72112 Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Rules and Regulations 

1 78 FR 74130 (Dec. 10, 2013). The Board’s PSR 

policy is available at www.federalreserve.gov/

paymentsystems/psr_policy.htm. 

2All times are eastern time unless otherwise 

specified. 

In 2008, the Board requested comment on moving 

the posting time of ACH debit transactions from 

11:00 a.m. to 8:30 a.m. to coincide with the posting 

of ACH credit transactions but decided not to 

pursue the change because of economic conditions 

at the time and the additional costs and liquidity 

pressures that could be placed on some institutions. 

The request for comment and the subsequent notice 

of the Board’s decision not to pursue the proposed 

changes can be found, respectively, at 73 FR 12443 

(Mar. 7, 2008) and 73 FR 79127 (Dec. 24, 2008). 

3Liquidity refers to balances in Federal Reserve 

accounts to make payments. An increase in 

liquidity involves higher account balances, which 

could result in fewer daylight overdrafts. 

4The Board’s four principles for measuring 

daylight overdrafts are as follows: (1) The 

time as provided in the Reserve Bank’s 

operating circular, or return the item by 

midnight of the day it receives the item. 

If the paying bank fails to settle for or 

return a cash item in accordance with 

this paragraph (b)(4)(i)(B), it shall be 

subject to any applicable overdraft 

charges. Settlement under this 

paragraph (b)(4)(i)(B) satisfies the 

settlement requirements of paragraph 

(b)(4)(i)(A) of this section. 

(ii) [Reserved] 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, December 1, 2014. 

Robert deV. Frierson, 

Secretary of the Board. 

[FR Doc. 2014–28516 Filed 12–4–14; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 210 

[Docket No. OP–1472] 

Federal Reserve Policy on Payment 

System Risk; Procedures for 

Measuring Daylight Overdrafts 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Policy statement. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (Board) has 

adopted revisions to part II of the 

Federal Reserve Policy on Payment 

System Risk (PSR policy) related to the 

procedures for measuring balances 

intraday in institutions’ accounts at the 

Federal Reserve Banks (Reserve Banks). 

The changes relate to the Board’s 

procedures for posting debit and credit 

entries to institutions’ Federal Reserve 

accounts for automated clearinghouse 

(ACH) debit transactions and 

commercial check transactions. 

Elsewhere in the Federal Register under 

Docket No. R–1473, the Board has 

adopted related changes to the Board’s 

Regulation J that affect when paying 

banks settle for check transactions 

presented to them by the Reserve Banks. 

Additionally, in this document, the 

Board has adopted a set of principles for 

establishing future posting procedures 

for the Reserve Banks’ same-day ACH 

service. The Board has also adopted a 

change in language of the PSR policy 

intended to clarify the Reserve Banks’ 

administration of the policy for U.S. 

branches and agencies of foreign 

banking organizations. Finally, the 

Board has adopted two technical 

revisions to the posting procedures to 

reflect deposit deadlines already in 

effect for Treasury checks, postal money 

orders, local Federal Reserve Bank 

checks, and savings bond redemptions 

in separately sorted deposits. 

DATES: Effective Dates: The policy 

changes related to the set of principles 

for establishing future posting 

procedures for the Reserve Banks’ sameday ACH service, the Reserve Banks’ 

administration of the policy for U.S. 

branches and agencies of foreign 

banking organizations, and the technical 

revisions to the posting procedures for 

Treasury checks, postal money orders, 

local Federal Reserve Bank checks, and 

savings bond redemptions will take 

effect on December 5, 2014. The policy 

changes to the Board’s procedures for 

posting debit and credit entries to 

institutions’ Federal Reserve accounts 

for ACH debit and commercial check 

transactions will take effect on July 23, 

2015. All items scheduled to settle on 

this date and after will post according 

to the new posting rule procedures for 

these transactions, regardless of date of 

deposit. 

FOR FURTHER INFORMATION CONTACT: 

Susan V. Foley, Senior Associate 

Director (202/452–3596), Jeffrey D. 

Walker, Assistant Director (202/721– 

4559), or Michelle D. Olivier, Senior 

Financial Services Analyst (202/452– 

2404), Division of Reserve Bank 

Operations and Payment Systems, Board 

of Governors of the Federal Reserve 

System; for users of 

Telecommunications Device for the Deaf 

(TDD) only, contact 202/263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On December 10, 2013, the Board 

requested comment on several changes 

to part II of the PSR policy intended to 

enhance the efficiency of the payment 

system.1 Technology and processing 

improvements have enabled payment 

systems and depository institutions to 

achieve significant efficiencies since the 

Board first established the procedures, 

referred to as posting rules, to measure 

depository institutions’ intraday Federal 

Reserve account balances. The proposed 

changes to these posting rules are 

intended to align them with current 

operations and processing times and to 

strategically position the rules for future 

advancements in the speed of clearing 

and settlement. 

Commercial and Government ACH 

Debit Transactions 

The Board proposed moving the 

posting times for commercial and 

government ACH debit transactions 

processed overnight to 8:30 a.m. from 

11:00 a.m. eastern time (ET) to coincide 

with the posting time for ACH credit 

transactions processed overnight.2

Under the proposal, other types of ACH 

transactions, including same-day ACH 

and certain ACH return items, would 

not be affected and would continue to 

post at 5:00 p.m. 

The Board outlined four potential 

benefits to shifting earlier the posting 

for ACH debit transactions. First, 

posting ACH debit transactions 

according to the proposed posting rules 

would simplify account management by 

allowing institutions to fund the net of 

all ACH activity at a single posting time, 

rather than funding debit and credit 

transactions separately. Second, the 

change would increase liquidity early in 

the day both for institutions that 

originate ACH debit transactions over 

the FedACH network and for those 

institutions that originate ACH debit 

transactions over the Electronic 

Payments Network (EPN), the other 

ACH operator, but have transactions 

delivered to receiving institutions over 

the FedACH network (interoperator 

transactions).3 Third, moving the 

posting time for ACH debit transactions 

to 8:30 a.m. would align the Reserve 

Banks’ FedACH settlement times with 

those of EPN. The Board believes that 

this change would remove any potential 

competitive disparities between the two 

ACH operators and their participants 

arising from the different settlement 

times for ACH debit transactions. 

Fourth, the earlier posting of ACH debit 

transactions would increase the 

efficiency of the ACH network by 

aligning better the settlement of ACH 

debit transactions with their processing. 

Additionally, posting ACH debit 

transfers at 8:30 a.m. would better 

conform to the Board’s principles for 

measuring daylight overdrafts, 

specifically the principle that 

encourages posting times to be as close 

as possible to the delivery of payments 

to the receiving institution.4


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measurement procedures should not provide 

intraday float to participants. (2) The measurement 

procedures should reflect the times at which payor 

institutions are obligated to pay for transactions. (3) 

The users of payment services should be able to 

control their use of intraday credit. (4) The Reserve 

Banks should not obtain any competitive advantage 

from the measurement procedures. The Board 

developed the principles in the early 1990s; for the 

latest version, refer to 73 FR 12443 (Mar. 7, 2008). 

5Under the current posting rules, commercial 

check credits post according to one of two options: 

(1) All credits post at a single, float-weighted 

posting time, or (2) fractional credits post between 

the hours of 11:00 a.m. and 6:00 p.m., depending 

on the institution’s preference. The second option 

lets the institution receive portions of its available 

check credits on the clock hours between 11:00 a.m. 

and 6:00 p.m. The option selected applies to all 

check deposits posted to an institution’s account. 

Both crediting options are based on surveys of 

check presentment times and vary across time 

zones. Commercial check debits are posted on the 

next clock hour at least one hour after presentment 

beginning at 11:00 a.m. for paper checks and 1:00 

p.m. local time for electronic checks, and ending at 

3:00 p.m. local time. 

6 Immediate credit would not be passed for 

deferred-availability deposit products. Customer 

availability for files deposited for these services 

would be the same as if the file were received at 

a deposit deadline before 8:00 a.m. the next 

business day. 

Currently, the Reserve Banks’ electronic check 

deposit deadlines are 9:00 p.m. on the previous 

business day, and 1:00 a.m., 5:00 a.m., and 10:00 

a.m. on the settlement day. The paper check deposit 

deadline is 7:00 p.m. on the previous business day. 

As a result, depositing banks could expect credit for 

all electronic items deposited for the 9:00 p.m., 1:00 

a.m., and 5:00 a.m. deposit deadlines to post at 8:30 

a.m., and credit for electronic items deposited for 

the 10:00 a.m. deadline to post at 1:00 p.m. Paper 

items deposited by 7:00 p.m. on the previous day 

would post at 8:30 a.m. 

7The posting of debits associated with electronic 

presentments earlier than the debits associated with 

paper check presentments may contribute 

marginally to a given paying bank’s incentive to 

require that checks be presented to it in paper form. 

Electronic check presentment is now pervasive, 

however, and the Board does not believe that a 

paying bank that receives presentments 

electronically would be swayed by the later posting 

time to return to paper presentment. 

Credits for checks presented in paper form would 

not be delayed to accommodate the extra time 

required for presentment and would post at the next 

available posting time at least 30 minutes after 

receipt by the Reserve Banks. The Reserve Banks 

will monitor the value of commercial checks 

presented in paper form, and should it increase 

materially, the Board may propose changes to the 

posting rules to reduce float. 

8The Board issued a companion document 

requesting comment on proposed changes to 

Regulation J, under which a paying bank would be 

required to settle for an item by as early as 8:30 a.m. 

and as soon as one half-hour after it receives the 

item from the Reserve Banks. The request for 

comment can be found at 78 FR 74041 (Dec. 10, 

2013). Elsewhere in the Federal Register under 

Docket No. R–1473, the Board adopted these 

changes to Regulation J. 

9The timing and frequency of presentments is 

subject to change by the Reserve Banks to align 

better with processing advancements and product 

type. 

10Corrections are account entries made to correct 

discrepancies detected by a Reserve Bank during 

the initial processing of checks. Adjustments are 

account entries made to correct discrepancies 

detected by an institution after entries have posted 

to Federal Reserve accounts. 

11Currently, credit corrections and adjustments 

amounting to $1 million or more post at 11:00 a.m. 

and hourly thereafter, coinciding with the current 

posting rules for commercial checks. 

12Currently, debit corrections amounting to $1 

million or more post at 11:00 a.m. and hourly 

thereafter. 

13Under the current posting rules, check credits 

and paper check debits begin posting at 11:00 a.m., 

whereas electronic check debits begin posting at 

1:00 p.m. local time. As a result, the current 

measurement procedures provide intraday float, 

which has increased over time as electronic 

deposits and presentments have expanded. 

14Although most institutions that maintain 

master accounts are involved in both ACH and 

commercial check activity, approximately half of 

these institutions settle their activity through a 

correspondent rather than their own master 

account. 

In connection with the 2013 proposal, analysis 

reflects activity at the master account level from the 

Continued 

Commercial Check Transactions 

The Board proposed several revisions 

to its posting rules for commercial check 

transactions to reflect today’s nearly 100 

percent electronic check-processing 

environment. Specifically, the Board 

proposed to post commercial check 

transactions, both credits and debits, at 

8:30 a.m., 1:00 p.m., and 5:30 p.m., with 

the specific posting time depending on 

when a check is deposited with the 

Reserve Banks (for credit) or presented 

by the Reserve Banks (for debit).5

Credits associated with any commercial 

checks received by the Reserve Banks’ 

deposit deadlines would post on a 

rolling basis at the next available 

posting time at least 30 minutes after 

receipt by the Reserve Banks.6

Similarly, debits associated with 

electronic check transactions would 

post on a rolling basis at the next 

available posting time that is at least 30 

minutes after presentment to the paying 

bank. To accommodate the extra time 

required to make paper presentments, 

debits for the few remaining paper 

commercial check transactions, which 

account for less than one-tenth of 1 

percent of checks processed by the 

Reserve Banks, would post at the final 

posting time of 5:30 p.m. on the day the 

paper check is presented to the paying 

bank.7

Under the current posting rules and 

Regulation J, at least one hour must 

elapse between presentment and posting 

to allow limited verification of cash 

letters. The Board proposed reducing 

this requirement from one hour to 30 

minutes. As a result of the widespread 

use of electronic check-handling 

methods and the extremely small value 

of paper presentments, the Board 

believes 30 minutes is now sufficient for 

institutions to verify cash letters.8

Additionally, as part of the proposed 

posting rules, the Reserve Banks would 

present multiple electronic cash letters 

per day to institutions that receive 

electronic presentments, with the first 

presentment by 8:00 a.m. for settlement 

at 8:30 a.m.9

The Board also proposed to revise the 

posting rules for large-value check 

corrections and adjustments amounting 

to $1 million or more.10 In alignment 

with the proposed posting times for 

commercial check transactions, the 

Board proposed to move the settlement 

of large-value credit corrections and 

adjustments to begin at 8:30 a.m. and 

hourly thereafter on the half-hour 

depending on when the discrepancy is 

detected.11 Additionally, the Board 

proposed to post large-value debit 

corrections after the close of the 

Fedwire Funds Service, the same time 

as large-value debit adjustments are 

posted.12

The Board outlined four potential 

benefits from the proposed changes to 

its commercial check posting rules. 

First, the proposed posting rules would 

give earlier availability for items 

deposited with the Reserve Banks based 

on an institution’s deposit behavior and 

would provide earlier availability for 

credit adjustments and corrections. 

Second, these changes would simplify 

the posting rule structure and, as a 

result, reduce the administrative burden 

on institutions and Reserve Banks. 

Third, the proposed rules would reduce 

the amount of intraday float currently 

provided by the Reserve Banks as a 

result of posting rules that do not 

adequately reflect current operations.13

Fourth, the proposals would align the 

posting rules with the significant shift 

over the past decade from paper to 

electronic check clearing. The proposed 

commercial check posting rules would 

conform better to the Board’s principles 

for measuring daylight overdrafts, 

specifically the principles that 

discourage providing intraday float and 

encourage posting times to be as close 

as possible to the delivery of payments 

to the receiving institution. 

As part of its posting rule proposals, 

the Board assessed the effect of the ACH 

debit and commercial check transaction 

posting rule changes on institutions’ 

account balances and daylight overdraft 

fees both separately and combined. The 

Board recognized that the combined 

effect of the changes would, on average, 

reduce institutions’ Federal Reserve 

account balances at 8:30 a.m. for the 

majority of master accounts that settle 

ACH and commercial check activity (94 

percent of approximately 3,500 master 

accounts) based on second-quarter 2013 

payment data.14 Less than 1 percent of 


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72114 Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Rules and Regulations 

second quarter 2013 and is intended to be 

illustrative only. All institutions should consider 

their own historical payment activity when 

evaluating the effect of the posting rule changes. 

The average balance calculation only includes 

days in the second quarter of 2013 for which 

institutions had ACH debit or commercial check 

payment activity. The simulation of balances 

focused only on balances held at 8:30 a.m., while 

the analysis of fees and collateral took into account 

balances held and collateral pledged over the entire 

21.5-hour Fedwire operating day. 

15These institutions include bankers’ banks and 

Federal Home Loan Banks, and not all would be 

eligible to earn interest on their Federal Reserve 

balances. 

16The current processing schedule has a 2:00 

p.m. deadline for submitting same-day, forward 

ACH transactions for settlement at 5:00 p.m. Return 

same-day ACH transactions post at 5:30 p.m. 

17 In 2011, NACHA, a not-for-profit association 

that manages the development, administration, and 

governance of the ACH network for participating 

depository institutions, proposed amendments to its 

operating rules to enable ACH debit and credit 

transfers to be cleared and settled on the same day 

that they are originated. The expedited service 

would require the participation of all receiving 

institutions in the ACH network, going beyond the 

Reserve Banks’ voluntary service. Although the 

majority of NACHA’s voting members were in favor 

of the proposal, NACHA did not receive the 75 

percent positive votes required for passage. NACHA 

is currently evaluating modifications to its earlier 

proposal to address concerns expressed regarding it. 

18These four posting-rule principles are outlined 

in a footnote earlier in this document. 

19NSS is a multilateral settlement service owned 

and operated by the Reserve Banks. The service is 

offered to institutions that settle for participants in 

clearinghouses, financial exchanges, and other 

clearing and settlement groups. Settlement agents, 

acting on behalf of those institutions in a settlement 

arrangement, electronically submit settlement files 

to the Reserve Banks. Files are processed upon 

receipt, and entries are automatically posted to the 

institutions’ Federal Reserve accounts. The NSS file 

submission window is currently 8:30 a.m. to 5:00 

p.m. 

20The previous language in the PSR policy that 

related to the administration of multiple master 

accounts was somewhat ambiguous and could have 

been interpreted to allow the Federal Reserve to 

administer these accounts as is the current practice 

(separate administration for the multiple master 

accounts) or the previous practice (consolidated 

administration). 

21The comment letters are available at http://

www.federalreserve.gov/apps/foia/

proposedregs.aspx. 

22Commenters were the Credit Union National 

Association, Georgia Credit Union League, Missouri 

Credit Union Association, National Association of 

Federal Credit Unions, and Midwest Independent 

Bank. 

these institutions, only 33 institutions, 

would incur overdraft fees in any of the 

six two-week reserve maintenance 

periods within the quarter analyzed. 

The low incidence of fees can be 

attributed to the current levels of 

pledged collateral and collateralized 

daylight overdrafts receiving a zero fee, 

the $150 fee waiver covering modest 

amounts of uncollateralized overdrafts, 

and the high balances held in Federal 

Reserve accounts. Twenty-eight of the 

33 institutions are eligible to incur 

daylight overdrafts and could avoid 

paying higher fees by pledging 

(additional) collateral, holding higher 

balances and receiving interest on their 

Federal Reserve balances, or arranging 

early-morning funding. The remaining 5 

institutions are ineligible to receive 

intraday credit and would need to 

increase funding in their accounts either 

by holding higher balances (and in some 

cases potentially receiving interest on 

their Federal Reserve balances) or by 

arranging early-morning funding.15

For both the ACH debit and 

commercial check posting rule 

proposals, the Board proposed an 

effective date of no less than six months 

from the publication of the revised PSR 

policy to give institutions sufficient 

time to make any necessary changes. 

Principles for Future Posting Rules for 

the Reserve Banks’ Same-Day ACH 

Service 

Given the Board’s expectations that 

the Reserve Banks’ same-day ACH 

service will evolve, with the potential 

establishment of additional processing 

cycles that require new posting times for 

settlement, the Board proposed 

establishing a set of principles that 

would be applied to any new same-day 

ACH posting rules.16 Under the 

proposal, the Board would generally 

request public comment on changes to 

the posting rules only when the changes 

deviate from the principles. Such 

principles would apply to the Reserve 

Banks’ voluntary (opt-in) same-day ACH 

service and to any future same-day ACH 

service, such as a universal same-day 

ACH service covering all participants in 

the ACH network.17 These principles, 

which would apply in addition to the 

current four posting-rules principles, 

were proposed as follows:18

(1) For each same-day ACH 

transmission deadline, the Reserve 

Banks will establish expected 

distribution times for the same-day ACH 

files. 

a. The Reserve Banks will post 

settlement for same-day ACH debit 

transactions no earlier than 15 minutes 

after the Reserve Banks’ expected 

distribution times for the associated 

same-day ACH file. 

b. The Reserve Banks will post 

settlement for ACH credit and debit 

transactions associated with a particular 

same-day ACH file distribution time at 

the same time. 

(2) The Reserve Banks will not post 

settlement for same-day ACH 

transactions between 6:30 p.m. and 8:30 

a.m. on the next processing day. 

(3) The Reserve Banks will post 

settlement for same-day ACH 

transactions exchanged with another 

operator to support universal same-day 

ACH during the operating hours for the 

Reserve Banks’ National Settlement 

Service (NSS).19

The Board proposed that the 

principles for future posting rules for 

the Reserve Banks’ same-day ACH 

service would be effective on final 

approval. 

Language Clarification in Section II.G.3 

The Board proposed a language 

clarification to part II of the PSR policy 

to explain more clearly the Reserve 

Banks’ administration of the PSR policy 

as it relates to U.S. branches and 

agencies of foreign banking 

organizations (FBOs). The proposed 

language would clarify that U.S. 

branches and agencies of the same 

foreign bank (also referred to as an FBO 

family) are expected to manage their 

accounts so that the daylight overdraft 

position in each account does not 

exceed the capacity allocated to that 

account from the FBO family’s net debit 

cap.20 In the past, the Reserve Banks 

monitored the master accounts of FBO 

families on a consolidated basis rather 

than requiring an FBO family to allocate 

its net debit cap if it wanted to incur 

daylight overdrafts in more than one 

account across the Federal Reserve. 

The Board proposed that the language 

change clarifying the Reserve Banks’ 

administration of the policy for U.S. 

branches and agencies of FBOs would 

be effective on final approval. 

III. Summary of Public Comments and 

Analysis 

The Board received thirteen comment 

letters in response to its PSR policy 

proposals.21 Comments were submitted 

by seven depository institution trade 

organizations, one private-sector 

clearing and settlement system, one 

commercial banking organization, one 

bankers’ bank, one governmentsponsored enterprise, and two 

individuals. Most commenters 

expressed support for the posting-rule 

proposals’ intent to improve the speed 

and efficiency of the payment system 

but also raised specific concerns. The 

Board considered these comments in 

finalizing its changes to the PSR policy, 

as discussed in more detail below. 

Effect on Credit Unions and Small 

Institutions 

Five commenters, including four 

depository institution trade 

organizations and a bankers’ bank, 

expressed concerns regarding the effect 

of the ACH debit and commercial check 

posting rule proposals on credit unions 

and small institutions.22 The 


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23The average calculation includes all reserve 

maintenance periods in the quarter. 

24The average calculation only includes reserve 

maintenance periods for which the credit union 

required (additional) collateral. 

25Edge and agreement corporations, bankers’ 

banks that have not waived their exemption from 

reserve requirements, limited-purpose trust 

companies, government-sponsored enterprises 

including Federal Home Loan Banks (FHLBs), and 

international organizations do not have regular 

access to the discount window and are not 

permitted to incur daylight overdrafts in their 

Federal Reserve accounts. Voluntary 

collateralization of daylight overdrafts and the $150 

fee waiver are not available to these institutions. 

26Only one of the four institutions is eligible to 

earn interest on its Federal Reserve account 

balance. 

commenters were supportive of the 

proposals’ intent but believed that credit 

unions and smaller institutions might be 

disproportionately affected and the 

proposals could lead to more-frequent 

and larger daylight overdrafts and 

associated fees. Given the concerns 

raised by commenters related to these 

types of institutions, the Board 

performed additional analysis on the 

effect of the combined ACH debit and 

commercial check proposals on these 

institutions based on second-quarter 

2013 payment data, consistent with the 

2013 proposal. Of the approximately 

3,500 master accounts maintained by 

institutions that settle ACH and 

commercial check activity, almost 800 

(22 percent) are maintained by natural 

person credit unions. The combined 

posting rule proposals would, on 

average, reduce account balances held 

in Federal Reserve accounts at 8:30 a.m. 

for 94 percent of these institutions. Out 

of those credit unions that would 

experience lower balances, only 1 credit 

union would incur higher daylight 

overdraft fees as a result of the 

proposals, and this credit union was 

already incurring fees under the current 

posting rules. The average increase in 

fees over the quarter under the proposed 

posting rules would be $132 per reserve 

maintenance period.23 To avoid fee 

increases, this credit union could pledge 

on average $7 million of additional 

collateral.24

Excluding natural person credit 

unions, an additional 2,500 master 

accounts of the approximately 3,500 

master accounts maintained by 

institutions that settle ACH and 

commercial check activity are 

maintained by institutions with assets of 

less than $10 billion. The combined 

posting rule proposals would reduce, on 

average, account balances held in 

Federal Reserve accounts at 8:30 a.m. 

for 95 percent of these institutions. Out 

of those small institutions that would 

experience lower balances, 

approximately 1 percent, only 25 

institutions, would incur higher fees as 

a result of the proposals. More than onethird of the 25 institutions were already 

incurring fees under the current posting 

rules, and the average increase in fees 

over the quarter under the proposed 

posting rules would be $66 per reserve 

maintenance period. To avoid fee 

increases, these 25 institutions could 

pledge on average $10 million of 

(additional) collateral. 

The Board recognizes that many 

institutions are holding higher balances 

in their Federal Reserve accounts today, 

and although second-quarter 2013 

payment data indicate that only a very 

limited number of credit unions and 

institutions with assets less than $10 

billion would incur higher fees under 

the proposal, over time, more of these 

institutions may need to alter their 

account management in response to the 

posting rule changes. Nevertheless, the 

Board believes that institutions have the 

tools to mitigate any adverse impact. For 

each two-week reserve maintenance 

period, institutions receive a $150 fee 

waiver, which is intended to reduce the 

burden on institutions that incur a small 

amount of uncollateralized daylight 

overdrafts. Many institutions have 

considerable room for additional 

daylight overdrafts under the waiver. In 

addition, institutions could post 

(additional) collateral, hold higher 

balances overnight, or arrange early 

morning funding. Interest on balances in 

Federal Reserve accounts would help 

compensate those institutions that hold 

higher balances overnight in their 

Federal Reserve accounts. 

Effect on Institutions Ineligible for 

Access to Intraday Credit 

One commenter, representing the 

interests of five Federal Home Loan 

Banks without regular access to the 

discount window and thus without 

access to intraday credit under the PSR 

policy because of their classification as 

government-sponsored enterprises, 

expressed concern that the proposed 

posting rule for ACH debit transactions 

would be excessively burdensome for 

institutions ineligible for access to 

intraday credit.25 The commenter 

believed that, in addition to account 

management changes necessary to avoid 

incurring daylight overdrafts, such as 

holding higher balances overnight or 

finding alternative liquidity sources, the 

proposal might require these 

institutions to reduce their incomegenerating investments of overnight 

funds. The commenter also believed 

that, if adopted, the new posting rule for 

ACH debit transactions might cause 

institutions ineligible for access to 

intraday credit to re-evaluate the 

provision of ACH services to their 

customers and the fees associated with 

ACH services. The Board acknowledges 

that institutions ineligible for access to 

intraday credit may face additional 

challenges as a result of the proposed 

posting rule for ACH debit transactions. 

Of the 26 institutions ineligible to incur 

daylight overdrafts that participate in 

FedACH, 22 on average would 

experience lower balances at 8:30 a.m. 

under the proposed posting rule for 

ACH debit transactions. Only 4 of these 

22 institutions, however, would incur 

daylight overdrafts according to the 

Board’s analysis of second-quarter 2013 

payment data. The average maximum 

overdrafts incurred by these 4 

institutions over the quarter analyzed 

ranged from just under $100,000 to 

slightly below $100 million, with an 

average of $33 million across the 4 

institutions. These institutions would 

need to arrange early-morning funding 

or hold higher balances overnight based 

on expected settlement of ACH 

activity.26 The Board understands that 

there may be costs associated with these 

actions, and institutions would need to 

weigh the costs and benefits of their 

account-management options. In 

addition, the Board acknowledges that 

some institutions that would experience 

lower balances might also need to 

manage their Federal Reserve accounts 

more closely to avoid daylight 

overdrafts under the proposed posting 

rule for ACH debit transactions. 

A limited number of institutions that 

are ineligible for access to intraday 

credit may need to manage their Federal 

Reserve accounts to avoid daylight 

overdrafts as a result of the earlier 

posting time for ACH debit transfers. 

The Board believes that these 

institutions can reasonably manage their 

Federal Reserve accounts for activity 

settling at 8:30 a.m. given the 

availability of Fedwire Funds beginning 

at 9:00 p.m. the previous calendar day. 

The Board believes that the associated 

burden of closer account management 

by a small number of institutions is 

outweighed by the benefits of the earlier 

posting time discussed earlier, 

including the long-run efficiency of the 

payment system. 

Competitive Disparity Between Reserve 

Bank and Private-Sector Services 

In response to the Board’s ACH debit 

and commercial check posting rule 

proposals, The Clearing House (TCH), 

which owns EPN, was supportive of the 

Board’s intent to align and modernize 

the posting rules but expressed several 


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27 In addition to debit corrections and 

adjustments, small-dollar credit corrections and 

adjustments also post after the close of the Fedwire 

Funds Service. 

28For the limited number of institutions that may 

expose the Federal Reserve and other payment 

system participants to risk of loss, the Reserve 

Banks have implemented tools, including the 

Account Balance Monitoring System (ABMS), 

which can monitor institutions’ payment activity in 

real time. ABMS verifies that institutions have 

sufficient balances to fund their Fedwire Funds, 

NSS, and certain ACH credit transactions as these 

payment files are submitted and processed. ABMS 

may reject these transactions if there are insufficient 

funds to cover the associated payments, regardless 

of whether the payment files are processed by the 

Reserve Banks or submitted by private-sector 

clearing and settlement systems through NSS. 

Institutions that are monitored in real time must 

fund the total amount of their commercial ACH 

credit originations in order for the transactions to 

be processed. If the Federal Reserve receives 

commercial ACH credit transactions from 

institutions monitored in real time after the 

scheduled close of the Fedwire Funds Service, 

these transactions are currently processed at 12:30 

a.m. the next business day, or by the ACH deposit 

deadline, whichever is earlier. ABMS provides 

intraday account information to the Reserve Banks 

and institutions and is used primarily to give 

authorized Reserve Bank personnel a mechanism to 

control and monitor account activity for selected 

institutions. For more information on ACH 

transaction processing, refer to the ‘‘ACH 

Settlement Day Finality Guide’’ available through 

the Federal Reserve Financial Services Web site at 

http://www.frbservices.org. 

29The Federal Reserve’s ‘‘Standards Related to 

Priced-Service Activities of the Federal Reserve 

Banks’’ states that ‘‘No Reserve Bank personnel 

with responsibility for priced services, unless acting 

in the capacity of president or first vice president, 

will also be responsible for monetary policy, bank 

supervision, or lending areas. Priced-service 

personnel will not make policy decisions affecting 

monetary policy, bank supervision, or lending 

matters.’’ http://www.federalreserve.gov/

paymentsystems/pfs_standards.htm. 

30Commercial check debit and small-dollar credit 

corrections and adjustments post after the close of 

Fedwire. Given the minimal occurrence of largevalue check corrections and adjustments and the 

low value of other check corrections and 

adjustments, the Board does not believe posting 

these transactions after the close of Fedwire 

provides a competitive advantage to the Reserve 

Bank priced services. 

31TCH also requested a clarification on how 

FedACH debit and credit transactions would post 

simultaneously at 8:30 a.m. Under the proposed 

posting rules, both ACH debit and credit 

transactions would be assigned the same posting 

time, 8:30 a.m., and post exactly at the same time 

for purposes of measuring an institution’s daylight 

overdraft balance. Debit and credit transactions 

would not be netted before posting; however, 

because all transactions would post exactly at the 

same minute, the institution’s account balance 

would only change by the net of its activity. 

short-term and long-term competitive 

disparity concerns. Specifically, TCH 

was concerned that the posting rules 

might give the Reserve Banks an unfair 

advantage over private-sector clearing 

and settlement systems as a result of 

underlying legal differences and the 

limited settlement hours of NSS. TCH 

also stated that in the long run, the 

Board should ensure that all processes 

related to the posting and settlement of 

Reserve Bank priced services do not 

provide an advantage to Reserve Bank 

priced services over those of other 

clearing and settlement systems. TCH 

stated that, in the short-term, the 

posting rules should avoid disrupting 

the settlement of clearing and settlement 

systems, specifically EPN’s 8:30 a.m. 

settlement of ACH transactions over 

NSS. Two additional commenters, U.S. 

Bank and NACHA, endorsed and 

emphasized the importance of 

addressing TCH’s concerns related to 

the proposed posting rules for ACH 

debit and commercial check 

transactions. 

Reserve Bank priced services settle 

transactions in participants’ Federal 

Reserve accounts through direct entries 

to the Federal Reserve’s accounting 

system whereas private-sector clearing 

and settlement systems typically use 

Fedwire Funds, ACH, or NSS to settle 

transactions in participants’ Federal 

Reserve accounts. The Board has 

traditionally encouraged the use of NSS 

for multilateral settlement arrangements 

to mitigate counterparty credit risk. The 

establishment of posting rules outside of 

the NSS operating day could potentially 

create competitive disparities between 

Reserve Bank and private-sector clearing 

and settlement systems. The posting 

rules proposed for ACH debit and 

commercial check transactions occur 

within the NSS file submission window, 

with the exception of the final posting 

time for commercial check transactions 

at 5:30 p.m. and the posting of a limited 

number of check debit and small-dollar 

credit corrections and adjustments after 

the close of Fedwire. The Reserve Banks 

will extend the NSS file submission 

window until 5:30 p.m. beginning in 

January 2015. In regard to the posting of 

debit corrections and adjustments after 

the close of Fedwire Funds, such late 

posting ensures that an institution could 

not receive a debit correction or 

adjustment before the associated 

transaction posted. Given the minimal 

occurrence of large-value check 

corrections and adjustments and the low 

value of other check corrections and 

adjustments, the Board does not believe 

posting these transactions after the close 

of Fedwire creates a significant 

competitive disparity between Reserve 

Bank and private-sector service 

providers.27

Additionally, TCH was concerned 

that the Reserve Banks’ priced services 

personnel could view participants’ 

Federal Reserve account balances, 

daylight overdraft capacity, and 

placement on the real-time monitor and 

use that information to restrict 

transactions or payment services as a 

means of managing potential settlement 

failures.28 Although the Reserve Banks’ 

priced services personnel may have the 

ability to view account balances in the 

normal course of business operations, 

they do not have access to daylight 

overdraft capacity or risk control 

information. The Reserve Banks, like 

other clearing and settlement systems, 

use a range of risk-management tools 

that may include requiring minimum 

balances and collateral to manage the 

inherent risk of providing services, but 

Reserve Bank priced services personnel 

do not influence the application of these 

controls to be able to affect the outcome 

of settlement and do not have the ability 

to apply such controls.29

TCH encouraged the Board to ensure 

that, in the long run, all processes 

related to the posting and settlement for 

Reserve Bank priced services more 

broadly do not provide an advantage to 

the Reserve Banks over the privatesector clearing and settlement systems 

as a result of legal or settlement 

differences between providers. In the 

normal course, the Board will continue 

to assess Reserve Bank priced service 

proposals for new products, pricing, or 

posting rules to determine if any 

competitive advantage is derived from 

legal differences. In the case of 

settlement, the Board believes that 

potential competitive disparities can be 

addressed by expanding NSS operating 

hours to encompass more of the Fedwire 

Funds day. Private-sector clearing and 

settlement systems would then 

generally have the ability if needed to 

settle transactions in participants’ 

Federal Reserve accounts over similar 

hours as Reserve Bank priced services.30

In the short run, TCH also requested 

that the Board delay the posting of ACH 

debit transactions until after 8:30 a.m. to 

avoid potentially disrupting EPN’s 8:30 

a.m. settlement over NSS.31 TCH 

believed that posting FedACH debit 

transactions at 8:30 a.m. could lower 

EPN participants’ Federal Reserve 

account balances and increase the 

likelihood that a participant would have 

insufficient funds to settle its activity 

over EPN. The Board believes there are 

several factors that minimize the 

likelihood of such an outcome. The 

posting of ACH debit and credit 

transactions simultaneously at 8:30 a.m. 

may result in an increase in balances 

held by institutions that are large 

originators of ACH debit transactions; 

many of the largest ACH debit 

originators are EPN customers. The 

posting-rule change benefits not only 

FedACH participants that originate 

debit transactions but also EPN 


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32Commenters were the American Bankers 

Association, Credit Union National Association, 

Georgia Credit Union league, Missouri Credit Union 

Association, and a joint letter from five Federal 

Home Loan Banks. 

33Commenters were U.S. Bank, TCH, Credit 

Union National Association, Georgia Credit Union 

League, and Missouri Credit Union Association. 

customers that originate debit 

transactions destined to FedACH 

customers, which settle according to the 

Board’s posting rules. Institutions 

currently hold high balances, and most 

have access to daylight overdrafts, with 

total daylight overdraft capacity 

calculated as multiples of capital for 

healthy institutions, to ensure the 

smooth functioning of the payment 

system. Although high balances may not 

remain, balances are not likely to drop 

precipitously in the near term, giving 

institutions time to adjust accountmanagement activity, if needed, to 

ensure sufficient balances for all 

payment activity settling at 8:30 a.m. In 

addition, the Reserve Banks debit funds 

to cover ACH credit transactions for any 

institution on the highest level of 

control under the real-time monitor at 

the time of file submission, not when 

the payments settle under the posting 

rules. The Reserve Banks also will 

extend the NSS file submission window 

from 7:30 a.m. to 5:30 p.m., beginning 

in January 2015, and are evaluating 

potential further expansion of NSS 

hours in the future. Given these factors, 

the Board continues to believe that 

posting ACH debit transactions at 8:30 

a.m. is the best option for the long-run 

safety and efficiency of the payment 

system. 

The Board acknowledges some of the 

competitive concerns expressed by TCH 

and agrees with the need to have 

settlement options available at the same 

time to avoid introducing potential 

competitive disparities. In the near 

term, the Board believes that extending 

the NSS file submission window from 

7:30 a.m. to 5:30 p.m. mitigates any 

adverse competitive effect of the ACH 

debit and commercial check posting 

rule changes. In the long run, the Board 

believes that any competitive disparity 

concerns resulting more broadly from 

Reserve Banks’ ability to settle 

transactions outside of NSS hours can 

be addressed by further expanding NSS 

operating hours, and potentially 

functionality. 

The Board has adopted the posting 

rules for ACH debit and commercial 

check transactions as proposed. 

Effective Dates for Posting Rule 

Proposals 

As part of its posting rules proposals 

for ACH debit and commercial check 

transactions, the Board proposed a sixmonth implementation period before 

the new posting rules would become 

effective. Five commenters, including 

four depository institution trade 

associations and one governmentsponsored enterprise, indicated that an 

effective date six months after the 

publication of the final rule in the 

Federal Register would allow enough 

time to make necessary operational 

changes.32 One commenter, the National 

Association of Federal Credit Unions, 

requested a one-year implementation 

period to allow institutions additional 

time to determine if they were affected 

by the proposed posting rules and, if so, 

to raise capital. Given commenters’ 

feedback, the Board is adopting an 

implementation period of no less than 

six months as proposed, and the posting 

rule changes for ACH debit and 

commercial check transactions will take 

effect on July 23, 2015. All items 

scheduled to settle on this date and after 

will post according to the new posting 

rule procedures, regardless of the date of 

deposit. 

Elsewhere in the Federal Register 

under Docket No. R–1473, the Board 

also adopted necessary related changes 

to the Board’s Regulation J (12 CFR part 

210) regarding the timing of when 

paying banks settle for check 

transactions presented to them by the 

Reserve Banks effective on July 23, 

2015. 

Principles for Future Posting Rules for 

the Reserve Banks’ Same-Day ACH 

Service 

Two commenters, TCH and U.S. 

Bank, raised account-management and 

competitive disparity concerns 

regarding the second principle proposed 

by the Board for future posting rules for 

the Reserve Banks’ same-day ACH 

service. The principle stated that the 

Reserve Banks would not post 

settlement for same-day ACH 

transactions between 6:30 p.m. and 8:30 

a.m. the next processing day. 

Commenters’ concerns related to the 

Reserve Banks’ ability to settle same-day 

ACH transactions until 6:30 p.m. 

Specifically, the commenters were 

concerned that posting these 

transactions up to the close of the 

Fedwire Funds Service would not allow 

sufficient time between the settlement 

of same-day ACH transactions and the 

close of Fedwire Funds for institutions 

to settle other positions amongst 

themselves, and that the period between 

5:00 p.m. and 6:30 p.m. was outside of 

current NSS operating hours, putting 

any future private-sector same-day ACH 

service providers at a potential 

disadvantage relative to the Reserve 

Banks’ service. To address this concern, 

the Board has modified the second 

principle to read, ‘‘The Reserve Banks 

will not post settlement for same-day 

ACH transactions between the close of 

the Reserve Banks’ National Settlement 

Service and 8:30 a.m. the next 

processing day.’’ The modified principle 

requires that settlement post within the 

NSS operating day before the close of 

Fedwire Funds. As a result of the 

modification, the third proposed posting 

rule principle, which stated that the 

Reserve Banks will post settlement for 

same-day ACH transactions exchanged 

with another operator to support 

universal same-day ACH during the 

operating hours for the Reserve Banks’ 

NSS, is no longer needed. The Board 

has removed the third principle from 

the final principles for establishing 

future posting rules for the Reserve 

Banks’ same-day ACH service. The 

revised principles are as follows: 

(1) For each same-day ACH 

transmission deadline, the Reserve 

Banks will establish expected 

distribution times for the same-day ACH 

files. 

a. The Reserve Banks will post 

settlement for same-day ACH debit 

transactions no earlier than 15 minutes 

after the Reserve Banks’ expected 

distribution times for the associated 

same-day ACH file. 

b. The Reserve Banks will post 

settlement for ACH credit and debit 

transactions associated with a particular 

same-day ACH file distribution time at 

the same time. 

(2) Settlement will not post between 

the close of the Reserve Banks’ National 

Settlement Service and 8:30 a.m. on the 

next processing day. 

In addition, five commenters, 

including one commercial banking 

organization, one private-sector clearing 

and settlement system, and three 

depository institution trade 

organizations indicated their preference 

that the Board always request comment 

on new same-day ACH posting rule 

proposals, regardless of whether these 

rules conformed to the posting rule 

principles.33 Commenters believed it 

was important to request comment, 

given that future material considerations 

may emerge that may not be addressed 

by the principles and any alterations to 

the current same-day ACH service may 

require institutions to make significant 

changes. The Board continues to believe 

that the principles provide a reasonable 

gating mechanism to enable flexibility 

in the evolution of same-day ACH while 

still constraining settlement to the NSS 

operating day during core business 

hours. The Board expects that 


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72118 Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Rules and Regulations 

34The Board’s ‘‘Principles for Pricing of Federal 

Reserve Bank Services’’ are available at http://

www.federalreserve.gov/paymentsystems/pfs_

principles.htm. 

35At this time, for posting at 8:30 a.m., the 

electronic deposit deadline is 5:00 a.m. the same 

day and the paper check deposit deadline is 7:00 

p.m. on the previous business day. 

36At this time, the deposit deadline is 10:00 a.m. 

for items posting at 5:00 p.m. 

37Federal Reserve Regulatory Service, 7–145.2. 

38 12 CFR 210.9(b)(1) and (b)(5). 

39 12 CFR 229.36(f)(2). 

40The request for comment and the subsequent 

notice of the Board’s decision can be found, 

respectively, at 63 FR 12700 (March 16, 1998) and 

63 FR 68701 (December 14, 1998). 

institutions can reasonably manage their 

Federal Reserve accounts during the 

core business day. The Board will assess 

each future posting rule for same-day 

ACH to determine if public comment 

may be warranted based on the specific 

circumstances and the environment at 

that time and in conformance with the 

Board’s ‘‘Principles for Pricing of 

Federal Reserve Bank Services.’’ 34

Those principles provide that that the 

Board will request comment on 

proposed fee or service changes that 

would have significant longer-run 

effects on the nation’s payment system. 

The Board has adopted the same-day 

ACH principles as revised earlier, 

effective on December 5, 2014. 

Language Clarification to Section II.G.3 

The Board received no comments on 

its proposed language clarification to 

part II of the PSR policy regarding 

operational changes in the 

administration of the policy as it relates 

to U.S. branches and agencies of FBOs. 

The Board has adopted the proposed 

language changes to section II.G.3 of the 

PSR policy as proposed effective on 

December 5, 2014. 

IV. Additional Technical Revisions to 

the Posting Rules 

The Board has revised the PSR 

policy’s posting rules to conform to the 

current deposit deadline for Treasury 

checks, postal money orders, local 

Federal Reserve Bank checks, and 

savings bond redemptions in separately 

sorted deposits, which post at 8:30 a.m. 

The posting rule currently reflects a 

previous deposit deadline for these 

items at 12:01 a.m. local time or the 

local deposit deadline, whichever is 

later.35 Additionally, the Board has 

revised the posting rules to conform to 

the current deposit deadline for 

Treasury checks, postal money orders, 

and savings bond redemptions in 

separately sorted deposits which post at 

5:00 p.m. The posting rule currently 

reflects a previous deposit deadline for 

these items at 4:00 p.m.36 The Board is 

removing these obsolete deposit 

deadline references and, in both cases, 

indicating that the posting time will 

apply to items deposited by the latest 

applicable deposit deadline preceding 

the posting time. 

As the updated deposit deadlines are 

already in effect for the transactions 

described earlier, institutions’ Federal 

Reserve account balances are not 

affected by these updates to the 

incorrectly stated deposit deadlines in 

the posting rules. These revisions are 

effective on December 5, 2014. 

V. Competitive Impact Analysis 

The Board conducts a competitive 

impact analysis when it considers a rule 

or policy change that may have a 

substantial effect on payment system 

participants, such as that being 

proposed for the posting of ACH debit 

and commercial check transactions. 

Specifically, the Board determines 

whether there would be a direct and 

material adverse effect on the ability of 

other service providers to compete with 

the Federal Reserve due to differing 

legal powers or due to the Federal 

Reserve’s dominant market position 

deriving from such legal differences.37

The Board believes that there are no 

adverse effects resulting from the 

changes due to legal differences. 

Shifting the posting of ACH debit 

transactions to 8:30 a.m. brings the 

settlement of ACH debit transactions 

processed by the Reserve Banks’ 

FedACH service in line with the privatesector ACH operator, EPN. The postingrule change benefits not only FedACH 

participants that originate debit 

transactions but also EPN customers 

that originate debit transactions 

destined to FedACH customers, which 

settle according to the Board’s posting 

rules. The Board also believes that the 

implementation window will provide 

ample time for institutions to make 

account-management changes, if any. 

Under Regulation J, the Reserve Banks 

have the legal ability to obtain same-day 

settlement for checks they present 

before the paying bank’s banking day 

cutoff hour through ‘‘auto-charge,’’ that 

is, a direct debit to the Federal Reserve 

account of the paying bank or its 

correspondent settlement agent.38

Under the amendments to Regulation J 

explained elsewhere in this Federal 

Register, the Reserve Banks will have 

the right to debit the account of the 

paying bank or its correspondent 

settlement agent on the next clock hour 

or half-hour that is at least one half-hour 

after presentment. In contrast, when a 

private-sector bank presents a paper 

check by 8:00 a.m. for same-day 

settlement, Regulation CC requires the 

paying bank to settle for the check by 

sending a Fedwire Funds transfer to the 

presenting bank by the close of Fedwire 

(or by another agreed upon method).39

Thus, Reserve Banks may present 

checks later in the day for same-day 

settlement than private-sector banks. In 

addition, Reserve Banks may obtain 

settlement earlier in the day than 

private-sector collecting banks and, in 

turn, may pass credits for deposited 

checks earlier in the day without 

incurring significant intraday float. 

In March 1998, the Board requested 

comment on whether the legal 

differences between rights of the 

Reserve Banks and the private-sector 

presenting banks provided the Reserve 

Banks with a competitive advantage and 

whether the Board should take action to 

reduce the differences. Commenters 

generally concluded that the costs of 

further changes outweighed any 

advantage of the Reserve Banks.40 In 

particular, commenters noted the 

efficiency of the Reserve Bank’s autocharge process for paying banks, and 

stated that moving the private-sector 

presentment deadline to later in the day 

or eliminating the direct debit of Federal 

Reserve accounts for check 

presentments would result in higher 

costs to paying banks and their business 

customers in terms of account 

management, settlement funds transfer 

fees, and shortened processing 

windows, and that those costs would 

outweigh the benefits gained by 

presenting banks. Based on an analysis 

of the comments, the Board took no 

further action. 

For the vast majority of checks 

presented by private-sector banks today, 

which are presented in electronic form, 

settlement occurs as agreed between the 

presenting bank and paying bank. Banks 

may determine, as part of the agreement 

between the presenting bank and paying 

bank, the time at which settlement for 

checks is required to be funded. 

Furthermore, for collecting banks and 

paying banks that opt to use a check 

clearinghouse, the clearinghouses have 

the option to use NSS to effect 

settlement of checks or may settle by 

directing their members to initiate funds 

transfers over the Reserve Banks’ 

Fedwire Funds Service. Beginning in 

January 2015, the NSS file submission 

window will be 7:30 a.m. to 5:30 p.m. 

Fedwire Funds operating hours begin at 

9:00 p.m. the previous calendar day and 

end at 6:30 p.m. As adopted in this 

Federal Register document, effective on 

July 23, 2015, the Reserve Banks will 

settle commercial check transactions at 


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41 In addition to debit corrections and 

adjustments, small-dollar credit corrections and 

adjustments also post after the close of Fedwire 

Funds. 

42 Institutions that are monitored in real time 

must fund the total amount of their commercial 

ACH credit originations before the transactions are 

processed by the Reserve Banks. If the Federal 

Reserve receives commercial ACH credit 

transactions from institutions monitored in real 

time after the scheduled close of the Fedwire Funds 

Service, these transactions are currently processed 

at 12:30 a.m. the next business day, or by the ACH 

deposit deadline, whichever is earlier. The Account 

Balance Monitoring System provides intraday 

account information to the Reserve Banks and 

institutions and is used primarily to give authorized 

Reserve Bank personnel a mechanism to control 

and monitor account activity for selected 

institutions. For more information on ACH 

transaction processing, refer to the ACH Settlement 

Day Finality Guide available through the Federal 

Reserve Financial Services Web site at http://

www.frbservices.org. 

43The Reserve Banks will identify and notify 

institutions with Treasury-authorized penalties on 

Thursdays. In the event that Thursday is a holiday, 

the Reserve Banks will identify and notify 

institutions with Treasury-authorized penalties on 

the following business day. Penalties will then be 

posted on the business day following notification. 44 12 U.S.C. 3101–3108. 

8:30 a.m., 1:00 p.m., and 5:30 p.m. and 

debits from corrections and adjustments 

amounting to $1 million or more will 

settle after the close of Fedwire Funds 

Service. A limited number of 

commercial check debit and smalldollar credit corrections and 

adjustments post after the close of 

Fedwire. Such late posting ensures that 

institutions only benefit intraday from 

detected processing errors and that an 

institution could not receive a debit 

correction or adjustment before the 

associated check transaction posted. 

Given the minimal occurrence of largevalue check corrections and adjustments 

and the low value of other check 

corrections and adjustments, the Board 

does not believe posting these 

transactions after the close of Fedwire 

creates a direct and material competitive 

disparity between Reserve Bank and 

private-sector service providers.41

Under the adopted posting rules, the 

bulk of the Reserve Banks’ postings of 

credits to depositing banks and debits to 

paying banks for commercial check 

transactions will shift to earlier in the 

day. The value of checks a bank sends 

to the Reserve Banks could be higher or 

lower than the value it receives from the 

Reserve Banks. As a result, the earlier 

posting of commercial check 

transactions may be viewed as more or 

less attractive, depending on whether 

the value of an institution’s check 

credits is higher or lower than the value 

of its check debits. Further, privatesector banks can achieve improvements 

similar to those provided by the 

proposed changes through private 

agreements among participants, as well 

as the use of the NSS. 

Given the factors discussed earlier, 

the Board does not believe that the 

changes to the posting rules would have 

a direct and material adverse effect on 

other service providers to compete 

effectively with Reserve Banks in 

providing similar services. 

VI. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3506; 

5 CFR part 1320 appendix A.1), the 

Board reviewed the PSR policy changes 

it is considering under the authority 

delegated to the Board by the Office of 

Management and Budget. No collection 

of information pursuant to the 

Paperwork Reduction Act are contained 

in the policy statement. 

VII. Federal Reserve Policy on Payment 

System Risk 

Technical Revisions to the Posting Rules 

Effective on December 5, 2014, the 

‘‘Federal Reserve Policy on Payment 

System Risk’’ section II.A. under the 

heading ‘‘Procedures for Measuring 

Daylight Overdrafts’’ and the 

subheadings ‘‘Post at 8:30 a.m. eastern 

time’’ and ‘‘Post at 5:00 p.m. eastern 

time’’ is amended as follows. 

Post at 8:30 a.m. eastern time: 

+/¥ Term deposit maturities and 

accrued interest 

+/¥ Government and commercial ACH 

credit transactions 42

+ Treasury checks, postal money orders, 

local Federal Reserve Bank checks, 

and savings bond redemptions in 

separately sorted deposits; these 

items must be deposited by the 

latest applicable deposit deadline 

preceding the posting time. 

+ Advance-notice Treasury investments 

¥ Penalty assessments for tax payments 

from the Treasury Investment 

Program (TIP).43

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

+/¥ FedACH SameDay Service 

transactions 

+/¥ Immediate settlement ACH 

transactions; these transactions 

include ACH return items and 

check-truncation items. 

+ Treasury checks, postal money orders, 

and savings bond redemptions in 

separately sorted deposits; these 

items must be deposited by the 

latest applicable deposit deadline 

preceding the posting time. 

+ Local Federal Reserve Bank checks; 

these items must be presented 

before 3:00 p.m. eastern time 

Revisions to Section II.G.3 of the PSR 

Policy 

Effective December 5, 2014, section 

II.G.3 of the ‘‘Federal Reserve Policy on 

Payment System Risk’’ is amended to 

clarify the Reserve Banks’ 

administration of the policy for U.S. 

branches and agencies of foreign 

banking organizations as follows. 

3. Multi-District Institutions 

An institution maintaining mergertransition accounts or an Edge or 

agreement corporation that accesses 

Fedwire through master accounts in 

more than one Federal Reserve District 

is expected to manage its accounts so 

that the total daylight overdraft position 

across all accounts does not exceed the 

institution’s net debit cap. One Reserve 

Bank will act as the administrative 

Reserve Bank and will have overall riskmanagement responsibilities for an 

institution maintaining master accounts 

in more than one Federal Reserve 

District. For domestic institutions that 

have branches in multiple Federal 

Reserve Districts, the administrative 

Reserve Bank generally will be the 

Reserve Bank where the head office of 

the bank is located. 

U.S. branches and agencies of the 

same foreign bank (also referred to as an 

FBO family) are assigned one net debit 

cap per FBO family. FBO families that 

access Fedwire through master accounts 

in more than one Federal Reserve 

District are expected to manage their 

accounts so that the daylight overdraft 

position in each account does not 

exceed the capacity allocated to that 

account from the FBO family’s net debit 

cap. The administrative Reserve Bank 

generally is the Reserve Bank that 

exercises the Federal Reserve’s oversight 

responsibilities under the International 

Banking Act.44 The administrative 

Reserve Bank, in consultation with the 

management of the foreign bank’s U.S. 

operations and with Reserve Banks in 

whose territory other U.S. agencies or 

branches of the same foreign bank are 

located, may recommend that these 

agencies and branches not be permitted 

to incur overdrafts in Federal Reserve 

accounts. Alternatively, the 

administrative Reserve Bank, after 

similar consultation, may recommend 

that all or part of the foreign family’s net 

debit cap be allocated to the Federal 

Reserve accounts of agencies or 

branches that are located outside of the 

administrative Reserve Bank’s District; 

in this case, the Reserve Bank in whose 

Districts those agencies or branches are 


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72120 Federal Register / Vol. 79, No. 234 / Friday, December 5, 2014 / Rules and Regulations 

45As in the case of Edge and agreement 

corporations and their branches, with the approval 

of the designated administrative Reserve Bank, a 

second Reserve Bank may assume the responsibility 

for administering this policy regarding particular 

foreign branch and agency families. This would 

often be the case when the payments activity and 

national administrative office of the foreign branch 

and agency family is located in one District, while 

the oversight responsibility under the International 

Banking Act is in another District. If a second 

Reserve Bank assumes management responsibility, 

monitoring data will be forwarded to the designated 

administrator for use in the supervisory process. 

46This schedule of posting rules does not affect 

the overdraft restrictions and overdraftmeasurement provisions for nonbank banks 

established by the Competitive Equality Banking 

Act of 1987 and the Board’s Regulation Y (12 CFR 

225.52). 47 Institutions that are monitored in real time 

must fund the total amount of their commercial 

ACH credit originations in order for the transactions 

to be processed. If the Federal Reserve receives 

commercial ACH credit transactions from 

institutions monitored in real time after the 

scheduled close of the Fedwire Funds Service, 

these transactions are currently processed at 12:30 

a.m. the next business day, or by the ACH deposit 

deadline, whichever is earlier. The Account 

Balance Monitoring System provides intraday 

account information to the Reserve Banks and 

institutions and is used primarily to give authorized 

Reserve Bank personnel a mechanism to control 

and monitor account activity for selected 

institutions. For more information on ACH 

transaction processing, refer to the ACH Settlement 

Day Finality Guide available through the Federal 

Reserve Financial Services Web site at http://

www.frbservices.org. 

48For the three commercial check transaction 

posting times, the Reserve Banks will post credits 

and debits to institutions’ accounts for checks 

deposited and presented, respectively, at least 30 

minutes before the posting time. 

49The Reserve Banks will identify and notify 

institutions with Treasury-authorized penalties on 

Thursdays. In the event that Thursday is a holiday, 

the Reserve Banks will identify and notify 

institutions with Treasury-authorized penalties on 

the following business day. Penalties will then be 

posted on the business day following notification. 

50Corrections are account entries made to correct 

discrepancies detected by a Reserve Bank during 

the initial processing of checks. 

51Adjustments are account entries made to 

correct discrepancies detected by an institution 

after entries have posted to Federal Reserve 

accounts. 

located will be responsible for 

administering all or part of this policy.45

Changes to the Posting Rules for ACH 

Debit and Commercial Check 

Transactions 

Effective on July 23, 2015, the 

‘‘Federal Reserve Policy on Payment 

System Risk’’ section II.A. under the 

heading ‘‘Procedures for Measuring 

Daylight Overdrafts’’ is amended as 

follows. 

Procedures for Measuring Daylight 

Overdrafts 46

Opening Balance (Previous Day’s 

Closing Balance) 

Post at 8:30 a.m. eastern time: 

+/¥ Term deposit maturities and 

accrued interest 

+/¥ Government and commercial ACH 

transactions 47

+/¥ Commercial check transactions, 

including returned checks 48

+ Treasury checks, postal money 

orders, local Federal Reserve Bank 

checks, and savings bond 

redemptions in separately sorted 

deposits; these items must be 

deposited by the latest applicable 

deposit deadline preceding the 

posting time. 

+ Advance-notice Treasury investments 

¥ Penalty assessments for tax 

payments from the Treasury 

Investment Program (TIP).49

Post at 8:30 a.m. eastern time and 

hourly, on the half-hour, thereafter: 

+/¥ Main account administrative 

investment or withdrawal from TIP 

+/¥ Special Direct Investment (SDI) 

administrative investment or 

withdrawal from TIP 

+ 31 CFR part 202 account deposits 

from TIP 

+ Credit corrections amounting to $1 

million or more 50

+ Credit adjustments amounting to $1 

million or more 51

¥ Uninvested paper tax (PATAX) 

deposits from TIP 

¥ Main account balance limit 

withdrawals from TIP 

¥ Collateral deficiency withdrawals 

from TIP 

¥ 31 CFR part 202 deficiency 

withdrawals from TIP 

Post at 11:00 a.m. eastern time and 

hourly thereafter: 

+ Currency and coin deposits 

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

+/¥ Commercial check transactions, 

including returned checks 

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

+/¥ FedACH SameDay Service return 

transactions. 

+/¥ Commercial check transactions, 

including returned checks 

Post after the close of Fedwire Funds 

Service: 

+/¥ All other transactions. These 

transactions include the following: 

currency and coin shipments; 

noncash collection; term-deposit 

settlements; Federal Reserve Bank 

checks presented after 3:00 p.m. 

eastern time but before 3:00 p.m. 

local time; foreign check 

transactions; small-dollar credit 

corrections and adjustments; and all 

debit corrections and adjustments. 

Discount-window loans and 

repayments are normally posted 

after the close of Fedwire as well; 

however, in unusual circumstances 

a discount window loan may be 

posted earlier in the day with 

repayment 24 hours later, or a loan 

may be repaid before it would 

otherwise become due. 

Equals: 

Closing Balance. 

* * * * * 

Dated: December 1, 2014. 

By order of the Board of Governors of the 

Federal Reserve System, 

Robert deV. Frierson, 

Secretary of the Board. 

[FR Doc. 2014–28664 Filed 12–4–14; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1238 

[No. 2014–N–15] 

Orders: Reporting by Regulated 

Entities of Stress Testing Results as of 

September 30, 2014 

AGENCY: Federal Housing Finance 

Agency. 

ACTION: Orders. 

SUMMARY: In this document, the Federal 

Housing Finance Agency (FHFA) 

provides notice that it issued Orders 

dated December 1, 2014, with respect to 

reporting under section 165(i)(2) of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act). 

DATES: Effective December 5, 2014. Each 

Order is applicable on December 1, 

2014. 

FOR FURTHER INFORMATION CONTACT: Naa 

Awaa Tagoe, Senior Associate Director, 

Office of Financial Analysis, Modeling 

and Simulations, (202) 649–3140, 

naaawaa.tagoe@fhfa.gov; Stefan 

Szilagyi, Examination Manager, 

FHLBank Modeling, FHLBank Risk 

Modeling Branch, (202) 649–3515, 

Stefan.szilagy@fhfa.gov; or Mark D. 

Laponsky, Deputy General Counsel, 

Office of General Counsel, (202) 649– 

3054 (these are not toll-free numbers), 

mark.laponsky@fhfa.gov. The telephone 

number for the Telecommunications 

Device for the Hearing Impaired is (800) 

877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

FHFA is responsible for ensuring that 

the regulated entities operate in a safe 

and sound manner, including the 

maintenance of adequate capital and 

internal controls, that their operations 

and activities foster liquid, efficient, 

competitive, and resilient national 

housing finance markets, and that they 

carry out their public policy missions 


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