[Federal Register Volume 75, Number 190 (Friday, October 1, 2010)]
[Notices]
[Page 60749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24649]


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FEDERAL RESERVE SYSTEM

[Docket No. OP-1345]


Policy on Payment System Risk

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
is announcing the implementation date of March 24, 2011, for revisions 
to part II of its Policy on Payment System Risk (PSR). The revisions 
explicitly recognize the role of the central bank in providing intraday 
credit to healthy depository institutions, and establish a zero fee for 
collateralized daylight overdrafts, a 50 basis point (annual rate) 
charge for uncollateralized daylight overdrafts, and a biweekly 
daylight overdraft fee waiver of $150. The Board approved these 
revisions in late 2008 for implementation in approximately two years 
following substantial changes to the Reserve Bank infrastructure.

DATES: Effective Date: The policy will take effect on March 24, 2011.

FOR FURTHER INFORMATION CONTACT: Jeffrey Marquardt, Deputy Director 
(202) 452-2360, Susan Foley, Deputy Associate Director (202) 452-3596, 
or Jeffrey Walker, Manager (202) 721-4559, Division of Reserve Bank 
Operations and Payment Systems, Board of Governors of the Federal 
Reserve System; for users of Telecommunications Device for the Deaf 
(``TDD'') only, contact (202) 263-4869.

SUPPLEMENTARY INFORMATION: On December 19, 2008, the Board approved 
revisions to part II of its PSR policy designed to improve intraday 
liquidity management and payment flows for the banking system, while 
also helping to mitigate credit exposures of the Federal Reserve Banks 
(Reserve Banks) from daylight overdrafts.\1\ The revisions formally 
recognize the role of the central bank in providing intraday credit to 
depository institutions and encourage them to collateralize explicitly 
their daylight overdrafts. Collateralized daylight overdrafts will be 
charged a zero fee, while uncollateralized daylight overdrafts will be 
charged 50 basis points (annual rate), an increase from the current 
rate of 36 basis points (annual rate), to encourage the voluntary use 
of collateral. The Board also approved a biweekly daylight overdraft 
fee waiver of $150 to minimize the effect of the proposed policy 
changes on institutions that use small amounts of daylight overdrafts. 
In addition, the Board changed other elements of the PSR policy dealing 
with daylight overdrafts, including adjusting net debit caps, 
streamlining max cap procedures for certain FBOs (implemented in March 
2009), eliminating the deductible for daylight overdraft fees, and 
increasing the penalty daylight overdraft fee for ineligible 
institutions to 150 basis points (annual rate). The revisions to the 
PSR policy will become effective on March 24, 2011.
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    \1\ See 73 FR 79109, December 24, 2008.
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    The Board encourages depository institutions to review 
documentation explaining the implementation of the revised PSR policy. 
Institutions should review either the Overview of the Federal Reserve's 
Payment System Risk Policy (Overview) or the Guide to the Federal 
Reserve's Payment System Risk Policy (the Guide). The purpose of the 
Overview is to help depository institutions that use only minimal 
amounts of Federal Reserve intraday credit understand and comply with 
the PSR policy. The purpose of the Guide is to help institutions that 
use Federal Reserve intraday credit more regularly, foreign banking 
organizations, and those that may be considered ``special situations'' 
because of their legal structure or payment activity, understand and 
comply with more detailed aspects of the PSR policy. Versions of the 
Guide and Overview that have been updated with information related to 
the revised policy will be available on the Board's Web site later this 
year at http://www.federalreserve.gov/paymentsystems/psr_relpolicies.htm. The current versions of the Guide and Overview will be 
available on the Board's Web site until 30 days after the 
implementation date.
    The Federal Reserve will also publish updated guidelines for 
collateral pledging and withdrawal to help institutions better 
understand the types of collateral eligible to pledge and the 
processing steps associated with these types of collateral. This 
information will be available on the discount window and PSR Web site 
later this year at  http://www.frbdiscountwindow.org. In addition, to 
assist all institutions in understanding the effect of the revised 
policy on their daylight overdraft fees, the Board created a simplified 
fee calculator that is located on the Board's Web site at https://www.federalreserve.gov/apps/RPFCalc/. The calculator enables 
institutions to input daylight overdraft and collateral data to 
estimate their daylight overdraft fees under the revised PSR policy. 
The calculator will be available until 30 days after the implementation 
date.


    By order of the Board of Governors of the Federal Reserve 
System, September 23, 2010.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010-24649 Filed 9-30-10; 8:45 am]
BILLING CODE 6210-01-P