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FEDERAL RESERVE BANK OF NEW YORK r Circular No. 9113 July 28, 1981 ~ J SECURITIES AND NONCASH COLLECTION SERVICES Fee Schedule, Effective October 1, 1981 To A ll D epository Institutions, and Others Concerned, in the Second F ederal R eserve D istrict: The Board of Governors of the Federal Reserve System has adopted a fee schedule for securities and noncash collection services provided by the Federal Reserve Banks. The schedule will be implemented on October 1, 1981. Printed on the following pages is the Board’s press release and F ederal R egister notice regarding the fee schedule. Questions on this matter may be directed to Jorge A. Brathwaite, Assistant Vice President (Tel. No. 212-791-5818), orH. John Costalos, Manager, Securities Clearance Department (Tel. No. 212-791-5986). Additional copies of this circular will be furnished upon request directed to our Circulars Division. A nthony M S olom on, *. P residen t. ‘ 3Of COv/ < -I**** 2 n \ rirmttgy.W 2 2 2 2 2 ■ ST..V m B SE E SA FEDERAL RESERVE press release . n"^r i j j f r i in W iiffir Vffrfr*' • t iirJiyTJ',t'" * *i»-*'r f 1-■ ^ ■ ^ |— For immediate release July 20, 1981 The Federal Reserve Board has adopted a fee schedule, effective October 1, for securities and for noncash collection services provided by the Federal Reserve Banks. The Board acted under the Monetary Control Act of 1980, which requires pricing of Federal Reserve services, and after review of comment received on proposals published in August 1980. The fee schedule has been revised to reflect 1981 costs, and a Private Sector Adjustment Factor (PSAF) of 16 percent, rather than the 12 percent PSAF proposed last year. The specific schedule of fees is set forth in an attached table. Upon implementation of the fee schedule on October 1, 1981, the securities and noncash collection services will be available to all financial depository institutions. Safekeeping of securities The fees for account maintenance in definitive (paper) securities safekeeping are based on the volume .of securities held (not on par value, as proposed) and the account maintenance fee covers coupon clipping, conforming to practice in the private sector. These fees will be the same throughout a Federal Reserve District except for the Chicago District, where they will differ for the territories served by the head office and the Detroit Branch, reflecting costs at those offices. The San Francisco District's definitive securities safekeeping services will be limited to certain arrangements in accord with current practice. Book-entry security service This service involves recording of ownership of securities by ccmrute*rather than by issuance of definitive paper securities to buyers. The 3oard adopted a standard national average fee schedule for all book-entry services: the -2 - basic on-line transfer charge, account maintenance charges and the off-line transfer surcharge. District fee. The off-line transfer surcharge replaces the proposed The Federal Reserve Bank of New York will continue to employ a time-of-day fee schedule for security transfers originating in that District. Purchase and sale of government securities and noncash collection services Fees for the purchase and sale of government securities have been revised to reflect 1981 costs and the 16 percent PSAF. A fee will be charged by the collecting bank for coupons clipped from securities held in safekeeping accounts and sent to another District Bank for collection. On average, the proposed 1981 fee schedule for Federal Reserve securities and noncash collection services is 12 percent higher than that proposed last August, a third of the increase being due to the 16 percent, rather than 12 percent, PSAF. The Board’ notice, explaining its fee schedule in detail, is attached. s FEDERAL RESERVE SYSTEM (Docket No. R-0324) FEE SCHEDULES FOR FEDERAL RESERVE BANK SERVICES AGENCY: Board of Governors of the Federal Reserve System. ACTION: Adoption of Fee Schedules fo r the Book-Entry and D e f in it iv e S e c u ri t ie s Safekeeping s e r v ic e s , the S e c u r it ie s Purchase and S a le S e rv ic e , and the Noncash C o lle c tio n S e rv ic e . SUMMARY: The Monetary Control Act of 1980 ( T it le I o f P u b lic Law 96-221) re q u ire s that fees be set fo r Federal Reserve Bank se rv ic e s. The Board h a s adopted a set of p ric in g p r in c ip le s fo r Federal Reserve Bank s e rv ic e s and h a s e sta b lish e d implementation dates on which fees fo r each of the se rv ic e s w ill become e ffe c tiv e . The Board has now adopted fees fo r the s e c u r it ie s and non cash c o lle c tio n se rv ic e s. EFFECTIVE DATE: October 1, 1981. FOR FURTHER INFORMATION CONTACT: L o rin S. Meeder, A sso c ia te D ire c to r fo r F e d eral Reserve Bank O perations (202/452-2738); Earl G. Ham ilton, Manager, Service P ric in g (202/452-3879); Merphil S. Kondo, S e n io r Economist (202/452-3875); Florence M. Young, Manager, F isc a l Agency Review (202/452-3954); G ilb e rt T. Schwartz, A sso c ia te General Counsel (202/452-3625); Lee S. Adams, S e n io r C o u n s e l (202/452-3623). SUPPLEMENTARY INFORMATION: In tro d u ctio n T h e M o n e t a r y C o n t r o l A c t o f 1 9 8 0 r e q u i r e s t h a t f e e s be d e v e l o p e d f o r F e d e r a l R e s e r v e Bank s e r v i c e s a c c o r d i n g t o a s e t o f p r i c i n g p r i n c i p l e s e s t a b l i s h e d by t h e B o a r d . The A c t p r o v i d e s t h a t th e B o a rd s h a l l b e g i n p u t t i n g i n t o e f f e c t a s c h e d u l e o f f e e s n o t l a t e r t h a n S e p t e m b e r 1, 1 9 8 1 , and t h a t s e r v i c e s c o v e r e d by t h e f e e s c h e d u l e a r e t o be made a v a i l a b l e t o a l l d e p o s i t o r y i n s t i tutions. The B o a r d , i n a c c o r d a n c e w i t h t h e r e q u i r e m e n t s o f t h e A c t , p u b l i s h e d f o r comment p r o p o s e d p r i c i n g p r i n c i p l e s a nd f e e schedules f o r services on A u g u s t 28, 1980 ( 4 5 FR 5 8 6 8 9 ) . The p e r i o d f o r p u b l i c comment e x p i r e d on O c to b e r 21, 1980. On D e c e m b e r 3 0 , 1 9 8 0 , a f t e r c o n s i d e r i n g t h e m o r e t h a n 2 3 0 comments r e c e i v e d f r o m t h e p u b l i c , t h e B o a r d t o o k a n u mb e r o f a c t i o n s r e l a t e d to the p r i c i n g of Federal R eserve s e r v i c e s , i n c l u d i n g a d o p tio n of r e v is e d p r i c i n g p r i n c i p l e s a n d s c h e d u l i n g o f f u l l a c c e s s and p r i c i n g o f t h e t a c k - e n t r y and d e f i n i t i v e s e c u r i t i e s s a f e k e e p i n g , s e c u r i t i e s p u r c h a s e and s a l e , a nd t h e n o n c a s h c o l l e c t i o n s e r v i c e s f o r O ctob e r 1981, s t a t i n g th a t fee s c h e d u le s f o r these s e r v i c e s w o u l d be p u b l i s h e d i n 1981 ( 4 6 FR 1 3 3 8 ) . The B o a r d h a s now a d o p t e d f e e s c h e d u l e s f o r s e c u r i t i e s and n o n c a s h c o l l e c t i o n s e r v i c e s . -2 - 1981 Fee S c h e d u l e The M o n e t a r y C o n t r o l A c t o f 1980 r e q u i r e s t h a t " o v e r t h e l o n g run f e e s s h a l l be e s t a b l i s h e d on t h e b a s i s o f a l l d i r e c t and i n d i r e c t c o s t s a c t u a l l y in cu rre d in p ro v id in g the Federal Reserve s e r v i c e s p r ic e d . " The A c t a l s o r e q u i r e s t h a t fe e s f o r F e d e ra l R e s e r v e s e r v i c e s t a k e i n t o a c cou n t imputed t a x e s and f i n a n c i a l c o s t s t h a t w o u l d h a v e b e e n i n c u r r e d i f t h e S y s t e m s e r v i c e s had been p r o v i d e d by a p r i v a t e f i r m . T h i s markup i s r e f e r r e d t o as t h e p r i v a t e s e c t o r adjustm ent f a c t o r (PSAF). T h e p r o p o s e d f e e s c h e d u l e s f o r F e d e r a l R e s e r v e B a n k s e c u r i t i e s and noncash c o l l e c t i o n s e r v i c e s p u b l i s h e d by th e B oa rd in A u g u st 1980 were based on e s t i m a t e s o f t h e f u l l 1 9 8 0 d i r e c t a nd i n d i r e c t c o s t s o f p r o v i d i n g t h e s e s e r v i c e s p l u s a 12 p e r c e n t P S A F . On D e c e m b e r 3 0 , 1 9 8 0 , t h e B o a r d a d o p t e d a 16 p e r c e n t P S A F f o r u s e i n c a l c u l a t i n g 1981 p r i c e s . Th e r e v i s e d fee schedules f o r s e c u r i t i e s and n o n c a s h co lle ctio n s e r v i c e s w i l l become e f f e c t i v e O c t o b e r 1 , 1 9 8 1 , a t w h i c h t i m e a c c e s s t o t h e s e s e r v i c e s w i l l be p r o v i d e d t o a l l d e p o s i t o r y i n s t i t u t i o n s . The f e e s c h e d u l e s a r e b a s e d on t h e e s t i m a t e d f u l l d i r e c t a nd i n d i r e c t c o s t s o f p r o v i d i n g t h e s e s e r v i c e s i n 1981 p l u s t h e 16 p e r c e n t P S A F . On a v e r a g e , t h e f e e s f o r 1981 a r e a p p r o x i m a t e l y 12 p e r c e n t h i g h e r t h a n t h o s e p u b l i s h e d i n 1 9 8 0 b a s e d o n 1 9 8 0 estim ated c o s t s . About o n e - t h i r d o f t h i s i n c r e a s e r e s u l t s from th e use o f a h i g h e r PSAF. The r e m a in d e r i s due t o c o s t i n c r e a s e s a nd r e a l l o c a t i o n s of c o sts derived from th e im proved c o s t accounting procedures for se cu ritie s s e r v i c e s implemented on J a n u a r y 1, 1981. However, th e com parison is not s t r a ig h t f o r w a r d because o f the r e d e f i n i t i o n o f the account m aintenance fee in the d e f i n i t i v e se curitie s services, and t h e c h a n g e i n v o l u m e u n i t s for w h i c h s u c h f e e s w i l l be a s s e s s e d . T h e 1981 f e e s c h e d u l e s w e r e c a l c u l a t e d b y t h e F e d e r a l R e s e r v e B a n k s u s i n g a m e t h o d o lo g y s i m i l a r t o t h a t u sed t o compute th e f e e s c h e d u l e p u b l i s h e d by t h e B oard i n A u g u s t 1980. T h e fe w c h a n g e s made a r e d e s c r i b e d b e l o w . The same m e t h o d o l o g y was u s e d f o r a l l F e d e r a l R e s e r v e D i s t r i c t s a n d o f f i c e s , and e s t i m a t e s w er e b a s e d on f u l l c o s t s , u s i n g t h e F e d e r a l R e s e r v e ' s P l a n n i n g and C o ntro l System (PACS). (The c o s t a c c o u n t i n g p r i n c i p l e s a nd p r o c e d u r e s u s e d by t h e R e s e r v e B an k s a r e d e s c r i b e d i n S y s t e m a c c o u n t i n g m a nu a ls a v a i l a b l e to the p u b lic . ) T h e f e e s t r u c t u r e f o r 1981 h a s b e e n c h a n g e d i n some r e s p e c t s f r om t h a t p u b l i s h e d i n A u g u s t 1 9 8 0 t o s i m p l i f y t h e f e e s c h e d u l e s a n d t o a l l o w them t o c o n f o r m more c l o s e l y w i t h c u r r e n t m a rk e t' p r a c t i c e . T h e a m ou nt o f re venue p r o j e c t e d i s e s s e n t i a l l y t h e same a s u n d e r t h e o r i g i n a l f e e s t r u c t u r e , a s s u m i n g t h e same v o l u m e o f a c t i v i t y . Th e c h a n g e s a r e s u m m a r i z e d a s f o l l o w s : Book-Entry 1. and D e f i n i t i v e Se cu ritie s Safekeeping S e rv ic e s N a t i o n a l B o o k - E n t r y S e c u r i t i e s S e r v i :;-:t F e e s . N a t i o n a l f e e s have been e s t a b l i s h e d f o r a l l b o o k - e n t r y s e r v i c e s — t h e b a s i c o n - l i n e t r a n s f e r c h a r g e , t h e a c c o u n t m a i n t e n a n c e c h a r g e , and t h e o f f - l i n e t r a n s f e r surcharge. T he l a t t e r r e p l a c e s t h e D i s t r i c t o f f - l i n e s u r c h a r g e p r o p o s ed i n A u g u s t . Th e F e d e r a l R e s e r v e B a n k o f New Y o r k w i l l c o n t i n u e t i m e - o f - d a y p r i c i n g o f i n t r a d i s t r i c t o n - l i n e t r a n s f e r s and e x t e n d t h e p r a c t i c e to i n t e r d i s t r i c t t r a n s f e r s o r i g i n a t i n g i n t h a t D i s t r i c t , r e c o v e r i n g t h e s t a n d a r d n a t i o n a l f e e on a v e r a g e . ___________________________________________ I -3- T h e $ 3 . 0 0 f e e a s s e s s e d c u r r e n t l y on v a rio u s Federal agencies for in te rd s e c u r i t i e s w i l l be d i s c o n t i n u e d when B o a r d b e c o m e s e f f e c t i v e on O c t o b e r 1, b e h a l f o f t h e U . S . T r e a s u r y and istrict transfers of book-entry t h e f e e s c h e d u l e a d o p t e d by t h e 1981. 2. D e f in it iv e S e c u r it ie s Safekeeping S e rv ic e s Fe e s. A ll d e fin itiv e se c u r i t i e s safekeeping- s e rv ic e s w ill be p r i c e d a t t h e D i s t r i c t l e v e l e x c e p t i n t h e C h i c a g o D i s t r i c t , w h e r e t h e y w i l l be p r i c e d a t t h e o f fic e le vel. In accord w ith i t s c u rre n t p r a c t ic e , the San F ra n c is c o D is t r ic t 's d e fin itive se cu ritie s services are lim ited to certain special c o lla te ra l accounts. General s a f e k e e p i n g a c c o u n t s are not provided in the San F r a n c is c o D i s t r i c t . 3. A c c o u n t M a i n t e n a n c e Fee f o r D e f i n i t i v e S e c u r i t i e s . The f e e f o r m a i n tain in g d e fin itiv e se curitie s safekeeping acounts w ill be b a s e d on number o f r e c e i p t s o r i s s u e s h e l d , a nd n o t on t h e p a r v a l u e h e l d as o r i g i n a l l y proposed. (The F e d e r a l Reserve Banks of New Y o r k and M inneapolis w ill b a s e t h e i r f e e s u p o n n u mb er o f i s s u e s because of the f i l i n g system s used .) T he s e p a r a t e f e e f o r c l i p p i n g c o u p o n s h a s be e n e l i m i n a t e d ; h o w e v e r , t h e f e e f o r c o l l e c t i n g c l i p p e d c o u p o n s w i l l c o n tin u e to be charged under the noncash colle ction service fee schedule as a separate charge. Th e a c c o u n t m a i n t e n a n c e f e e i s now c a l c u l a t e d t o r e c o v e r t h e f u l l c o s t s o f b o t h m a i n t e n a n c e and c o u p o n clip p in g. W h i l e t h e s e c h a n g e s r e s u l t i n t h e a p p e a ra n c e o f a lo w er f e e f o r a c c o u n t m a i n t e n a n c e t h a n t h a t p r o p o s e d u n d e r t h e 1 9 80 s t r u c t u r e , t h e new f e e i s b a s e d on p h y s i c a l volume, r a t h e r than value h e l d , and w i l l be l e v i e d m o n t h l y on t h e F e d e r a l R e s e r v e s t a t e m e n t o f se rv ic e charges. F o r m e r l y , t h e a c c o u n t m a i n t e n a n c e f e e was e x p r e s s e d a s an a n n u a l f e e t o be a s s e s s e d q u a r t e r l y . A t t h e same t i m e , f e e s fo r d ep o sits, w ithdraw als, redem ptions, and account sw itches are g e n e r a l l y l o w e r due t o c o s t r e a l l o c a t i o n s . Purchase and S a l e o f Government S e c u r i t i e s Service T h e b a s i c s t r u c t u r e o f f e e s f o r t h e p u r c h a s e and s a l e o f g o v e r n m e n t s e c u r i t i e s r e m a i n s u n c h a n g e d ; t h e f e e s h a v e b e e n i n c r e a s e d t o r e f l e c t 1981 c o s t e s t i m a t e s and t h e 16 p e r c e n t p r i v a t e s e c t o r adjustm ent fa c to r . It s h o u l d be n o t e d t h a t t h e A t l a n t a D i s t r i c t a n d t h e S t . L o u i s D i s t r i c t do n o t o f f e r s e c u r i t i e s p u r c h a s e and s a l e s e r v i c e s . Noncash C o l l e c t i o n Se rvice s The f e e s f o r n o n c a s h c o l l e c t i o n s e r v i c e s have been updated to r e f l e c t 1981 c o s t e s t i m a t e s a n d t h e 16 p e r c e n t p r i v a t e s e c t o r a d j u s t m e n t f a c t o r . In t h e c a s e o f co u p o ns c l i p p e d from s e c u r i t i e s h e l d i n s a f e k e e p i n g and s h i p p e d to an oth er R eserve D i s t r i c t f o r c o l l e c t i o n , f u l l c o s t s f o r the c o l l e c t i o n s e r vice w ill be r e c o v e r e d b y c h a r g i n g t h e f e e o f t h e c o l l e c t i n g R e s e r v e B an k . C u r r e n t l y , a System w ide coupon s h i p p i n g f e e o f $1 p e r $ 1 , 0 0 0 v a l u e i s charged. W i t h t h e i m p l e m e n t a t i o n o f p r i c i n g , t h i s f e e w i l l be e s t a b l i s h e d a t t h e D i s t r i c t l e v e l a n d w i l l d i f f e r f r o m $1 a t t h o s e R e s e r v e B a n k s w h er e u s e o f t h e $1 f e e w ill resu lt in s i g n i f i c a n t over- or under-recovery of actual costs. T h e 1981 f e e s c h e d u l e s f o r s e c u r i t i e s and n o n c a s h c o l l e c t i o n s e r v i c e s are se t f o r t h in Appendix I. Appendix I I c o n t a in s a d e s c r i p t i o n o f a l l p ric e d F e d e r a l R e s e r v e s e c u r i t i e s and n o n c a s h c o l l e c t i o n s e r v i c e s , and an i d e n t i f i c a t i o n o f nonpriced s e r v ic e s . July 17, By o r d e r 1981. of the Board of Governors of the Federal (signed) William W. Wiles W i l l i am W. W i l e s S e c r e t a r y o f the B oa rd [SEAL] e Reserve aystem , Svstem APPENDIX I F E E SC HE DU LE B O O K - E N TR Y S E C U R I T I E S S E R V I C E S E f f e c t i v e O c t o b e r 1, 1981 Se cu rity Transfers: $2.00* O riginated O n-Line per tra n sa c tio n O riginated O ff-Line per t r a n s a c t io n 8.50** per tra n sa c tio n 6.50 per account 6.00 Received O ff-Line Account Maintenance * Fees at the Federal as fo llo w s: Reserve B a n k o f New Y o r k w i l l T i m e o f D a y _________ 9:00 12:01 2:01 ** Composed o f t h e surcharge. NOTE: a.m. p.m. p.m. o n -lin e p e r mont h - .1 2 :00 noon 2 : 0 0 p.m. - close originatio n vary by tim e o f day O r i g i nated O n-Line $0.50 1.25 4.50 fee o f $2.00 plus the $6.50 o ff-lin e T h e $ 3 . 0 0 f e e c u r r e n t l y a s s e s s e d b y t h e F e d e r a l R e s e r v e B a n k s on b e h a l f o f t h e T r e a s u r y and v a r i o u s F e d e r a l a g e n c i e s f o r i n t e r d i s t r i c t t r a n s f e r s o f s e c u r i t i e s w i l l be d i s c o n t i n u e d e f f e c t i v e O c t o b e r 1, 1 9 8 1 . FE E S CHEDULE D E F IN IT IV E S E C U R IT IE S SAFEKEEPING, PURCHASE AND S A L E , AND NONCASH C O L L E C T I O N S E R V I C E S E f f e c t i v e O c t o b e r 1, 1981 O qj E to o o c LU O 5- O O O or *o o CJ ZD o o Z3 a? ID T 3 -r- GJ Q. c. O O O > S_ O a> « c Q .r — 4»D CLJC 3 to O o GJ < - r — C l 0J > V. a» -u> * C L* ■ - _c < QJ 4-> u c L- V. aj aj C L C lI a; o i- E 1* C * O C -It 03 L- C 4-> O •r— J- 4-> G U J CL 03 c o 00 c * < o O CO T3 Z <u E cu a a) t/i o c s- o qg o LU C D C LU ZC _J cu> < Q C G O 23 Q. < • to C h— z zz 03 23 < 3 L O 1 -u> — O ■ C> 3 i_ <C C G D J C L LU CU > ( z: — 2 < 23 Z o O LU z C 3 h_ c_> z : < CL. LU LU < oo CO ac UJ 23 C_3 C O Z LU > OG LU OD LU QG QG H— I/O • i — C2 f— C_J _J o * *< — • H 2 H to t— < Q_ c < CD Q Z 03 G L u O Q U l. LU Cl. ZZ CD 4-> Q LU i— LU CD • i Q U — G G J 2 CG C s L o _J <C CSG LU Cl LU Lu o o 4»d o G O • O O • CM CD- n LO C M CD o in o o O K J• r— o o o C O • C M • O o O o r~~ o o n 00 • C M o o • r-* CM O o C M o o • o o • C M O o CM o n o o o < — o o CM o in o n C M • ro CM n ro n o in o o o • i o n C M o o o ro o n • C M o n • r*» 1 o C M ro o o o ro • o n • C M O n f—H n p“ o o o in i o 00 • C M n f-H o o o to n C M • C M 23 n • n o o o o o o o r-H r-H o o to rH o o ro rH o n C C c QJ 03 l f-H o in o o o o CO O n C M r— 4»D O n n • 4—1 LD o o CM 4-> aj CD 4—1 •— p o CO CM -C o I/O •r— 03 O __1 f— T3 C | J2 U QG o CO 03 CJ n r“ CL r— QJ *o 03 F — • r— ft- 03 4-1 SZ 03 r—* 4-1 < n ro JX s_ o >• 2 GJ G2 *o c 03 F— GJ > GJ r— cu CM •tD C o u> to O CO o o O C M • ro o n • o f-H o o n C M • C M o n • o CM o *D o o n ro rH n o n 03 o l/l OJ o o • CM r —< LO o o • n rH S' to O3 CO X LU o o n C O • to qj •a 03 to to aj to to to GJ GJ u C 03 to G J 0) t* — to 't— to Zi gj Q. a; L. • r— c 03 S2! to c GJ U O o L. GJ CL ID to GJ a; CL X GJ CL CL •f— JIT '/i T3 23 03 to GJ G J GG J to • O C S_ O 4-1 >»••“ • i— * 00 c c i- S- 4-> o C 03 C * to 03 aj O- GJ JX L _ L. > - to L. 2 GJ GJ J X 2= O i_ GJ _Q x: c: z: ■ > to u * * + Lu j C — < a . o JO GJ 2 L. GJ to ~o 03 GJ Lu to -a l . c GJ O _c r— GJ to to aj "O QG c O 03 S - 03 GJ -C GJ 4~> > O Cl • 03 >> GJ C C to ■ — O j* JC C - - r tO » r Q D3 to U QJ O JC to • TM CM 1 o u to • r— c o 03 L. C 03 CO APPENDIX II D E S C R I P T I O N OF F E D E R A L R E S E R V E S E C U R I T I E S SERVICE SERVICES DESCRIPTIONS The s e c u r i t i e s s e r v ic e s o ffe re d to d e p o sit o ry i n s t i t u t i o n s by the Federal Reserve f a l l in to th re e c a te g o rie s : b o o k - e n t r y and d e f i n i tive se curitie s s a f e k e e p i n g s e r v i c e s ; p u r c h a s e and s a l e o f g o v e r n m e n t s e c u r i t i e s ; and n o n c a s h c o l l e c t i o n s e r v i c e s . A c c o u n t m a in t e n a n c e f e e s f o r b o o k - e n t r y and d e f i n i t i v e s a f e k e e p i n g s e r v i c e s c o v e r e s t a b l i s h i n g , m a i n t a i n i n g , and s e r v i c i n g s a f e k e e p i n g accounts fo r d e p o sito ry in stitu tio n s. Separate fees w ill be i m p o s e d f o r each t r a n s a c t i o n affe ctin g safekeeping account balances, su ch as d e p o sits, w ithdraw als, account sw itches, and w i r e t r a n s f e r s of bookentry s e c u ritie s. H o w e v e r , no f e e s w i l l be i m p o s e d f o r : ( 1 ) e s t a b l i s h i n g , m a i n t a i n i n g , a nd s e r v i c i n g c o l l a t e r a l a c c o u n t s f o r b o r r o w i n g s f r o m t h e F e d e r a l R e s e r v e o r f o r T r e a s u r y d e p o s i t s , s u c h a s T r e a s u r y t a x and l o a n a c c o u n t s ( s e e T r e a s u r y D e p a r t m e n t C i r c u l a r s No. 92 a n d No. 1 7 6 . ) ; (2) th e h a n d l i n g o f t r a n s a c t i o n s a f f e c t i n g the b a la n c e s o f t h e s e c o l l a t e r a l a c c o u n t s ; ^ / ( 3 ) t h e d e p o s i t o f b o o k - e n t r y s e c u r i t i e s on o r i g i n a l i s s u e ; (4) the c o n v e r s io n o f d e f i n i t i v e s e c u r i t i e s t o b o o k - e n t r y form o r the c o n v e rsio n o f b o o k -e n try h o ld in g s to d e f i n i t i v e s e c u r i t i e s (other u h a n w i r e - r e l a t e d f e e s ) ; a nd ( 5 ) t h e p a y m e n t o f p r i n c i p a l - a n d i n t e r e s t on U . S . G o v e r n m e n t and F e d e r a l a g e n c y s e c u r i t i e s , i n c l u d i n g t h e w i t h d r a w a l o f matured b o o k - e n t r y s e c u r i t i e s . T h e se s e r v i c e s a r e p r o v i d e d by the Federal Reserve e it h e r in i t s c a p a c it y as F i s c a l Agent o f the United S t a t e s where r e im b u rs e m e n t i s p ro v id e d by the T r e a s u r y Department or o th e r Federal agencies, or in i t s c a p a c ity as a ce n tra l bank l e n d e r , u n d e r t h e p r o v i s i o n s o f R e g u l a t i o n A. When t h e fees in the attached schedule are im plem ented on O c t o b e r 1, 1981, the $3.00 fee for in te rd istric t se cu rity transfers t h a t t h e F e d e r a l R e s e r v e B a n k s now c o l l e c t o n b e h a l f o f t h e D e p a r t m e n t o f the T re a su ry and various Federal agencies w ill be d i s c o n t i n u e d . The f e e s f o r the purchase or sale of government se curitie s c o v e r th e Fed e ral R e s e rv e B a n k s ' c o s t s f o r r e c e i v i n g r e q u e s t s from d ep os i t o r y i n s t i t u t i o n s a nd p l a c i n g p u r c h a s e o r s a l e o r d e r s f o r T r e a s u r y and Fed e ral agency se curitie s in th e se c o n d a ry market. F e e s a s s e s s e d by d e a l e r s and b r o k e r s f o r e x e c u t i n g t r a n s a c t i o n s , if any, w i l l a l s o be r e c o v e r e d from u s e r s o f t h i s s e r v i c e . 1/ T h e r e i s no c h a r g e f o r w i t h d r a w a l o f a m a t u r e d s e c u r i t y f r o m a c o l la t e r a l account, but a charge w ill be i m p o s e d for colle ction of s e c u r i t i e s o t h e r t h a n t h o s e i s s u e d by t h e U .S. T r e a s u r y o r v a r i o u s Federal agencies. -2 - The f e e s for noncash colle ction services in clu d e re c e iving, c o l l e c t i n g , and c r e d i t i n g t h e a c c o u n t s o f d e p o s i t o r y i n s t i t u t i o n s for d e p o s i t s o f item s e l i g i b l e f o r c o l l e c t i o n th ro u g h th e Federal R e s e r v e , such as m unicipal c o u p o n s a nd b o n d s (in clu d in g coupons clippe d from s e c u r i t i e s held in sa fe k e e p in g ). See P a rt C o f t h i s appendix f o r a l i s t i n g of e ligib le item s. In general, d ep osits should be shipped d i r e c t l y to the Federal Reserve o f f i c e th a t s e r v i c e s the t e r r i t o r y in which th e p a yin g agent i s lo c a t e d . C r e d i t f o r d e p o s i t s w i l l be p o s t e d to accou n ts m a in ta in ed at the lo c a l Federal R ese rve o f f i c e o f the depos i t o r y i n s t i t u t i o n e v e n t h o u g h d e p o s i t s may h a v e b ee n r e c e i v e d a t a n o t h e r Federal Reserve o f f ic e . A. B OOK- EN TRY AND D E F I N I T I V E 1. SECU RITIES SAFEKEEPING SE R V IC E S Book-Entry Safekeeping S e rv ic e s A d e p o s i t o r y i n s t i t u t i o n may e s t a b l i s h several types of booke n t r y s a f e k e e p i n g a c c o u n t s ( e . g . , a g e n e r a l a c c o u n t , an i n v e s t ment a c c o u n t , a t r u s t a c c o u n t , or a d ea le r account) w ith i t s lo ca l Federal Reserve o f f ic e . To d e t e r m in e th e s p e c i f i c t y p e s of accounts a v a ila b le , depository in stitu tio n s should contact t h e ir local Federal Reserve o ffic e . Account m aintenance fees w i l l be a s s e s s e d f o r c u s t o d y and c o l l a t e r a l a c c o u n t s ; f e e s w i l l a l s o be a s s e s s e d for processing se curity tra n sfe rs affe ctin g those accounts. No f e e s , however, w ill be a s s e s s e d f o r - t h e m aintenance of or a c t iv it y in collate ral accounts su p p o rtin g b o r r o w in g s from the F ederal R e s e rv e o r T r e a s u r y d e p o s i t s . a. Se cu rity Transfer: O riginated O n-line O n-line se cu rity transfers are wire transfers of bookentry se c u rit ie s o riginated by a d e p o s i t o r y in stitu tio n t h a t has d i r e c t acce ss to its book-entry accounts held at a Fed e ral Reserve office. A depository in stitu tio n may: ( 1 ) t r a n s f e r book-entry s e c u r it ie s held in one of it s custody or c o lla te ra l a c c o u n t s t o a n o t h e r one o f i t s custody or co llate ral accounts (account sw itches); and (2) t r a n s f e r book-entry se curitie s held in one of its custody or co llate ral accounts to a custody account of another d ep ository in stitu tio n located w ithin the same Federal Reserve D i s t r i c t (in tra d istric t transfer) o r an other Federal Reserve D istrict (in te rd istric t transfer). These t r a n s f e r s may be sent again st payment, with the funds being c re d ite d to the se nd in g i n s t i t u t i o n 's rese rve account. -3- b. Se cu rity Transfer: O riginated O ff-lin e O f f - l i n e s e c u r it y t r a n s f e r s are w ire t r a n s f e r s o f bookentry se curitie s transm itted by Federal Reserve per sonnel a c t in g on a u t h e n t i c a t e d requests received from d ep ository in s t it u t io n s . At the re q u e st o f d e p o s it o r y i n s t i t u t i o n s , Federal Reserve personnel w i l l : (1) t r a n s f e r b o o k - e n t r y s e c u r i t i e s between c u s t o d y o r c o l l a t e r a l accounts of the same depository in stitu tio n (account s w i t c h ) ; and (2 ) t r a n s f e r b o o k - e n t r y s e c u r i t i e s from a c u s t o d y o r c o l l a t e r a l a c c o u n t o f one d e p o s i t o r y i n s t i t u tio n to a custody or c o lla t e r a l account of another f in a n c i a l i n s t i t u t i o n l o c a t e d w i t h i n t h e same F e d e r a l R e s e r v e D istrict (in tra d istrict transfer) or another Federal Reserve D i s t r i c t (in te rd istrict transfer), a g a in s t pay ment i f s o a u t h o r i z e d . The o f f - l i n e s u r c h a r g e o n l y w i l l be i m p o s e d f o r o f f - l i n e t r a n s f e r s a nd a c c o u n t s w i t c h e s t h a t d o n o t r e q u i r e t h e u s e o f t h e F e d e r a l R e s e r v e Com m u n ic a t io n s System. c. Se cu rity Transfer: Received O f f - l i n e Security tra n sfe rs received o f f - l i n e include in t r a and i n t e r d i s t r i c t se c u rity t r a n s fe r s destined fo r d ep ository i n s t i t u t i o n s t h a t have not e s t a b l i s h e d o n - l i n e communica t i o n s l i n k s with the Federal Reserve. A c t i n g u p on a u t h e n t i c a t e d i n s t r u c t i o n s s u b m i t t e d by t h e r e c e i v i n g d e p o s i t o r y i n s t i t u t i o n , Federal Reserve personnel w ill d e p o sit booke n try s e c u r i t i e s to the c u sto d y o r c o l l a t e r a l account o f t h e d e p o s i t o r y i n s t i t u t i o n , a g a i n s t p a ym e n t i f s o a u t h o r ized. d. Account M aintenance B o o k - e n t r y sa fe k e e p in g account m aintenance fees r e f l e c t the c o s t s a s s o c ia t e d with e s t a b l i s h i n g a ccou n ts, m a in t a in ing account i n s t r u c t i o n s , m a in ta in in g re c o rd s r e f l e c t i n g book-entry h o ld in gs, reconciling accounts, n o tifyin g account hold ers of m aturing se cu ritie s in collate ral a c c o u n t s , and p r o v i d i n g periodic statem ents of account holdings. Except for colla te ra l accounts sup porting b o r r o w in g s from the Federal R e se rv e o r T r e a s u r y d e p o s i t s , a s e p a r a t e m o n t h l y f e e w i l l be a s s e s s e d f o r e a c h c u s t o d y and c o l l a t e r a l a c c o u n t m a i n t a i n e d f o r a d e p o s i t o r y i n s t i tution. 2. D e finitive Safekeeping S e rv ic e s A d e p o s i t o r y i n s t i t u t i o n may e s t a b l i s h s e v e r a l t y p e s o f d e f i n itive safekeeping accounts ( e . g ., a free or unpledged a c c o u n t , a T r e a s u r y t a x and l o a n c o l l a t e r a l a c c o u n t , a d i s count c o lla t e r a l a c c o u n t , o r i n some D istricts a public -4- monies c o l l a t e r a l account) w ith its local Federal Reserve office. To d e t e r m i n e t h e s p e c i f i c t y p e s o f a c c o u n t s a v a i l a b l e , depository in s t it u t io n s should contact th e ir local Federal Reserve o ffic e . It s h o u l d be n o t e d t h a t t h e S a n F r a n c i s c o D i s t r i c t ' s s e rv ic e s are lim ite d to c e r t a in sp e c ia l c o lla t e r a l accounts. Account m aintenance fees w ill be im posed for custody and co llate ral d e fin itive se curitie s accounts; fees w ill also be a s s e s s e d f o r p r o c e s s i n g t r a n s a c t i o n s a ffe c tin g those ac counts. No f e e s w i l l b e a s s e s s e d f o r t h e m a i n t e n a n c e o f o r d e p o s i t and w i t h d r a w a l a c t i v i t y i n c o l l a t e r a l a c c o u n t s s u p p o r t in g b o r r o w in g s from the F e d e ra l R e s e r v e o r T r e a s u r y d e p o s i t s . F e e s w i l l be i m p o s e d , h o w e v e r , f o r t h e c o l l e c t i o n o f m a t u r i n g s e c u r i t i e s o t h e r t h a n U .S. Government s e c u r i t i e s h e l d in t h e s e accounts. a. D eposits, W ithdraw als, a nd R e d e m p t i o n s D eposits, w ithdraw als, a nd redem ptions of d e fin itive s e c u r i t i e s are p rocessed at the d i r e c t i o n o f d e p o s it o r y in stitu tio n s. Acting u po n authenticated in stru ctio n s, Federal Reserve personnel w ill: (1) accept d e p o s it s to custody or c o lla te ra l a c c o u n t s and p r o c e s s th e r e l a t e d paym ents; (2) w i t h d ra w s e c u r i t i e s from c u s t o d y o r c o l l a t e r a l a c c o u n t s , e f f e c t d e l i v e r i e s , and p r o c e s s t h e r e l a t e d payments; and ( 3 ) w i t h d r a w m aturing se curitie s from custody or c o lla te ra l accounts, present them to the p a y i n g a g e n t , c o l l e c t t h e p r i n c i p a l , and c r e d i t d e p o s i t o r y in s t it u t io n s ' reserve or c le a rin g accounts. Fees for processing d ep osits and w i t h d r a w a l s are based on t h e number of transactions processedwithout regard to t h e number of piecesin vo lve d . Fees for p rocessing redem ptions w i ll in clu d e the tran saction fees o f the R e s e r v e Bank h o l d i n g t h e s e c u r i t i e s a s w e ll as t h e n on cash c o lle c t io n fees o f the c o l l e c t i n g R e s e r v e Bank. Shipping expenses and i n s u r a n c e fees in c u r r e d in d e live rin g s e c u r it y w ithdraw als and r e d e m p t i o n s w ill w ill also be r e c o v e r e d from depositoryin s t it u t io n s . b. Account Sw itches Account sw itches are t r a n s f e r s of d e f i n i t i v e s e c u r i t i e s among t h e c u s t o d y a c c o u n t s o f t h e same d e p o s i t o r y i n s t i tution. Account sw itches w i l l be p r o c e s s e d b y F e d e r a l R e s e r v e p e r s o n n e l on t h e b a s i s o f a u t h e n t i c a t e d i n s t r u c t i o n s r e c e iv e d from d e p o s i t o r y in stitu tio n s. Fees f o r p r o c e s s i n g a c c o u n t s w i t c h e s a r e b a s e d on t h e n u m b e r o f t r a n s a c t i o n s p r o c e s s e d w i t h o u t r e g a r d t o t h e number o f pieces inyolved. -5- c. Account Maintenance D e f i n i t i v e safekeeping account m aintenance fees reflect the c o s t s associate d w ith e sta b lishing accounts, main t a in in g account in stru ctio n s, sto rin g se cu ritie s, main t a in in g records r e f le c t in g se c u rity h oldings, reconciling a c c o u n t s , d e t a c h in g m a t u r in g coupons from s e c u r i t i e s and p r e p a r i n g th em for d elivery to the appropriate paying agent, n o tifyin g d ep ositin g in stitu tio n s of m aturing s e c u r i t i e s , and p ro vid in g periodic state m ents o f account h o ld i ngs. A m o n t h l y f e e w i l l be a s s e s s e d p e r a c c o u n t b a s e d on t h e number o f r e c e i p t s h e l d i n t h a t a c c o u n t f o r each d e p o s i tory in stitu tio n .^/ It should be n o t e d th a t the fees a s s o c ia t e d w ith s h ip p in g and c o l l e c t i n g m a t u r i n g co u pons w i l l be a s s e s s e d s e p a r a t e l y u n d e r t h e n o n c a s h c o l l e c t i o n service. B. PURCHASE AND S A L E OF GOVERNMENT S E C U R I T I E S The p u r c h a s e and s a l e s e r v i c e i n c l u d e s t h e r e c e i p t o f i n s t r u c t i o n s f r o m d e p o s i t o r y i n s t i t u t i o n s a nd t h e p l a c i n g o f o r d e r s t o p u r c h a s e o r s e l l T r e a s u r y o r Government a g e n c y s e c u r i t i e s t h r o u g h b r o k e r s or dealers. A fee w i l l ,be charged for each t r a n s a c t i o n processed. Fees a sse sse d b y b r o k e r s o r d e a l e r s , i f a n y , w i l l be r e c o v e r e d f ro m users of t h is se rvice. I t s h o u l d be n o t e d t h a t t h i s s e r v i c e i s n o t a v a i l a b l e i n t h e A t l a n t a and t h e S t . L o u i s F e d e r a l R e s e r v e D i s t r i c t s . C. NONCASH C O L L E C T I O N The non cash c o l l e c t i o n s e r v i c e i n c l u d e s r e c e i v i n g , c o l l e c t i n g , and cre d itin g reserve or c le a rin g accounts of d e p o sito ry in stitu tio n s for e lig ib le item s. Federal Reserve o f f ic e s accept the fo llo w in g item s f o r c o l l e c t i o n : m a tu rin g o r matured m u n ic ip a l c o u p o ns; c a l l e d , m aturing, or matured m unicipal se curitie s; bankers' acceptances; b i l l s o f l a d i n g ; d r a f t s ; c h e c k s w i t h documents a t t a c h e d ; and o t h e r c h e c k s t h a t c a n n o t be h a n d l e d a s c a s h i t e m s . T h e c o l l e c t i o n o f and c r e d i t i n g f o r m a tu rin g coupons detached from d e f i n i t i v e se curitie s h e l d i n c u s t o d y a nd c o l l a t e r a l a c c o u n t s a t a F e d e r a l R e s e r v e o f f i c e are a lso in clu d e d in t h i s se rv ic e . M a t u r i n g and m a tu red m u n i c ip a l coupons are processed on a c a s h b a sis; that is, d ep ositors are c r e d i t e d on t h e b a s i s o f a t i m e s c h e d u l e i n much t h e same way t h a t d e p o s it o r s are c re d ite d f o r checks d e p o site d at the Federal Reserve fo r co lle ctio n . C re d it a v a i l a b i l i t y schedules (th at i s , the s p e c if ic time fram es in which d e p o s i t o r s w ill be c r e d i t e d ) are a v a ila b le fro m any Federal Reserve office. All other noncash co lle ctio n item s a re c r e d it e d to the d e p o s i t o r 's a c c o u n t o n l y a f t e r payment 2/ T h e F e d e r a l f e e s on t h e R e s e r v e Bank o f num ber o f i s s u e s New Y o r k a nd M i n n e a p o l i s h e l d i n an a c c o u n t . have based t h e i r -6 - h a s been c o l l e c t e d . A fee w i l l be a s s e s s e d f o r e a c h i t e m ( e . g . , envelope o r s e c u r it y ) in c lu d e d in a d e p o s it . In a d d itio n , fees fo r s h i p p i n g c o l l e c t i o n i t e m s w i l l be c h a r g e d t o u s e r s o f t h i s s e r v i c e . F e e s f o r s h ip m e n t o f coupon e n v e l o p e s w i l l be a s s e s s e d on a f i x e d ra te per thousand d o l l a r s o f valu e. F e e s f o r s h i p m e n t o f b o n d s and o t h e r n o n c a s h i t e m s w i l l g e n e r a l l y be a s s e s s e d o n a n o u t - o f - p o c k e t recovery b a sis. I n g e n e r a l , d e p o s i t s s h o u l d be s h i p p e d d i r e c t l y t o t h e F e d e r a l R e s e r v e o f f i c e t h a t s e r v i c e s th e t e r r i t o r y i n which th e p a y i n g agent i s located. If such ite m s a re d e p o s i t e d w ith the lo c a l Reserve o f f i c e , h a n d l i n g and s h i p p i n g f e e s o r e x p e n s e s w i l l be a s s e s s e d by b o t h t h e d e p o s i t i n g and t h e c o l l e c t i n g o f f i c e . The f e e f o r c o l l e c t i o n o f coupons detached from s e c u r i t i e s h e ld in a c u s t o d y o r c o l l a t e r a l a c c o u n t a t a n y F e d e r a l R e s e r v e o f f i c e w i l l be t h e f e e s e t by the c o l l e c t i n g F ed eral R e se rv e o f f i c e .
@FedFRASER