[Federal Register Volume 71, Number 142 (Tuesday, July 25, 2006)]
[Notices]
[Page 42093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11765]


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FEDERAL RESERVE SYSTEM

[Docket No. OP-1260]


Federal Reserve Payment System Risk Policy: Modified Procedures 
for Measuring Daylight Overdrafts

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Policy Statement.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
has adopted changes to its Policy on Payments System Risk affecting the 
procedures for measuring daylight overdrafts. Funds transfers that the 
Reserve Banks function for certain international organizations using 
systems other than their payments processing systems will be posted 
throughout the business day, which is the same treatment as for Fedwire 
funds transfers.

DATES: Effective Date: July 20, 2006.

FOR FURTHER INFORMATION CONTACT: Lisa Hoskins, Assistant Director (202-
452-3437) or Susan Foley, Manager (202-452-3596), Division of Reserve 
Bank Operations and Payment Systems, Board of Governors of the Federal 
Reserve System; for users of Telecommunications Device for the Deaf 
(``TDD'') only, contact (202) 263-4869.

SUPPLEMENTARY INFORMATION:

I. Background

    The Board's Payment System Risk Policy establishes maximum limits 
(net debit caps) and fees on daylight overdrafts in depository 
institutions' accounts at Reserve Banks. When the Board adopted 
daylight overdraft fees, the Reserve Banks began measuring depository 
institutions' intraday account balances according to a set of ``posting 
rules'' established by the Board. These rules comprise a schedule for 
the posting of debits and credits to institutions' Federal Reserve 
accounts for different types of payments.\1\ The Board's objectives in 
designing the posting rules include minimizing intraday float, 
facilitating depository institutions' monitoring and control of their 
cash balances during the day, and reflecting the legal rights and 
obligations of parties to payments.
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    \1\ See ``Federal Reserve Policy Statement on Payments System 
Risk,'' section I.A (57 FR 47093, October 14, 1992).
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    Under these posting rules, certain transactions, including Fedwire 
funds transfers, Fedwire book-entry securities transfers, and National 
Settlement Service transactions, are posted as they are processed 
during the business day. The posting rules do not currently address 
instances when the Reserve Banks, acting as fiscal agents for certain 
international organizations, process funds transfers using internal 
systems other than their payments processing systems, such as Fedwire, 
to function payments in these institutions' accounts. The legal rights 
and obligations of the parties to these payments enable the Reserve 
Banks to treat these funds transfers as final once the accounting 
entries are made in internal systems. The Board believes that these 
funds transfers should be treated consistent with Fedwire funds 
transfers, which are posted throughout the business day, for daylight 
overdraft measurement purposes. A footnote has been added to the 
posting rules under Fedwire funds transfers to clarify this treatment 
of funds transfers processed on internal systems by the Federal Reserve 
Banks for certain international organizations.

II. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
ch. 3506; 5 CFR Part 1320, Appendix A.1), the Board has reviewed the 
policy statement under the authority delegated to the Board by the 
Office of Management and Budget. No collections of information pursuant 
to the Paperwork Reduction Act are contained in the policy statement.

Policy on Payments System Risk

    In the Federal Reserve Policy on Payments System Risk, section 
II.A., under heading ``Procedures for Measuring Daylight Overdrafts'' 
and sub heading ``Post Throughout Business Day'', a new footnote under 
Fedwire funds transfers will be added. The new footnote will read

    \25\ Funds transfers that the Reserve Banks function for certain 
international organizations using internal systems other than 
payment processing systems such as Fedwire will be posted throughout 
the business day for purposes of measuring daylight overdrafts.

All subsequent footnotes will be renumbered to accommodate the addition 
of footnote number 25.

    By order of the Board of Governors of the Federal Reserve 
System, acting through the Director of the Division of Reserve Bank 
Operations and Payment Systems under delegated authority, July 19, 
2006.
 Robert deV. Frierson,
 Deputy Secretary of the Board.
[FR Doc. E6-11765 Filed 7-24-06; 8:45 am]
BILLING CODE 6210-01-P