Full text of Federal Reserve Bank of New York Circulars : 7548. Collection of Bonds and Coupons

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FED ER AL RESERVE BANK
O F N EW YORK

r Circular No. 7548*1
L January 10, 197S J

COLLECTION OF BONDS AND COUPONS
Provision for Exchange Charges To Be Discontinued, Effective July 1, 1975
'ID the M em ber B a n ks of the Second F ederal
R eserve D istric t, and O th e rs C oncerned:

It is the practice of some commercial banks to assess an “exchange” charge when pay­
ing bonds and coupons presented to them by other banks, including Federal Reserve Banks.
However, the practice has declined to the point where only a few banks and issuers now
assess such charges. A large m ajority of bonds and coupons are paid at par.
The imposition of such charges presents problems to both commercial banks and Federal
Reserve offices in apportioning the charges fo r groups of bonds and coupons to individual
owners. In addition, many parties have expressed concern regarding the appropriateness
of passing redemption costs to the owners of such obligations rather than to the issuers.
Consequently, on July 1, 1975, operating circulars of all Federal Reserve Banks will
be amended to require par payment for all bonds and coupons when presented for payment
by a Federal Reserve Bank. This should remove a minor impediment to the free flow of
such items through the collection process.
Questions or comments regarding this change should be directed to John Chowansky,
M anager, Collection Department, at our H ead Office (Telephone No. 212-791-5079) or
Gary S. W eintraub, A ssistant Cashier, at our Buffalo Branch (Telephone No. 716-853-1700,
E xt. 203).




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