “ F ederal R eserve P a r L is t,” indicating the banks u p on which checks w ill be received b y F ed era l R eserve B a n k s f o r collection and credit, is f u r nished fr o m tim e to tim e and a sup plem en t is furnished each month show ing changes subsequent to the last com plete list. T his list is subject to change w ithout notice and the righ t is reserved to return without presentm ent an y item s draw n on banks w hich m ay have w ithdraw n or m a y have been rem oved fr o m the list or m a y have been reported closed. (2 ) Governm ent checks draw n on the Treasurer o f the U nited States. ( 3 ) P osta l m oney orders (U n ite d S tates p ostal m oney ord ers; U nited S tates international p osta l m oney o rd ers; and dom estic-international p ostal m oney o rd ers). ( 4 ) Such other item s, collectible at p a r in fu n d s acceptable to the F edera l R eserve B a n k o f the D istrict in which such item s are p ayable, as we m a y be w illin g to accept as cash item s. W h e n any such item is accepted 1 The instructions contained in paragraph 16 under the heading “ Uniform instructions regard ing protest and wire advice of nonpayment,” and in paragraphs 24 to 28, inclusive, under the heading “ Instructions to collecting and remitting banks,” are applicable to all collecting and remitting banks (including not only member and nonmember clearing banks but also other non member banks) to which we send cash letters. This operating circular is accordingly sent to all banks in the Second Federal Reserve District. 2 For the purposes of this circular, any dependency, insular possession, or part of the United States outside the States of the United States and the District of Columbia shall be deemed to be in or of such Federal Reserve District as the Board of Governors may designate. as a cash item , we w ill give credit th erefor in accordance w ith the p r o visions o f this circular and our tim e schedules; and w ith respect to such item the “ T E R M S O F C O L L E C T I O N ” o f Section 2 0 7 .3 o f R e g u la tio n G o f the B o ard o f G overnors o f the F edera l R eserve S ystem , as set fo rth in our current circular relatin g to the collection o f noncash item s, w ill a p p ly as well as the relevant term s and conditions o f this circular, includ in g p aragrap h s (c ) and (e ) o f Section 2 1 0 .5 o f R egu lation J as set fo rth in this circular. 2. W e may receive cash items pre-encoded as to transit numberrouting symbol and as to amount in magnetic ink in E-13B type and we may so encode cash items received by us. 3. The right is reserved to establish different closing times, and to require separate sorts and cash letters for items which we may be willing to accept as cash items and which are not suitable for process ing on high-speed document-handling equipment. 4. Items with passbook, certificate, or any other document attached, and items with special instructions or requiring special handling must be sent to us as noncash collections, subject to the terms of our current circular relating to the collection of noncash items. W e reserve the right to return or to handle as a noncash collection any item which has been previously dishonored. 5. Checks drawn on or payable at a nonmember bank which is not included in the currently effective Federal Reserve Par List, referred to above, will not be received either as cash items or as noncash items by us or by any other Federal Reserve Bank. 6. In the interests of good banking, the indirect routing of cash items is discouraged, and member and nonmember clearing banks should not send to us or to other Federal Reserve Banks for our account any items payable in other Federal Reserve Districts which bear the endorsements of banks located in other Federal Reserve Districts, in cases where it is evident that such items have been routed indirectly. 7. Items drawn on one office of a bank will not be accepted from another office of the same bank for collection as either cash items or noncash items. Terms and conditions of collection 8. Every bank sending cash items to us or to another Federal Reserve Bank direct for our account, by such act, will be understood to have agreed to the terms and conditions of this circular, of our time schedules, and of Regulation J in effect at the time such cash items are received by the Federal Reserve Bank. 9. Cash items payable in other Federal Reserve Districts and fo r warded for collection to the Federal Reserve Banks of such other Districts either by us or by our member and nonmember clearing banks for our account will be handled by such other Federal Reserve 2 Banks subject to the terms and conditions of Regulation J and of the respective circulars and time schedules of such other Federal Reserve Banks, and to the rules of law applicable to such banks; but we will give credit for such items in accordance with our time schedules. 10. Section 210.5 of Regulation J prescribes terms and conditions under which all Federal Reserve Banks will handle checks as cash items for member and nonmember clearing banks. Such terms and conditions, and the terms and conditions of this circular and of our time schedules, will apply to the handling of all items which we accept for collection as cash items and to the handling of all bank drafts and other forms of payment or remittance which we receive for such items. The terms and conditions prescribed by Section 210.5 of Regulation J are as follows: “ ( a ) The B o ard o f G overnors o f the F edera l Reserve System hereby authorizes the F ederal R eserve banks to handle such cheeks subject to the follow in g term s and co n d ition s; and each m em ber and nonm em ber clearing bank and each F edera l R eserve bank which sends checks to a F ederal R eserve bank fo r deposit or collection shall b y such action be d eem ed : ( 1 ) to authorize the F edera l R eserve banks to handle such checks subject to the fo llo w in g term s and con dition s; ( 2 ) to w arrant its own authority to give the F ederal R eserve banks such a u th o rity ; ( 3 ) to agree to in d em n ify an y F edera l R eserve bank f o r an y loss or expense sustained (inclu d in g but not lim ited to attorneys’ fees and expenses o f litigation) resulting fro m the failu re o f such sending bank to have such authority, or resulting fro m such F ed era l R eserve ban k ’s gua ra n ty o f p rio r endorse m ents, or resulting fro m an y action taken b y the F ederal Reserve bank w ithin the scope o f its authority fo r the p u rp ose o f collecting such checks, or resulting fro m an y and all w arranties b y the F edera l R eserve bank, in respect o f such checks, under the law o f any S tate applicable to the F ederal R eserve bank as a collecting b a n k ; ( 4 ) to guarantee all p rio r en dorsem ents on such checks whether or n ot a specific gu aran ty is incor porated in an endorsement o f the sending b a n k ; and ( 5 ) to w arrant to the F ederal R eserve bank, in respect o f such checks, all such m atters and things as the F edera l R eserve bank shall w arrant in respect thereof under the law o f any S tate ap p licab le to the F edera l R eserve bank as a collect in g b a n k ; provid ed , that nothing herein contained shall, or shall be deemed to, constitute a lim itation u pon the effect o f any w arranty by such sending bank arisin g under the law o f any S tate app licab le to such sending bank as a collecting bank. “ ( b ) A F ederal R eserve bank w ill act only as agent o f the bank fro m which it receives such checks and w ill assum e no liab ility except f o r its own negligence, its gu a ra n ty o f p rio r endorsements and its w arranties under the law o f an y S tate app licab le to it as a collecting bank. “ ( c ) A F edera l R eserve bank m a y presen t such checks fo r p aym ent or send such checks f o r collection direct to the bank on which they are drawn or at which they are p ayable, or in its discretion m ay forw ard them to another agen t w ith authority to present them fo r p aym en t or send them f o r collection direct to the bank on which they are drawn or at which they are p ay able. A F edera l R eserve bank, or an y agent to which such cheeks are forw ard ed by a F ederal R eserve bank, m a y present such checks pursuan t to an y special collection agreem ent not inconsistent 3 w ith the term s o f this regulation or m a y present them through a clearing house su bject to the rules and practices thereof. “ ( d ) A F edera l R eserve ban k m a y, in its discretion and at its op tion , either directly or through or fro m an agent, accept in p a y m en t o f or in rem ittance fo r such checks, cash, bank d ra fts, tran sfe rs o f fu n d s or bank credits, or other fo rm s o f p ay m en t or rem ittance, acceptable to the collecting F edera l R eserve bank. The F ed era l R eserve bank shall not be liable fo r the fa ilu re o f the drawee bank or an y agen t to p a y or rem it fo r such checks, nor f o r an y loss resu lting fr o m the acceptance fr o m the drawee bank or an y collecting agen t, in lieu o f cash, o f an y other fo rm o f p ay m en t or rem ittance authorized herein, nor f o r the n on p a ym en t o f, or fa ilu re to realize up on , an y bank d ra ft or other m edium o f p ay m en t or rem ittance which m ay be accepted fro m the drawee bank or an y col lecting agent. “ (e ) A n y check which a F ed era l R eserve bank or an agen t thereof presents to the drawee bank f o r p ay m en t or sends to the drawee bank fo r collection, and f o r which rem ittance or settlem ent is m ade b y the drawee bank on the day on which it receives4 such check, m a y be returned f o r credit or refu n d at an y tim e p rio r to m idnight o f the draw ee’s next business day fo llo w in g such day o f receipt or p rio r to the tim e p rovided b y ap p licab le clearing house rule or special collection agreem ent, w hich ever is earlier, except that this p aragrap h shall not a p p ly to checks presented over the counter. “ ( f ) Checks received b y a F e d e ra l R eserve bank w hich are p ayable in its ow n district w ill ord in arily be forw ard ed or presented direct to the banks on which they are draw n, and such banks w ill be required to rem it or p a y therefor at p a r in such one or m ore o f the fo rm s o f p a y m ent or rem ittance authorized under p a ra g ra p h ( d ) h ereof as m a y be acceptable to the F ederal R eserve bank. “ ( g ) Checks received b y a F ederal R eserve bank p ay ab le in other districts w ill ordinarily be forw ard ed f o r collection to the F ed era l Reserve bank o f the district in which such checks are p a y a b le ; p ro vid ed , how ever, that, where arrangem ents can be m ade satisfa cto ry to the collecting bank or agen t and to the F ed era l R eserve bank o f the district in w hich such checks are p ay able, an y such checks m a y be forw ard ed f o r collection direct to the bank on which they are draw n or at which they are p ay ab le, or m a y be forw ard ed f o r collection to another agen t w ith authority to present them f o r p ay m en t direct to the bank on w hich they are drawn or at w hich they are p ay able. A ll such checks shall be handled su bject to all the term s and conditions o f this regulation. “ (h ) W it h respect to an y check sent direct b y a m em ber or non m em ber clearing bank in one district to a F e d e ra l R eserve bank in another district, the relationships and the rights and liabilities existing between the m em ber or nonm em ber clearing bank, the F e d e ra l R eserve ban k o f its district and the F ed era l R eserve bank to w hich the check is sent w ill be the sam e, and the relevant provisions o f this regulation w ill a p p ly , as though the m em ber or nonm em ber clearing bank had sent such “ 4A check received by a drawee bank on a day other than its business day, or received on a business day after its regular business hours or during afternoon or evening periods when it has reopened (or remained open) for limited functions, shall be deemed to have been received on its next succeeding business day.” 4 check to the F ed era l R esrve bank o f its district w ith its endorsement and gu aran ty o f p rio r endorsements and such F ed era l R eserve bank had sent the check to the other F ed era l R eserve bank w ith its endorsem ent and gu a ra n ty o f p rio r endorsements. “ ( i ) B a n k d ra fts received by a F ederal Reserve bank in p aym en t o f or in rem ittance f o r cheeks handled under the term s o f this regu la tion shall likewise be handled f o r collection subject to all the term s and conditions o f this regulation. “ ( j ) The am ount o f an y check fo r which p ay m en t in actually and finally collected fu n d s is not received shall be charged back to the fo rw a rd in g bank, regardless o f whether or not the check itse lf can be returned. I n such event, neither the owner or holder o f an y such check, nor the bank w hich sent such check to the F edera l R eserve bank f o r collection shall have an y righ t o f recourse up on , interest in, or righ t o f p aym ent fro m , an y reserve balance, clearing account, deposit account, or other fu n d s o f the drawee bank or o f an y bank to which such checks have been sent f o r collection, in the possession o f the F edera l Reserve bank. N o d ra ft, authorization to charge, or other order, u p on an y reserve balance, clearing account, deposit account, or other fu n d s o f a p a y in g , rem itting, or collecting bank in the possession o f a F edera l Reserve bank, issued fo r the p u rp ose o f settling item s handled under the term s o f this regu la tion w ill be p a id , acted u p on , o r honored a fte r receipt b y such F ederal R eserve bank o f notice o f suspension or closing o f such p a y in g , rem itting, or collecting bank.” G o v e r n m e n t ch e ck s 11. United States Government checks will be handled in accord ance with, and subject to the provisions of, Treasury Department Circular No. 176 in effect at the time such items are received by us; and with respect to matters not covered by such circular, the pro visions of Regulation J, this circular, and our time schedules shall be deemed applicable to all Government checks. Credit for Government checks will be given in accordance with our time schedules and will be subject in all cases to examination and payment by or on behalf of the Treasurer of the United States. 12. Section 25 of Treasury Department Circular No. 176 (Title 31, Code of Federal Regulations, Chapter II, Subchapter A, Section 202.25) relates to the handling and payment of checks drawn on the Treasurer of the United States received at Federal Reserve Banks. Copies of this section will be furnished upon request. P o sta l m o n e y o rd e rs 13. Postal money orders will be handled in accordance with an agreement made by the Postmaster General, in behalf of the United States, and the Federal Reserve Banks as depositaries and fiscal agents of the United States pursuant to authorization of the Secretary of the Treasury; and with respect to matters not covered by such agreement, the provisions o f Regulation J, this circular, and our time schedules shall be deemed applicable to all postal money 5 orders. Immediate credit will be given to member banks and non member clearing banks for postal money orders as provided in onr time schedules, and simultaneously with such credit we will debit the amount of such money orders against the general account of the Treas urer of the United States under such symbol numbers as may be assigned by the Treasurer of the United States. Said agreement fu r ther provides in effect that no claim for refund or otherwise with respect to any money order debited against the general account of the Treasurer of the United States and delivered to the representa tive of the Post Office Department as provided in said agreement (other than a claim based on the negligence of a Federal Reserve Bank) will be made against 01* through any Federal Reserve Bank; that if the Post Office Department makes any such claim with respect to any such money order, such money order will not be returned or sent to a Federal Reserve Bank, but the Post Office Department will deal directly with the bank or the party against which such claim is made; and that the Federal Reserve Banks will assist the Post Office Department in making such claim, including making their records and any relevant evidence in their possession available to the Post Office Department. Preparation of cash letters by sending banks 14. A ll cash items sent to us, or to another Federal Reserve Bank direct for our account, may be listed in cash letters without description. We believe, however, that each sending bank should bear in mind the desirability of maintaining adequate records to enable it to identify its depositors or other endorsers on such items, so that, in the event any such item is lost or destroyed while in transit to a Federal Reserve Bank or Branch, or is thereafter lost or destroyed, the sending bank may be in a position to take appropriate action with respect to the item. All cash letters and tape listings accompanying such cash letters should be dated and identified with the name and A.B.A. transit number of the sending bank. Other instructions relative to sorting and listing of items are set forth in our time schedules. Endorsements 15. All cash items sent to us, or to another Federal Reserve Bank direct for our account, should be endorsed without restriction to the order of the Federal Reserve Bank to which sent, or endorsed to the order of any bank, banker, or trust company, or endorsed with equiva lent words or abbreviations thereof. Cash items will be accepted by us and by other Federal Reserve Banks only upon the understanding and condition that all prior endorsements are guaranteed by the sending bank. There should be incorporated in the endorsement of the sending bank the phrase, “ All prior endorsements guaranteed,” which may be abbreviated as, for example, “ P.E .G .” in conformity with the A.B.A. uniform transit instructions, or “ Pr. Ends. Gtd.” The act of sending or delivering a cash item to us or to another Federal Reserve Bank will, however, be deemed and understood to constitute a guaranty of 6 all prior endorsements on such item, whether or not an express guar anty is incorporated in the sending bank’s endorsement. The endorse ment of the sending bank should be dated and should show the A.B.A. transit number of the sending bank in prominent type on both sides. Uniform instructions regarding protest and wire advice of nonpayment 16. Federal Reserve Banks will receive, handle, and forward cash items subject to the following uniform instructions regarding protest and wire advice of nonpayment, except that United States Government checks will not be protested: (1 ) P R O T E S T dishonored item s o f $ 1 ,0 0 0 and o v e r : ( a ) that ap p ea r on their face to be draw n outside o f the S tate in which p ay able, except those bearing on their fa ce the A .B .A . n o-protest sym bol o f a F edera l Reserve B a n k or o f a p receding bank endorser, or ( b ) that bear on their fa ce the legend, “ P R O T E S T R E Q U I R E D ,” o f a F ed era l R eserve B a n k or o f a preceding bank endorser. ( 2 ) D O N O T P R O T E S T item s o f less than $ 1 ,0 0 0 , or item s o f $ 1 ,0 0 0 and over except those protestable under su bp aragraph ( 1 ) . (3 ) D O than $ 1 ,0 0 0 . NOT W IR E A D V IC E o f n on paym ent o f item s o f less ( 4 ) W I R E A D V I C E o f non paym ent o f all item s o f $ 1 ,0 0 0 or over, except those not p aid because o f m issing, irregular, or unsatis fa cto ry endorsem ent and those bearin g on their face “ D O N O T W I R E N O N P A Y M E N T ” w ith the A .B .A . transit num ber o f a F edera l R eserve B a n k or o f a preceding bank endorser. In clud e in the w ire advice o f n on paym ent the A .B .A . transit num bers or the nam es o f the two endorsers im m ediately p receding the F edera l R eserve B a n k . ( 5 ) D O N O T P R O T E S T A N D D O N O T W I R E A D V I C E o f non p ay m en t o f any check, regardless o f am ount, endorsed b y the T reasurer o f the U nited States, or endorsed fo r credit to the Treasurer o f the U n ited S tates, or bearing on its face or in an endorsement the legend “ T h is check is in p aym en t o f an obligation to the U nited States and m ust be p a id a t p a r. N .P . D o not w ire n on paym ent” or w ords o f sim ilar im p ort. 17. A ll Federal Reserve Banks will receive, handle, and forward cash items only in accordance with these uniform instructions, and any contrary or special instructions noted on cash letters or otherwise transmitted with cash items will be disregarded. 18. I f a bank should desire to have any cash item handled by us or by any other Federal Reserve Bank under any instructions differing from the uniform instructions given above, it will be necessary for such bank to forward such item as an individual noncash item, with the instructions noted in the letter of transmittal, for collection and credit when paid, in accordance with the terms of our current circular relating to the collection of noncash items. 7 Telegraphic costs 19. Telegrams pertaining to payment, nonpayment, or tracing of cash items, or in connection with receiving or transmitting pertinent information or instructions, will be sent, to the extent practicable, over the Federal Reserve leased wires without cost to member and non member clearing banks. The cost of all such telegrams sent over commercial wires will be charged to the banks from which the items were received, and commercial wire telegrams to such banks will be sent collect. Time schedules and availability of credits 20. W e publish and furnish to member and nonmember clearing banks time schedules showing when cash items will become available for reserve and withdrawal or other use by the sending banks after receipt by us. For all items accepted as cash items, the sending bank will be given immediate credit or deferred credit, in accordance with such time schedules and as provided in Regulation J. Credit for letters containing items unassorted as to availability may be deferred for the longest period of availability prescribed by our current time schedules with respect to any item enclosed, not to exceed two busi ness days. 21. Time schedules do not in many instances show the actual time required for collection, and advices received from us showing the availability of credit for cash items cannot be considered as advices of actual payment on the dates of availability. Credit will in all instances be subject to receipt of payment by us in actually and finally collected funds. Immediate credit 22. For all such cash items as are accepted for immediate credit in accordance with our current time schedules, immediate credit will be given upon our books at full face value in the reserve account or clear ing account upon the day o f receipt, and the proceeds will at once be counted as reserve (in the case of a member bank) and become avail able for withdrawal or other use by the sending bank; provided, however, that we may in our discretion refuse at any time to permit the withdrawal or other use of credit given for any item for which we have not yet received payment in actually and finally collected funds. Deferred credit 23. For all such cash items as are accepted for deferred credit in accordance with our current time schedules, deferred credit will be entered upon our books at full face value, but the proceeds will not be counted as reserve nor become available for withdrawal or other use by the sending bank until the expiration of the time specified in our 8 time schedules, at which time credit will be transferred from the deferred account to the reserve account or clearing account and will then be counted as reserve (in the case of a member bank) and become available for withdrawal or other use by the sending bank; provided, however, that we may in our discretion refuse at any time to permit the withdrawal or other use of credit given for any item for which we have not yet received payment in actually and finally collected funds. Instructions to collecting and remitting banks 24. Remittances for our cash letters should be made on the day of receipt, at par in immediately available or acceptable funds. Member and nonmember clearing banks may, and are urged to, remit by specific authorizations to debit their accounts on our books. Forms for such authorizations are printed at the bottom of the remittance letter forms which we furnish to collecting and remitting banks with our cash letters. 25. We will receive for credit or refund cash items which are returned to us by collecting and remitting banks in accordance with paragraph (e) of Section 210.5 of Regulation J, set forth in this circu lar under the heading “ Terms and conditions of collection.” Such provision of Regulation J does not mean, however, that any bank is required to follow the practice of delaying the return of unpaid cash items; and any collecting or remitting bank may continue to return un paid cash items with its remittance on the day of receipt. Each cash item returned unpaid should bear a notation clearly indicating the reason therefor. 26. Each bank returning cash items for credit or refund represents that such items are returned within the time allowed by paragraph (e) of Section 210.5 of Regulation J ; and this Bank may recover or revoke any refund, deduction, or credit made, allowed, or given by it for any item returned after the time allowed by Regulation J unless we are instructed not to do so by our sending bank, but any such recovery or revocation shall be without prejudice to the rights and obligations of the returning and sending banks, as between themselves, in respect of the item or any settlement or credit therefor. A bank may, however, return to us without entry a cash item which it has failed to return in time, with a request that we ask our sending bank to make refund therefor, in which event we shall make refund to the returning bank and charge our sending bank only if the latter specifically authorizes us to do so. 27. Collecting and remitting banks may deduct unpaid items from, and return such items with, their remittances for our cash letters, or a member or nonmember clearing bank may, at its option, return such items listed on a separate letter for credit to its account on our books. Such separate letters must be captioned “ Return Items” and must not include any other items. For convenience, we have available for use 9 as such separate letter a return item cash letter form (Form R&R 82), a supply of which will be furnished upon request. 28. The instructions set forth in paragraph 16 of this circular under the heading ‘ ‘ Uniform instructions regarding protest and wire advice o f nonpayment” are applicable to all items which we forward as cash items. Information to sending banks regarding return items 29. The attention of sending banks is called to our “ Instructions to collecting and remitting banks” to the effect that (a) each bank returning cash items for credit or refund represents that such items are returned within the time allowed by paragraph (e) of Section 210.5 of Regulation J, and (b) that this Bank may recover or revoke any refund, deduction, or credit made, allowed, or given by it for any item returned after the time allowed by Regulation J unless we are instructed not to do so by our sending bank, but any such recovery or revocation shall be without prejudice to the rights and obligations of the returning and sending banks, as between themselves, in respect of the item or any settlement or credit therefor. We do not undertake to examine all returned cash items to confirm that such items are returned within the time permitted under the provisions of paragraph (e) of Section 210.5 of Regulation J. Direct sending of cash items to other Federal Reserve Banks 30. Member and nonmember clearing banks having a substantial volume of cash items (exclusive of Government checks and postal money orders) payable in other Federal Reserve Districts which they wish to collect through the Federal Reserve Banks are urged to apply to us for permission to send such items direct to the Federal Reserve Banks and Branches of the Districts in which such items are payable, for collection and credit to us. Appropriate instructions will be sent to the banks to which such permission is granted. 31. When in our judgment a member or nonmember clearing bank has a sufficient volume of cash items payable in other Federal Reserve Districts to justify direct routing, we reserve the right to decline to accept such items for collection unless they are routed direct to the Federal Reserve Banks and Branches o f such other Federal Reserve Districts. Reimbursement of transportation costs 32. Each member bank which sends cash items direct to other Fed eral Reserve Banks and Branches, each member bank located in the Head Office territory which sends cash items payable in Buffalo direct to our Buffalo Branch, and each member bank located in the Buffalo Branch territory which sends cash items payable in New York City direct to our Head Office will be reimbursed by us for postage or other trans it) portation costs, not including insurance, on all such direct-sent items. In the interest of expeditious and economical handling, those directsending member banks that by arrangement deliver cash items payable in other Federal Reserve Districts to this Bank for consolidated shipment should not deviate from the arrangement except upon prior approval of this Bank. Transportation costs of consolidated shipments will be paid by us. 33. Claims for reimbursement of transportation costs should be submitted monthly on our Form TR.181, a supply of which will be furnished upon request. Member banks located in the territory assigned to our Buffalo Branch should submit their claims to the Branch. Upon approval of the claim, the reserve account of the mem ber bank will be credited with the amount thereof. 34. Each direct-sending member bank is requested to give constant attention to methods of shipment and to change a method in any case in which shipment can be made at a lower cost without loss of time in presentment. In cases in which we pay the transportation costs, we reserve the right to require a change in method of shipment in any situation where, by the use of another method, presentment can con sistently be made more promptly, or at a lower cost and without loss of time. Check standardization, sorting, routing, and mechanized processing 35. The depositor of each cash item which is sent to this Bank for handling hereunder and every prior collecting bank agree with respect to such item that: ( 1 ) this B a n k m ay handle and forw ard such item hereunder to any bank whose nam e or designation ap p ears on the item as the bank b y , at, or through which the item is p ay able, whether such nam e or designation is w ritten or m ade b y m eans o f an y m agnetically inscribed routing sym bol and A .B .A . tran sit num ber, or by m eans o f any routing sym bol and A .B .A . transit num ber not m agnetically inscribed, or b y any other m ean s; ( 2 ) i f the item does not bear any routin g sym bol and A .B .A . transit num ber, this B a n k m ay inscribe on the item in m agnetic ink, or other wise w rite thereon, the routin g sym bol, the A .B .A . transit num ber, or both, o f the bank b y , at, or through which the item is p ay able, and handle and fo rw ard the item accordingly. The depositor of such item and each such collecting bank hereby are given notice and recognize that the efficient operation of the Federal Reserve collection system makes impracticable the assumption by the Federal Reserve Banks of any responsibility for delay resulting from action taken by this Bank, as stated in (1) and (2) above; and they hereby assume any and all risk o f loss arising from any such delay and agree that the handling of such item in accordance herewith shall constitute the exercise of ordinary care by this Bank. 11 36. To facilitate the sorting, routing, and mechanized processing of checks and other cash items by all banks, and thereby promote earlier presentment and return of unpaid items, it is urged that: ( 1 ) The ap p ro p ria te transit n u m b er-routing sym bol in fractio n al fo r m be clearly im p rin ted in the u p p e r righ t-h an d corner o f all checks or other cash item s draw n p ay ab le b y , at, or through all p a r-re m ittin g banks. I t is p referab le that the sym bol be p rin ted in G othic ty p e , the fa ce o f which measures at least 8 p oin ts vertically or 1 / 9 o f an inch fro m the to p to the bottom o f the individual characters. ( 2 ) I n co n fo rm ity w ith the A m erica n B ankers A ssocia tio n M agn etic In k Character R ecogn ition P ro g ra m , the ro u tin g sym bol and the suffix o f the tran sit num ber be encoded on all checks and other cash item s in m agnetic ink in E -1 3 B ty p e in the m anner prescribed and at the location assigned b y the A .B .A . w ithin the % -in c h strip reserved f o r m agnetic ink encoding along the bottom edge o f such item s. ( 3 ) Checks and other cash item s be con form ed to the standards prescribed b y the A .B .A ., inclu din g a m inim um w idth o f 2 % inches, a m axim u m w idth o f 3 % inches, a m inim um length o f 6 inches, and a m axim u m length o f 8 % inches, and be restricted to a single thickness o f card or p ap er. Right to amend 37. The right is reserved to withdraw, add to, or amend, at any time, any of the provisions of this circular and of our time schedules. Effect of this circular on previous circular 38. This circular supersedes our Operating Circular No. 4, Revised effective August 10, 1960, and the First, Second, and Third Supple ments thereto, dated August 1, 1961, December 2, 1963, and Decem ber 6, 1963, respectively. A lfred H a y e s , President. 12 Federal of R N eserve ew B ank York [ Operating Circular No. 8 Revised effective September 1, 1964 COLLECTION OF NONCASH ITEMS To the Member and Nonmember Clearing Banlcs o f the Second Federal Reserve D istrict: Regulation G of the Board of Governors of the Federal Reserve System (hereinafter referred to as Regulation G) and this circular prescribe the terms and conditions upon which we will receive and handle noncash items for collection. Section 207.4 of Regulation G pro vides that each Federal Reserve Bank may promulgate rules not inconsistent with the terms of the law or o f Regulation G, governing the details of its noncash collection operations, and that such rules shall be binding upon any member or nonmember clearing bank which sends any noncash item to such Federal Reserve Bank for collection or to any other Federal Reserve Bank for the account of such Federal Reserve Bank for collection. This circular is issued pursuant to this provision of Regulation G. Definition of noncash items 1. As used in Regulation G and in this circular, the term “ noncash items” means any items of the following classes when payable in any Federal Reserve District ( 1 ) M aturin g1 notes, acceptances, bankers’ acceptances, certificates o f deposit, bills o f exchange, and d ra fts with or w ithout securities, bills o f lad ing, or other docum ents a tta ch ed ; (2) D r a fts and orders on savings deposits w ith passbooks attach ed; ( 3 ) Checks, d ra fts, and other cash item s which have p reviously been dishonored or on which special advice o f p aym en t or dishonor is required ( A n y check, d ra ft, or other item which is norm ally handled as a cash item w ill not be handled as a noncash item unless special condi tions require that this be done, and the F edera l R eserve B a n k will decide whether such special conditions e x i s t .) ; ( 4 ) Checks, d ra fts, and requiring special h a n d lin g ; other item s w ith special instructions or ( 5 ) M atu rin g bonds and coupons (other than obligations o f the United S tates and its agencies, which are redeemed b y F ederal R eserve B an ks as fiscal a g e n t s ) ; ( 6 ) S tate and m unicipal w arrants, including both orders to p a y addressed to officers o f S tates and political subdivisions thereof and any special or general obligations o f S tates and political subdivisions th e r e o f; ( 7 ) A ll other evidences o f indebtedness and orders to p a y , except cheeks and bank d ra fts handled under the p rovisions o f R egulation J 1 For the purposes of this_ circular, any dependency, insular possession, or part of the United States _outside the States of the United States and the District of Columbia shall be deemed to be in or of such Federal Reserve District as the Board of Governors may designate. and cheeks and bank d ra fts draw n on or p ay ab le b y a nonm em ber bank which cannot be collected at p a r in fu n d s acceptable to the F ederal R eserve B a n k o f the D istrict in w hich such nonm em ber bank is located. (C hecks and bank d ra fts draw n on or p ay ab le b y a nonm em ber bank which cannot be collected at p a r in fu n d s acceptable to the F ederal R eserve B a n k o f the D istrict in w hich such nonm em ber bank is located, and which m ay not be received under the term s o f R egu lation J , likewise m a y not be received as noncash item s under the term s o f R egu lation G and this circular.) 2. This Bank will not receive as noncash items (a) items payable in the same community in which an office of the sending bank is located; or (b) checks drawn on the Treasurer of the United States or postal money orders (United States postal money orders, United States international postal money orders, and domestic-international postal money orders). Terms of collection 3. Every bank sending noncash items to us or to another Federal Reserve Bank direct for our account by such act shall be understood to have agreed to the terms and conditions of this circular and of Regu lation G in effect at the time such noncash items are received by the Federal Reserve Bank. 4. Noncash items payable in other Federal Reserve Districts and forwarded for collection to the Federal Reserve Banks of such other Districts either by us or by our member and nonmember clearing banks for our account will be handled by such other Federal Reserve Banks subject to the terms and conditions of Regulation G and of the respective circulars of such other Federal Reserve Banks, and to the rules of law applicable to such Banks; but we will give credit to the sending banks for such items in accordance with the provisions of this circular. 5. Any noncash item, or check received in remittance therefor, may be presented through a clearing house or a clearing house associa tion subject to the rules and practices thereof. 6. Any noncash item, or check received in remittance therefor, may be presented by delivery to a bank or representative thereof, pur suant to an agreement or arrangement permitting such bank at any time during the same day to pay or remit for such noncash item or check or to return it as dishonored and entitling such bank, if it has previously made conditional payment or remittance for the noncash item or check so returned, to receive credit or refund therefor. The specific authorization of the above methods of presentment shall not be construed to exclude any other method of forwarding or presentment which may be authorized or would constitute ordinary care under exist ing rules of law or under any provision of Regulation G or any other provision of this circular. 7. W e do not undertake to present time items on the day of maturity unless such items are received by us sufficiently in advance of the day 2 of maturity to permit presentment to the payer utilizing the means which we normally utilize for that purpose. 8. Section 207.3 of Regulation Gr on the date of this circular pre scribes the following terms and conditions under which all Federal Reserve Banks will handle noncash items for member and nonmember clearing banks: “ ( a ) A gree m e n t of sending bank.— E ach m em ber and nonm em ber clearing bank and each F edera l R eserve bank which sends noncash items to a F ederal R eserve bank fo r collection shall b y such action be d eem ed : ( 1 ) to authorize the F ederal R eserve banks to handle such items subject to the term s and conditions o f this p a r t ; ( 2 ) to w arrant its own authority to give the F ed era l R eserve banks such a u th o rity ; ( 3 ) to agree to indem n ify an y F ed era l R eserve bank f o r any loss or expense sustained (includ in g but not lim ited to attorneys’ fees and expenses o f litig ation ) resulting fro m the failu re o f such sending bank to have such authority, or resulting fro m such F ederal R eserve bank’s gu a ra n ty o f p rio r endorsements, or resulting fr o m an y action taken by the F ederal R eserve bank w ithin the scope o f its authority fo r the p u rp ose o f collecting such noncash items, or resulting fro m an y and all w arranties given b y the F edera l Reserve bank, in respect o f such item s, under the law o f an y S tate app licab le to the F edera l R eserve bank as a collecting b a n k ; ( 4 ) to guarantee all prior endorsements on such items whether or not a specific gu a ra n ty is incorporated in an endorsement o f the sending b a n k ; and ( 5 ) to w arrant to the F edera l R eserve bank, in respect o f such item s, all such m atters and things as the F edera l R eserve bank shall w arrant in respect thereof under the law o f an y S tate app licable to the F edera l Reserve bank as a collecting b a n k ; provid ed , that nothing herein contained shall, or shall be deemed to, constitute a lim itation upon the effect o f an y w arranty by such sending bank arisin g under the law o f any S tate app licab le to such sending bank as a collecting bank. “ ( b ) Federal R eserve bank as agent.— A F ederal R eserve bank w ill act on ly as agen t o f the bank fro m which it receives such noncash items and w ill assum e no liab ility except fo r its own negligence, its guaranty o f p rio r endorsements and its w arranties under the law o f any State app licable to it as a collecting bank. “ ( c) Presentation of item s by Federal Reserve bank.— A F ederal R eserve bank m ay present such noncash item s w ith any accom panying docum ents f o r p aym en t direct to the person, firm, or corporation on which they are drawn or by or through which they are p ayable or collec tible, or m ay present them f o r p ay m en t or forw ard them fo r collection direct to the bank on which they are draw n, at which they are p ay able, or through which they are p ayable or collectible; or, in its discretion, m ay forw ard them to another agen t w ith sim ilar authority to present them fo r p ay m en t or forw ard them f o r collection. The bank u p on which an y such noncash item m ay be draw n, or at which the sam e m a y be p ayable or through Avhich the same m ay be p ayable or collectible shall be deemed to be a p ro p er agent f o r collection w ithin the m eaning o f this regulation. “ ( d ) Ite m s payable in other districts.— Noncash items received b y a F ederal R eserve bank p ayable in other districts w ill be forw ard ed fo r collection to the F ederal R eserve bank o f the district in which such items are p a y a b le ; except that, when in the ju d gm en t o f the F edera l Reserve bank the size or character o f the items or other special circumstances 3 ju s tify such action, any such item s, in the discretion o f the F ed era l R eserve bank, m ay be forw ard ed fo r collection direct to the bank on which they are draw n, at which they are p ay ab le, or through w hich they are p ayable or collectible, or m ay be forw ard ed f o r collection to another agent w ith au thority to presen t them f o r p ay m en t direct to the person, firm, or corporation on which they are draw n or b y or through which they are p ayable or collectible or to p resent them f o r p a y m en t direct to the bank on which they are draw n, at which they are p ay ab le, or through which they are p ayable or collectible. “ ( e) F o r m s of paym ent accepted by F ederal R eserve bank.— A F e d eral R eserve bank m a y , in its discretion and at its op tion , accept fro m a n y bank in p ay m en t o f or fro m any collecting agen t in rem ittance f o r such noncash item s, cash, checks, bank d ra fts, tran sfers o f fu n d s or bank credits, or other fo rm s o f p ay m en t or rem ittance, acceptable to the collect in g F edera l R eserve bank. The F ed era l R eserve bank shall not be liable f o r the failu re o f an y bank or an y agen t to collect, or to p a y , or to rem it fo r , such noncash item s, nor f o r an y loss resulting fr o m the acceptance fro m an y bank or an y agen t, in lieu o f cash, o f an y other fo r m o f p a y m ent or rem ittance authorized herein, nor f o r the n on paym en t o f , or fa ilu re to realize u p on , an y bank d ra ft or other m edium o f p ay m en t or rem ittance which m a y be accepted fro m any bank or any collecting agen t. “ ( f ) Collection of rem ittances for noncash item s.— B a n k d ra fts and other fo rm s o f p ay m en t or rem ittance received b y a F edera l R eserve bank in p ay m en t o f or in rem ittance f o r noncash item s handled under the term s o f this regulation w ill be collected, at the op tion o f the F ederal R eserve bank, either under the term s and conditions o f this regulation or under the term s and conditions o f R egu lation J o f the B o a rd o f G overnors o f the F edera l R eserve S ystem . “ ( g ) Suspension or closing of paying or rem itting bank.— N o d ra ft, authorization to charge, or other order, u p on any reserve balance, clearing account, deposit account, or other fu n d s o f a p a y in g , rem ittin g, or collect ing bank in the possession o f a F ed era l R eserve bank, issued f o r the p u rp ose o f settling item s handled under the term s o f this regulation w ill be p aid , acted u p on , or honored a fte r receipt b y such F ed era l R eserve bank o f notice o f suspension or closing o f such p a y in g , rem itting, or collecting bank. “ (h ) Ite m s sent direct to F ederal R eserve bank in another district.— W it h respect to an y noncash item sent direct b y a m em ber or nonm em ber clearing bank in one district to a F ederal Reserve bank in another district, the relationships and the rights and liabilities existing betw een the m em ber or nonm em ber clearing bank, the F ederal R eserve bank o f its district, and the F ed era l R eserve bank to which the noncash item is sent w ill be the sam e, and the relevant p rovisions o f this regulation w ill a p p ly , as though the m em ber or nonm em ber clearing bank had sent such noncash item to the F ed era l R eserve bank o f its district w ith its endorsem ent and g u a r an ty o f p rio r endorsements and such F ed era l R eserve bank had sent the noncash item to the other F ed era l R eserve bank w ith its endorsem ent and gu a ra n ty o f p rio r endorsem ents.” Procedure to be followed by sending banks General 9. Items forwarded for collection and credit when paid should be listed in a letter different in form from that in which cash items are listed. It is desirable that collection letters include a description of each item listed, showing the name of the payer, place of payment, 4 maturity, amount, whether or not subject to protest, and any special instructions such as request for telegraphic advice of payment or non payment. I f documents are attached, they must be clearly and ade quately identified in the accompanying letter. The collection letter should also show the collection number assigned to each item by the sending bank. 10. Any special instructions as to handling should be incorporated in the collection letter. Special instructions noted on or attached to the items themselves and not supported by like instructions in the col lection letter will be ignored. 11. This Bank will receive, handle, and forward noncash items subject to the following instruction: D o not hold a fte r m atu rity or f o r convenience o f payer. Any contrary instruction in the collection letter or otherwise will be disregarded; and this Bank reserves the right, without prior notice to the sending bank, to recall any noncash item and to return it to the sending bank whenever, in the judgment of this Bank, such item is being held contrary to such instruction. 12. Securities, whether or not accompanied by drafts, should not be included in a letter enclosing other items. 13. Time items should not be forwarded to us or sent direct to another Federal Reserve Bank for our account more than 30 days prior to their maturity. Coupons and bonds sent for collection 14. Coupons sent to us for collection should be enclosed in sepa rate envelopes according to issue. Envelopes containing coupons should show the name of the sending bank and that of its depositor, and should give a complete description of the coupons enclosed. Such envelopes should also be separately listed and described (either by issue or collection number) on the sending bank’s letter. Bonds sent to us for collection should be sorted according to issue, and should be accompanied by the same information as accompanies coupons sent for collection. Such bonds should also be listed and described on the sending bank’s letter in the same manner as coupons sent for collection. 15. Sending banks are requested to sort bonds and coupons that they send to us for collection into the following classes, with a separate letter for each class: ( a ) Coupon Cash Letter — Coupons p ayable in N ew Y o r k C ity fo r which credit, subject to p ay m en t in actually and finally collected funds, is desired. Such letter should be totaled. (b ) C ity Coupon Collection Letter — B on ds and coupons p ayable in N ew Y o r k C ity f o r which credit is desired only u p on receipt by us o f p aym en t in actu ally and finally collected fu n d s. ( c ) Country Coupon Collection Letter — B onds and coupons payable outside N ew Y o r k C ity fo r which credit w ill be given upon receipt by us o f p aym en t in actually and finally collected fu n d s. 5 A totaled letter containing only coupons payable in New York City will be treated as a coupon cash letter unless it indicates that credit is desired only upon receipt by us of payment in actually and finally collected funds. Coupons sent for payment 16. Obligations of the United States, its agencies or instrumentali ties, or of the International Bank for Reconstruction and Development or the Inter-American Development Bank, are not received by us for collection but are paid or redeemed by us as fiscal agent of the United States, or o f such Banks. Coupons from such obligations should be listed on schedules and enclosed in envelopes showing the name of the sending bank, and should be sent to us as follows: ( a ) C ou pons fro m obligations o f the U nited S tates should be enclosed in separate envelopes according to current or uncurrent interest due dates and d en o m in a tion ; on ly coupons that bear an interest due date o f F e b ru a ry 1 5 , M arch 1 5 , M a y 1 5 , June 1 5 , A u g u st 1 5 , S ep tem ber 1 5 , N ovem ber 1 5 , or D ecem ber 1 5 , and are presented fo r p ay m en t on or b efore such interest due date or b efo re the next such interest due date w ill be considered as bearing current interest due dates ( f o r exam ple, i f a coupon bearing an interest due date o f A u g u st 1 5 , 1 9 6 4 is presented not later than Septem ber 1 4 , 1 9 6 4 , it should be classified as “ current” ) . ( b ) C oupon s fro m obligations o f agencies or instrum entalities o f the U nited S tates, and fr o m obligations o f the In tern a tio n al B a n k f o r R econstruction and D evelop m en t and the In te r-A m e rica n D evelop m ent B a n k , should be enclosed in separate envelopes according to issue and denom ination. The envelopes and schedules to be used for such coupons will be fu r nished by us upon request. Immediate credit will be given for due or past due coupons paid or redeemed by us, if listed in a separate totaled letter and received by 3 p.m. on any business day. Ownership certificates 17. Ownership certificate forms, when required by law, should be attached to coupons sent to us either for collection or payment. Such forms should be obtained by the sending bank from the nearest Director of Internal Revenue. Protest practice in absence of instructions 18. In the absence of specific instructions in the sending bank’s collection letter, this Bank will receive, handle, and forward noncash items subject to the following protest instructions: (a ) D O N O T P R O T E S T item s o f less than $ 1 ,0 0 0 . ( b ) P R O T E S T dishonored item s o f $ 1 ,0 0 0 or over, excep t bonds, debentures, coupons, and other sim ilar securities. Collection charges 19. Except as provided below, the Federal Reserve Banks make no charge for their services in collecting noncash items; however, it is recognized that any other bank acting as agent to collect any such item 6 renders a service in presenting, collecting, and remitting, for which a reasonable charge may be made if it cares to do so, and when such a charge is made, it will be deducted and credit given to the forwarding bank for the net proceeds. 20. No charge may be made by a collecting bank in connection with the collection or payment of any check that may be handled as a noncash item. 21. Items sent to the Federal Reserve Banks for collection are subject to the following charges: (1) C harges m ade b y collecting banks or agents, referred to ab ove; ( 2 ) C harges m ade in the discretion o f the F edera l Reserve B an ks fo r handling or collecting secu rities; ( 3 ) A service charge o f 50^ p er item on all collection items returned unpaid and u n p ro tested ; ( 4 ) E xp en ses incurred fo r postage and insurance or forw ard in g items b y registered m ail or e x p re ss; (5 ) express in A ll telephone and telegraph charges. Telegraphic advice 22. When instructed to do so by forwarding banks, this Bank will request telegraphic advice of payment or nonpayment of noncash items and will transmit by telegraph any information received. A service charge of $1.50 will be made against the forwarding bank’s account for each telegram transmitted over the leased wire pertaining to payment, nonpayment, or tracing of items, and in connection with receiving or transmitting any other information or instructions. Charges for tele grams transmitted over commercial wire facilities will be made at com mercial wire rates against the forwarding bank’s account; telegrams to such banks will be sent collect. Interpretation of terms requesting telegraphic advice 23. The terms listed below, when used in advices or communica tions in connection with noncash items, will be understood to have the meanings indicated, as follow s: ( a ) “ W I R E P A Y M E N T ” when it is desired that the collecting agent fu rn ish telegraphic advice that p ay m en t has been m ade b y the drawee or p ay er. I t w ill be understood that banks requesting “ wire p ay m en t” wish to be advised when p ay m en t has been m ade to the collecting agent, rather than when the proceeds are credited to the reserve or nonm em ber clearing account with the F edera l R eserve B a n k . W h e n a F edera l R eserve B a n k gives such advice o f p aym en t, it does not necessarily im p ly that actually and finally collected fu n d s are in its possession. (b ) “ W I R E N O N P A Y M E N T ” when a telegraphic advice o f dis honor on ly is desired. (c ) “ W I R E F A T E ” or “ W I R E P A Y M E N T O R N O N P A Y M E N T ” when a p ro m p t advice o f p aym en t or non paym ent b y drawee or p ayer is desired. ( d ) “ W I R E C R E D I T ” when a telegraphic advice o f final paym ent and o f credit to the reserve or nonm em ber clearing account o f the sending bank is desired. 7 Availability of proceeds of noncash items 24. Except as hereinafter provided with respect to bankers’ acceptances, certificates of deposit, and due and past due coupons, credit for the proceeds of noncash items, with the usual advice, will be given in the reserve account of member banks, or the clearing account of nonmember banks, upon receipt by this Bank of payment in actually and finally collected funds or on receipt of advice from other Federal Reserve Banks of such payment. 25. Credit for bankers’ acceptances and certificates of deposit will be given, subject to payment in actually and finally collected funds, in accordance with the following schedule, if received by us sufficiently in advance to permit forwarding in time to reach the place of payment at least one day before m aturity: Place Payable Credit Available Federal Reserve Bank or Branch cities Elsewhere .............................................. On maturity date 1 day after maturity 26. Credit for due and past due coupons payable in New York City and listed to us in a separate totaled coupon cash letter will be given, subject to payment in actually and finally collected funds, one day after receipt if received by us by 9 a.m., or two days after receipt if received by us after 9 a.m. Direct routing to other Federal Reserve Districts 27. Member and nonmember clearing banks are authorized to send, for our account, noncash items payable in other Federal Reserve Districts direct to the Federal Reserve Banks and Branches of the Districts in which the items are payable. Since direct sending of such items expedites handling by Federal Reserve offices and also is of advantage to member and nonmember clearing banks, banks are urged to send such items direct whenever feasible. 28. When in our judgment the number or nature of noncash items payable in other Federal Reserve Districts usually received from a bank justifies such action, we reserve the right to decline to accept such items for collection unless they are routed direct to the Federal Reserve Banks or Branches of the Districts in which they are payable. Revision of this circular 29. The right is reserved to withdraw, add to, or amend at any time any of the provisions of this circular. Effect of this circular on previous circular 30. This circular supersedes our Operating Circular No. 8, Revised effective August 18, 1960, and the First, Second, Third, and Fourth Supplements thereto, dated November 1, 1961, March 28, 1962, April 19, 1963, and December 2, 1963, respectively. A lfred H a y e s , P re s id e n t.
@FedFRASER