Full text of Roundup : September/October 1986, Volume 5, Number 8

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DALLAS
Federal Reserve Bank of Dallas

September/October 1986

Volume 5, Number 8

Accounting/billing procedures modified
The Federal Reserve Board has
modified the System’s accounting
methodology for float pricing pur­
poses for the Automated Clear­
inghouse (ACH) effective Aug. 1, 1986.
The effects of this change will reduce
the amount and cost of float charged
to depositors. The change will take in­
to account the effect float would have

The effects of this
change will reduce the
amount and cost of
float charged to
depositors.
on reserve requirements if Reserve
Banks were required to hold reserves.
The new accounting procedures for
float will closely conform to those of
correspondent financial institutions.
When a correspondent passes credit
for a cash item deposit to a respon­
dent prior to collection of that cash
item by the correspondent, the cor­
respondent retains a cash item in pro­
cess of collection (CIRC) deduction
for the amount of that credit when
computing its required reserves.

Since the CIRC deduction will allow
the correspondent to reduce its level
of non-earning reserves and increase
its level of investable balances, the
cost of the float to the correspondent
is reduced by its earnings on these
additional investable balances.
Assuming the correspondent has a
12 percent reserve requirement, the
correspondent could effectively
reduce its cost of float by 12 percent.
In order to make accounting for
ACH float consistent with that for
check float, net ACH float will be
deducted from the amount of clearing
balances maintained with the Federal
Reserve before the Federal Reserve
calculates its required reserves. Thus,
net clearing balances will be larger
and imputed income from clearing
balances will increase. The effect of
this action will be to permit a reduc­
tion of 12 percent in ACH float
charged to depositors. The Federal
Reserve has been applying this ra­
tionale for float arising from the
check collection service since the
second quarter of 1985.
The Board wishes to emphasize
that, in spite of these reductions in
float charges to depository institu­
tions, the Federal Reserve’s internal
accounting procedures will continue

The effect of this action
will be to permit a
reduction of 12 percent
in ACH float charged to
depositors.
to recognize as a cost to the Federal
Reserve the full value of float at the
federal funds rate, as required by the
Monetary Control Act.
Further questions concerning this
accounting modification should be
directed to Larry Ripley at (214)
651-6118 at the Dallas Office or to
your nearest Federal Reserve Bank
or Branch.

INSIDE
■ BULK DATA
■ 1987 HOLIDAYS
■ FEDWIRE

BULK DATA System expedites ACH
If your institution processes ACH
tapes, transports them to the Federal
Reserve and then waits for a courier
to pick them up and return them to
your institution, you could be wasting
money, time and personnel resources.
The Federal Reserve Bank of Dallas
has an alternative that can help you:
• Reduce costs
• Receive ACH information earlier
• Have more time to prepare tapes
and still get them to the Fed by
the deadline
• Eliminate lost, delayed or stolen
tapes
• Receive positive confirmation of
receipt without making a phone
call
• Eliminate ACH transportation and
courier costs

Directories available
A telephone directory for all
offices of the Eleventh Federal
Reserve District is currently
available. The directory has been
revised to provide a comprehensive
alphabetical listing of all depart­
ments as well as contact names
within each department. Operating
department numbers at the Dallas
Office as well as the El Paso,
Houston and San Antonio
Branches are included. The direc­
tory also contains a complete
listing of all Customer Assistance
functions and numbers. If you
would like a copy, please call Faye
Kocian at (214) 651-6372.

• Receive confirmation that you have
sent the file you meant to send
• Reduce errors
The latest way to transmit ACH in­
formation is through a system
developed by the Federal Reserve
called Bulk Data. This quick and
reliable software was originally
developed for the Federal Reserve to
transmit information between its own
offices. Now it has been opened to
financial institutions for transmitting
ACH files.
Using BULK DATA to transmit your
institution’s ACH information will not
only save time and money, you’ll be
able to keep track of what informa­
tion was sent, when the Fed received
it, and process information on an
almost real-time basis with no

transportation delays.
BULK DATA Options

If your institution currently has a
computer-to-computer connection to
the Dallas Fed, then you will incur a
one-time $100 software fee. If your in­
stitution does not have this type of
connection, you will need to establish
a dedicated line connection which
carries a monthly $300 access fee.
If your institution originates more
than eight ACH tapes per week or
receives more than 300 items per day,
you should consider the BULK DATA
alternative. To find out more about
the BULK DATA method of ACH
transmission, please contact the
Dallas Fed’s Larry Ripley at (214)
651-6118.

‘Single cycle’ enhances ACH processing
The Federal Reserve Bank of Dallas
will change its ACH operations in
mid-October to what is termed “single
cycle.” The new operation is expected
to reduce processing time and will of­
fer an opportunity for depository
financial institutions (DFIs) to receive
one file containing both day and night
cycle data.
The operating change will also
allow the Fed to provide day cycle
output files to receiving institutions
that still want a day cycle file earlier
than has been available in the past.
“Single cycle” will produce files out
of the day cycle only for institutions
that want two files each day.
Only one set of advices and one
file will be produced out of the night
cycle. The advices and file will be
available in the early morning from
the last night and previous day’s pro­

cessing. Local pick-up DFIs and datalinks will be given the option of
receiving one or two files daily.
While RCPC (Regional Check Pro­
cessing Centers) courier points will
be consolidated to one file, mail
points and West Texas country end­
points will continue to receive two
files. The advantage to one file is that
DFIs will handle less files and enjoy
more efficient operations.
Additional changes also due in the
near future will provide ACH Return
Item summary advices through the
GARS (Generalized Advice Retrieval
System) facility of the RESPONSE
network system.
For more information on “single
cycle” operations contact Larry
Ripley at the Dallas Office at (214)
651-6118.

Holidays scheduled for 1987
The Federal Reserve System has
adopted a standard holiday schedule
for all Reserve Banks and Branches.
Beginning in 1987, all Reserve Bank
offices will be closed for ten standard
holidays, unless a fixed-date holiday
falls on a Saturday. For example, in
1987 the fourth of July falls on a
Saturday and will neither be observed
the preceding Friday nor the following
Monday.
The three other fixed-date holidays,
which will be treated in the same
manner, include: Veterans’ Day,
November 11; Christmas Day,
December 25; and New Year’s Day,
January 1. Should these holidays fall
on a Sunday, however, they will be
observed on the following Monday.
Reasoning behind the System’s
decision for adopting this policy was
based on concerns made by parties
responding to the Board of Gover­
nors’ request for public comments.

The principal comment was that clos­
ing Reserve Banks on a Friday prior
to a Saturday holiday would place un­
necessary hardship on the banking in­
dustry, especially on the last
business day of the year—December
31, when it falls on a Friday.
In addition, respondents indicated
that most states do not observe a
Saturday holiday on the prior Friday,
and therefore, most financial institu­
tions would be required to remain
open under state law.
Eleventh District financial institu­
tions (those in Texas, northern Loui­
siana and southern New Mexico)
usually follow the holiday schedule
set by the laws of their respective
states, and under those schedules
many institutions do close on the
prior Fridays. However, officials at
the Dallas Office said they anticipate
that the state legislatures of those
states will vote to amend their

schedules so that the nation’s
payments system will be better
served.
Holiday Schedule for 1987

The Federal Reserve Banks and
Branches will observe the following
holidays in 1987 by being closed on
the dates listed below.
January 1, New Year’s Day
January 19, Martin Luther King’s Day
February 16, Presidents’ Day
May 25, Memorial Day
September 7, Labor Day
October 12, Columbus Day
November 11, Veterans’ Day
November 26, Thanksgiving Day
December 25, Christmas Day
In 1988, all ten holidays will be
observed since none of the fixed-date
holidays fall on a Saturday.

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FEBRUARY
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MAY
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Fedwire Extension: Transfer of Funds
The Federal Reserve Board has
established a new national policy on
the extension of Fedwire operations
beyond regularly scheduled operating
hours. The policy became effective
Aug. 1, 1986.
Financial institutions that send
transfer of funds through the Fed
should expect to meet the final cutoff
of 5:00 p.m., central standard time
(CST), for off-line institutions and 5:30
p.m. (CST) for on-line institutions.
The third party interdistrict cutoff
deadline is 3:30 p.m. (CST) for off-line
institutions and 4:00 p.m. (CST) for
on-line institutions.
Consideration in granting exten­
sions beyond these deadlines will be
based on whether financial institu­
tions have backup dial-up lines
available or other contingency ar­

rangements. Institutions will also be
closely monitored for the dollar
amount of their extension requests,
as well as for frequency of those ex­
tensions granted.
Should an outage situation occur in
a particular Reserve Bank, all 12
Federal Reserve Banks will observe
extensions of the others for up to two
hours, in 30 minute increments.
Automatic extensions will also be
given for situations involving
monetary policy, supervisory action,
and support of a troubled financial
institution.
If a financial institution were to
have very large dollar aggregate send­
ings or were in a highly unusual situa­
tion, the deadline could be extended
an additional 30 minutes given suffi­
cient notice prior to the deadline ap­

plicable to the sendings. Extensions
to interdistrict third party deadlines
must be requested by no later than
3:30 p.m. (CST). Extensions to settle­
ment and final cutoff deadlines must
be requested by no later than 5:00
p.m. (CST).
Requests for discretionary exten­
sions must be approved by the first
vice president of the requestor’s Fed
District. The request can be directed
to a member of a Reserve Bank’s wire
transfer staff, who would be responsi­
ble for getting approval for the exten­
sion from the Reserve Bank’s first
vice president and notifying the finan­
cial institution of either the approval
or denial.

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