[Federal Register Volume 75, Number 121 (Thursday, June 24, 2010)]
[Pages 36089-36091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-15276]




Payment System Risk Policy; Daylight Overdraft Posting Rules

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Announcement.


SUMMARY: As part of its Payment System Risk Policy, the Board is 
announcing posting rules for a new same-day automated clearing house 
(ACH) service. The Reserve Banks' FedACH SameDay service, which will 
include certain debit transactions, will be available only to customers 
who elect to participate.

DATES: Effective Date: August 2, 2010.

FOR FURTHER INFORMATION CONTACT: Susan Foley, Deputy Associate Director 
(202-452-3596), Holly Kirkpatrick, Senior Financial Services Analyst, 
Payment System Risk (202-452-2796), or Jennifer Davidson, Senior 
Financial Services Analyst, Retail Payments (202-452-2446), 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.


I. Background

    The Reserve Banks will be offering an opt-in, same-day settlement 
service for certain ACH debit payments through the FedACH service 
effective August 2, 2010.\1\ FedACH customers may opt-in to

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this service by completing a participation agreement. As part of the 
agreement, depository institutions may choose the extent of their 
participation: They may send only, receive only, or send and receive 
same-day debit items. This service will be limited to transactions 
arising from consumer checks converted to ACH and consumer debit 
transfers initiated over the Internet and phone.\2\

    \1\ For additional information on the FedACH SameDay service, 
please contact your Federal Reserve Account Executive or visit 
    \2\ This service is limited to the origination of non-government 
debit payments and includes only Accounts Receivable Entry (ARC), 
Back Office Conversion Entry (BOC), Point-of-Purchase Entry (POP), 
Telephone-Initiated Entry (TEL), Represented Check Entry (RCK), and 
Internet-Initiated Entry (WEB).

    Institutions that choose to use this service should be aware of the 
posting times and associated settlement times established for same-day 
forward and return transfers, as these times could influence how 
participating institutions manage their Federal Reserve accounts, 
especially late in the day.\3\ When the Reserve Banks offer new 
financial services, the Board determines when the payments will post to 
an institution's Federal Reserve account so it may manage and 
appropriately fund its account.\4\ The following table outlines the 
transmission deadlines and associated posting times for the FedACH 
SameDay service.\5\

    \3\ The posting time is the time by which a transaction will be 
recorded for daylight overdraft purposes and reflected in an 
institution's daylight overdraft balance. Settlement for the 
transaction will occur approximately fifteen to thirty minutes 
before the associated posting time and will be reflected in the 
institution's account balance. Institutions may view their real-time 
account balance and daylight overdraft balance in Account Management 
Information (AMI), which is a service offered by the Reserve Banks.
    \4\ Under the current posting times, government and commercial 
ACH credit transactions post at 8:30 a.m. Eastern Time and debit 
transactions post at 11 a.m. Eastern Time. ACH return transactions 
post at 5 p.m. Eastern Time.
    \5\ All times associated with the deadlines and posting rules 
are Eastern Time.

 FedACH SameDay opt-in service   deadline to FedACH      Posting time
Forward same-day debit           2 p.m.............  5 p.m.
Return same-day debit transfers  4:30 p.m..........  5:30 p.m.

    In considering these transmission deadlines and posting times, the 
Board sought to provide receiving institutions with enough time to 
process same-day transactions. Depository institutions may send a same-
day forward item to FedACH until 2 p.m. FedACH will process these 
forward items and send them to the receiving institutions by 
approximately 4 p.m., and these items will settle the same day at 5 
p.m. The Board also wanted to ensure that institutions have sufficient 
time to manage their Federal Reserve account if they receive a returned 
debit transfer late in the day. Depository institutions will have until 
4:30 p.m. to return same-day debit items for same-day settlement.\6\ 
FedACH will process and send the returned items to the originating 
institutions by approximately 5 p.m., and these items will settle the 
same day at 5:30 p.m. The Board believes that because these processing 
and posting times provide institutions with information sufficiently in 
advance of the close of Fedwire, participants in the FedACH SameDay 
service will be able to react appropriately to any debit transfers they 
may receive in their Federal Reserve accounts.

    \6\ Institutions have the option of returning same-day items by 
4:30 p.m. for same-day return settlement at 5:30 p.m. If a same-day 
item is not returned by the same-day return deadline, institutions 
have until the generally applicable return deadline specified in the 
National Automated Clearing House Association (NACHA) rules to 
return items.

    The Board also considered the possibility of how extensions to the 
FedACH service may affect the FedACH SameDay service. Today, under 
certain circumstances, FedACH customers may request an extension to the 
transmission deadline of 2 p.m. for immediate-settlement transactions. 
Immediate-settlement transactions include ACH return items and check-
truncation items. The posting time for these items is 5 p.m. While 
customers will not be able to request an extension to the FedACH 
SameDay service, the transmission deadline for this service may be 
minimally affected by extensions granted for the immediate-settlement 
transactions. If a customer is granted an extension, FedACH would 
extend both the transmission deadline to send immediate-settlement 
return payments and the transmission deadline to send same-day forward 
items past 2 p.m. While this extension would grant all FedACH customers 
more time to send these items, it would not delay the posting times as 
FedACH would absorb the extension by shortening its processing window. 
Depository institutions interested in learning more detailed 
information about the FedACH SameDay service should contact their local 
Reserve Bank or visit http://www.frbservices.org.

II. Competitive Impact Analysis

    The Board conducts a competitive impact analysis when it considers 
a change, such as introducing posting rules for a new service. 
Specifically, the Board determines whether there would be a direct and 
material adverse effect on the ability of other service providers to 
compete with the Federal Reserve due to differing legal powers or due 
to the Federal Reserve's dominant market position deriving from such 
legal differences.\7\ The Board believes that there are no adverse 
effects to other service providers resulting from the new posting 
rules. While FedACH is the only ACH operator that is currently offering 
a same-day service, if the other ACH operator elects to offer a same-
day service, FedACH would support inter-operator transfers to enable 
customers to benefit from both operators' same-day service offerings.

    \7\ Federal Reserve Regulatory Service, 7-145.2.

III. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1), the Board reviewed the new posting 
rules 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 these new posting rules.

IV. Federal Reserve Policy on Payment System Risk

    The Federal Reserve Policy on Payment System Risk, Section II.A. 
under the subheading ``Procedures for Measuring Daylight Overdrafts,'' 
is amended with changes as follows in italics.
    Procedures for Measuring Daylight Overdrafts \8\

    \8\ These posting times do not affect the overdraft restrictions 
and overdraft-measurement provisions for nonbank banks established 
by the Competitive Equality Banking Act of 1987 and the Board's 
Regulation Y (12 CFR 225.52).

    Post at 5 p.m. Eastern Time:
    +/- FedACH SameDay service transactions.
    + Treasury checks, postal money orders, and EZ-Clear savings bond 
redemptions in separately sorted

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deposits; these items must be deposited by 4 p.m. Eastern Time.
    + Local Federal Reserve Bank checks; these items must be presented 
before 3:00 p.m. Eastern Time.
    +/- Immediate-settlement ACH transactions; these transactions 
include ACH return items and check-truncation items.
    Post at 5:30 p.m. Eastern Time:
    +/- FedACH SameDay service return transactions.

    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, June 16, 
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010-15276 Filed 6-23-10; 8:45 am]