[Federal Register Volume 81, Number 141 (Friday, July 22, 2016)]
[Rules and Regulations]
[Pages 47692-47694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17334]


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FEDERAL RESERVE SYSTEM

12 CFR Chapter II

[Docket No. OP-1544]


Federal Reserve Policy on Payment System Risk; 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 revised part II of the Federal Reserve Policy on Payment System 
Risk (PSR policy) related to the procedures for measuring balances 
intraday in institutions' accounts at the Federal

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Reserve Banks (Reserve Banks) to conform with enhancements to the 
Reserve Banks' same-day automated clearinghouse (ACH) service 
previously approved by the Board.

DATES: Effective Date: September 23, 2016.

FOR FURTHER INFORMATION CONTACT: Jeffrey D. Walker, Assistant Director 
(202-721-4559), Jason Hinkle, Manager, Financial Risk Management (202-
912-7805), or Michelle D. Olivier, Senior Financial Services Analyst 
(202-452-2404), 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:

Background

    The Board's PSR policy establishes the procedures, referred to as 
posting rules, for the settlement of credits and debits to 
institutions' Federal Reserve accounts for different payment types.\1\ 
The application of these posting rules determines an institution's 
intraday account balance and whether it has incurred a negative balance 
(daylight overdraft).
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    \1\ The Board's PSR policy is available at 
www.federalreserve.gov/paymentsystems/psr_policy.htm.
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    As announced on September 23, 2015, the Board approved enhancements 
to the Reserve Banks' FedACH[supreg] SameDay Service (FedACH SameDay 
Service) effective September, 23, 2016.\2\ The enhancements are 
intended to align the Reserve Banks' existing opt-in same-day ACH 
service with amendments to NACHA's Operating Rules and Guidelines.\3\ 
Under the newly enhanced Reserve Bank service, all receiving depository 
financial institutions will be required to participate in same-day ACH, 
and originating depository financial institutions will be required to 
pay a fee to receiving depository financial institutions for each same-
day ACH forward transaction. The NACHA amendments, as incorporated into 
the Reserve Bank Operating Circulars, will become effective in multiple 
phases, beginning with same-day credit and return transactions this 
September and followed by same-day debit transactions in September 
2017. Upon implementation of the first phase, the Reserve Banks' 
current opt-in same-day ACH service will cease to exist and will be 
supplanted by the newly-enhanced same-day service. The PSR policy's 
posting rules for forward and return same-day ACH transactions are 
being updated to conform to the Reserve Banks' new FedACH SameDay 
Service, effective September 23, 2016.
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    \2\ 80 FR 58248 (Sep. 28, 2015).
    \3\ NACHA, whose membership consists of insured financial 
institutions and regional payment associations, establishes network-
wide ACH rules through its Operating Rules & Guidelines. As an ACH 
operator, the Reserve Banks, through Operating Circular 4, 
incorporate NACHA's Operating Rules & Guidelines as rules that 
govern clearing and settlement of commercial ACH items by the 
Reserve Banks, except for those provisions specifically excluded in 
the Operating Circular.
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    Under the Reserve Banks' current same-day ACH service, credits and 
debits for forward same-day ACH transactions post at 5:00 p.m.\4\ 
Beginning September 23, 2016, credits and debits for same-day ACH 
credit transactions will post at 1:00 p.m. or 5:00 p.m., depending on 
when the ACH file is received by the Reserve Banks for processing. 
Forward ACH debit transactions will be eligible to settle same-day 
beginning September 15, 2017, as part of the implementation of the 
second phase of the NACHA rule amendments, and credits and debits for 
same-day ACH debit transactions will post according to the same posting 
rules as same-day ACH credit transactions.\5\ The posting of future-
dated ACH forward transactions will not be affected, and credits and 
debits for these transactions will continue to post at 8:30 a.m. on the 
effective settlement date.
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    \4\ All times are eastern time.
    \5\ Enhancements to the Reserve Banks' same-day ACH service will 
alter treatment of check truncation items that settle through 
FedACH. A check truncation item is a check that has been converted 
into an ACH debit entry for presentment and settlement over the ACH 
network based on an agreement between the collecting and paying 
banks. Under the current posting rules, check truncation 
transactions post at 5:00 p.m. on the current business day. 
Beginning September 23, 2016, check truncation transactions will 
post at the same time as other ACH debit transactions at 8:30 a.m. 
on the next business day and will post either next-day or same-day, 
as appropriate, beginning with phase two of the NACHA rule 
amendments. At this time, the Reserve Banks do not have any volume 
associated with check truncation items.
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    The approved enhancements effective this September also alter the 
settlement of ACH return items processed by the Reserve Banks. Under 
the current posting rules, credits and debits for returns of future-
dated and same-day ACH forward items post either at 8:30 a.m. or in the 
afternoon at 5:00 p.m. and 5:30 p.m., respectively, with the specific 
posting time determined by when the item is received by the Reserve 
Banks. Effective September 23, 2016, all ACH return items, regardless 
of whether the associated forward item was future-dated or same-day, 
will post at the next available posting time or following the 
settlement of the associated forward transaction. Thus, credits and 
debits for return items will post at 8:30 a.m., 1:00 p.m., 5:00 p.m., 
or 5:30 p.m., with the specific posting time determined by when the 
item is received by the Reserve Banks.\6\
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    \6\ Paper returns, FedLine Web returns, paper notifications of 
change (NOCs) and FedLine Web NOCs will only be processed twice 
daily at 2:15 a.m. and 2:45 p.m. As such, these transactions will 
post at 8:30 a.m. or 5:00 p.m., depending on when the item is 
received by the Reserve Banks.
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Policy on Payment System Risk

    The Federal Reserve Policy on Payment System Risk, section II.A, 
under the heading ``Procedures for Measuring Daylight Overdrafts'' and 
the subheadings ``Post at 8:30 a.m. eastern time,'' ``Post at 1:00 p.m. 
eastern time,'' ``Post at 5:00 p.m. eastern time,'' and ``Post at 5:30 
p.m. eastern time,'' is amended as follows:
    Post at 8:30 a.m. eastern time:

+/- Term deposit maturities and accrued interest
+/- Government and commercial ACH transactions, including return items 
\7\
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    \7\ Institutions that are monitored in real time must fund the 
total amount of their commercial ACH credit originations in order 
for the transactions to be processed. If the Federal Reserve 
receives commercial ACH credit transactions from institutions 
monitored in real time after the scheduled close of the Fedwire 
Funds Service, these transactions will be processed at 12:30 a.m. 
the next business day, or by the ACH deposit deadline, whichever is 
earlier. The Account Balance Monitoring System provides intraday 
account information to the Reserve Banks and institutions and is 
used primarily to give authorized Reserve Bank personnel a mechanism 
to control and monitor account activity for selected institutions. 
For more information on ACH transaction processing, refer to the ACH 
Settlement Day Finality Guide available through the Federal Reserve 
Financial Services Web site at http://www.frbservices.org.
    The federal government will not participate in the same-day ACH 
upon initial implementation in September 2016. ACH forward 
transactions originated or received by the federal government will 
not be eligible for same-day settlement and will settle on the next 
business day, or on a future date as indicated by the effective 
settlement date.
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+/- Commercial check transactions, including returned checks \8\
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    \8\ For the three commercial check transaction posting times, 
the Reserve Banks will post credits and debits to institutions' 
accounts for checks deposited and presented, respectively, at least 
30 minutes before the posting time.
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+ Treasury checks, postal money orders, local Federal Reserve Bank 
checks, and savings bond redemptions in separately sorted deposits; 
these items must be deposited by the latest applicable deposit deadline 
preceding the posting time
+ Advance-notice Treasury investments

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- Penalty assessments for tax payments from the Treasury Investment 
Program (TIP) \9\

    \9\ The Reserve Banks will identify and notify institutions with 
Treasury-authorized penalties on Thursdays. In the event that 
Thursday is a holiday, the Reserve Banks will identify and notify 
institutions with Treasury-authorized penalties on the following 
business day. Penalties will then be posted on the business day 
following notification.

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    Post by 1:00 p.m. eastern time:

+/- Commercial check transactions, including returned checks
+/- FedACH SameDay Service transactions, including return items
+ Same-day Treasury investments

    Post at 5:00 p.m. eastern time:

+/- FedACH SameDay Service transactions, including return items \10\
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    \10\ Paper returns, FedLine Web returns, paper notifications of 
change (NOCs), and FedLine Web NOCS will only post at 8:30 a.m. and 
5:00 p.m., depending on when the item is received by the Reserve 
Banks.
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+ Treasury checks, postal money orders, and savings bond redemptions in 
separately sorted deposits; these items must be deposited by the latest 
applicable deposit deadline preceding the posting time
+ Local Federal Reserve Bank checks; these items must be presented 
before 3:00 p.m. eastern time

    Post at 5:30 p.m. eastern time:

+/- FedACH SameDay Service return transactions
+/- Commercial check transactions, including returned checks
* * * * *

    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 18, 
2016.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2016-17334 Filed 7-21-16; 8:45 am]
BILLING CODE 6210-01-P