Full text of Federal Reserve Notes : October 1985

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Federctf Re/erve flote/
Federal Re/erve Bank <5f /an Franci/co • October 1985
/erving flla/ka, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, & UUa/hington

NEW SERVICE
FedLine and On-Line

Equipment
Purchase Option

The Federal Reserve Bank of San Francisco is offering a purchase option to all FedLine and on-line

customers who have leased equipment from the Bank for a minimum of twelve months. The purchase

price for a complete configuration (system unit, monitor, printer and cables) will range from $950 to
$2454, with the actual price depending on the number of lease payments made to date. This new
offer took effect September 9, 1985 for FedLine customers and September 11, 1985 for on-line
customers.

Purchase contracts should be signed and returned to the local Financial Services Officer by December
1, 1985. Depository institutions that choose to continue leasing FedLine equipment are asked to
sign a new long-term lease agreement that will cover a period starting from the original leasing date
and that will be thirty-six months in length. On-line customers not choosing the purchase option
may continue with their current month-to-month leasing arrangement without signing a new lease.
For further information, please contact the local Financial Services Officer.

INFORMATION ON REPOS

The Federal Reserve System has embarked on a public education program designed to provide information

about managing the risks involved in participating in the repurchase agreement market. A free package of
information materials may be obtained by writing to "Repo Education Program", Public Information Depart
ment, Federal Reserve Bank of San Francisco, P.O. Box 7702, San Francisco, CA 94120.
Educational materials also will be made available at a half-day public seminar on repurchase agreements to be
held in San Francisco on October 31, 1985. Invitations to the seminar have been sent to the chief financial

officers of depository institutions, county and municipal governments, and school districts in California.
Others interested in attending the seminar should write to the above address.
REGULATIONS AND OPERATIONS UPDATE
Collection of Cash
Items— Notice of

Nonpayment

As noted previously, the Federal Reserve Board has amended Regulation J to improve the system of
notification of nonpayment of large-dollar return items (checks of $2500 or more).

Effective October 1, 1985, a depository institution on which a large-dollar check is drawn is required

to notify the institution of first deposit within a specified time limit that the check is being returned.
Circular 1, "Collection of Cash Items," has been revised to reflect these changes.

Because of the new notification requirements, the Federal Reserve encourages all institutions to
review their check endorsement procedures to ensure that endorsements are legible and in com

pliance with ANSI standards, including use of only current and complete (9-digit) routing numbers.

Copies of the revised Circular 1 and/or an information brochure titled "Return Item Notification:
Information About the New Requirement," are available from Corporate Servicesat (415) 974-2752.
For further information, please contact the Payments Services officer serving you. For more infor
mation about check endorsement standards, contact ANSI, 1430 Broadway, New York, NY 10018
or(212) 354-3473.

REGULATIONS AND OPERATIONS UPDATE (continued)
FFIEC Uniform

Examination Report

The Federal Financial Institutions Examination Council (FFIEC) has adopted a uniform examination
repprt to be used by the Federal Reserve System, the Federal Deposit Insurance Corporation, and
the Office of the Comptroller of the Currency. The Council set September 1, 1985 as the imple
mentation date for the new report. The report consists of two parts: 1) a mandatory "core" con
sisting of six schedules, and 2) an appendix of optional supporting schedules.
Copies of the uniform examination report may be obtained from the Federal Financial Institutions
Examination Council, 1776 G Street, N.W., Suite 701, Washington, D.C. 20006.

FOR PUBLIC COMMENT

Regulation K —
International

Banking Operations

The Federal Reserve Board has requested comment by October 28, 1985 on proposed changes to
Regulation K that would prohibit all lending to affiliates by Edge Corporations that are not subsidiaries
of U.S.-insured banks. The Board is requesting comment on the effect of the proposal on the opera
tions of existing Edge Corporations and whether any exceptions or exemptions are appropriate to
the prohibition of affiliate lending. The proposed changes are designed to preserve the safety and
soundness of Edge Corporations and would result in more equitable treatment of all owners of Edge
Corporations.

Copies of the notice are available from Corporate Services at (415) 974-2752. For further information,
please contact Rodney Reid in Supervision, Regulation, and Credit at (415) 974-2266.

AUTOMATED CLEARINGHOUSE UPDATE
New Software

The Federal Reserve has developed a new automated clearinghouse processing
software package and is installing it systemwide. The new software package will
better enable the Federal Reserve to handle growing numbers of ACH transactions
and serve as the base for future service enhancements and processing capabilities.

Notification of

The Federal Reserve Bank of San Francisco, with cooperation from NACHA, has
revised the ACH paper Notification of Change (NOC) form for use starting August
30, 1985. These revisions provide originating depository institutions with improved
payment correction data. They also provide originators with the transaction type,
accommodate use of the NACHA-approved change codes, and include formatted
corrected data fields. Receiving institutions will use this same form to notify

Change Form

originators of changes or corrections to the payment data.
Net Settlement

Beginning December 5, 1985, automated clearinghouses must provide the Federal
Reserve with specific information about transactions in order to receive Reserve

Bank net settlement services. Each ACH must provide the following data for each
settling participant:

•
•
•
•

gross
gross
gross
gross

credits from the origination of debit transactions
debits from the receipt of debit transactions
debits from the origination of credit transactions
credits from the receipt of credit transactions

ACHs may report this information once each week or with daily settlement entries
submitted to the Federal Reserve.

In addition, the Board determined that all ACH transactions will be posted to the
Board's daylight overdraft monitoring position at the opening of business on the
settlement date.

The Board's notice is available from Corporate Services at (415) 974-2752. For

further information, please contact Sharon Reisdorf in Accounting at (415)
974-2688.