69538 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

1These imputed costs, such as taxes that would

have been paid and the return on capital that would

have been earned had the services been provided

by a private business, are referred to as the PSAF.

The PSAF is based on data developed in part from

a model comprising the nation’s fifty largest (by

asset size) bank holding companies. Based on

consolidated financial data for the holding

companies in the model for each of the last five

years, the targeted ROE is the budgeted after-tax

profit that the Federal Reserve would have earned

had it been a private business. This ten-year

recovery rate is based upon the method used for the

pro forma income statement for Federal Reserve

priced services published in the Board’s Annual

Report. The pro forma income statement reflects

certain offsets to costs related to the transition to

financial accounting standards number 87 (FAS 87)

that have not been included in the 1999 repricing

pro forma in this memorandum. Beginning in 2000,

the PSAF includes additional financing costs

associated with pension assets used by priced

services. This ten-year cost-recovery amount has

been computed as if these costs historically had

been included in the PSAF calculations. If this

modification were not applied to prior periods, the

ten-year recovery rate would increase to 101.1

percent. In order to provide a more accurate

comparison against the targeted return on equity

that was used for establishing prices within those

services, the 1999 service-line recovery data in this

memorandum do not reflect the revisions to the

PSAF method.

2These estimates are based on a chained Fisher

Ideal price index. This index provides customers

with a representation of the total price or cost of

Reserve Bank services, offering a more complete

picture than is possible solely from comparing

changes in individual service fees over time. This

index is not adjusted for quality changes in Federal

Reserve priced services. Data elements used in

calculating the index include explicit fee revenue

from priced services products and services and

electronic connections to the Reserve Banks,

volumes associated with those products and

services, and imputed income associated with

clearing balances through the Reserve Banks. The

price index is calculating using the actual,

estimated, or projected full-year revenues and

volumes. For 2001, the year-over-year percentage

change in the index results from a comparison of

the 2001 projections to the 2000 estimates for

priced services revenues and volumes. The Reserve

Banks delayed implementing the fee changes for

2000 until April to minimize changes for depository

institution customers during the period

surrounding the century rollover. The 2001 index,

therefore, does not directly compare the impact of

the prices implemented on April 2000 against the

2001 prices because the 2000 estimate includes

revenues and volumes from the first quarter of

2000. The changes in the price index since 1996 are

calculated with full-year 2001 projected and 1996

actual revenues and volumes.

2. Svenska Handelsbanken,

Stockholm, Sweden; to engage de novo,

through its subsidiary, Oktogon

Advisers, LLC, New York, New York, in

providing portfolio investment advice

on a discretionary and directed basis

(including advice on derivative

transactions and structured assets) to

U.S. and non-U.S. clients, including

corporations and institutional investors

(such as pension funds and insurance

companies), charitable foundations,

religious and university endowment

funds, private investment companies,

and hedge funds (both off-shore and onshore) and mutual funds, pursuant to

§ 225.28(b)(6) of Regulation Y.

3. Westdeutsche Landesbank

Girozentrale, Dusseldorf, Germany; to

acquire Gulfstream Global Investors,

Ltd., Addison, Texas, and thereby

engage in investment advisory activities,

pursuant to § 225.28(b)(6) of Regulation

Y.

Board of Governors of the Federal Reserve

System, November 14, 2000.

Robert deV. Frierson,

Associate Secretary of the Baord.

[FR Doc. 00–29527 Filed 11–16–00; 8:45 am]

BILLING CODE 6210–01–P

FEDERAL RESERVE SYSTEM

[Docket No. R–1086]

Federal Reserve Bank Services

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Notice.

SUMMARY: The Board has approved the

fee schedules for Federal Reserve priced

services and electronic connections and

a private-sector adjustment factor

(PSAF) for 2001 of $206.9 million.

These actions were taken in accordance

with the requirements of the Monetary

Control Act of 1980, which requires

that, over the long run, fees for Federal

Reserve priced services be established

on the basis of all direct and indirect

costs, including the PSAF.

DATES: The new fee schedules become

effective January 2, 2001.

FOR FURTHER INFORMATION CONTACT: For

questions regarding the fee schedules:

Erik Kiefel, Financial Services Analyst,

Retail Payments, (202/721–4559); Susan

Foley, Senior Financial Services

Analyst, ACH Payments, (202/452–

3596); Cynthia Yablon, Financial

Services Analyst, Funds Transfer and

Book-Entry Securities Services, (202/

452–2046); Donna DeCorleto, Financial

Services Project Leader, Noncash

Collection Service, (202/452–3956);

Michael Lambert, Senior Financial

Services Analyst, Special Cash Services,

(202/452–3376); or Paul Grabow, Senior

Information Technology Analyst

(electronic connections), (202/452–

2830), Division of Reserve Bank

Operations and Payment Systems. For

questions regarding the PSAF: Gregory

Evans, Manager, Financial Accounting,

(202/452–3945), Division of Reserve

Bank Operations and Payment Systems.

For users of Telecommunications

Device for the Deaf (TDD) only, please

contact Janice Simms (202/872–4984).

Copies of the 2001 fee schedules for the

check service are available from the

Board, the Reserve Banks, or the Federal

Reserve Banks’ financial services web

site at www.frbservices.org.

SUPPLEMENTARY INFORMATION:

I. Priced Services

A. Overview

The Federal Reserve Banks continue

to meet the Monetary Control Act’s

requirement that they recover, over the

long run, their direct and indirect costs,

including imputed costs and profits, of

providing priced services. Over the

period 1990 through 1999, the Reserve

Banks recovered 99.7 percent of their

total costs for providing priced services,

including imputed expenses, special

project costs that were budgeted for

recovery, and targeted after-tax profits,

or return on equity (ROE).1

For 2000, the Reserve Banks estimate

that they will recover 100.4 percent of

the costs of providing priced services.

They project a 98.0 percent recovery

rate in 2001, largely due to transition

costs associated with the check

modernization project and the transition

to a new cost-allocation method for the

book-entry service. The primary risks to

the 2001 projection are the Reserve

Banks’ ability to meet aggressive

revenue and cost targets in the check

service, because of the impact of the

check modernization project; the

uncertain effects of price-structure and

service-level changes being

implemented for automated

clearinghouse (ACH) interoperator

transactions; and increased competition

for ACH and funds-transfer services.

In their 2001 fee schedules, the

Reserve Banks include changes that

continue to provide an economic

incentive for depository institution

customers to make greater use of

electronic payment services. In

particular, the price index for electronic

payment services (ACH, funds transfer

and net settlement, book-entry

securities, and electronic check) and

electronic connections is projected to

decline approximately 1.9 percent in

2001. The index for paper-based

payment services (check, special cash,

and noncash collection) is expected to

increase 6.4 percent. The overall 2001

price index for all Federal Reserve

priced services is projected to increase

4.2 percent, the same as the increase in

2000. Since 1996, the overall price

index has increased only half a

percent.2

The following are changes in fee

structures and levels for priced services

in 2001:

• The Reserve Banks will make no

changes to fees for the Fedwire funds

transfer and national net settlement

services. The price index for Fedwire

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69539

3The volume-weighted fee calculations for 2001

are based on a comparison of current and April

2000 transaction fees with the 2001 fees for check

products, all weighted using the projected 2001

volumes. These volume-weighted calculations

summarize changes in specific check product

transaction fees while the chained Fisher Ideal

price index includes the all-in costs to a customer

of purchasing a market basket of Federal Reserve

check products. The fees being introduced to

encourage the accuracy of qualified returned checks

and the greater use of electronic payment systems

instead of large dollar checks are not included in

the calculations of these transaction fee changes.

funds transfers has declined more than

46 percent since 1996.

• The Reserve Banks will increase the

surcharge for an off-line Fedwire bookentry securities transfer 39 percent in

2001 to $25. The fee change is expected

to cost customers approximately

$197,000 next year. Other book-entry

fees will remain at 2000 levels.

Including the fee change for 2001, the

price index for the book-entry securities

service has declined more than 9

percent since 1996.

• The Reserve Banks will retain

current prices for customers of the

FedACH service. The Reserve Banks are

initiating discussions with privatesector operators (PSOs) to negotiate

deposit deadlines and fees for

transactions that they exchange with

each other. The new deadlines will be

in place no later than June 2001, and the

price structure modifications will be

implemented no later than September

2001. Since 1996, the price index for the

ACH service has decreased almost 49

percent.

• The Reserve Banks will increase

transaction fees for all check products

2.6 percent compared with current

prices or 3.9 percent compared with

April 2000 fees. Transaction fees for

paper check products are projected to

increase 2.6 percent over current prices

or 3.9 percent compared to April 2000

fees. Paper check products include

forward-processed, fine-sort, and

returned checks. Reserve Banks are

standardizing paper check products and

implementing a more-consistent pricing

structure across the Reserve Banks.

Reserve Banks also will introduce new

prices designed to encourage the

accuracy of qualified returned checks

and discourage the use of large-dollar

checks. Transaction fees for payor bank

services, which include electronic check

products, will increase 2.9 percent from

current prices or 3.7 percent from April

2000 fees. Electronic check products

include electronic check presentment,

image services, and electronic

information. The price index for all

check products, which includes

imputed fees and other product and

service fees not captured in the

comparison of the individual

transaction fees, is projected to increase

5.9 percent in 2001. The price index for

paper check products is increasing 6.3

percent, while that for payor bank and

check electronic connection services is

decreasing 2.2 percent. Including the fee

changes in 2001, the price index for the

entire check service has increased

almost 23 percent since 1996. Aggregate

check service fee increases in 2001 are

expected to cost depository institution

customers approximately $50 million,

assuming no changes to current

customer processing choices.3

B. Discussion

Table 1 presents an overview of the

budgeted 2000, estimated 2000, and

projected 2001 cost-recovery

performance for all priced services.

69540 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

TABLE 1.—PRICED SERVICES COST RECOVERY

[Percent]

Priced service 2000 Budget 2000 Estimate 2001 Budget

All services ................................................................................................................................... 99.0 100.4 98.0

Check .................................................................................................................................... 98.7 100.3 97.7

ACH ...................................................................................................................................... 100.0 100.1 100.2

Funds transfer ...................................................................................................................... 100.4 100.0 100.1

Book-entry ............................................................................................................................ 101.3 102.4 94.9

Noncash collection ............................................................................................................... 108.5 110.8 102.2

Special cash ......................................................................................................................... 101.6 103.4 100.6

The aggregate cost-recovery rate is

heavily influenced by the check service,

which accounts for approximately 83

percent of the total cost of priced

services. The electronic services (ACH,

Fedwire funds transfer, and Fedwire

book-entry securities transfer) account

for about 17 percent of costs. The

noncash collection and special cash

services represent a de minimis

proportion of priced services expenses.

Figure 1 shows the proportion of 2000

estimated priced services costs

attributable to each service.

BILLING CODE 6210–01–P

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69541

69542 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

Table 2 summarizes the cost and revenue performance for priced services since 1999.

TABLE 2.—PRO FORMA COST AND REVENUE PERFORMANCEa

[In millions of dollars]

Year 1

Revenueb

2

Total expensec

3

Net income

(ROE)

4

Target ROEd

5

Recovery rate

after target

ROEe

[1¥2] [1/(2+4)]

(percent)

1999 ..................................................................................... 867.6 787.0 80.6 56.0 102.9

2000 (Estimate) .................................................................... 920.5 818.7 101.7 98.4 100.4

2001 (Budget) ...................................................................... 978.5 889.4 89.1 109.3 98.0

a Calculations on this table and subsequent pro forma cost and revenue tables may be affected by rounding.

b Includes net income on clearing balances.

cThe calculation of total expense on this and subsequent pro forma cost and revenue tables includes operating expenses and imputed costs

plus special project costs recovered during the year. Imputed costs include interest on debt, taxes, FDIC insurance, Board of Governors expenses related to priced services, and the cost of float. Credits for prepaid pension costs under SFAS 87 are also included. In 1999, the bookentry service recovered $1.7 million in special project costs related to the completion of the automation consolidation project. In 2000, the check

service estimates that it will recover fully $6.3 million in special project costs related to the ongoing check modernization initiative. In 2001, the

check service projects that it will recover fully $15.1 million in special project costs related to check modernization. dTarget ROE is based on the ROE included in the PSAF and has been adjusted for taxes, which are included in column 2.

e If the PSAF method used to calculate the 2000 and 2001 aggregate priced service cost in this table were applied to the actual 1999 calculations, the recovery rate would decline to 100.4 percent.

1. 2001 Price Index

The price index for electronic

payment services and electronic

connections is projected to decline

approximately 1.9 percent in 2001, and

the index for paper-based payment

services is expected to increase 6.4

percent. The overall 2001 price index

for Federal Reserve services is projected

to increase 4.2 percent, the same as the

increase in 2000. The overall price

index has increased half a percent since

1996. The higher overall price index in

2001 is attributable mainly to increased

check prices. Figure 2 compares the

Federal Reserve’s price index for priced

services with the gross domestic

product price deflator, which shows

that the cost of Federal Reserve priced

services has historically increased more

slowly than that of the deflator.

The decline in the price index for

electronic payments services since 1996

has reflected, in large part, the ability of

the Reserve Banks to capitalize on the

operational efficiencies and scale

economies inherent in providing

payment services through centralized

electronic payment processing

applications. Between 1992 and 1998,

the Reserve Banks’ automated data

processing facilities were consolidated

into three sites, significantly reducing

the cost of providing electronic payment

services.

BILLING CODE 6210–01–P

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69543

4Under the new Reserve Bank cost accounting

method, corporate overhead costs for 2001 include

all of the following activities: corporate

administration functions, budget preparation and

control, expense accounting, and general ledger

accounting. Corporate overhead costs for 1999 and

2000 also included all or a portion of central mail

operations, legal, records management and

contingency planning, motor vehicles, and audit,

which have now become support costs.

BILLING CODE 6210–01–C

2. Allocation of Corporate Overhead

Costs to Priced Services

Corporate overhead costs are allocated

to priced services in total and to other

Reserve Bank activities based on their

proportion of total Reserve Bank costs

(expense-ratio basis). Because corporate

overhead costs are not closely related to

any particular priced service, the priced

services portion of these costs are

assigned among the individual services

to facilitate the funding of significant

multiyear strategic investments that

would otherwise result in short-term

price fluctuations, subject to established

minimum and maximum amounts.4 To

a small extent in 1999, the Reserve

Banks assigned these costs among

priced services to accelerate the

retirement of debt associated with the

automation consolidation special

project. In 2000, the assignment of

corporate overhead costs to individual

priced services supported the Reserve

Banks’ strategic check modernization

project. In 2001, the overhead costs will

be assigned along the traditional

expense-ratio basis. Table 3 shows the

assignment of corporate overhead costs

for the years 1999–2001.

TABLE 3.—CORPORATE OVERHEAD ALLOCATIONS TO PRICED SERVICES

[In millions of dollars]

Year Check ACH Funds transfer Book-entry Noncash

collection Special cash Total

1999 Actual .................. 38.8 3.7 6.0 0.0 0.1 0.2 48.8

2000 (Estimate) ............ 55.6 2.4 3.1 0.8 0.1 0.1 62.1

2001 (Budget) .............. 45.1 4.2 2.9 1.1 0.1 0.1 53.5

3. 2001 Projected Performance

The Reserve Banks project that they

will recover 98.0 percent of total

expenses related to priced services,

including imputed expenses and target

ROE, in 2001. The 2001 fees for priced

services will result in a net income of

$89.1 million, compared with a target

ROE of $109.3 million. The check

69544 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

5Through August 2000, the Reserve Banks

recovered 101.5 percent of total priced services

expenses, including imputed expenses, check

modernization special project costs, and target ROE.

6Total costs include special project costs of $15.1

million. None of those costs are deferred and

financed.

service will recover fully the

approximately $15.1 million of 2001

priced services costs associated with the

check modernization special project.

4. 2000 Estimated Performance

The Reserve Banks estimate that

priced services will yield a net income

of $101.7 million in 2000, compared

with a target ROE of $98.4 million. In

2000, the Reserve Banks estimate that

they will recover 100.4 percent of the

costs of providing priced services,

including imputed expenses, all check

modernization special project costs, and

target ROE, compared with a target

recovery rate of 99.0 percent.5

5. 1999 Performance

In 1999, the Reserve Banks’’ priced

services revenue yielded a net income of

$80.6 million, compared with a targeted

ROE of $56.0 million. The Reserve

Banks recovered 102.9 percent of total

expenses, including imputed expenses,

automation consolidation special

project costs budgeted for recovery, and

targeted ROE, compared with a targeted

recovery rate of 101.0 percent. The

Reserve Banks recovered a larger-thanexpected percentage of costs because of

higher volumes, midyear increases in

check prices, and increased pension

credits.

In 1999, the Reserve Banks completed

their recovery of transition costs

associated with the automation

consolidation project (special project

costs) and associated financing costs. In

addition to facilitating fee reductions in

electronic payment services, the

consolidation initiative has dramatically

improved the Reserve Banks’ disaster

recovery and information security

capabilities, increased the System’s

responsiveness to change, and enhanced

the central bank’s management of

payment system risk.

C. Check

Table 4 presents the actual 1999,

estimated 2000, and projected 2001

cost-recovery performance for the check

service.

TABLE 4.—CHECK PRO FORMA COST AND REVENUE PERFORMANCE

[In millions of dollars]

Year 1

Revenue

2

Total expense

3

Net income

(ROE)

4

Target ROE

5

Recovery rate

after target

ROE

[1¥2] [1/(2+4)]

(percent)

1999 ..................................................................................... 707.3 649.8 57.5 45.1 101.8

2000 (Estimate) .................................................................... 762.2 678.9 83.3 80.8 100.3

2001 (Budget) ...................................................................... 816.1 745.2 70.9 90.3 97.7

1. 1999 Performance

The check service recovered 101.8

percent of total costs in 1999, including

imputed expenses and targeted ROE.

Higher-than-anticipated volume growth

at most Reserve Banks and midyear

price increases helped actual cost

recovery to exceed the targeted rate of

101.0 percent. The volume of checks

collected increased 3.0 percent from

1998 levels because of several factors,

including the increased reliance on

Reserve Bank check processing by some

banks during merger-related operational

changes and the introduction of new

check products.

2. 2000 Performance

Through August 2000, the check

service has recovered 101.0 percent of

total costs, including imputed expenses

and target ROE.6 The Reserve Banks

estimate that the check service will

recover 100.3 percent of its costs for the

full year compared with the target 2000

recovery rate of 98.7 percent. The higher

recovery rate is due to improved cost

controls implemented by Reserve Banks,

midyear price increases at a number of

Reserve Banks, and increased pension

credits.

Volume growth within paper check

products through August 2000 has

varied from the original budget

projections. Growth of the volume of

forward-processed items slowed

substantially from the 1999 pace as

some merger and acquisition volumes

that were outsourced to the Reserve

Banks reverted back to the merged

institutions’ processing platforms.

Return-item volume has been higher

than anticipated Systemwide as several

correspondents have stopped providing

return-check services. Table 5

summarizes the year-to-date and fullyear estimated growth rates for all paper

check products.

TABLE 5.—PAPER CHECK PRODUCT GROWTH RATES

[Percent]

Budgeted

2000 growth

Volume growth

through August 2000

Estimated

2000 growth

Total forward-collected ................................................................................................................ 4.5 0.7 1.9

Forward-processed ............................................................................................................... 4.7 2.4 3.0

Fine-sort a .............................................................................................................................. 2.6 ¥10.2 ¥9.3

Returns ........................................................................................................................................ ¥2.3 1.3 ¥1.6

aElectronic fine-sort volume is excluded from these numbers. Electronic fine-sort is a service that allows depository institutions to exchange

fine-sort information electronically among themselves while also exchanging the actual checks. Including the electronic fine-sort product offered

at one Reserve Bank, budgeted 2000 fine-sort volume growth is actually targeted to decrease 1.6 percent, with the estimated 2000 volume

growth decreasing 14.2 percent.

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69545

The Board considers the Reserve

Banks’ 2000 volume estimates for

forward-processed items to be

reasonable. The Board believes, based

upon year-to-date trends, that returnvolume growth may be understated.

Continuing a trend over the last few

years, the Reserve Banks have seen

steadily increasing demand for

electronic check products. Reserve

Banks provide electronic check data or

images provided to paying bank for

about 35 percent of checks they collect.

Year-to-date 2000 demand for image

products has grown to approximately

800 million items, or 7 percent of

checks collected by the Reserve Banks

in 2000. Growth and penetration rates

for electronic check products are

summarized in table 6. Given the

current volume growth through August,

the Board believes that Reserve Banks

are underestimating demand for

electronic check services.

TABLE 6.—ELECTRONIC CHECK PRODUCT PENETRATION AND GROWTH RATES

[Percent of checks collected]

Penetration

rate through

August 2000

Year-over-year

growth through

August 2000

Estimated

2000 growth

Electronic check presentment ..................................................................................................... 20.6 10.2 5.6

Truncation ............................................................................................................................. 5.4 9.8 4.5

Non-truncation ...................................................................................................................... 15.2 10.4 6.0

Electronic check information ........................................................................................................ 7.3 ¥7.4 ¥11.9

Images ......................................................................................................................................... 6.9 46.2 34.8

3. 2001 Pricing

For the coming year, the Reserve

Banks will focus on the check

modernization initiatives to

standardized check processing across all

Reserve offices. The Board expects the

Reserve Banks to incur significant

transition costs associated with these

initiatives over the next several years.

These initiatives include

• Check standardization—implement

a standard, centrally managed, checkprocessing environment at all Reserve

Banks

• Enterprise-wide adjustments—

implement a standard, centrally

managed, enterprise-wide adjustments

system at all offices

• Image services system—redesign

the current image-processing

infrastructure based on a standard,

centrally managed, single platform

• Electronic access and delivery—

design and execute a strategy to provide

customers with remote electronic access

and delivery of check services over the

Internet.

The check modernization initiatives

are expected to reduce costs and

improve service over the long term. This

effort will lead to better quality and

more technologically advanced products

and services for customers, greater

flexibility and responsiveness to

customer needs and requirements, and

more consistent price and product

structures across the Reserve Banks.

Ultimately, the efficiencies gained

through the modernization initiatives

should lead to cost savings at the

Reserve Banks.

In 2001, per-item and cash-letter fees

for all check products are increasing 3.9

percent on a volume-weighted basis

compared with fees introduced in April

2000 and 2.6 percent compared with

current fees. Per-item and cash-letter

fees for paper-based check products are

increasing at about the same rate. This

increase was driven by price

adjustments for both forward and return

products. On a volume-weighted basis,

the average per-item and fixed fees for

payor bank services will increase 3.7

percent compared with April 2000 fees

and 2.9 percent compared with current

fees.

Table 7 provides details on the 2000 price changes.

TABLE 7.—2001 PRICE CHANGES

[Percent]

Products 2001 vs. April

3, 2000 fees

2001 vs. current 2000 fees

All check products ................................................................................................................................................... 3.9 2.6

Total paper products ................................................................................................................................................ 3.9 2.6

Forward-processed ........................................................................................................................................... 3.6 2.5

Fine-sort ............................................................................................................................................................ 7.0 5.1

Returns ............................................................................................................................................................. 3.7 2.9

Payor bank services ................................................................................................................................................ 3.7 2.9

Electronic check presentment .......................................................................................................................... 0.4 0.1

Table 8 summarizes ranges of key check fees for 2001.

TABLE 8.—SELECTED CHECK FEES

2000 price ranges (per item) 2001 price ranges (per item)

Items:

Forward-processed:

City ....................................................................................... $0.004 to 0.081 ................................ $0.005 to 0.079.

RCPC ................................................................................... $0.004 to 0.180 ................................ $0.004 to 0.200.

69546 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

TABLE 8.—SELECTED CHECK FEES—Continued

2000 price ranges (per item) 2001 price ranges (per item)

Forward fine-sort:

City ....................................................................................... $0.004 to 0.015 ................................ $0.005 to 0.020.

RCPC ................................................................................... $0.0025 to 0.018 .............................. $0.004 to 0.019.

Qualified returned checks:

City ....................................................................................... $0.17 to 1.11 .................................... $0.17 to 1.10.

RCPC ................................................................................... $0.21 to 1.75 .................................... $0.21 to 1.50.

Raw returned checks:

City ....................................................................................... $1.00 to 5.50 .................................... $1.00 to 5.50.

RCPC ................................................................................... $1.00 to 5.50 .................................... $1.00 to 5.55.

Cash letters: ........................................................................................ (per cash letter) ............................... (per cash letter)

Forward-processed a .................................................................... $1.75 to 9.25 .................................... $2.00 to 13.50.

Forward fine-sort ......................................................................... $3.00 to 14.00 .................................. $3.00 to 14.00.

Returned checks: raw/qualified ................................................... $1.75 to 14.00 .................................. $1.75 to 14.00.

Payor bank services: .......................................................................... (min.) (per item) ..................... (fixed) (per item)

MICR information ......................................................................... $5–$30 $0.001–0.0060 $2–$15 $0.0012–0.0060.

Electronic presentment ................................................................ $3–$14 $0.001–0.0045 $2–$11 $0.0010–0.0100.

Truncation .................................................................................... $3–$25 $0.004–0.0170 $2–$10 $0.0060–0.0180.

Image ........................................................................................... ..................................................... $2–$15 $0.0020–0.0200.

a Includes a fifty-cent check-relay surcharge due to higher fuel costs. Both bounds of the price range would decrease $0.50 if this surcharge

were not included.

The Reserve Banks will adopt several

pricing strategies that are designed to

increase the efficiency of Reserve Bank

operations, improve the quality of

return-check deposits, and reduce the

risk associated with the check payments

system. In turn, these improvements

will decrease the costs associated with

processing payments, and the savings

will ultimately be passed along to

customers in the form of lower

transaction fees. Specifically, the

Reserve Banks will price for certain

categories of return-item exceptions that

can be identified in Reserve Bank

processing operations. The Reserve

Banks also will charge for processing

commercial checks with a value of $10

million or more to depositing

customers. It is expected that this charge

will encourage customers to use

electronic payment systems, such as

funds transfer and ACH, for large-dollar

payments. These prices will be

introduced during the second quarter of

2001.

For 2001, the Reserve Banks project

that the check service will recover 97.7

percent of total costs, including imputed

expenses, costs associated with the

check automation standardization

special project, and target ROE. Total

expenses are projected to increase

approximately $66.3 million, or 9.9

percent, from estimated 2000 expenses.

Total expenses for 2001 include

approximately $67.6 million for the four

check modernization projects and a

special project for related extraordinary

expenses, a total increase of $44 million

from the 2000 estimate.

The check service is projected to have

revenue in 2001 of $816.1 million from

forward collection and return-item

processing (81.4 percent), payor bank

services (10.8 percent), and other

operating and imputed revenues (7.8

percent). Total revenue is expected to

increase approximately $53.9 million, or

7.1 percent, in 2001 as a result of

increased service revenue ($53.4

million).

In 2001, forward-processed volume is

projected to be 15.5 billion, an increase

of 1.6 percent compared with the 2000

estimate. Fine-sort volumes, without

electronic fine-sort, are estimated to be

1.3 billion, or 5.2 percent, less than the

2000 estimate. Fine-sort volumes

including electronic fine-sort are

estimated to be 2.0 billion, or 3.5

percent, less than the 2000 estimate.

Total returns are projected to be 175.8

million, an increase of 0.5 percent from

the 2000 estimate.

MICR presentment and MICR

presentment plus volume are projected

to be 2.9 billion, reflecting growth of

about 17 percent in 2001. Truncation

volume is expected to be 987.0 million,

an increase of almost 10 percent, and

image services volume is budgeted to be

1.5 billion, reflecting growth of nearly

27 percent in 2001. MICR information is

projected to decrease by 1.0 billion

items or about 13 percent in 2001.

The Board believes that the costs of

check modernization initiatives present

the greatest risk to the cost projections

for the check service. In particular,

staffing costs may be greater than

anticipated given the competitive labor

markets that exist nationwide. Further,

operational costs, productivity, and

service quality are at risk if there are

slippages in the transition schedules or

unanticipated increases in the costs for

the modernization initiatives.

D. Automated Clearinghouse (ACH)

Table 9 presents the actual 1999,

estimated 2000, and projected 2001

cost-recovery performance for the

commercial ACH service.

TABLE 9.—ACH PRO FORMA COST AND REVENUE PERFORMANCE

[In millions of dollars]

Year 1

Revenue

2

Total expense

3

Net income

(ROE)

4

Target ROE

5

Recovery

rate after

target ROE

(percent)

[1¥2] [1/(2+4)]

1999 ......................................................................................................... 67.8 55.9 11.9 4.5 112.3

2000 (Estimate) ....................................................................................... 70.5 61.4 9.1 8.0 101.6

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69547

TABLE 9.—ACH PRO FORMA COST AND REVENUE PERFORMANCE—Continued

[In millions of dollars]

Year 1

Revenue

2

Total expense

3

Net income

(ROE)

4

Target ROE

5

Recovery

rate after

target ROE

(percent)

[1¥2] [1/(2+4)]

2001 (Budget) .......................................................................................... 75.5 66.4 9.1 8.9 100.2

1. 1999 Performance

The ACH service recovered 112.3

percent of total expenses, including

imputed expenses and targeted ROE, in

1999. Commercial ACH volume was

12.5 percent higher than 1998 volume,

slightly greater than the 12.0 percent

increase originally projected for 1999.

During the year, ACH lowered all

origination fees by $0.0005.

2. 2000 Performance

Through August 2000, the ACH

service recovered 103.4 percent of total

expenses, including imputed expenses

and target ROE. For the full year,

Reserve Banks estimate that the service

will recover 101.6 percent of total

expenses compared with the target 2000

recovery rate of 100.0 percent. The

estimated over-recovery is due to lower

total expenses of 1.4 percent, which is

being caused by a reduction in national

support costs. The increase in total

expenses since 1999 is mainly

attributable to ACH’s assuming a larger

allocation of joint priced corporate

overhead to support the check

modernization initiatives.

Through August 2000, commercial

ACH volume has increased 13.5 percent

from the same period in 1999. For the

full year, Reserve Banks expect

commercial volume to increase 11.6

percent compared with the 13.9 percent

increase originally projected for 2000.

The Reserve Banks cite consolidation in

the financial services industry as a

partial driver for the lower-thanexpected volumes and anticipate further

volume reductions as competitive

pressures increase. The Board questions

whether the significantly slower growth

rate that is expected through year-end

reasonably reflects the effect of these

competitive pressures. The Board

believes that the expected growth rate

may be understated.

3. 2001 Pricing

The Board recently approved

modifications to the Reserve Banks’

deposit deadlines and pricing practices

for transactions they exchange with

private-sector operators (PSOs). (65 FR

66249, November 3, 2000). The Reserve

Banks are working collaboratively with

ACH operators to establish interoperator

deposit deadlines by which the Reserve

Banks and the PSOs would exchange

interoperator transactions. Further, the

Reserve Banks are initiating discussions

with the PSOs to negotiate the structure

and level of fees that will be charged by

the Reserve Banks as well as those fees

that the Reserve Banks will pay the

PSOs. The new deadlines and price

structure for PSOs are intended to

address the competitive concerns that

have been raised by industry

representatives. The new deadlines will

be implemented no later than June 2001

and the price structure modifications

will be implemented no later than

September 2001. The specific

implementation date for each of these

modifications will be announced well in

advance of the effective dates. The

Reserve Banks will also assess a

monthly settlement fee of $20 (per

routing number), rather than the current

monthly account-servicing fee, to

depository institutions that send and

receive all their transactions to and from

the Reserve Banks through PSOs. The

Reserve Banks no longer plan to assess

origination or receipt fees directly to

these depository institutions.

Additionally, the Reserve Banks will

charge ACH operators half the

published electronic connection fee to

reflect the use of the connection by both

ACH operators and the Reserve Banks to

send each other interoperator

transactions. These changes will only

apply to any intermediary that is

defined as an operator under National

Automated Clearing House Association

(NACHA) rules. The Reserve Banks will

retain the 2001 ACH prices at the

current levels, except for the changes for

interoperator transactions.

The Reserve Banks project that the

ACH service will recover 100.2 percent

of its costs in 2001, including imputed

expenses and target ROE. Total

expenses are projected to increase $5.9

million, or 8.5 percent, from the 2000

estimate because of growth in support

and overhead costs, particularly those

related to business development. Total

revenue in 2001 is projected to increase

$4.9 million, or 7.0 percent more than

the 2000 estimate. The higher revenue is

attributable to projected commercial

volume growth and increased revenue

from electronic connections, offset

somewhat by lost revenue from the new

pricing of interoperator transactions.

ACH volume in 2001 is projected to

increase 12.1 percent from 2000

estimates. The 2001 volume projection

assumes a rate of growth between the

12.5 percent experienced in 1999 and

expected growth in 2000, which is

estimated at 11.6 percent. This growth

rate, revenues, and cost recovery,

however, do not account for several

risks in 2001. The major risks include

the uncertain effects of price-structure

and service-level changes being

implemented for interoperator

transactions, the increased competitive

pressures from PSOs, and future

consolidations in the financial services

industry. The Board believes that a 12.1

percent growth rate may be difficult to

achieve because this rate may not fully

reflect these risks.

E. Funds Transfer and Net Settlement

Table 10 presents the actual 1999,

estimated 2000, and projected 2001

cost-recovery performance for the funds

transfer and net settlement services.

69548 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

7The Reserve Banks provide securities transfer

services for securities issued by the U.S. Treasury

Department, federal government agencies,

government-sponsored enterprises, and certain

international institutions. The priced component of

this service, reflected in this memorandum, consists

of revenues, expenses, and volumes associated with

the transfer of all non-Treasury securities. For

Treasury securities, the Treasury Department

assesses fees for the securities transfer component

of the service. The Reserve Banks assess a fee for

the money settlement component of a Treasury

securities transfer; this component is not treated as

a priced service.

TABLE 10.—FUNDS TRANSFER AND NET SETTLEMENT PRO FORMA COST AND REVENUE PERFORMANCE

[In millions of dollars]

1

Revenue

2

Total expense

3

Net income

(ROE)

4

Target ROE

5

Recovery

rate after

target ROE

(percent)

[1¥2] [1/(2+4)]

1999 ......................................................................................................... 69.2 61.3 7.8 5.2 104.0

2000 (Estimate) ....................................................................................... 65.1 57.6 7.5 7.5 100.0

2001 (Budget) .......................................................................................... 63.1 55.6 7.5 7.5 100.1

1. 1999 Performance

For 1999, the funds transfer and net

settlement services recovered 104.0

percent of total costs, including imputed

expenses and targeted ROE, compared

with a targeted recovery rate of 102.0

percent. This over-recovery was

primarily due to expenses $3.2 million

(4.5 percent) less than original budget

projections; the decrease in expenses

resulted from an 11.2 percent and a 3.2

percent decrease in direct and support

costs, respectively. Service revenue for

1999 was approximately $1.8 million

(2.6 percent) less than original budget

projections. A $0.9 million (27.7

percent) decrease in net income on

clearing balances accounted for almost

half of the deficit. In addition, electronic

connection revenue was $0.6 million

(6.2 percent) lower than anticipated due

to fewer than anticipated customers

signing on to services related to

electronic access. The rest of the

revenue shortfall was due to lower-thananticipated volume in the highestpriced (low-volume) tier. Funds transfer

volume increased 4.7 percent from the

1998 level, compared with a budgeted

5.8 percent growth.

2. 2000 Performance

Through August 2000, the funds

transfer and net settlement services

recovered 103.9 percent of total costs,

including imputed expenses and target

ROE. For full-year 2000, the Reserve

Banks estimate that the funds transfer

and net settlement services will recover

100.0 percent of total expenses,

compared with a target recovery rate of

100.4 percent. The Board believes the

Reserve Banks’ estimated 2000 cost

recovery is too low given year-to-date

experience.

Funds transfer volume through

August 2000 has increased 6.5 percent

relative to the same period in 1999. For

the full year, the Reserve Banks estimate

a 5.7 percent volume increase compared

with a budgeted increase of 6.0 percent.

3. 2001 Funds Transfer Pricing

The Reserve Banks will retain the

current per-transfer fees and thresholds

for volume-based discounts. The

average (volume-weighted) per-transfer

price would be $0.223. In addition, the

Reserve Banks will retain the off-line

surcharge at its current level.

Reserve Banks project that the

Fedwire funds transfer service will

recover 100.1 percent of total costs,

including imputed expenses and target

ROE, in 2001. Total costs are expected

to decline $2.0 million (3.1 percent)

from the 2000 estimate, primarily due to

reduced operating costs of $1.4 million

(2.4 percent) and a decrease in PSAF

costs of $0.5 million (3.6 percent). The

reduction in operating costs is mainly

due to staff reductions.

Funds transfer volume is expected to

decrease 1.2 percent from 2000

estimated levels, due primarily to

potential shifts in volume to CHIPS. In

first quarter 2001, CHIPS will introduce

a new intraday finality service that will

provide more risk controls and thus

reduce the impediments to the use of

CHIPS for some payments that are

currently processed via Fedwire. The

Reserve Banks anticipate a 3.0 percent

decline in funds transfer volume from

high-volume customers that are also

CHIPS participants, partially offset by

increases in volume from middle-tier

customers. Revenue is projected to

decline $2.0 million (3.1 percent) in

2001 compared with the 2000 estimate

because of slightly lower 2001 volume

and the full-year effects of the April

2000 on-line fee reductions.

4. 2001 Net Settlement Pricing

The Reserve Banks will retain the

local and enhanced net settlement fees

at the 2000 price levels. The enhanced

net settlement service will be fully

implemented during 2001 as local

settlement services are phased out by

year-end.

F. Book-Entry Securities

Book-entry securities includes

purchase and sale activity. Table 11

presents the actual 1999, estimated

2000, and projected 2001 cost-recovery

performance for the book-entry

securities service.7

TABLE 11.—BOOK-ENTRY SECURITIES TRANSFER PRO FORMA COST AND REVENUE PERFORMANCE

[In millions of dollars]

Year 1

Revenue

2

Total expense

3

Net income

(ROE)

4

Target ROE

5

Recovery

rate after

target ROE

(percent)

[1¥2] [1/(2+4)]

1999 ......................................................................................................... 17.3 15.1 2.2 1.0 107.4

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69549

8 In 1999, the book-entry service recovered the

last $1.7 million remaining from the Reserve Banks’

automation consolidation special project. All costs

associated with this special project have now been

fully recovered.

9Before February 1999, the Federal Reserve did

not charge customers for book-entry receipts.

Therefore, the volume data before February 1999

includes only originations whereas the data after

February 1999 includes both originations and

receipts. A comparison of volumes using January

1999 data would skew the results.

TABLE 11.—BOOK-ENTRY SECURITIES TRANSFER PRO FORMA COST AND REVENUE PERFORMANCE—Continued

[In millions of dollars]

Year 1

Revenue

2

Total expense

3

Net income

(ROE)

4

Target ROE

5

Recovery

rate after

target ROE

(percent)

[1¥2] [1/(2+4)]

2000 (Estimate) ....................................................................................... 18.0 15.7 2.3 1.9 102.4

2001 (Budget) .......................................................................................... 19.9 18.6 1.3 2.3 94.9

1. 1999 Performance

The book-entry securities service

recovered 107.4 percent of total costs in

1999, including imputed expenses,

automation consolidation special

project costs budgeted for recovery, and

targeted ROE, compared with a targeted

recovery rate of 105.2 percent.8 Service

revenue for 1999 was approximately

$650,000 (3.9 percent) greater than

original budget projections. Origination

volume increased 0.6 percent from the

1998 level, compared with an expected

decrease of 5.7 percent. The increase in

volume resulted from a general increase

in mortgage-debt refinancing and a

higher-than-expected issuance of

mortgage-backed securities.

2. 2000 Performance

Through August 2000, the book-entry

securities service recovered 106.4

percent of total costs, including imputed

expenses and target ROE. For full-year

2000, the Reserve Banks estimate that

the book-entry securities service will

recover 102.4 percent of total costs,

compared with a target recovery rate of

101.3 percent. This higher-thanbudgeted recovery rate reflects revenue

that is 6.1 percent greater than budget.

The increase in revenue is due to

higher-than-expected volumes.

Book-entry securities transfer volume

has increased 7.5 percent from February

2000 to August 2000 compared with the

same period in 1999.9 The full-year

growth rate for origination volume is

expected to be 4.8 percent more than

actual 1999 volumes, compared with the

flat projections originally forecast at the

beginning of the year. Like the increase

in 1999, this volume increase is due to

an increase in mortgage-debt refinancing

and greater use of agency securities as

a hedge against other investment risks.

3. 2001 Pricing

Except as noted below, the Reserve

Banks will retain all fees in 2001 at their

current levels. There will be a $7

increase to the off-line surcharge to

originate and receive a transfer, to $25,

to better reflect the costs of providing

off-line transfers for book-entry

securities.

The purchase and sale service

represents less than 1 percent of the

costs and revenues of the book-entry

securities service line. Provision of this

service, which facilitates the purchase

and sale of Treasury and government

agency securities by depository

institutions on the secondary market, is

consolidated at the Federal Reserve

Bank of Chicago. The Reserve Banks

will maintain the $40 transaction fee for

securities purchases and sales.

The Reserve Banks project that the

book-entry securities service will

recover 94.9 percent of costs in 2001,

including imputed expenses and target

ROE. Excluding target ROE, expenses

are projected to increase $2.9 million

(18.3 percent) from the 2000 estimate.

This is primarily due to the

implementation of the new book-entry

cost allocation model that will shift

more costs to the priced portion of the

service.

Book-entry securities transfer volume

is projected to increase 8.9 percent

compared with the 2000 estimate. The

18.3 percent increase in total book-entry

expenses is expected to be partially

offset by a $1.8 million (10.2 percent)

increase in revenue from the projected

start of the conversion of Government

National Mortgage Association (Ginnie

Mae) securities to the National BookEntry System (NBES) during the fourth

quarter of 2001. Full recovery under the

new cost-allocation approach is

expected in 2002 when the conversion

of Ginnie Mae to NBES has been

completed.

G. Noncash Collection

Table 12 lists the actual 1999,

estimated 2000, and projected 2001

cost-recovery performance for the

noncash collection service.

TABLE 12.—NONCASH COLLECTION PRO FORMA COST AND REVENUE PERFORMANCE

[In millions of dollars]

Year 1

Revenue

2

Total

Pexpense

3

Net income

(ROE)

4

Target ROE

5

Recovery

rate after

target ROE

(percent)

[1¥2] [1/(2+4)]

1999 ......................................................................................................... 3.0 2.0 1.0 0.1 140.3

2000 (Estimate) ....................................................................................... 2.4 2.0 0.4 0.2 110.8

2001 (Budget) .......................................................................................... 2.0 1.7 0.2 0.2 102.2

69550 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

1. 1999 Performance

The noncash collection service

recovered 140.3 percent of total

expenses in 1999 (including imputed

expenses and targeted ROE) compared

with a targeted recovery rate of 118.6

percent. Volume for 1999 decreased

18.8 percent from 1998 levels compared

with a 26.6 percent budgeted volume

decline. The volume decline was less

than budgeted levels because of both

unexpected called-bond activity and

higher-than-expected coupon volume.

2. 2000 Performance

Through August 2000, the noncash

collection service recovered 119.3

percent of its costs. For full-year 2000,

the Reserve Banks estimate that the

noncash collection service will recover

110.8 percent of costs, including

imputed expenses and target ROE,

compared with the target recovery rate

of 108.5 percent. Through August,

volume declined 15 percent compared

with the same period in 1999, while the

overall industry experienced a volume

decline of 18 to 20 percent for the same

period. The Reserve Banks estimate that

full-year 2000 volume will decline 17.1

percent from 1999 levels compared with

a 31.5 percent budgeted decline.

Volume decline is expected to be lower

than budgeted in part because the

service received unexpected volume

from existing and new customers as

well as higher-than-budgeted bond

collections from called and maturing

securities. The estimated volume

decline for the year is slightly greater

than the actual decline for the first eight

months of the year because of the recent

withdrawal of volume by the System’s

largest depositor of noncash items.

3. 2001 Pricing

The Reserve Banks will increase one

fee relative to 2000 fee levels.

Specifically, the Reserve Banks will

increase the return-item fee from $15 to

$20 for items that are returned to the

depositor as uncollected. The Reserve

Banks project that the noncash

collection service will recover 102.2

percent of total costs, including imputed

expenses and target ROE, in 2001.

Total expenses are projected to

decline approximately $0.2 million, or

10.8 percent, in 2001. Despite the higher

return-item fee, the Reserve Banks

project that revenue will decline

approximately $0.4 million, or 17.7

percent, in 2001, because of a projected

volume decline of 20.9 percent. The

projection is based on the recent loss of

the Reserve Banks’ largest depositor,

which has begun to process its own

volume, and the overall industry

volume decline.

New issues of bearer municipal

securities effectively ceased in 1983

when the Tax Equity and Fiscal

Responsibility Act of 1982 removed the

tax advantage for investors. Volume

declines will continue as the number of

unmatured bearer municipal securities

declines. The Reserve Banks’ Cash

Fiscal Product Office estimates that in a

few years, the steadily declining number

of bearer securities will make full cost

recovery in this service unlikely. The

Board is working with the Reserve

Banks to determine the long-term

strategy for this service.

H. Special Cash

Priced special cash services represent

a very small portion (less than one

percent) of overall cash services

provided by the Reserve Banks to

depository institutions. Special cash

services include the provision of

wrapped coin, packaging of

nonstandard currency orders and

deposits as well as coin deposits, and

shipping of currency and coin by

registered mail. Table 13 presents the

actual 1999, estimated 2000, and

projected 2001 cost-recovery

performance for the special cash service.

TABLE 13.—SPECIAL CASH PRO FORMA COST AND REVENUE PERFORMANCE

[In millions of dollars]

Year 1

Revenue

2

Total expense

3

Net income

(ROE)

4

Target ROE

5

Recovery

rate after

target ROE

(percent)

(1¥2) [1/(2+4)]

1999 ......................................................................................................... 3.0 2.9 0.2 0.0 103.8

2000 (Estimate) ....................................................................................... 2.2 2.1 0.2 0.1 103.4

2001 (Budget) .......................................................................................... 1.8 1.7 0.1 0.1 100.6

1. 1999 Performance

In 1999, the special cash service

recovered 103.8 percent of total

expenses, including imputed expenses

and targeted ROE, compared with a

targeted recovery rate of 105.8 percent.

2. 2000 Performance

Through August 2000, the special

cash service recovered 99.3 percent of

total expenses, including imputed

expenses and target ROE. For full-year

2000 the Reserve Banks estimate,

however, that the special cash service

will recover 103.4 percent of total

expenses, compared with a target

recovery rate of 101.6 percent. Revenue

is estimated to decrease approximately

$0.8 million, or 26.1 percent, and total

costs in 2000 are estimated to decrease

slightly more than $0.8 million, or 28.9

percent, compared with 1999 costs. The

estimated revenue and cost decreases

are due mainly to the elimination of the

wrapped-coin business in Cleveland

and of the registered mail business in

the Dallas and San Francisco Districts.

3. 2001 Pricing

For 2001, the Reserve Banks project

that the special cash service will recover

100.6 percent of costs, including

imputed expenses and target ROE. Total

costs in 2001 are projected to decline

$0.3 million, or 15.4 percent, from the

2000 level. Revenue in 2001 is expected

to decline $0.4 million, or 18.3 percent.

The anticipated revenue and cost

reductions are due primarily to the fullyear effects of the Fourth District’s

decision to exit the coin-wrapping

business in April 2000 and the Eleventh

and Twelfth Districts’ decisions to exit

the registered mail business in late

August 2000.

Beginning in 2001, the El Paso office

will increase the fee for Express Cash

Orders from $60.00 to $80.00. Boston

will increase the surcharge for registered

mail from $30 to $45 and decrease the

insurance fee from $0.80 to $0.50 per

$1,000 in excess of the first $25,000.

The Tenth District will increase the

surcharge for registered mail from $13 to

$16 and the insurance fee from $0.27 to

$0.32.

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69551

10FRRS 7–145.2.

II. Private-Sector Adjustment Factor

A. Background

Each year, as required by the

Monetary Control Act, the Reserve

Banks set fees for ‘‘priced services’’ to

depository institutions. These fees are

set to recover all direct and indirect

costs and imputed costs, such as

financing costs, return on capital, taxes,

and certain other expenses that would

have been paid had the services been

provided by a private business firm.

These imputed costs are based on data

developed in part from a model

comprising consolidated financial data

for the nation’s fifty largest (asset size)

bank holding companies (BHCs). The

imputed costs and imputed profit are

collectively referred to as the privatesector adjustment factor (PSAF).

1. Cost of Capital

The method for calculating the PSAF

involves determining the value of

Federal Reserve assets that will be used

in providing priced services during the

coming year, the financing mix used to

fund them, and the rates paid for this

financing. Assets are determined using

Reserve Bank information on actual

assets and projected disposals and

acquisitions. The priced portion of

mixed-use assets is determined based on

the allocation of the related depreciation

expense. Short-term assets are assumed

to be financed with short-term liabilities

and long-term assets are assumed to be

financed with a combination of longterm debt and equity.

The long-term debt and equity rates

are based on the average of these

elements for BHCs in the model for each

of the last five years. Because short-term

debt, by definition, matures within one

year, only data for the most recent year

are used for computing the short-term

debt rate.

2. Income Taxes

For simplicity, given that federal

corporate tax rates are graduated,

various credits and deductions can

apply and state taxes vary, a specific tax

rate is not calculated for Federal Reserve

priced services. Instead, imputed taxes

are captured by using a pretax return on

equity (ROE). This result influences the

dollar level of the PSAF and Federal

Reserve price levels because this is the

return a shareholder would expect in

order to invest in a private business

firm. The use of the pretax return on

equity assumes a 100 percent recovery

of expenses, including the target return

on equity, will be achieved. The PSAF

is, therefore, based on a precise

matching of revenues and actual and

imputed costs. Should the pretax

earnings be over or under the target

ROE, the PSAF is adjusted (‘‘variable

PSAF’’) for the tax expense or savings

associated with the adjusted recovery.

The tax rate is the median of the rates

paid by the BHCs over the past five

years adjusted to the extent that BHCs

are invested in municipal bonds.

3. Other

The PSAF also comprises the

estimated expenses of the Board of

Governors related to priced services. An

assessment for FDIC insurance is

imputed based on current FDIC rates

and projected clearing balances held

with the Federal Reserve.

B. Discussion

The increase in the 2001 PSAF is due

to higher priced service asset levels,

primarily the net pension asset. Partially

offsetting the increase in asset levels is

the inclusion of short-term payables as

a source for financing short-term assets.

1. Asset Base

The total estimated value of Federal

Reserve assets to be used in providing

priced services in 2001 is reflected in

Table 14. Table 15 shows that the assets

assumed to be financed through debt

and equity are projected to total

$1,162.4 million. This amount

represents an increase of $45.9 million,

or 4.1 percent, from the assets financed

in 2000. Growth of $105.1 million in the

net pension asset accounts for the

majority of the increase, while higher

Reserve Bank building and equipment

assets account for an additional $20.9

million.

Partially offsetting the increase in

asset levels is a reduction of $80.1

million resulting from the inclusion of

short-term payables as a financing

source. Only those short-term assets that

cannot be financed with actual (rather

than imputed) short-term liabilities,

such as sundry items payable, earnings

credits due depository institutions, and

accrued expenses, are financed with

short-term debt. This is a change for

2001, recognizing that these nonimputed liabilities could be used to

finance assets, which resulted in a $4.0

million decrease in PSAF.

2. Cost of Capital and Taxes

Table 15 also shows the financing and

tax rates and the other required PSAF

recoveries for 2001 and the rates used

for developing the PSAF for 2000. The

pretax ROE rate increased from 23.3

percent for 2000 to 24.0 percent for

2001. The effective tax rate to be used

in 2001 remains unchanged from the

2000 rate at 31.5 percent.

3. Capital Adequacy and FDIC

Assessment

As shown in table 16, the amount of

capital imputed for the 2001 PSAF

totals 30.8 percent of risk-weighted

assets and 5.3 percent of total assets.

The capital to risk-weighted asset ratio

and the capital to total assets ratio both

exceed regulatory guidelines for wellcapitalized institutions and BHCs. As a

result of these capital ratios, the FDIC

assessment decreased from $2.9 million

for 2000 to zero for 2001.

III. Analysis of Competitive Effect

All operational and legal changes

considered by the Board that have a

substantial effect on payment system

participants are subject to the

competitive impact analysis described

in the March 1990 policy statement

‘‘The Federal Reserve in the Payments

System.’’ 10 Under this policy, the Board

assesses whether the change would have

a direct and material adverse effect on

the ability of other service providers to

compete effectively with the Federal

Reserve in providing similar services

because of differing legal powers or

constraints or because of a dominant

market position of the Federal Reserve

deriving from such legal differences. If

the fees or fee structures create such an

effect, the Board must further evaluate

the changes to assess whether their

benefits—such as contributions to

payment system efficiency, payment

system integrity, or other Board

objectives—can be retained while

reducing the hindrances to competition.

The Board does not believe that these

fees and fee structures will have a direct

and material adverse effect on the

ability of other service providers to

compete effectively with the Federal

Reserve in providing similar services.

Assuming the Reserve Banks’ volume

and cost projections are accurate, these

fees are set to provide the Federal

Reserve a return on equity similar to

that earned by large BHCs and provide

for full cost recovery over the long run.

69552 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

TABLE 14.—COMPARISON OF PRO FORMA BALANCE SHEETS FOR FEDERAL RESERVE PRICED SERVICES

[In millions of dollars—average for year]

2001 2000

Short-term assets:

Imputed reserve requirement on clearing balances ......................................................................................... $742.4 $762.2

Investment in marketable securities ................................................................................................................. 6,681.9 6,859.5

Receivables 11 .................................................................................................................................................. 77.3 74.2

Materials and supplies 11 .................................................................................................................................. 3.6 3.4

Prepaid expenses 11 ......................................................................................................................................... 23.4 21.4

Items in process of collection ........................................................................................................................... 3,606.7 3,804.2

Total short-term assets ................................................................................................................................. 11,135.3 11,524.9

Long-term assets:

Premises 11 12 .................................................................................................................................................... 417.5 411.7

Furniture and equipment 11 .............................................................................................................................. 185.5 180.1

Leasehold improvements and long-term prepayments 11 ................................................................................ 73.9 64.2

Prepaid pension costs 11 .................................................................................................................................. 718.5 599.8

Total long-term assets .................................................................................................................................. 1,395.4 1,255.8

Total Assets ............................................................................................................................................... 12,530.7 12,780.7

Short-term liabilities:

Clearing balances and balances arising from early credit of uncollected items ............................................. 7,424.3 7,621.7

Deferred credit items ........................................................................................................................................ 3,606.7 3,804.2

Short-term debt 13 ............................................................................................................................................. 18.9 99.0

Short-term payables 14 ..................................................................................................................................... 85.4 0.0

Total short-term liabilities .............................................................................................................................. 11,135.3 11,524.9

Long-term liabilities:

Postemployment/retirement benefits 11 ............................................................................................................ 251.9 238.3

Long-term debt 13 ............................................................................................................................................. 479.1 400.9

Total long-term liabilities ............................................................................................................................... 731.0 639.2

Total liabilities .......................................................................................................................................................... 11,866.3 12,164.1

Equity 13 ................................................................................................................................................................... 664.4 616.6

Total liabilities and equity ................................................................................................................................. 12,530.7 12,780.7

NOTE: Details may not add to totals due to rounding. 11Financed through PSAF; other assets are self-financing. 12 Includes allocations of Board of Governors’ assets to priced services of $0.7 million for 2001 and $0.5 million for 2000. 13 Imputed figures represent the source of financing for certain priced services assets. 14For the 2001 PSAF, short-term payables attributable to priced services are included as a financing source for short-term assets such as receivables, materials and supplies, and prepaid expenses.

TABLE 15.—DERIVATION OF THE 2001 AND 2000 PSAF

[In millions of dollars]

2001 2000

A. Assets to be financed 15:

Short-term 16 ................................................................................................. $18.9 $99.0

Long-term 17 .................................................................................................. 1,143.5 1,017.5

1,162.4 1,116.5

B. Weighted average costs:

1. Capital Structure 18:

Short-term debt (percent) ...................................................................... 1.6 8.9

Long-term debt (percent) ...................................................................... 41.2 35.9

Equity (percent) ..................................................................................... 57.2 55.2

2. Financing rates/costs 18:

Short-term debt (percent) ...................................................................... 4.7 5.1

Long-term debt (percent) ...................................................................... 6.5 6.6

Pretax equity (percent) .......................................................................... 24.0 23.3

3. Elements of capital costs:

Short-term debt ..................................................................................... $18.9×4.7%=$0.9 $99.0×5.1%=$ 5.0

Long-term debt ...................................................................................... $479.1×6.5%=31.1 $400.9×6.6%=26.5

Equity 19 ................................................................................................. $664.4×24.0%=159.5 $616.6×23.3%=143.7

$191.5 $175.2

C. Other required PSAF recoveries:

Sales taxes ................................................................................................... $10.5 $10.4

Federal Deposit Insurance assessment ....................................................... 0.0 2.9

Board of Governors expenses ..................................................................... 4.9 4.2

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69553

TABLE 15.—DERIVATION OF THE 2001 AND 2000 PSAF—Continued

[In millions of dollars]

2001 2000

15.4 17.5

D. Total PSAF recoveries .................................................................................... $206.9 $192.6

As a percent of assets ......................................................................................... 17.8 17.3

As a percent of expenses 20 ................................................................................ 24.5 28.5

E. Tax Rate (percent) .......................................................................................... 31.5 31.5

NOTE: Details may not sum to totals due to rounding. 15Priced service assets are based on the direct determination of assets method. 16For 2001, short-term assets consist only of those short-term assets that are not financed with short-term payables. 17 Consists of total priced long-term assets less postretirement/postemployment benefit liabilities. 18For 2001, net short-term assets are assumed to be financed with short-term debt, for 2000 all short-term assets are assumed to be financed

with short-term debt. Of the total long-term assets for 2001, 41.9% are assumed to be financed with long-term debt and 58.1% with equity. 19The pretax rate of return on equity is based on the average after-tax rate of return on equity, adjusted by the effective tax rate to yield the

pretax rate of return on equity for each bank holding company for each year. These data are then averaged over five years to yield the pretax return on equity for use in the PSAF. 20System 2001 budgeted priced service expenses less shipping are $842.8 million.

TABLE 16.—COMPUTATION OF 2001 CAPITAL ADEQUACY FOR FEDERAL RESERVE PRICED SERVICES

(millions of dollars)

Assets Risk weight

assets Weighted

Imputed reserve requirement on clearing balances ................................................................................ $742.4 0.0 $0.0

Investment in marketable Securities ....................................................................................................... 6,681.9 0.0 0.0

Receivables ............................................................................................................................................. 77.3 0.2 15.5

Materials and supplies ............................................................................................................................. 3.6 1.0 3.6

Prepaid expenses .................................................................................................................................... 23.4 1.0 23.4

Items in process of collection .................................................................................................................. 3,606.7 0.2 721.3

Premises .................................................................................................................................................. 417.5 1.0 417.5

Furniture and equipment ......................................................................................................................... 185.5 1.0 185.5

Leases, leasehold improvements & long-term prepayments .................................................................. 73.9 1.0 73.9

Prepaid pension costs ............................................................................................................................. 718.5 1.0 718.5

Total .............................................................................................................................................. 12,530.7 2,159.2

Imputed equity for 2001 ........................................................................................................................... $664.4

Capital to risk-weighted assets (percent) ................................................................................................ 30.8

Capital to total assets (percent) .............................................................................................................. 5.3

NOTE: Details may not sum to totals due to rounding.

AUTOMATED CLEARING HOUSE FEE SCHEDULE 21

Fees

Origination (per item or record) 22:

Items in small files ........................................................................................................................................................................ $0.0055

Items in large files ........................................................................................................................................................................ 0.0045

Addenda record ............................................................................................................................................................................ 0.0020

Receipt (per item or record):

Item ............................................................................................................................................................................................... 0.007

Addenda record ............................................................................................................................................................................ 0.002

Input file processing fees (per file):

Small file ....................................................................................................................................................................................... 1.75

Large file ....................................................................................................................................................................................... 6.75

Monthly fees:

Account servicing fee (per routing number) ................................................................................................................................. 25.00

Information extract file .................................................................................................................................................................. 10.00

Return item/notification of change (NOC) fees 23:

Voice response return/NOC 24 ..................................................................................................................................................... 2.00

Nonelectronic input/output fees25:

Tape input/output .......................................................................................................................................................................... 25.00

Paper output ................................................................................................................................................................................. 15.00

Diskette output .............................................................................................................................................................................. 15.00

Facsimile return/NOC 26 ............................................................................................................................................................... 15.00

Cross-border fees:

Cross-border item ......................................................................................................................................................................... 0.037

Same-day recall of item at receiving gateway operator .............................................................................................................. 3.50

Same-day recall of item not at receiving gateway operator ........................................................................................................ 5.00

Item trace ...................................................................................................................................................................................... 5.00

69554 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

AUTOMATED CLEARING HOUSE FEE SCHEDULE 21—Continued

Fees

Microfiche ..................................................................................................................................................................................... 3.00

Delivery by courier 27 .................................................................................................................................................................... 10.00

21This fee schedule does not reflect the price changes for interoperator transactions. 22Small files contain fewer than 2,500 items and large files contain 2,500 or more items. 23The Reserve Banks also assess a $15 fee for every government paper return/NOC they process. This service is not considered a priced

service. The fee includes the transaction fee and conversion fee. 24The fee includes the transaction fee in addition to the voice-response fee. 25These services are offered in contingency situations only. 26The fee includes the transaction fee in addition to the conversion fee. 27The courier charge is in addition to the fee charged by the Reserve Banks.

FUNDS TRANSFER AND NET SETTLEMENT FEE SCHEDULE

Fees

Funds transfer:

Volume-based pricing fees (originations and receipts):

Per transfer for the first 2,500 transfers per month .............................................................................................................. $0.33

Per transfer for additional transfers up to 80,000 per month ............................................................................................... 0.24

Per transfer for every transfer over 80,000 per month ......................................................................................................... 0.17

Surcharge:

Off-line transfer originated ..................................................................................................................................................... 15.00

Telephone notification ........................................................................................................................................................... 15.00

Net settlement:

Basic fee (settlement sheet and enhanced NSS):

Settlement charge per entry .................................................................................................................................................. 0.95

Settlement file charge ........................................................................................................................................................... 12.00

Surcharge:

Off-line origination per file 28 (settlement sheet) ................................................................................................................... 15.00

Telephone notification per file (settlement sheet and enhanced NSS) ................................................................................ 15.00

Minimum monthly fee ................................................................................................................................................................... 60.00

Fedwire-based, small-dollar arrangement per settlement day 29 .......................................................................................... 100.00

Fedwire-based, large-dollar arrangement per settlement day 29 .......................................................................................... 100.00–175.00

28The off-line origination surcharge will be waived by Reserve Banks that do not provide an electronic submission capability for the settlement

sheet service. 29Participants in arrangements and settlement agents are also charged the applicable Fedwire funds transfer fee for each transfer into and out

of the settlement account.

BOOK-ENTRY SECURITIES FEE SCHEDULE

Fees

Book-entry securities transfer:

Basic transfer fee:

Transfer originated ................................................................................................................................................................ $0.70

Transfer received .................................................................................................................................................................. 0.70

Reversal originated ............................................................................................................................................................... 0.70

Reversal received .................................................................................................................................................................. 0.70

Surcharge:

Off-line transfer originated or received ................................................................................................................................. 25.00

Off-line reversal originated or received ................................................................................................................................. 25.00

Monthly maintenance fees:

Account maintenance (per account) ..................................................................................................................................... 15.00

Issues maintained (per issue/per account) ........................................................................................................................... 0.45

Purchase & sale:

Transaction fee ...................................................................................................................................................................... 40.00

NONCASH COLLECTION FEE SCHEDULE

Fees

Coupon collection:

Cash letters:

With five or fewer coupon envelopes .................................................................................................................................... $7.50

With six to fifty coupon envelopes ........................................................................................................................................ 15.00

Coupon envelopes:

With five or fewer coupon envelopes .................................................................................................................................... 4.75

With six to fifty coupon envelopes ........................................................................................................................................ 2.50

Return items ................................................................................................................................................................................. 20.00

Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices 69555

37 Installation, training, contingency hardware,

and software certification are not considered priced

services, and the fees for these services are not

listed here. For a copy of the full electronic access

fee schedule, contact the local Federal Reserve

Bank.

NONCASH COLLECTION FEE SCHEDULE—Continued

Fees

Bond collection (per bond): ................................................................................................................................................................. 30 40.00

30Plus actual shipping costs.

SPECIAL CASH SERVICES FEE SCHEDULE

Fee

Wrapped coin (per box 31):

All Fourth District offices ................................................................................................................... Discontinued April 2000.

Helena ............................................................................................................................................... $2.25.

Nonstandard packaging:

Seventh District offices (per currency order or deposit) ................................................................... $12.00.32

Helena (per coin bag deposited) ...................................................................................................... $2.00.

El Paso (express cash orders) ......................................................................................................... $80.00.33

Surcharge Insurance fee 35

Registered mail fees 34:

First District ...................................................................................................................................... $45.00 $0.50.

Helena 36 .......................................................................................................................................... $14.00

Tenth District offices ........................................................................................................................ $16.00 $0.32.

El Paso ............................................................................................................................................ Discontinued August 2000.

Twelfth District offices ...................................................................................................................... Discontinued August 2000.

31There are 50 rolls of coin in each box. 32This service only applies to the $1 through $20 denominations. 33El Paso’s Express Cash Order fee applies only to orders that need to be prepared on the same day as notice is received from depository institutions. 34 Depository institutions also pay any postage fees incurred for registered mail. Postage fees are billed separately from Federal Reserve Bank

surcharges and insurance fees. 35 Insurance fees are based on every $1,000 shipped via the registered mail service in excess of the first $25,000, which is covered by the

U.S. Postal Service. 36The Helena Office only ships registered mail packages valued up to $25,000, so no additional insurance is needed in excess of the $25,000

covered by the U.S. Postal Service.

Electronic Connection Fee Schedule 37

The Reserve Banks charge fees for the electronic connections used by depository institutions to access priced services

and allocate cost and revenue associated with electronic access to the various priced services.

Per month

Current FEDNET Network:

Dial—receive and send (FedLine) ............................................................................................................................................... $75.00

Link encrypted dial ......................................................................................................................................................................... 200.00

High-speed dial @ 56 kbps ........................................................................................................................................................... 350.00

Multi-drop leased line ..................................................................................................................................................................... 500.00

Dedicated leased line (to 9.6 kbps) ............................................................................................................................................... 750.00

High-speed leased line @ 19.2 kbps ............................................................................................................................................ 850.00

High-speed leased line @ 56 kbps ............................................................................................................................................... 1,000.00

High-speed leased line @ 128 kbps ............................................................................................................................................. 1,800.00

High-speed leased line @ 256 kbps ............................................................................................................................................. 2,000.00

Cross-District .................................................................................................................................................................................. Actual cost 38

Frame Relay Network:

Frame Relay—Fedline @ up to 19.2 kbps 39 ................................................................................................................................ 500.00

Frame Relay—Computer Interface (CI) @ 56 kbps ...................................................................................................................... 1,000.00

Frame Relay—CI @ 256 kbps ...................................................................................................................................................... 2,000.00

Frame Relay—CI T1 ...................................................................................................................................................................... 2,500.00

38The customer will pay the actual costs of the circuit and a monthly surcharge to cover an equitable share of expenses associated with customer support, depreciation of hardware (that is, link encryption units), and other overhead expenses. This fee must be, at a minimum, equivalent

to the standard fee for the particular type of leased line connection. 39The Frame Relay FedLine 19.2 kbps connection is identical to the Frame Relay 56 kbps connection except for the following: (a) redundant

equipment is not included with the 19.2 kbps option; and (b) the speed limitation of 19.2 kbps is imposed by FedLine. This connection is otherwise capable of operating at 56 kbps.

69556 Federal Register / Vol. 65, No. 223 / Friday, November 17, 2000 / Notices

40Test and contingency options, including

redundant parts, are only available to customers

with a primary connection.

41Prices shown are for full circuit backup only

located at the customer site. Multiple customers

sharing a single disaster-recovery connection at a

third-party provider will result in custom

implementations. Districts will bill the vendor’s

bank for the contingency circuit.

42Prices shown are for frame connection only

located at the customer site. Multiple customers

sharing a single disaster recovery connection at a

third-party provider will result in custom

implementations. Districts will bill the vendor’s

bank for the contingency circuit.

43Redundant components are available only for

the following connections: CI 56 kbps, CI 256 kbps,

and CI T1. Customers with FedLine 19.2 kbps

connections that require redundant equipment will

be obliged to upgrade their connection to CI 56

kbps.

Test and Contingency Options 40

Connection type Logical split Full circuit

backup

Frame connection onlyRedundant

components

Fedline @ up to 19.2 kbps ............................................................. No charge .................................. $500 $420 N/A

CI @ 56 kbps .................................................................................. No charge .................................. 845 765 155

CI @ 256 kbps ................................................................................ No charge .................................. 1,750 1,585 250

CI T1 ............................................................................................... No charge .................................. 2,230 2,010 270

Logical split: Applies to production

and test systems that are located

together at the same facility. The

institution could use the production

equipment with a logical split (different

port) in their router as a test or

contingency facility. There is no

additional cost for this option.

Full circuit backup: Applies to

production and test systems, or

production and contingency systems,

that are located at separate facilities,

including another bank office or a thirdparty contingency site.41 This option

replicates full production technology

and costs; only one set of equipment

components is provided.

Frame connection only: Applies to

production and test systems, or

production and contingency systems,

that are located at separate facilities.

The institution uses a frame relay link

connection with no ISDN dial-up

backup. Only one set of equipment

components is provided.42

Redundant components: Includes a

Cisco router, CSU/DSU, encryptor and

rack.43

By order of the Board of Governors of the

Federal Reserve System, November 8, 2000.

Jennifer J. Johnson,

Secretary of the Board.

[FR Doc. 00–29384 Filed 11–16–00; 8:45 am]

BILLING CODE 6210–01–P

FEDERAL RESERVE SYSTEM

Sunshine Meeting Notice

AGENCY HOLDING THE MEETING: Board of

Governors of the Federal Reserve

System.

TIME AND DATE: 10 a.m., Wednesday,

November 22, 2000.

PLACE: Marriner S. Eccles Federal

Reserve Board Building, 20th and C

Streets, NW., Washington, DC 20551.

STATUS: Closed.

MATTERS TO BE CONSIDERED: 

1. Personnel actions (appointments,

promotions, assignments, reassignments, and

salary actions) involving individual Federal

Reserve System employees.

2. Any matters carried forward from a

previously announced meeting.

CONTACT PERSON FOR MORE INFORMATION:

Lynn S. Fox, Assistant to the Board;

202–452–3204.

SUPPLEMENTARY INFORMATION: You may

call 202–452–3206 beginning at

approximately 5 p.m. two business days

before the meeting for a recorded

announcement of bank and bank

holding company applications

scheduled for the meeting; or you may

contact the Board’s Web site at http://

www.federalreserve.gov for an

electronic announcement that not only

lists applications, but also indicates

procedural and other information about

the meeting.

Dated: November 15, 2000.

Robert deV. Frierson,

Associate Secretary of the Board.

[FR Doc. 00–29575 Filed 11–15–00; 11:52

am]

BILLING CODE 6210–01–P

FEDERAL TRADE COMMISSION

Public Workshop: The Mobile Wireless

Web, Data Services and Beyond:

Emerging Technologies and Consumer

Issues

AGENCY: Federal Trade Commission.

ACTION: Notice announcing workshop.

SUMMARY: The Federal Trade

Commission (‘‘Commission’’) has set

December 11–12, 2000 as the dates for

a public workshop examining emerging

wireless Internet and data technologies

and the privacy, security, and consumer

protection issues they raise.

DATES: The workshop will be held

December 11–12, 2000 in the

Commission Meeting Room (432), 600

Pennsylvania Avenue, NW.,

Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: For

questions about the workshop, contact:

Ellen Finn, Division of Financial

Practices, Federal Trade Commission,

600 Pennsylvania Avenue, NW.,

Washington, DC 20580, telephone 202–

326–3296, e-mail efinn@ftc.gov; Stacy

Feuer, Division of Advertising Practices,

Federal Trade Commission, 600

Pennsylvania Avenue, NW.,

Washington, DC 20580, telephone 202–

326–3072, e-mail sfeuer@ftc.gov.

SUPPLEMENTARY INFORMATION:

The Mobile Wireless Web, Data

Services and Beyond: Emerging

Technologies and Consumer Protection

Issues

Workshop Goals

One of the Commission’s principal

missions is to protect consumers from

unfair and deceptive acts or practices. In

recent years, the Internet and other new

technologies have had a significant

effect on this mission and the

Commission has held numerous public

workshops on issues related to the

emerging global electronic marketplace.

These workshops provide an

opportunity for the Commission and the

public to learn about these technologies

changes and for the Commission to

learn how best to provide guidance to

both consumers and businesses. These

workshops also provide an opportunity

for businesses to learn about the

Commission’s consumers protection and

competition concerns. In the past, the

Commission has hosted forums on such

topics as online consumer privacy

issues, advertising disclosures in new

media, on-line dispute resolution

mechanisms, and business to business

electronic marketplaces.

Mobile wireless Internet and data

technologies raise money of the privacy

and advertising issues previously

considered by the Commission.