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FEDERAL RE SE RV E BANK O F N E W YO R K r L Circular No. 8 4 6 5 1 December 1, 1978 J PRICING OF FEDERAL RESERVE SERVICES Preliminary Schedule for Check and A C H Services w fAf Following is the text of a statement issued by the Board of Governors of the Federal Reserve System: The Federal Reserve Board today zy] approved for transmission to Congress a preliminary schedule of prices for Federal Reserve check and automated clearing house services. The tentative schedule was developed by the Board and the 12 Federal Reserve Banks as part of a comprehensive plan to provide greater competitive equality among financial institutions. The prices will not be implemented until effective steps have been taken to alleviate the burden of membership in the Federal Reserve System. Pricing schedules for other Federal Reserve services, such as the shipment o f coin and currency, wire transfers of funds and the safekeeping of securities are under consideration. The pricing of Federal Reserve services is part of an over-all effort to modernize the role of the Federal Reserve in the nation's financial system and the relationship of financial institutions in general to the Federal Reserve. This program has been under active consideration by the Congress since July 1978 when the Board submitted its legislative proposals. These proposals included a statement of the guidelines that underlie the development by the Federal Reserve of a system of prices for its services. 77u? of .ycrzacM suggested in the attached schedule is based on the volume of check clearings by the Federal Reserve in the first half of 1978. The prices are meant to recoup direct and indirect costs o f providing such services. In addition, adjustments totaling 11 percent of these costs have been added to reflect additional costs that would be borne in the private sector. These adjustments include capital costs, taxes, an allowance for dividends, and provision for reserve. Pricey for OMfowafcd ana? have been calculated to be competitive with check prices. Establishment of prices for automated clearing house services at this level is intended to encourage banks and their customers to take advantage of the potentially lower cost of electronic fund transfers as compared to the cost of payments by check, while still affording oppor tunity to develop competing automated clearing and settlement services in the private sector. Before a final decision is made in pricing, the Federal Reserve will consider the advisability of establishing different prices for each zone in some Federal Reserve Districts. Printed on the following pages is the text of the pricing proposal and a table showing a preliminary price schedule. We would be particularly interested in your views as to the competitiveness of the prices and your estimate of the effect of these prices on your institution. Your response may be sent to Thomas C. Sloane, Senior Vice President and Senior Adviser, at this Bank. PA U L A . VOLCKER, BDARD DF GDVERNDRS DF THE FEDERAL RESERVE SYSTEM P r o p o sal For P r i c i n g oi F e d e r a l R e s e r v e C h e c k C o l l e c t i o n and A u t o m a t ed C l e a r i n g and S e t t l e m e n t S e r v i c e s N o v e m b e r 17, 1976 In c o n n e c t i o n wit h l e g i s l a t i o n to e n h a n c e c o m p e t i t i v e e q u i t y in banking, to i mprove m o n e t a r y p o l i c y and to r e l i e v e the b u r d e n borne Dy F e d e r a l R es e r v e m e m b e r banks, one of the i ss ue s u n d e r d i s c u s s i o n d u r i n g the recent s e s s i o n of C o n g r e s s was p r i c i n g oi R e s e r v e B a n k s er vices. S er vi ce c h a r g e s were one e l e m e n t of tne c o m p r e h e n s i v e p la n a d d r e s s i n g these issues that tne Boa rd s u b m i t t e d to the C o n g r e s s last summer. In a ddition, m a n y oi tne bills u n d e r c o n s i d e r a t i o n by tne C o n g r e s s r e q u i r e d the f ed e r a l R es e r v e to p u b l i s h a p ri ce s ch ed ul e for its s e r v i c e s to f in an ci al i n s t i t u ti on s. At h e a r i n g s on tne bills, m e m b e r s of C o n g r e s s and o t h er i n t e r e s t e d p arties c o m m e n t e d that a price s ch ed ul e for R e s e r v e B a n k s er vi ce s was n ee ue d m o r d er to e v a l u a t e fully the e f f e c t s of tne p r o p o s e d leg is la ti on . In r es po ns e to these c om me nt s, the S y s t e m has p r e p a r e d a p r e l i m inary p ro po sa l for c h a r g i n g lor R e s e r v e b a n k c h e c k c o l l e c t i o n and a u t o m a t e d c l e a r i n g and s e t t l e m e n t s ervices. A t e n t a t i v e pri ce s ch ed ul e is p r e s e n t e d tc e li ci t a dd i t i o n a l d i s c u s s i o n . T he S y s t e m p a r t i c u l a r l y h o p e s to r ec e i v e i nd ic at io ns of the c o m p e t i t i v e n e s s of the pricer; in r e l a t i o n to prices for c o m p a i a o l e servi ce s twhere a v a i l a b l e ) m local m a r k e t s , in addition, the System: e xp ec ts tc r ec e i v e a n a l y s e s of the e ff ec ts ct i m p l e m e n t i n g tnese p ri ce s on tne b an k i n g i n d u s t r y and u p o n o t h e r u s e rs of payme nt s services. 2 A t t a c h m e n t 1 to this p ro po sa l shows a t e n t a t i v e s c h e d u l e oi p ri c e s a p p r o x i m a t i n g tnose that w o u l d h av e b ee n m e f f e c t in the first n a i f of 1^7o c o v e r i n g c h e c k c o l l e c t i o n and A u t o m a t e d C l e a r i n g House (ACH) c l e a r i n g and s et t l e m e n t services. The p ay me nt s m e c h a n i s m s e r v i c e s in this i ni ti al s ch ed ul e acc ou nt tor aDout 60 per cent of the total e x p e n s e s in c u r r e d by the R es e r v e Ban xs in p r o v i d i n g s e r v i c e s to f i n a n c i a l i ns ti tu t i o n s . P r e l i m i n a r y prices for the r e m a i n i n g s er vi ce s are in p r e p a r a t i o n and will be a v a i l a b l e later. I m p l e m e n t a t i o n 01 P ri ce s C h a r g e s for R e s e r v e B a n k s e r v i c e s c o u ld e n h a n c e the e f f i c i e n c y of tne n a t i o n ' s p ay me nt s m e c h a n i s m . Suc h C h a r g e s wou ld p ro mo te both cost e t i e c t i v e p ay me nt s t e c h n i q u e s and e q u i t y a m o n g i n s t i t u t i o n s p r o v i d i n g p a y m e n t s s e r vi ce s to tne public. H ow ev er , tne Feder al R e s e r v e S y s t e m does not int en d to imple me nt s er v i c e c h a r g e s until e f f e c t i v e steps h av e b e e n t a x e n to r e l i e v e tne D u r d e n of m e m b e r s h i p m the F ed e r a l Reserve. Oth er wi se , the a l r e a d y v e r y serious p r o b l e m of w i t h d r a w a l s from the S y s t e m w o u l d s im pl y be e x a c e r b a t e d . The F ed er al R e s e r v e r e c o g n i z e s that these p r e l i m i n a r y p ri ce s m a y n av e to oe a d j u s t e d to r e f l e c t c o m p e t i t i v e r e a l i t i e s and c h a n g i n g conditions m the i n d u s t r y and in the R e s e r v e Banks. time of i m p l e m e n t a t i o n , F u r t h e r m o r e , at the the b y s t e m w o u l d m o n i t o r d e v e l o p m e n t s and could r ev i s e the prices to avo id d i s r u p t i o n cf e x i s t i n g c l e a r i n g a r r a n g e m e n t s . U b i e c L i v e s of p r i c i n g In c o n s t r u c t i n g the t e n t a t i v e price s cneoule, the S y s t e m has 3 b ee n g u i d e d by tne p o l i c i e s a n n o u n c e d by tne B oa rd on J u l y 10, lS*7d in c o n j u n c t i o n with its pla n to r e s o l v e the m e m b e r s h i p prooiem. The B o a ru sta te d that s er v i c e c n a r g e s sho ul d p r o m o t e c o m p e t i t i v e e q u i t y a m o n g users ot F ed e r a l R e s e r v e services, e n c o u r a g e i n n o v a t i o n and m o r e e f f i c i e n t use ot p a y me nt s servi ce s, and e n n a n c e the o p p o r t u n i t i e s of the p ri va te s ec to r to c o m p e t e wit h ana impro ve u p o n f e d e r a l R e s e r v e s ervices. In a dd it io n, tne Boa rd a n n o u n c e d that c h a r g e s w o u l d be e s t a b l i s h e d w it h due r eg ar d to the n ee d to a ss ur e c o n t i n u e d e f f i c i e n t f u n c t i o n i n g of the p a y m e n t s m e c h a n i s m , to avo id m a j o r d i s r u p t i o n d u r i n g the t r a n s i t i o n to a m o r e c o m p e t i t i v e e n v i r o n m e n t , and to m a i n t a i n a s a t i s l a c t o r y basic level ot s er v i c e n a t i o n w i d e . Deri v a t i o n o f me the P r i c e s s c h e d u l e in A t t a c h m e n t 1 snows prices a p p r o x i m a t i n g those that w o u l d hav e Deen m first h alf of 1^7d. effect it s er vi ce c h a r g e s had be e n i m p l e me n te d in t h e The c h e c k c o l l e c t i o n prices are b as ed u p o n the cost a c c o u n t i n g d a t a r e c o r d e d oy the P l a n n i n g and C on tr ol b y s t e m (FACS) for the R e s e r v e Banks. A m a r k u p of 11 per cent was a p p l i e d to the total of d i r e c t and i ndirect PACs cost of p r o v i d i n g the c h e c k c o l l e c t i o n service, aft er c e r t a i n m i n o r a d j u s t m e n t s wer e m a d e to r ef in e the r a w data. The m a r k u p cov er s i mp u t e d c os ts simil ar to the c ap it al c os ts and taxes that a p ri va te b u s i n e s s firm p r o v i d i n g the s er vi ce w o u l d hav e borne. Thi s m a r k u p or p r i v a t e - s e c t o r a d j u s t m e n t was c a l c u l a t e d u n d e r the a s s u m p t i o n that the R e s e r v e B a n k a s s e t s used in p r o v i d i n g c h e c k c o l l e c t i o n s e r v i c e s w er e f m a n c e u o n e - h a l f by debt and o n e - n a i f oy e quity. 4 The cost of s e r v i c i n g che debt was a s s u m e d to be 9 p er cent a n n u a ll y. T h e a f t e r t a x cost of i mp ut ed e q u i t y w a s set at 7 per cent, e q u al to the 6 p e r cent s t a t u t o r y d i v i d e n d that the S y s t e m p ays on R e s e r v e B a n k stocks h e l d b y m e m b e r b a n k s plus a n a d d e d 1 per c en t for r e s e r v e . T he m e t h o d u sed to c o n s t r u c t t he p r i v a t e - s ec t o r a d j u s t m e n t is d e s c r i b e d in A t t a c h m e n t 2. N o c h a r g e for F e d e r a l R e s e r v e float is i n c l u d e d in t h e c h e c k c o l l e c t i o n prices. T h e r e are a l t e r n a t i v e s t r a t e g i e s for d e a l i n g w i t h float that m i g h t be m or e d e s i r a b l e and s ho ul d be c o n s i d e r e d . In a d d i t i o n the re are u n c e r t a i n t i e s in m e a s u r i n g the v a l u e of float to s o c i e t y or to i n d i v i d u a l ban ks w h i c h c l o u d the issue of c h a r g i n g for float. T e n t a t i v e p r i c e s for A C H c l e a r i n g and s e t t l e m e n t s e r v i c e s hav e b e e n b a s e d u p o n p r o j e c t i o n s of the e s t i m a t e d unit p r o c e s s i n g cost a s s o c i a t e d w i t h p r o b a b l e fut ur e v o l u m e s of e l e c t r o n i c p a y m e n t s items. B e c a u s e of the inher en t u n c e r t a i n t i e s , h o w e v e r , the p r e l i m i n a r y A C H p r i c e s a r e set c o m f o r t a b l y a b o v e the e s t i m a t e d l o n g - r u n cost. T h e pri ce for i n t r a - A C H items equ al s the lowest D i s t r i c t p r i c e for R CP C c h e c k items. T h e s e p r i c e s w i l l per mi t banks, b u s i n e s s e s , and c o n s u m e r s to r e d u c e cos ts b y c o n v e r t i n g to this new, h i g h l y e f f i c i e n t and sec ur e e l e c t r o n i c p a y m e n t s m e d i u m . L e v e l of D e t a i l of P r i c e s T h e t e n t a t i v e p r i c e s c h e d u l e p r e s e n t s the p r i c e s at the level of the F e d e r a l R e s e r v e D i s t r i c t . S e r v i c e level d i f f e r e n c e s , r e g i o n a l w a g e a n d t r a n s p o r t a t i o n cost d i f f e r e n t i a l s , a n d o t h e r f ac t o r s c o n t r i b u t e to the d i f f e r e n c e s a m o n g t h e D i s t r i c t pri ce s shown. a m o n g o ff ic es w i t h i n a D i s t r i c t . S u c h d i f f e r e n c e s m a y exist B e f o r e a final d e c i s i o n is m a d e on p r i c i n g , the S y s t e m w i l l c o n s i d e r the a d v i s a b i l i t y of e s t a b l i s h i n g d i f f e r e n t prices 5 tor e ac h zone in some R e s e r v e D i s t r i c t s . F or this reason, the S y s t e m p a r t i c u l a r l y hop es to r e c e i v e i n d i c a t i o n s ot the c o m p e t i t i v e n e s s of tne t e n t a t i v e price s c h e d u l e c o m p a r e d w i t h p ri ce s c h a r g e d by o th er s in tho se cas es where c o m p a r a b l e s er vi ce s are a v a i l a o l e in a local m a r k e t . D i s p a r i t i e s b e t w e e n the D i s t r i c t a v e r a g e pri ce and prices tor c o m p a r a b l e s e r v i c e s in i n d i v i d u a l o ff i c e zones c o u l d lead to i ne ff i c i e n t v o l u m e s ni ft s or h av e o t h e r u n d e s i r a b l e e f f e c t s on the p ay me nt s m ec h a n i s m . In sucn a case, a d j u s t m e n t of the p ri ce s m a y be neces sa ry . — November 17, 1976 PRELIMINARY PRICK SCHEDULE FOR FEDERAL RESERVE CHECK COLLECTION AND ACH SERVICES (centa per item) Cash Letters Consolidated with Shipments Sent from Other Fed O f fic e s to Processing Fed O ffic e ____ Caah Letter* Deposited Direc ly at Processing Fed O f fic e * F ed era l Reserve D istrict C iti Count rv RCPC Mixed Other Feds NonMach . Package Sort Automated C learing and Settlement S ervices Items Deposited D ire ctly at Processing Fed Off ice Croup Sort City Count ry RCPC Int ra-AfH Int cr-ACH Boston 1.5 — 1.5 1 .9 3.7 3 .9 .3 1.4 1.9 -- 1.9 1.4 2 .0 New York 2 .2 2.4 2 .0 2 .0 4 .5 5 .6 .6 1.9 2.6 2.8 2.4 .3 1.5 Ph i ladelph ia 1,4 1.9 1.9 1 .9 3 .6 4 .2 .6 1.5 1.8 2.3 2.3 1.4 2 .0 Cleve land 1.3 -- 1.9 2 .0 3.5 4 .1 — -- 1.7 -- 2.3 1.4 2 .0 Richmond 1.3 2.3 1.6 1.8 3 .6 3 .1 .2 — 1.7 2.7 2 .0 1.4 2 .0 At lanta 1.3 -- 1.5 1.6 3.4 3 .9 .7 -- 1.7 -- 1.9 1.4 2 .0 Chicago 1.5 2.3 1.6 — 4 .0 3 .4 .8 — 1.9 2.7 2 .0 1.4 2 .0 S t . Louis 1.4 2.2 2 .0 2 .7 3.5 3.3 .5 — 1.8 2.6 2.4 1.4 2 .0 Minneapolia 1.2 2 .0 1.4 1.8 3 .6 4 .6 .6 1.2 1.6 2.4 1.8 1.4 2 .0 Kansas C ity 1.2 1.9 1.4 2 .2 3 .4 3.5 -- — 1.6 2.3 1.8 1.4 2 .0 D allas 1.4 2 .1 1.7 1.8 3 .8 5 .0 .7 1.6 1.8 2.5 2.1 1.4 2 .0 San F ra n cisco 1.3 -- 1.4 -- 3 .6 4 .2 .3 — 1.7 -- 1.8 1.4 2 .0 (1 ) (2 ) (3) (4) (5 ) (6 ) (7) (8) (9) (10) (11) (12) (13) * In clu des D irect Send Cash L e t t e r s . P rice s o f other s p e c i a l d ep osit s e r v ic e s w i l l be a v a il a b le from each Federal Reserve o f f i c e . P r ic e s in d ic a t e d are a p p l i c a b l e at lo c a t io n s o f f e r i n g these s e r v i c e s . A ttached to t h i s schedule is a d e s c r i p t i o n o f each o f the s e r v ic e s fo r which p r ic e s are shown in columns 1 through 13 Description oi Cash L e t t e r s ( C n e c k s ) reserve o f f i c e Services D e p o s i t e d D i r e c t l y at the P r o c e s s i n g f e d e r a l The p r i c e s shown t o r t h e e i g h t t y p e s o f c a s h l e t t e r s a p p l y Doth t o c h e c k s d e p o s i t e d oy f i n a n c i a l i n s t i t u t i o n s l o c a t e d i n t he p r o c e s s i n g f e d e r a l R e s e r v e o f f i c e t e r r i t o r y and t o t h o s e c n e c k s s e n t d i r e c t l y by i n s t i t u t i o n s l o c a t e d i n o t h e r F e d e r a l Reserve o f f i c e t e r r i t o r i e s . (The l a t t e r i n s t i t u t i o n s p r o v i d e t h e r e q u i r e d t r a n s p o r t a t i o n t o meet t n e d e p o s i t d e a d l i n e s at the p r o c e s s i n g F e d e r a l R ese rve o f f i c e . ) Tne F e d e r a l R e s e r v e i n t e n d s t o d i s c o n t i n u e d i r e c t send t r a n s p o r t a t i o n reimbursements with implementation o f p r i c i n g . City C ity checks a r e drawn on f i n a n c i a l in stitu tion s located m the same cit y as the p r o c e s s i n g F ed er al R es er ve office. C i t y c n e c k s er vi ce s are a v a i l a b l e at 43 Fed er al Res er ve o if ic es . Cre di t for cit y che ck s is a v a i l a b l e on the day of d e p o s i t at tne p r o c e s s i n g F ed er al R e s e r v e o ff ic e if t im e l y d e p o s i t is m a d e (i.e., p r i or to the e s t a b l i s n e a c u t - o i t nour. (Column U Country Country checks a r e drawn on Danks t h a t a r e g e o g r a p h i c a l l y l oc a t e d o u t s i d e a F ed e r a l R e s e r v e o f f i c e c i t y and o u t s i d e the are a served oy R e g i o n a l C h e c k P r o c e s s i n g Cen te r (RCPC) o p e r ations. P r e s e n t m e n t of c he ck s to c o u n t r y banks u s u a l l y is m a d e t h r o u g h the u.S. P os ta l service. C o u n t r y c h e c k s er vi ce s are a v a i l a b l e at 13 F e d e r a l R e s e r v e o ffices. Cre di t for c o u n t r y checks is a v a i l a b l e one d a y aft er t i m e l y d e p o s i t at the p r o c e s s i n g F e d e r a l R e s e r v e office. ( C o l u m n 2) RCP C R C P C che ck s are d r a w n on f i n a n ci al i n s t i t u t i o n s loc at ed in g e o g r a p h i c areas d e s i g n a t e d as RCPC zones. C he c k s d r a w n on R CPC finan ci al i n s t i t u t i o n s are u s u a l l y t r a n s p o r t e d by c o u r i e r for pre se nt me nt . T h e r e are 44 F ed er al R e s e r v e o f f i c e s that o f f e r RCP C c h e c k services. C re d i t for R CP C c he ck s is a v a i l a b l e the same b u s i n e s s day if the items are d e p o s i t e d by 12:01 a.m. ( Co l u m n 3) Mixed m i x e d cash l et te rs c o n t a i n checks d r a w n on f in an ci al i n s t i t u t i o n s l oc a t e d in city, country, RCP C and in o t h e r F ed er al R e s e r v e o f f i c e ter ri to ri es . At p resent, o n l y tho se m e m b e r ban ks w itn less tha n 3,U bO items to be c l e a r e d e a c h day are e l i g i b l e to d e p o s i t m i x e d cash letters. Dixed cash l et te r s e r v i c e s are a v a i l a b l e at 27 F ed e r a l R e s e r v e o f f i c e s . C re di t for c h e c k s d e p o s i t e d in m i x e d cas h l etters n o r m a l l y is a v a i l a b l e the day a ft er d e p o s i t if the d e p o s i t is m a d e b ef or e tne p r o c e s s i n g F ed e r a l R e s e r v e o f f i c e "cr ty c h e c k c u t - o f f hour". k C o l u m n <+) 8 Otn er Feds Nonhacnineable P ac ka ge Sort G r o up Sort O t n e r feus c a s h l et t e r s c o n t a i n c h e c k s d r a w n on f in a n c i a l i n s t i t ut io ns l oc a t e d in all F ed e r a l R e s e r v e o f f i c e t e r r i t o r i e s o t h er t ha n tne p r o c e s s i n g F e d e r a l R e s e r v e o f f i c e t er ritory. P ri ce s tor c o l l e c t i n g tnese c he ck s r e f l e c t the r e s o u r c e s r e q u i r e d to sort tne c n e c u s at two F e d e r a l R e s e r v e o f f i c e s and to t r a n s p o r t the items b e t w e e n these otf ic es . Ail 4o F e d e r a l R e s e r v e o f f i c e s o f f e r this service. C re d i t for O t h e r Fed s c a s h l et t e r s is a v a i l a b l e 1 or z days aft er t i m e l y d e p o s i t at the p r o c e s s i n g F e d e r a l R e s e r v e o ffice. S uc h c r e d i t is d e p e n d e n t on the a v a i l a b i l i t y of o v e r n i g h t t r a n s p o r t a t i o n and the type of i tem (city, c o u n t r y or RCPC). ( C o l u m n b) h o n - m a c h i n e a b l e c as h l et t e r s c o n t a i n che ck s w h i c h h a v e r e j e c t e d fro m the c o m p u t e r s o r t i n g e q u i p m e n t of the d e p o s i t i n g f in an ci al i n s t i t u t i o n , and those che ck s w h i c h are m u t i l a t e d and cannot be c o m p u t e r proce ss ed . P ri c e s for n o n - m a c h i n e a b l e c h e c k s ref le ct the a d d i t i o n a l m a n u a l h a n d l i n g r e q u i r e d to p ro ce ss these e x c e p t i o n items. Cre di t for n o n - m a c h i n e a b l e c h e c k s is d e f e r r e d one day b e y o n d n or ma l for the same type c h e c k (e.g., c re di t for a cit y n o n - m a c h i n e a b l e c n e c k w o u l d be a v a i l a b l e the d a y aft er t im el y d e p o s i t to the p r o c e s s i n g F ed e r a l R e s e r v e offic e) . ( C o l u m n 6) P a c k a g e sort c as h l et te rs c o n t a i n o n l y c he c k s that are d r a w n o n o ne l in an ci al i n s t i t u t i o n and are p a c k a g e d for deliv er y. F ed e r a l R e s e r v e s er v i c e is l i m i t e d to p r e s e n t m e n t and settlement. The p a c k a g e sort s er vi ce is c u r r e n t l y o f f e r e d at 24 F e d e r a l R e s e r v e offic es . L a t e r c u t - o f f h o u r s are a p p l i c a b l e to p ac k a g e sort cas h l et te rs and c re di t is a v a i l a b l e on the same s ch ed ul e as for city, c ou nt ry , and R CP C items. ( C o l u m n 7) G r o u p sort c ash l et t e r s c o n t a i n che ck s of a s pe ci fi c type (i.e., city, c o u n t r y . o r RoPC) w ni ch h a v e b ee n p a r t i a l l y p r o c e s s e d by the d e p o s i t i n g f i n a n ci al i ns t i t u t i o n . For e xample, the first pass t h r o u g h a c h e c k s o r t e r of a m u l t i p l e - p a s s s o r t i n g p rocess w o u l d c o n s t i t u t e a g r o u p sort. S ev en F e d e r a l R e s e r v e o fl i c e s o t f e r tnis service. L a t e r c u t - o f f h ou rs are also a p p l i c a b l e to g r o u p sort c as h l et t e r s and c re di t is p as se d to d e p o s i t i n g i n s t i t u t i o n s on tne same s c h e d u l e as for city, c o u n t r y and RCP C items. ( C o l u m n o) C ash L e t t e r s C o n s o l i d a t e d w i t h S h i p m e n t s Sent f ro m O t h e r F e d e r a l R e s e r v e w i n c e s to toe P r o c e s s i n g f e d e r a l r e s e r v e U l t i c e The c o n s o l i d a t e d s h i p m e n t s e r v i c e c o n s i s t s of c o n s o l i d a t i n g direct send c h e c k s h i p m e n t s w i t h r e g u l a r l y s c h e d u l e d F ed e r a l R e s e r v e i n t e r - o f f i c e c h e c k s h i pm en ts . The c ash let te r types l is te d kciry, c o u n t r y and RCPC) are the same as tho se d e s c r i b e d earli er . The price for t h e s e items r ef le ct s the cos ts a s s o c i a t e u w i t h r e c e i v i n g , sorting, r e c o n c i l i n g , settl in g, and p r e s e n t i n g c h e c k s uv the p r o c e s s i n g F e d e r a l R e s e r v e O ff i c e , and the price 9 t o r t r a n s p o r t i n g t n e c n e c k s Detween F e d e r a l R e s e r v e o f i i c e s . Those f i n a n c i a l i n s t i t u t i o n s a u t h o r i z e d t o use t n e c o n s o l i d a t e d shi pme nt s e r v i c e a r e a l s o a u t h o r i z e d t o d i r e c t send c h e c k s t o p r o c e s s i n g F e d e r a l R e s e r v e o f f i c e s , (columns l b ana 11) Au t om a te d C l e a r i n g h o use S e r v i c e s — I t em s D e p o s i t e d D i r e c t l y P rocessin g Federal Reserve O f f i c e at the The p r i c e s shown, e x c e p t a t hew Y o r k , a r e a p p l i c a b l e a t a l l F e d e r a l R e s e r v e o p e r a t e d c l e a r i n g and s e t t l e m e n t f a c i l i t i e s and i n c l u d e r e c e i v i n g , s o r t i n g , r e c o n c i l i n g , s e t t l i n g and d e l i v e r y o f e i t h e r d e b i t o r c r e d i t a u t o mated c l e a r i n g h o u s e ( Adh ) t r a n s a c t i o n s . New Y or k p r i c e s r e f l e c t t h e p r o v i s i o n o f ACn c l e a r i n g o p e r a t i o n s i n t h e p r i v a t e s e c t o r and s e t t l e m e n t Dy t h e F e d e r a l R e s e r v e . I n f r a ACn Payment t r a n s a c t i o n s r e c e i v e d from l o c a l o r i g i n a t i n g lin a n c ia l i n s t i t u t i o n s fo r d e l i v e r y to fin a n c ia l i n s t i t u t i o n s l o c a t e d i n t h e same A d d a r e a . (Column IT) i n t e r ACh P ay m e n t t r a n s a c t i o n s r e c e i v e d from local o r i g i n a t i n g i m a n c i a l i n s t i t u t i o n s and fro m p r i v a t e s ec to r A C H f a c i l i t i e s for d e l i v e r y to f in an ci al i n s t i t u t i o n s in areas s e r v e d by o t h e r ACHs. ( C o l u m n 13) 10 BALLOT ENVELOPE E L E C T IO N O F D m E C T O R S o f Federal Reserve Bank of New Y o rk The marked preferential ballot should be placed in this envelope, and this envelope should then be sealed and placed in the certificate envelope. FEDERAL OF RESERVE NEW BANK YORK Ballot Group No. 3 December 4, 1978 This ballot and the certificate on the certificate envelope must be executed by an officer who has been authorized to cast the vote and whose designation has been duly certified to me. The polls will open at 10 a.m. on December 5, 1978, and will close at 12 noon on Wednesday, December 20, 1978. This ballot must be returned so as to reach me before the latter time. Failure to observe instructions will invalidate this ballot. ROBERT H. K N IG H T , Chairman of the Board. V O T E FO R CLASS A D IR E C T O R OF F E D E R A L R E S E R V E BAN K OF N E W Y O R K (Section 4 of the Federal Reserve Act requires the olRcer casting a member bank's vote to indicate "first, second, and other choices." Where there are two can didates involved and only a first choice is made, the member bank will be deemed to have indicated the other candidate as its second choice.) CANDIDATES NICHOLAS L . DEAJK JAMES WHELDEN President Deak National Bank Fleischmanns, N. Y. President Ballston Spa National Bank Ballston Spa, N. Y. (Indicate choice by X below) S^f'rirtrl First Choice Choice o o o o V O T E FO R CLASS B D IR E C T O R OF F E D E R A L R E S E R V E B AN K OF N EW Y O R K CANDIDATE JOHN R. MuLHEARN President New York Telephone Company New York, N. Y. X b e lo w ) o D IR E C T IO N S FO R R E TU R N OF B A L L O T 1. Mark this ballot to indicate vote for each position. 2. Place marked ballot in the pink ballot envelope and seal that envelope. Reserve Bank of New York, Federal Reserve P. O. Station, New York, N. Y. 10045. CERTIFICATE ENVELOPE This Envelope Should Contain Only Ballot in Sealed Pink Envelope It Will Not Be Opened Until Polls Close ,1978 To MR. ROBERT II. KNIGHT, Chairm an o f the Board, Federal Reserve Bank of N e w York. In accordance with section 4 of the Federal Reserve A ct, as am ended, I hereby certify that m y votes for a class A director and a class B director o f the Federal Reserve Bank of N e w York for terms o f ofEce from January 1, 1979 to D ecem ber 31, 1981, are as indicated (b y X ) in the ballot sealed herein. For (Signature of officer designated to vote. See list of member banks in Group 3 in accompanying circular.) (Location o f Bank) (TITLE of Voting OfBcer) M R . ROBERT H. KNIGHT, R o#rt% o / D ^rec^ors, Federal Reserve Bank of New York, Federal Reserve P. 0 . Station, New Y ork , N. Y . 1 0 0 4 5 Room 1120
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