80 FR 70783 - Federal Reserve Bank Services
FEDERAL RESERVE SYSTEM Federal Register Volume 80, Issue 220 (November 16, 2015)
Federal Register Volume 80, Issue 220 (November 16, 2015)
| Page Range | 70783-70802 | |
| FR Document | 2015-28932 |
[Federal Register Volume 80, Number 220 (Monday, November 16, 2015)] [Notices] [Pages 70783-70802] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-28932] ======================================================================= ----------------------------------------------------------------------- FEDERAL RESERVE SYSTEM [Docket No. OP-1522] Federal Reserve Bank Services AGENCY: Board of Governors of the Federal Reserve System. ACTION: Notice. ----------------------------------------------------------------------- SUMMARY: The Board of Governors of the Federal Reserve System (Board) has approved the private sector adjustment factor (PSAF) for 2016 of $13.1 million and the 2016 fee schedules for Federal Reserve priced services and electronic access. These actions were taken in accordance with 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 1, 2016. FOR FURTHER INFORMATION CONTACT: For questions regarding the fee schedules: Susan V. Foley, Senior Associate Director, (202) 452-3596; Slavea A. Assenova, Financial Services Analyst, (202) 452-2087, Division of Reserve Bank Operations and Payment Systems. For questions regarding the PSAF: Gregory L. Evans, Deputy Associate Director, (202) 452-3945; Lawrence Mize, Deputy Associate Director, (202) 452-5232; Manuel Garcia, Senior Financial Analyst, (202) 452-3480, Division of Reserve Bank Operations and Payment Systems. For users of Telecommunications Device for the Deaf (TDD) only, please call (202) 263-4869. Copies of the 2016 fee schedules for the check service are available from the Board, the Federal Reserve Banks, or the Reserve Banks' financial services Web site at www.frbservices.org. SUPPLEMENTARY INFORMATION: I. Private Sector Adjustment Factor, Priced Services Cost Recovery, and Overview of 2016 Price Changes A. Overview--Each year, as required by the Monetary Control Act of 1980, the Reserve Banks set fees for priced services provided to depository institutions. These fees are set to recover, over the long run, all direct and indirect costs and imputed costs, including financing costs, taxes, and certain other expenses, as well as the return on equity (profit) that would have been earned if a private business firm provided the services. The imputed costs and imputed profit are collectively referred to as the PSAF. From 2005 through 2014, the Reserve Banks recovered 102.9 percent of their total expenses (including imputed costs) and targeted after-tax profits or return on equity (ROE) for providing priced services.\1\ --------------------------------------------------------------------------- \1\ The ten-year recovery rate is based on the pro forma income statement for Federal Reserve priced services published in the Board's Annual Report. Effective December 31, 2006, the Reserve Banks implemented Statement of Financial Accounting Standards (SFAS) No. 158: Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans [Accounting Standards Codification (ASC) 715 Compensation--Retirement Benefits], which resulted in recognizing a cumulative reduction in equity related to the priced services' benefit plans. Including this cumulative reduction in equity from 2005 to 2014 results in cost recovery of 95.1 percent for the ten- year period. This measure of long-run cost recovery is also published in the Board's Annual Report. --------------------------------------------------------------------------- Table 1 summarizes 2014 actual, 2015 estimated, and 2016 budgeted cost-recovery rates for all priced services. Cost recovery is estimated to be 104.1 percent in 2015 and budgeted to be 101.9 percent in 2016. Table 1--Aggregate Priced Services Pro Forma Cost and Revenue Performance a [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Recovery rate Year Revenue Total expense Net income Targeted ROE after targeted ROE [1/(2+4)] 1 \b\ 2 \c\ 3 4 \d\ 5 \e\ ---------------------------------------------------------------------------------------------------------------- 2014 (actual)................... 433.1 418.7 14.5 5.5 102.1% 2015 (estimate)................. 427.1 404.6 22.6 5.6 104.1% 2016 (budget)................... 426.9 414.9 12.0 4.1 101.9% ---------------------------------------------------------------------------------------------------------------- \a\ Calculations in this table and subsequent pro forma cost and revenue tables may be affected by rounding. \b\ Revenue includes imputed income on investments when equity is imputed at a level that meets minimum capital requirements and, when combined with liabilities, exceeds total assets (attachment 1). \c\ The calculation of total expense includes operating, imputed, and other expenses. Imputed and other expenses include taxes, Board of Governors' priced services expenses, the cost of float, and interest on imputed debt, if any. Credits or debits related to the accounting for pension plans under FAS 158 [ASC 715] are also included. \d\ Targeted ROE is the after-tax ROE included in the PSAF. \e\ The recovery rates in this and subsequent tables do not reflect the unamortized gains or losses that must be recognized in accordance with FAS 158 [ASC 715]. Future gains or losses, and their effect on cost recovery, cannot be projected. Table 2 provides an overview of cost-recovery performance for the ten-year period from 2005 to 2014, 2014 actual, 2015 budget, 2015 estimate, and 2016 budget by priced service. [[Page 70784]] Table 2--Priced Services Cost Recovery [Percent] ---------------------------------------------------------------------------------------------------------------- 2015 budget 2016 budget Priced service 2005-2014 2014 actual \a\ 2015 estimate \b\ ---------------------------------------------------------------------------------------------------------------- All services.................... 102.9 102.1 102.0 104.1 101.9 Check........................... 103.7 115.6 105.2 110.1 106.7 FedACH.......................... 100.0 86.7 100.4 100.0 99.0 Fedwire Funds and NSS........... 101.9 103.2 100.7 100.7 100.0 Fedwire Securities.............. 102.3 104.1 97.5 105.7 98.7 ---------------------------------------------------------------------------------------------------------------- \a\ The 2015 budget figures reflect the final budgets as approved by the Board in December 2014. \b\ The 2016 budget figures reflect preliminary budget information from the Reserve Bank. The Reserve Banks will submit final budget data to the Board in November 2015, for Board consideration in December 2015. 1. 2015 Estimated Performance--The Reserve Banks estimate that they will recover 104.1 percent of the costs of providing priced services in 2015, including total expense and targeted ROE, compared with a 2015 budgeted recovery rate of 102.0 percent, as shown in table 2. Overall, the Reserve Banks estimate that they will fully recover actual and imputed costs and earn net income of $22.6 million, compared with the targeted ROE of $5.6 million. The Reserve Banks estimate that all services will achieve full cost recovery, despite higher-than-budgeted pension expenses. Greater-than-expected check volume processed by the Reserve Banks has been the single most significant factor influencing priced services cost recovery. 2. 2016 Private-Sector Adjustment Factor--The 2016 PSAF for Reserve Bank priced services is $13.1 million. This amount represents a decrease of $4.9 million from the 2015 PSAF of $18.0 million. This decrease is primarily the result of a reduction in the assets to be financed on the imputed priced-services balance sheet and an associated decline in the cost of debt and equity. 3. 2016 Projected Performance--The Reserve Banks project a priced services cost-recovery rate of 101.9 percent in 2016, with net income of $12.0 million, compared with a targeted ROE of $4.1 million. The Reserve Banks project that the check service and the Fedwire[supreg] Funds and National Settlement Service will fully recover their costs; however, the Reserve Banks project that the FedACH[supreg] Service and the Fedwire Securities Service will not achieve full cost recovery because of investment costs associated with multiyear technology initiatives to modernize their processing platforms.\2\ These investments are expected to enhance efficiency, the overall quality of operations, and the Reserve Banks' ability to offer additional services to depository institutions. --------------------------------------------------------------------------- \2\ The Reserve Banks have been engaged in a multiyear technology initiative to modernize the FedACH processing platform by migrating the service from a mainframe system to a distributed computing environment. In late 2013, the Reserve Banks conducted an assessment focused on the viability and cost-effectiveness of the program. As a result, the Reserve Banks in 2014 suspended the program and began to investigate the use of other technology solutions. In 2015, the Reserve Banks evaluated alternative processing solutions, including commercially available options. --------------------------------------------------------------------------- The primary risks to the Reserve Banks' ability to achieve their targeted cost-recovery rates are unanticipated volume and revenue reductions and the potential for cost overruns with the technology modernization initiatives. In light of these risks, the Reserve Banks will continue to refine their business and operational strategies to manage operating costs, to increase product revenue, and to capitalize on efficiencies gained from technology initiatives. 4. 2016 Pricing--The following summarizes the Reserve Banks' changes in fee schedules for priced services in 2016: CheckThe Reserve Banks will increase the per-item fee for FedReturn[supreg] items that are qualified to the Reserve Bank in instances in which the bank of first deposit cannot be identified from $8 to $15. The Reserve Banks will increase the fees for traditional paper check forward and return collection deposits. The Reserve Banks will increase the per-item fee for paper forward deposits from $2.00 to $2.50 and the per-item fee for each unencoded item from $1.00 to $1.50.\3\ The Reserve Banks will increase the per-item fee for paper return-collection deposits from $5.00 to $5.50 and the per-item fee for unqualified paper returns from $7.00 to $7.50. The Reserve Banks will discontinue image retrievals by fax for both incoming and outgoing retrievals within FedImage[supreg] Services.\4\ --------------------------------------------------------------------------- \3\ Unencoded items are those items deposited without encoding of certain elements, such as amount, added to the magnetic ink character recognition (MICR) line. \4\ FedImage Services offer depository institutions products for the capture, archive, and retrieval of check images. A current list of services can be found at https://www.frbservices.org/serviceofferings/check/fed_image_services.html. --------------------------------------------------------------------------- The Reserve Banks will introduce Select Mixed Level 3 to the Select Mixed image cash letter (ICL) product.\5\ The new level will have a daily fee of $3,000 and per-item fees from $0.002 to $0.350. --------------------------------------------------------------------------- \5\ A current list of Select Mixed endpoints can be found at https://www.frbservices.org/servicefees/check21_endpoint_listing.html. --------------------------------------------------------------------------- The Reserve Banks will eliminate the FedForward[supreg] Fine Sort (ICL) product in January 2017 as part of the Reserve Banks' effort to reflect today's electronic check processing environment in their check fee schedule.\6\ To encourage depositors to shift volume from the fine-sort products to mixed deposit options in advance of this elimination, the Reserve Banks will increase the FedForward Fine Sort ICL product per-item fees at the 9 p.m., 1 a.m., and 5 a.m. deadlines by $0.002, $0.004, and $0.006, respectively.\7\ The Reserve Banks will increase the FedForward Deferred Fine Sort ICL product per-item fees at the 1 a.m., 5 [[Page 70785]] a.m., and 10 a.m. deadlines by $0.004, $0.006, and $0.008, respectively. --------------------------------------------------------------------------- \6\ In a paper check processing environment, the fine sort product allowed the Reserve Banks to gain efficiencies because the checks did not require processing on reader-sorters. In today's electronic check processing environment, all image cash letters are processed through the Reserve Banks' electronic system in the same manner, and the Reserve Banks do not gain any efficiencies by having the depositing bank fine sort electronic checks prior to deposit. \7\ All times are stated in the Eastern Time zone (ET). Depository institutions may deposit image cash letters using nine deposit options within the FedForward product line; the options vary in price structure and funds availability. The Reserve Banks offer customers the option of sending FedForward ICLs for items drawn on specific endpoints in a separate cash letter, which combines a high fixed fee with a lower variable fee. All eligible items in the cash letter receive immediate availability, while ineligible items receive deferred availability of the next business day. A current list of FedForward deposit options can be found at https://www.frbservices.org/servicefees/check_services_2015.html. --------------------------------------------------------------------------- In addition to the above changes, the Reserve Banks plan to announce further modifications to the check fee schedule during 2016 that reflect the efficiencies of today's electronic check processing environment. The new schedule may include elimination of certain sorted deposit options and modifications to the current endpoint-based tiered pricing structure. FedACH The Reserve Banks will increase the minimum monthly fee for forward origination from $35 to $45.\8\ --------------------------------------------------------------------------- \8\ Any originating depository financial institution (ODFI) incurring less than $45 for the following fees will be charged the difference to reach the minimum: Forward value and nonvalue item origination fees, FedGlobal ACH origination surcharges, and FedACH SameDay forward origination surcharges. --------------------------------------------------------------------------- The Reserve Banks will increase the minimum monthly fee for receipt from $25 to $35.\9\ --------------------------------------------------------------------------- \9\ Any receiving depository financial institution (RDFI) originating forward value and nonvalue items below the minimum level and incurring less than $35 in receipt fees will be charged the difference to reach the minimum based on origination. RDFIs not originating forward value and nonvalue items will incur the $35 minimum monthly fee for receipt. --------------------------------------------------------------------------- The Reserve Banks will eliminate the large file and small file per-item fees and introduce a single base fee of $0.0032 for all origination files. The Reserve Banks will provide a discount of $0.0005 for origination volume between 750,000 to 1,500,000 items per month and $0.0007 for origination volume greater than 1,500,000 items per month. The Reserve Banks will lower the top-tier volume origination discount level based on monthly receipt volume from 17,500,000 to 15,000,000 items per month, while maintaining the current discount amounts.\10\ --------------------------------------------------------------------------- \10\ Origination discounts apply only to those items received by FedACH receiving points and are available only to Premium Receivers. --------------------------------------------------------------------------- The Reserve Banks will increase the forward item receipt fee from $0.0025 to $0.0032 per item, while keeping the return item receipt fee at $0.0075 per item. The Reserve Banks will change the volume-based receipt discount structure to encourage additional receipt volume. The changes will include a decrease in the first volume-based discount by 250,000 items per month to 750,001 items a month, the introduction of a new volume-based discount tier for volume between 1,500,001 and 2,500,000 items per month, and an increase for all existing volume-based receipt discounts by $0.0007.\11\ --------------------------------------------------------------------------- \11\ Premium Receivers (institutions receiving a certain portion of volume through FedACH) with volume greater than 1,500,000 items a month will receive the increased discount for all items received. --------------------------------------------------------------------------- The Reserve Banks will implement a $20 monthly billing discount for any customer that pays the origination minimum fee, subscribes to a FedLine Web[supreg] Plus or higher package, and subscribes to either FedACH RDFI Alert, FedACH Risk[supreg] Origination Monitoring, or FedPayments[supreg] Reporter. In addition to the above changes, the Reserve Banks plan to reassess the FedGlobal[supreg] ACH fee schedule during 2016. Fedwire Funds and National Settlement The Reserve Banks will increase the Tier 1 per-item pre- incentive fee from $0.73 to $0.79 per transaction, increase the Tier 3 per-item pre-incentive fee from $0.150 to $0.155 per transaction, and leave Tier 2 per-item pre-incentive fees unchanged.\12\ --------------------------------------------------------------------------- \12\ The per-item pre-incentive fee is the fee that the Reserve Banks charge for transfers that do not qualify for incentive discounts. The Tier 1 per-item pre-incentive fee applies to the first 14,000 transfers, the Tier 2 per-item pre-incentive fee applies to the next 76,000 transfers, and the Tier 3 per-item pre- incentive fee applies to any additional transfers. The Reserve Banks apply an 80 percent incentive discount to transfers over 60 percent of a customer's historic benchmark volume. --------------------------------------------------------------------------- The Reserve Banks will increase the surcharge for offline transactions from $50 to $55. The Reserve Banks will increase the monthly participation fee from $90 to $95. Fedwire Securities and National Settlement Services The Reserve Banks will keep prices at existing levels for the priced Fedwire Securities and National Settlement Services. FedLine[supreg] Access Solutions The Reserve Banks will increase the fee for the FedLine Exchange\SM\ subscriber pack by $5 per month.\13\ The Reserve Banks will keep all other existing FedLine fees unchanged. --------------------------------------------------------------------------- \13\ FedLine packages do not include user subscriptions for priced services. Depository institutions that wish to access priced services must purchase user subscriptions in packs of five (5- packs). --------------------------------------------------------------------------- The Reserve Banks will introduce a 256K/T1 legacy router surcharge of $5,000 per month to encourage customers to migrate to more efficient access solutions.\14\ --------------------------------------------------------------------------- \14\ The $5,000 per month surcharge will be effective July 1, 2016. The price will increase to $10,000 per month on September 1, 2016 and $20,000 per month on November 1, 2016. --------------------------------------------------------------------------- The Reserve Banks will introduce a fee for customers that choose to implement FedLine using a customized (nonstandard) router setup. The fee will vary from $2,500 to $5,000 based on the complexity of the setup. The Reserve Banks will include two virtual private network (VPN) devices in the FedLine Direct[supreg] Premier package (rather than one) to align better with the FedLine Advantage[supreg] Premier package. Depository institutions with more than 250 Fedwire transactions per month, or more than one routing number, will only have access to the FedPayments Manager Import/Export (FPM) tool via FedLine Advantage Premier.\15\ Affected customers will experience a fee increase ranging from $15 to $75 per month to upgrade to FedLine Advantage Premier. --------------------------------------------------------------------------- \15\ These customers are generally large institutions that may benefit from the expanded suite of services included in the FedLine Advantage Premier package. For example, large customers may benefit from the enhanced contingency preparedness solutions (such as a secondary VPN device) that are included in FedLine Premier packages. FedComplete Plus customers with more than 250 Fedwire transactions per month that use the FPM tool will also be transferred to FedComplete Premier packages with the associated fee increase because FedComplete Plus packages incorporate FedLine Advantage Plus. The transfer will affect about 10 current FedCompelete customers. --------------------------------------------------------------------------- 5. 2016 Price Index--Figure 1 compares indexes of fees for the Reserve Banks' priced services with the GDP price index.\16\ The price index for Reserve Bank priced services is projected to increase approximately 1 percent in 2016 from the 2015 level. The price index for Check 21 services is projected to increase less than 1 percent. The price index for the FedACH Service is projected to decrease nearly 1 percent. The price index for the Fedwire Funds and National Settlement Services is projected to increase approximately 5 percent. The price index for the Fedwire Securities Services is projected to decrease nearly 1 percent. For the period 2006 to 2015, the price index for total priced services is expected to decrease 26 percent. --------------------------------------------------------------------------- \16\ For the period 2006 to 2014, the GDP price index increased 15 percent. --------------------------------------------------------------------------- BILLING CODE 6210-01-P [[Page 70786]] [GRAPHIC] [TIFF OMITTED] TN16NO15.212 BILLING CODE 6210-01-C B. Private Sector Adjustment Factor--The imputed debt financing costs, targeted ROE, and effective tax rate are based on a U.S. publicly traded firm market model.\17\ The method for calculating the financing costs in the PSAF requires determining the appropriate imputed levels of debt and equity and then applying the applicable financing rates. In this process, a pro forma balance sheet using estimated assets and liabilities associated with the Reserve Banks' priced services is developed, and the remaining elements that would exist are imputed as if these priced services were provided by a private business firm. The same generally accepted accounting principles that apply to commercial-entity financial statements apply to the relevant elements in the priced services pro forma financial statements. --------------------------------------------------------------------------- \17\ Data for U.S. publicly traded firms is from the Standard and Poor's Compustat[supreg] database. This database contains information on more than 6,000 U.S. publicly traded firms, which approximates the entirety of the U.S. market. --------------------------------------------------------------------------- The portion of Federal Reserve assets that will be used to provide priced services during the coming year is determined using information about actual assets and projected disposals and acquisitions. The priced portion of these assets is determined based on the allocation of depreciation and amortization expenses of each asset class. The priced portion of actual Federal Reserve liabilities consists of postemployment and postretirement benefits, accounts payable, and other liabilities. The priced portion of the actual net pension asset or liability is also included on the balance sheet.\18\ --------------------------------------------------------------------------- \18\ The pension assets are netted with the pension liabilities and reported as a net asset or net liability as required by ASC 715 Compensation--Retirement Benefits. --------------------------------------------------------------------------- The equity financing rate is the targeted ROE produced by the capital asset pricing model (CAPM). In the CAPM, the required rate of return on a firm's equity is equal to the return on a risk-free asset plus a market risk premium. The risk-free rate is based on the three- month Treasury bill; the beta is assumed to be equal to 1.0, which approximates the risk of the market as a whole; and the market risk premium is based on the monthly returns in excess of the risk-free rate over the most recent 40 years. The resulting ROE reflects the return a shareholder would expect when investing in a private business firm. For simplicity, given that federal corporate income tax rates are graduated, state income tax rates vary, and various credits and deductions can apply, an actual income tax expense is not explicitly calculated for Reserve Bank priced services. Instead, the Board targets a pretax ROE that would provide sufficient income to fulfill the priced services' imputed income tax obligations. To the extent that performance results are greater or less than the targeted ROE, income taxes are adjusted using the effective tax rate. [[Page 70787]] Capital structure. The capital structure is imputed based on the imputed funding need (assets less liabilities), subject to minimum equity constraints. Short-term debt is imputed to fund the imputed short-term funding need. Long-term debt and equity are imputed to meet the priced services long-term funding need at a ratio based on the capital structure of the U.S. publicly traded firm market. The level of equity must meet the minimum equity constraints, which follow the FDIC requirements for a well-capitalized institution. The priced services must maintain equity of at least 5 percent of total assets and 10 percent of risk-weighted assets.\19\ Any equity imputed that exceeds the amount needed to fund the priced services' assets and meet the minimum equity constraints is offset by a reduction in imputed long- term debt. When imputed equity is larger than what can be offset by imputed debt, the excess is imputed as investments in Treasury securities; income imputed on these investments reduces the PSAF. --------------------------------------------------------------------------- \19\ The FDIC rule, which was adopted as final on April 8, 2014, requires that well-capitalized institutions meet or exceed the following standards: (1) Total capital to risk-weighted assets ratio of at least 10 percent, (2) tier 1 capital to risk-weighted assets ratio of at least 8 percent, (3) common equity tier 1 capital to risk-weighted assets ratio of at least 6.5 percent, and (4) a leverage ratio (tier 1 capital to total assets) of at least 5 percent. Because all of the Federal Reserve priced services' equity on the pro forma balance sheet qualifies as tier 1 capital, only requirements 1 and 4 are binding. The FDIC rule can be located at https://www.fdic.gov/news/board/2014/2014-04-08_notice_dis_c_fr.pdf. --------------------------------------------------------------------------- Application of the Payment System Risk (PSR) Policy to the Fedwire Services. The Board's PSR policy reflects the new international standards for financial market infrastructures (FMIs) developed by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions in the Principles for Financial Market Infrastructures. The revised policy retains the expectation that the Fedwire Services meet or exceed the applicable risk-management standards. Principle 15 states that an FMI should identify, monitor, and manage general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that it can continue operations and services as a going concern if those losses materialize. Further, liquid net assets should at all times be sufficient to ensure a recovery or orderly wind-down of critical operations and services. The Fedwire Services do not face the risk that a business shock would cause the service to wind down in a disorderly manner and disrupt the stability of the financial system. In order to foster competition with private- sector FMIs, however, the Reserve Banks' priced services will hold six months of the Fedwire Funds Service's current operating expenses as liquid financial assets and equity on the pro forma balance sheet.\20\ Current operating expenses are defined as normal business operating expenses on the income statement less depreciation, amortization, taxes, and interest on debt. The Fedwire Funds Service's six months of current operating expenses are computed based on its preliminary 2016 budget at $53.8 million. In 2016, $51.1 million of equity was imputed to meet the FDIC capital requirements; however, an additional $2.7 million of equity was imputed to meet the PSR policy requirement. The additional equity is solely allocated to Fedwire Funds Service. --------------------------------------------------------------------------- \20\ This requirement does not apply to the Fedwire Securities Service. There are no competitors to the Fedwire Securities Service that will face such a requirement, and imposing such a requirement when pricing securities services could artificially increase the cost of these services. --------------------------------------------------------------------------- Effective tax rate. Like the imputed capital structure, the effective tax rate is calculated based on data from U.S. publicly traded firms. The tax rate is the mean of the weighted average rates of the U.S. publicly traded firm market over the past 5 years. Debt and equity financing. The imputed short- and long-term debt financing rates are derived from the nonfinancial commercial paper rates from the Federal Reserve Board's H.15 Selected Interest Rates release (AA and A2/P2) and the annual Merrill Lynch Corporate & High Yield Index rate, respectively. The rates for debt and equity financing are applied to the priced services estimated imputed short-term debt, long-term debt, and equity needed to finance short- and long-term assets and meet equity requirements. The decrease in the 2016 PSAF is primarily due to lower financing costs as a result of fewer priced services assets to be financed than in 2015. Debt and equity financing rates declined and less debt and equity was imputed to fund priced services assets. Projected 2016 Federal Reserve priced-services assets, reflected in table 3, have decreased $486.3 million from 2015. This reduction is primarily due to a $589.0 million decrease in the balance of imputed investments in federal funds, driven by recent changes in the PSR policy resulting in a decrease in daily float balances and a corresponding effect on imputed investments. The reduction is offset by an increase of $170.0 million from 2015 in items in process of collection. As shown in table 3, imputed equity for 2016 is $53.8 million, a decrease of $18.1 million from the equity imputed for 2015. In accordance with FAS 158 [ASC 715], this amount includes an accumulated other comprehensive loss of $666.1 million. Table 4 reflects the portion of short- and long-term assets that must be financed with actual or imputed liabilities and equity. Debt and equity imputed to fund the 2016 priced services assets within the observed market leverage ratio produced an equity level that did not meet the FDIC minimum equity requirements. As a result, additional equity was imputed to meet the FDIC requirements, and imputed long-term debt was reduced. The ratio of capital to risk-weighted assets exceeds the required 10 percent of risk-weighted assets and equity exceeds 5 percent of total assets (table 6). In 2015, long-term debt and equity was imputed to meet the asset funding requirements and reflects the leverage ratio observed in the market; additional equity of $7.6 million was required (table 5) to meet the market leverage ratio. Table 5 shows the derivation of the 2016 and 2015 PSAF. Financing costs for 2016 are $6.1 million lower than in 2015. In addition to the decline in the levels of debt and equity mentioned above, the cost of equity declined 3 basis points. The reduced equity balance and the lower cost of equity result in a pretax ROE that is $2.0 million lower than the 2015 pretax ROE. Imputed sales taxes declined to $2.8 million in 2016 from $3.3 million in 2015. The priced services portion of the Board's expenses increased $1.7 million to $5.0 million in 2016 from $3.3 million in 2015. The effective income tax rate used in 2016 decreased to 21.6 percent from 22.4 percent in 2015. [[Page 70788]] Table 3--Comparison of Pro Forma Balance Sheets for Budgeted Federal Reserve Priced Services [Millions of dollars--projected average for year] ---------------------------------------------------------------------------------------------------------------- 2016 2015 Change ---------------------------------------------------------------------------------------------------------------- Short-term assets: Receivables................................................. $35.6 $34.5 $1.0 Materials and supplies...................................... 0.5 0.6 (0.1) Prepaid expenses............................................ 10.2 11.0 (0.9) Items in process of collection \21\......................... 321.0 151.0 170.0 ----------------------------------------------- Total short-term assets................................. 367.2 197.2 170.1 Imputed investments: \22\ Imputed investment in Treasury Securities................... 55.8 .............. 55.8 Imputed investment in Fed Funds............................. 11.0 600.00 (589.0) ----------------------------------------------- Total imputed investments............................... 66.8 600.00 (533.2) Long-term assets: Premises \23\............................................... 111.0 116.2 (5.2) Furniture and equipment..................................... 38.5 39.9 (1.5) Leasehold improvements and long-term prepayments............ 89.5 91.5 (2.0) Pension asset............................................... .............. 79.6 (79.6) Deferred tax asset.......................................... 187.9 222.8 (35.0) ----------------------------------------------- Total long-term assets.................................. 426.8 550.0 (123.2) ----------------------------------------------- Total assets............................................ 860.9 1,347.2 (486.3) =============================================== Short-term liabilities: Deferred credit items....................................... 332.0 751.0 (419.0) Short-term debt............................................. 19.0 18.5 0.5 Short-term payables......................................... 27.2 27.6 (0.4) ----------------------------------------------- Total short-term liabilities............................ 378.2 797.2 (418.9) Long-term liabilities: Pension liability........................................... 17.6 .............. 17.6 Long-term debt.............................................. .............. 81.9 (81.9) Postemployment/postretirement benefits and net pension 411.3 396.3 15.0 liabilities \24\............................................... ----------------------------------------------- Total liabilities....................................... 807.1 1,275.3 (468.3) Equity \25\..................................................... 53.8 71.9 (18.1) ----------------------------------------------- Total liabilities and equity............................ 860.9 1,347.2 (486.3) ---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------- \21\ Credit float, which represents the difference between items in process of collection and deferred credit items, occurs when the Reserve Banks debit the paying bank for transactions prior to providing credit to the depositing bank. Float is directly estimated at the service level. \22\ Consistent with the Board's PSR policy, the Reserve Banks' priced services will hold six months of the Fedwire Funds Service's current operating expenses as liquid net financial assets and equity on the pro forma balance sheet. Six months of the Fedwire Funds Service's projected current operating expenses is $53.8 million. In 2016, $51.1 million of equity was imputed to meet the regulatory capital requirements; however, an additional $2.7 million of equity was imputed to meet the PSR policy requirement. \23\ Includes the allocation of Board of Governors assets to priced services of $1.3 and $0.7 million for 2016 and 2015, respectively. \24\ Includes the allocation of Board of Governors liabilities to priced services of $0.6 million for 2016 and 2015. \25\ Includes an accumulated other comprehensive loss of $666.1 million for 2016 and $523.7 million for 2015, which reflects the ongoing amortization of the accumulated loss in accordance with FAS 158 [ASC 715]. Future gains or losses, and their effects on the pro forma balance sheet, cannot be projected. See table 5 for calculation of required imputed equity amount. Table 4--Imputed Funding for Priced-Services Assets [Millions of dollars] ------------------------------------------------------------------------ 2016 2015 ------------------------------------------------------------------------ A. Short-term asset financing Short-term assets to be financed: Receivables......................... $35.6 $34.5 Materials and supplies.............. 0.5 0.6 Prepaid expenses.................... 10.2 11.0 ------------------------------- Total short-term assets to be 46.2 46.2 financed....................... Short-term payables................. 27.2 27.6 ------------------------------- Net short-term assets to be 19.0 18.5 financed....................... =============================== [[Page 70789]] Imputed short-term debt 19.0 18.5 financing \26\................. =============================== B. Long-term asset financing Long-term assets to be financed: Premises............................ 111.0 116.2 Furniture and equipment............. 38.5 39.9 Leasehold improvements and long-term 89.5 91.5 prepayments........................ Pension asset....................... .............. 79.6 Deferred tax asset.................. 187.9 222.8 ------------------------------- Total long-term assets to be 426.8 550.0 financed....................... Pension liability................... 17.6 .............. Postemployment/postretirement 411.3 396.3 benefits and net pension liabilities........................ ------------------------------- Net long-term assets to be (2.0) 153.8 financed....................... =============================== Imputed long-term debt \26\......... .............. 81.9 Imputed equity \26\................. 53.8 71.9 ------------------------------- Total long-term financing....... 53.8 153.8 ------------------------------------------------------------------------ --------------------------------------------------------------------------- \26\ See table 5 for calculation. Table 5--Derivation of the 2016 and 2015 PSAF [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- 2016 2015 --------------------------------------------------------------- Debt Equity Debt Equity ---------------------------------------------------------------------------------------------------------------- A. Imputed long-term debt and equity Net long-term assets to finance............. $(2.0) $(2.0) $153.8 $153.8 Capital structure observed in market........ 58.5% 41.5% 58.2% 41.8% --------------------------------------------------------------- Pre-adjusted long-term debt and equity...... $(1.2) $(0.8) $89.5 $64.3 Equity adjustments \27\: Equity to meet capital requirements..... .............. 51.1 .............. 71.9 Adjustment to debt and equity funding 1.2 (1.2) (7.6) 7.6 given capital requirements \28\........ Adjusted equity balance................. .............. (2.0) .............. 71.9 Equity to meet capital requirements \29\ .............. 53.1 .............. .............. --------------------------------------------------------------- .............. $51.1 $81.9 $71.9 =============================================================== B. Cost of capital: Elements of capital costs Short-term debt \30\.................... $19.0 x 0.3% = $0.1 $18.5 x 0.2% = $0.0 Long-term debt \30\......................... x 4.2% = 81.9 x 5.0% = 4.1 Equity \31\................................. 51.1 x 9.8% = 5.0 71.9 x 10.1% =7.3 rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr .............. 5.1 .............. 11.4 C. Incremental cost of PSR policy: Equity to meet policy....................... $2.7 x 9.8% = $0.3 x 10.1% = $ rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr D. Other required PSAF costs: Sales taxes................................. .............. $2.8 .............. $3.3 Board of Governors expenses................. .............. 5.0 .............. 3.3 rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr .............. .............. 7.8 6.6 rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr .............. .............. $13.1 $18.0 rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr E. Total PSAF: As a percent of assets...................... .............. 1.5% .............. 1.0% As a percent of expenses.................... .............. 3.6% .............. 4.5% [[Page 70790]] F. Tax rates.................................... .............. 21.6% .............. 22.4% ---------------------------------------------------------------------------------------------------------------- \27\ If minimum equity constraints are not met after imputing equity based on the capital structure observed in the market, additional equity is imputed to meet these constraints. The long-term funding need was met by imputing long-term debt and equity based on the capital structure observed in the market (see tables 4 and 6). In 2016, the amount of imputed equity exceeded the minimum equity requirements for risk-weighted assets. \28\ Equity adjustment offsets due to a shift of long-term debt funding to equity in order to meet FDIC capital requirements for well-capitalized institutions. \29\ Additional equity in excess of that needed to fund priced services assets is offset by an asset balance of imputed investments in treasury securities. \30\ Imputed short-term debt and long-term debt are computed at table 4. \31\ The 2016 ROE is equal to a risk-free rate plus a risk premium (beta * market risk premium). The 2016 after- tax CAPM ROE is calculated as 0.03% + (1.0 * 7.62%) = 7.65%. Using a tax rate of 21.6%, the after-tax ROE is converted into a pretax ROE, which results in a pretax ROE of (7.65%/(1-21.6%)) = 9.76%. Calculations may be affected by rounding. Table 6--Computation of 2016 Capital Adequacy for Federal Reserve Priced Services [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Weighted Assets Risk weight assets ---------------------------------------------------------------------------------------------------------------- Imputed investments: 1-Year Treasury securities \32\............................. $55.8 .............. .............. Federal funds \33\.......................................... 11.0 0.2 2.2 ----------------------------------------------- Total imputed investments............................... 66.8 .............. 2.2 Receivables..................................................... $35.6 0.2 $7.1 Materials and supplies.......................................... 0.5 1.0 0.5 Prepaid expenses................................................ 10.2 1.0 10.2 Items in process of collection.................................. 321.0 0.2 64.2 Premises........................................................ 111.0 1.0 111.0 Furniture and equipment......................................... 38.5 1.0 38.5 Leasehold improvements and long-term prepayments................ 89.5 1.0 89.5 Pension asset................................................... .............. 1.0 .............. Deferred tax asset.............................................. 187.9 1.0 187.9 ----------------------------------------------- Total................................................... 860.9 .............. 511.0 =============================================== Imputed equity.................................................. $53.8 Capital to risk-weighted assets................................. 10.5% Capital to total assets......................................... 6.2% ---------------------------------------------------------------------------------------------------------------- \32\ If minimum equity constraints are not met after imputing equity based on all other financial statement components, additional equity is imputed to meet these constraints. Additional equity imputed to meet minimum equity requirements is invested solely in Treasury securities. The imputed investments are similar to those for which rates are available on the Federal Reserve's H.15 statistical release, which can be located at http://www.federalreserve.gov/releases/h15/data.htm. \33\ The investments are imputed based on the amounts arising from the collection of items prior to providing credit according to established availability schedules. C. Check Service--Table 7 shows the 2014 actual, 2015 estimated, and 2016 budgeted cost-recovery performance for the commercial check service. Table 7--Check Service Pro Forma Cost and Revenue Performance [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Recovery rate Net income after targeted Year Revenue Total expense (ROE) Targeted ROE ROE [1/(2 + 4)] 1 2 3 4 5 ---------------------------------------------------------------------------------------------------------------- 2014 (actual)................... 174.7 149.3 25.4 1.8 115.6% 2015 (estimate)................. 159.3 142.7 16.5 2.0 110.1 2016 (budget)................... 149.9 139.1 10.7 1.3 106.7 ---------------------------------------------------------------------------------------------------------------- [[Page 70791]] 1. 2015 Estimate--The Reserve Banks estimate that the check service will recover 110.1 percent of total expenses and targeted ROE, compared with a 2015 final budgeted recovery rate of 105.2 percent. Greater- than-expected check volumes processed by the Reserve Banks and lower- than-expected costs have influenced significantly the check services cost recovery. The decline in Reserve Bank check volume, which is attributable to the decline in the number of checks written generally, was not as great as anticipated.\34\ Through August, total forward check volume is 4.6 percent lower and total return check volume is 11.9 percent lower-than for the same period last year. For full-year 2015, the Reserve Banks estimate that their total forward check volume will decline 5.6 percent (compared with a budgeted decline of nearly 7 percent) and their total return check volume will decline 11.6 percent (compared with a budgeted decline of about 14 percent) from 2014 levels.\35\ --------------------------------------------------------------------------- \34\ The greater-than-expected check volume is attributed to the retention of current customers through continued enhancements of two FedForward product offerings: select mixed and premium mixed. \35\ Total Reserve Bank forward check volumes are expected to drop from 5.7 billion in 2014 to 5.4 billion in 2015. Total Reserve Bank return check volumes are expected to drop from roughly 36.5 million in 2014 to 32.3 million in 2015. --------------------------------------------------------------------------- 2. 2016 Pricing--The Reserve Banks expect the check service to recover 106.7 percent of total expenses and targeted ROE in 2016. The Reserve Banks project revenue to be $149.9 million, a decline of 5.9 percent from the 2015 estimate. This decline is driven largely by projected reductions in both forward check and return check volume. The Reserve Banks estimate that total Reserve Bank forward check volumes will decline 6.2 percent, to 5.1 billion, and return check volumes will decline 12.7 percent to 28.5 million in 2016. Total expenses for the check service are projected to be $139.1 million, a decline of 2.5 percent from 2015.\36\ --------------------------------------------------------------------------- \36\ The reduction in check costs is driven in part by lower pension costs in 2016. --------------------------------------------------------------------------- The Reserve Banks will increase the per-item fee for FedReturn items that are qualified to the Reserve Bank in instances in which the bank of first deposit cannot be identified from $8 to $15. The Reserve Banks will increase the fees for traditional paper check forward and return collection deposits. The Reserve Banks will increase the per-item fee for paper forward deposits from $2.00 to $2.50 and the per-item fee for each unencoded item from $1.00 to $1.50.\37\ The Reserve Banks will increase the per-item fee for paper return collection deposits from $5.00 to $5.50 as well as the per-item fee for unqualified paper returns from $7.00 to $7.50. The Reserve Banks will discontinue image retrievals by fax for both incoming and outgoing retrievals within FedImage Services.\38\ --------------------------------------------------------------------------- \37\ Unencoded items are those items deposited without encoding of certain elements, such as amount, added to the MICR line. \38\ FedImage Services offer depository institutions products for the capture, archive, and retrieval of check images. A current list of services can be found at https://www.frbservices.org/serviceofferings/check/fed_image_services.html. --------------------------------------------------------------------------- The Reserve Banks will introduce Select Mixed Level 3 tier to the Select Mixed image cash letter (ICL) product.\39\ The new level will have a daily fee of $3,000 and per-item fees from $0.002 to $0.350, as seen in table 8. --------------------------------------------------------------------------- \39\ A current list of Select Mixed endpoints can be found at https://www.frbservices.org/servicefees/check21_endpoint_listing.html. Table 8--FedForward Select Mixed Image Cash Letter a b -------------------------------------------------------------------------------------------------------------------------------------------------------- 5 a.m. 12 p.m. Deadline ----------------------------------------------------------------------------------------------- Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 ------------------------------------------------------------------------------------------------------------------------------------------ Daily fixed fee........................... $2,200.00 $900.00 $3,000.00 $2,200.00 $900.00 $3,000.00 Cash letter surcharge..................... .............. .............. .............. 25.00 25.00 25.00 Tier 1.................................... 0.0020 0.0020 0.0020 0.0020 0.0020 0.0020 Tier 2.................................... 0.0040 0.0060 0.0040 0.0040 0.0060 0.0040 Tier 3.................................... 0.0060 0.0080 0.0060 0.0060 0.0080 0.0060 Tier 4.................................... .............. .............. 0.0130 .............. .............. 0.0130 Tier 5.................................... .............. .............. 0.0220 .............. .............. 0.0220 Tier 6.................................... .............. .............. 0.1000 .............. .............. 0.3500 Non-eligible endpoints.................... 0.1000 0.1000 N/A 0.3500 0.3500 N/A -------------------------------------------------------------------------------------------------------------------------------------------------------- \a\ All deadlines are Monday through Friday. \b\ A current list of FedForward endpoint tier listings can be found at http://www.frbservices.org/servicefees/check21_endpoint_listing.html. The Reserve Banks will eliminate the FedForward Fine Sort ICL product in January 2017 as part of the Reserve Banks effort to reflect today's electronic check processing environment in their check fee schedule.\40\ To encourage depositors to shift volume from the fine- sort products to mixed deposit options in advance of this elimination, the Reserve Banks will increase the FedForward Fine Sort ICL product per-item fees at the 9 p.m., 1 a.m., and 5 a.m. deadlines by $0.002, $0.004, and $0.006, an average increase of 22.7 percent.\41\ The Reserve Banks will increase the FedForward Deferred Fine Sort ICL product per-item fees at the 1 a.m., 5 a.m., and 10 a.m. deadlines by $0.004, $0.006, and $0.008, an average increase of 48.8 percent. The per item fees for each deadline are listed in table 9. --------------------------------------------------------------------------- \40\ In a paper check processing environment, the fine sort product allowed the Reserve Banks to gain efficiencies because the checks did not require processing on reader-sorters. In today's electronic check processing environment, all image cash letters are processed through the Reserve Banks' electronic system in the same manner, and the Reserve Banks do not gain any efficiencies by having the depositing bank fine sort electronic checks prior to deposit. \41\ All times are stated in the eastern time zone (ET). Depository institutions may deposit image cash letters using nine deposit options within the FedForward product line; the options vary in price structure and funds availability. The Reserve Banks offer customers the option of sending FedForward ICLs for items drawn on specific endpoints in a separate cash letter, which combines a high fixed fee with a lower variable fee. All eligible items in the cash letter receive immediate availability, while ineligible items receive deferred availability of the next business day. A current list of FedForward deposit options can be found at https://www.frbservices.org/servicefees/check_services_2015.html. [[Page 70792]] Table 9 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- FedForward Fine Sort Image Cash Letter \a\ \b\ ---------------------------------------------------------------------------------------------------------------- Deadline........................................................ 9 p.m. 1 a.m. 5 a.m. ---------------------------------------------------------------------------------------------------------------- Cash letter fee................................................. $3.50 $6.50 $12.50 Tier 1...................................................... 0.0080 0.0120 0.0250 Tier 2...................................................... 0.0120 0.0170 0.0290 Tier 3...................................................... 0.0210 0.0260 0.0380 Tier 4...................................................... 0.0310 0.0360 0.0480 ---------------------------------------------------------------------------------------------------------------- FedForward Fine Deferred Sort Image Cash Letter \a\ \b\ ---------------------------------------------------------------------------------------------------------------- Deadline........................................................ 1 a.m. 5 a.m. 10 a.m. ---------------------------------------------------------------------------------------------------------------- Cash letter fee................................................. $3.50 $3.50 $3.50 Tier 1...................................................... 0.0100 0.0130 0.0160 Tier 2...................................................... 0.0130 0.0160 0.0190 Tier 3...................................................... 0.0220 0.0250 0.0280 Tier 4...................................................... 0.0320 0.0350 0.0380 ---------------------------------------------------------------------------------------------------------------- \a\ All deadlines are Monday through Friday. \b\ A current list of FedForward endpoint tier listings can be found at http://www.frbservices.org/servicefees/check21_endpoint_listing.html. The Reserve Banks estimate that the price changes will result in a 0.5 percent average price increase for check customers. In addition to the above changes, the Reserve Banks plan to announce further modifications to the check fee schedule during 2016 that reflect the efficiencies of today's electronic check processing environment. The new schedule may include elimination of certain sorted deposit options and modifications to the current endpoint-based tiered pricing structure. Risks to the Reserve Banks' ability to achieve budgeted 2016 cost recovery for the check service include lower-than-expected check volume due to reductions in check writing overall and competition from correspondent banks, aggregators, and direct exchanges, which will result in lower-than-anticipated revenue. D. FedACH Service--Table 10 shows the 2014 actual, 2015 estimate, and 2016 budgeted cost-recovery performance for the commercial FedACH service. Table 10--FedACH Service Pro Forma Cost and Revenue Performance [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Year Revenue Total expense Net income Targeted ROE Recovery rate ----------------------------------------------------------------- (ROE) ---------------- after targeted ---------------- ROE [1/(2 + 4)] 1 2 3 4 --------------- 5 ---------------------------------------------------------------------------------------------------------------- 2014 (actual)................... 124.4 141.4 -17.0 2.0 86.7% 2015 (estimate)................. 125.5 123.7 1.8 1.7 100.0 2016 (budget)................... 129.8 129.9 -0.0 1.2 99.0 ---------------------------------------------------------------------------------------------------------------- 1. 2015 Estimate--The Reserve Banks estimate that the FedACH service will recover 100.0 percent of total expenses and targeted ROE, compared with a 2015 final budgeted recovery rate of 100.4 percent.\42\ Through August, FedACH commercial origination and receipt volume was 5.1 percent higher-than the same period last year. For full-year 2015 the Reserve Banks estimate that FedACH commercial origination and receipt volume will increase 5.5 percent, compared with a budgeted increase of 3.5 percent. --------------------------------------------------------------------------- \42\ The Reserve Banks have been engaged in a multiyear technology initiative to modernize the FedACH processing platform by migrating the service from a mainframe system to a distributed computing environment. In late 2013, the Reserve Banks conducted an assessment focused on the viability and cost-effectiveness of the program. As a result, the Reserve Banks in 2014 suspended the program and began to investigate the use of other technology solutions. In 2015, the Reserve Banks evaluated alternative processing solutions, including commercially available options. --------------------------------------------------------------------------- 2. 2016 Pricing--The Reserve Banks expect the FedACH service to recover 99.0 percent of total expenses and targeted ROE in 2016. FedACH commercial origination and receipt volume is projected to grow 4.5 percent contributing to an increase of $4.4 million in total revenue from the 2015 estimate. Total expenses are budgeted to increase $7.2 million from 2015 budgeted expenses of $122.6 million, primarily because of costs associated with the development of a new FedACH technology platform. The Reserve Banks will increase the minimum monthly fee for forward origination from $35 to $45 and the minimum monthly fee for receipt from $25 to $35.\43\ --------------------------------------------------------------------------- \43\ Any originating depository financial institution (ODFI) incurring less than $45 for the following fees will be charged the difference to reach the minimum: Forward value and nonvalue item origination fees, FedGlobal ACH origination surcharges, and FedACH SameDay forward origination surcharges. Any receiving depository financial institution (RDFI) originating forward value and nonvalue items below the minimum level and incurring less than $35 in receipt fees will be charged the difference to reach the minimum based on origination. RDFIs not originating forward value and nonvalue items will incur the $35 minimum monthly fee for receipt. --------------------------------------------------------------------------- The Reserve Banks will eliminate large- and small-file per-item origination fees and introduce a single base fee of $0.0032 for all origination files with a discount of $0.0005 for origination volume between 750,000 to 1,500,000 [[Page 70793]] items per month and $0.0007 for origination volume greater than 1,500,000 items per month. The Reserve Banks will lower the top-tier volume origination discount level based on monthly receipt volume from 17,500,000 to 15,000,000 items per month, while maintaining the current discount amounts.\44\ --------------------------------------------------------------------------- \44\ Origination discounts apply only to those items received by FedACH receiving points and are available only to Premium Receivers (institutions receiving a certain portion of volume through FedACH). --------------------------------------------------------------------------- The Reserve Banks will increase the forward item receipt fee from $0.0025 to $0.0032 per item, while keeping the return item receipt fee at $0.0075 per item. The Reserve Banks will change the volume-based receipt discount structure to encourage additional receipt volume. The changes will include a decrease in the first volume-based discount by 250,000 items per month to 750,001 items a month, the introduction of a new volume-based discount tier for volume between 1,500,001 and 2,500,000 items per month, and an increase for all existing volume- based receipt discounts by $0.0007 as seen in table 11. [GRAPHIC] [TIFF OMITTED] TN16NO15.213 The Reserve Banks will implement a $20 monthly billing discount for any customer that pays the origination minimum fee, subscribes to a FedLine Web Plus or higher package, and subscribes to either FedACH RDFI Alert, FedACH Risk Origination Monitoring, or FedPayments Reporter. The Reserve Banks estimate that the price changes will result in a 6.5 percent average price increase for FedACH customers. In addition to the above changes, the Reserve Banks plan to reassess the FedGlobal ACH fee schedule during 2016. The primary risks to the Reserve Banks' ability to achieve budgeted 2016 cost recovery for the FedACH service are cost overruns associated with unanticipated problems related to efforts to modernize the FedACH processing platform and higher-than-expected support and overhead costs. Other risks include lower-than-expected volume and associated revenue due to unanticipated mergers and acquisitions and loss of market share due to direct exchanges and a shift of volume to the private-sector operator. E. Fedwire Funds and National Settlement Services--Table 12 shows the 2014 actual, 2015 estimate, and 2016 budgeted cost-recovery performance for the Fedwire Funds and National Settlement Services. Table 12--Fedwire Funds and National Settlement Services Pro Forma Cost and Revenue Performance [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Year Revenue Total expense Net income Targeted ROE Recovery rate ----------------------------------------------------------------- (ROE) [1-2] ---------------- after targeted ---------------- ROE [1/(2 + 4)] 1 2 3 4 --------------- 5 ---------------------------------------------------------------------------------------------------------------- 2014 (actual)................... 110.1 105.2 4.8 1.4 103.2% 2015 (estimate)................. 115.1 112.7 2.4 1.6 100.7 2016 (budget)................... 121.4 120.1 1.3 1.3 100.0 ---------------------------------------------------------------------------------------------------------------- 1. 2015 Estimate--The Reserve Banks estimate that the Fedwire Funds and National Settlement Services will recover 100.7 percent of total expenses and targeted ROE, equal to the final budgeted recovery rate. Through August, Fedwire Funds Service online volume was 6.9 percent higher than for the same period last year. For full-year 2015, the Reserve Banks estimate Fedwire Funds Service online volume to increase 4.0 percent from 2014 levels, compared with the 3.2 percent volume decrease that had been budgeted. The Reserve Banks do not expect the strong volume growth in late 2014 and early 2015 to continue at that level through year-end. Through August, National Settlement Service settlement file volume was 7.1 percent lower than for the same period last year, and settlement entry volume was 19.3 percent lower. For the full year, the Reserve Banks estimate that settlement file volume will decrease 5.9 percent (compared with a 1 percent budgeted decrease) and settlement entry volume [[Page 70794]] will decrease 15.6 percent from 2014 levels (compared with a budgeted 7.2 percent decrease). 2. 2016 Pricing--The Reserve Banks expect the Fedwire Funds Service to recover 100.0 percent of total expenses and targeted ROE. Revenue is projected to be $121.4 million, an increase of 5.5 percent from the 2015 estimate. The Reserve Banks project total expenses to be $7.4 million higher than the 2015 estimate. The Reserve Banks expect volume to grow 1.5 percent in 2016. The Reserve Banks will adjust the incentive pricing fees for the Fedwire Funds Service by increasing the Tier 1 per item pre-incentive fee (the fee before volume discounts are applied) from $0.73 to $0.79 and increasing the Tier 3 per item pre-incentive fee from $0.150 to $0.155. The Reserve Banks will keep the Tier 2 per-item pre-incentive fee unchanged.\45\ --------------------------------------------------------------------------- \45\ The per-item pre-incentive fee is the fee that the Reserve Banks charge for transfers that do not qualify for incentive discounts. The Tier 1 per-item pre-incentive fee applies to the first 14,000 transfers, the Tier 2 per-item pre-incentive fee applies to the next 76,000 transfers, and the Tier 3 per-item pre- incentive fee applies to any additional transfers. The Reserve Banks apply an 80 percent incentive discount to transfers over 60 percent of a customer's its historic benchmark volume. --------------------------------------------------------------------------- The Reserve Banks will increase the surcharge for offline transactions from $50 to $55. In addition, the Reserve Banks will increase the monthly participation fee from $90 to $95. The Reserve Banks estimate that the price changes will result in a 5.8 percent average price increase for Fedwire Funds customers. The Reserve Banks will not change National Settlement Service fees for 2016. The Reserve Banks' Fedwire Funds and National Settlement Services fees are consistent with their multiyear strategy to minimize pricing volatility while undertaking ongoing technology upgrades and projects to further strengthen operational resiliency. The Reserve Banks recently completed a significant milestone in the Fedwire Funds portion of its modernization initiative by migrating its back-end settlement system from a mainframe to a distributed platform, although key work to complete the initiative remains in progress. The primary risk to the Reserve Banks' ability to achieve budgeted 2016 cost recovery for these services is cost overruns from unanticipated problems with completing the final stages of complex technology programs. F. Fedwire Securities Service--Table 13 shows the 2014 actual, 2015 estimate, and 2016 budgeted cost recovery performance for the Fedwire Securities Service.\46\ --------------------------------------------------------------------------- \46\ The Reserve Banks provide transfer services for securities issued by the U.S. Treasury, 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 U.S. Treasury assesses fees for the securities transfer component of the service. The Reserve Banks assess a fee for the funds settlement component of a Treasury securities transfer; this component is not treated as a priced service. Table 13--Fedwire Securities Service Pro Forma Cost and Revenue Performance [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Year Revenue Total expense Net income Targeted ROE Recovery rate ----------------------------------------------------------------- (ROE) [1-2] ---------------- after targeted ---------------- ROE [1/(2 + 4)] 1 2 3 4 --------------- 5 ---------------------------------------------------------------------------------------------------------------- 2014 (actual)................... 24.0 22.7 1.2 0.3 104.1% 2015 (estimate)................. 27.3 25.5 1.8 0.4 105.7 2016 (budget)................... 25.8 25.9 -0.1 0.2 98.7 ---------------------------------------------------------------------------------------------------------------- 1. 2015 Estimate--The Reserve Banks estimate that the Fedwire Securities Service will recover 105.7 percent of total expenses and targeted ROE, compared with a 2015 final budgeted recovery rate of 97.5 percent. The higher-than-expected cost recovery is primarily due to not spending contingency funds that were budgeted for the Fedwire Modernization Program. Increased revenues generated from higher-than- expected volumes from online agency transfers and account maintenance also increased cost recovery. Through August, Fedwire Securities Service online volume was 8.0 percent lower than during the same period last year. For full-year 2015, the Reserve Banks estimate Fedwire Securities Service online volume will decline 5.4 percent from 2014 levels, compared with a budgeted decline of 12.9 percent. The higher-than-expected online agency transfer volume resulted from the continued low interest-rate environment, which has supported mortgage underwriting activity and mortgage-backed securities issuance, and is generally associated with increased online agency transfer activity over the Fedwire Securities Service. Through August, account maintenance volume was 9.1 percent lower than during the same period last year. For the full year, the Reserve Banks estimate that account maintenance volume will decline 8.4 percent over 2014 levels, compared with a budgeted decline of 14.1 percent. The higher account maintenance volume is the result of conservative estimates for customer account closures that have not materialized. 2. 2016 Pricing--The Reserve Banks expect the Fedwire Securities Service to recover 98.7 percent of total expenses and targeted ROE in 2016. The Reserve Banks project that 2016 revenue will decrease by $1.5 million and expenses will increase by $0.4 million, compared with 2015 estimates. The Reserve Banks project that online transfer activity will decline 7.7 percent in 2016, the number of accounts maintained will decrease 8.5 percent, and the number of agency securities maintained will decrease 3.3 percent.\47\ The projected decline in account maintenance activity reflects customer closures of empty accounts to avoid unnecessary expenses and increased competition in collateral management services.\48\ The Reserve Banks project a decrease in online transfers as gradually increasing interest rates lead to less [[Page 70795]] mortgage refinancing, and, in turn, reduce issuances of mortgage-backed securities. The reduction in agency debt issuance reflects a reduction in government-sponsored enterprise portfolios, as required by the U.S. Treasury and the Federal Housing Finance Agency, leading to a reduced funding need for new debt issuance.\49\ New settlement logic introduced by the Fixed Income Clearing Corporation in late 2015 is also expected to reduce the number of agency debt transfers over the Fedwire Securities Service.\50\ --------------------------------------------------------------------------- \47\ The online transfer fee, monthly account maintenance fee, and monthly issue maintenance fee accounted for approximately 92 percent of total Fedwire Securities Service revenue through June 2015. \48\ Specifically, collateral management services refers to the Fedwire Securities Joint Custody Service, which facilitates the collateralization of deposits made by a government entity, through the pledging of book-entry securities by its depository institution. Approximately 72 percent of Fedwire Securities priced accounts are collateral accounts related to the Joint Custody Service. \49\ Government sponsored enterprises are reducing their retained portfolio by 15 percent annually through 2018, as mandated by the Senior Preferred Stock Purchase Agreements, until each portfolio reaches a target level of $250 billion. Further information on these agreements can be found at: http://www.fhfa.gov/Conservatorship/Pages/Senior-Preferred-Stock-Purchase-Agreements.aspx. \50\ Information on the new settlement logic can be found at http://www.dtcc.com/~/media/Files/pdf/2015/6/22/GOV045-15.pdf. --------------------------------------------------------------------------- Expenses are budgeted to remain approximately the same as 2015 estimates, reflecting higher expected operating costs offset by increased reimbursements from Treasury for fiscal agency services.\51\ Higher operating costs in 2016 reflect the full-year impact of the completion of a multiyear technology modernization initiative and the advancement of new initiatives to improve resiliency and operational functionality. --------------------------------------------------------------------------- \51\ Treasury reimbursement is calculated by multiplying costs by the ratio of Treasury to agency transfers. In 2015, Treasury projects its transfer volume will increase 7.0 percent, while the Reserve Banks expect agency transfers to decrease. Therefore, the higher projected ratio of Treasury to agency transfers will result in Treasury reimbursing a higher portion of total costs. --------------------------------------------------------------------------- The Reserve Banks will not change priced Fedwire Securities Service fees for 2016. The primary risk to the Reserve Banks' ability to achieve budgeted 2016 cost recovery for these services is cost overruns and schedule delays from unanticipated problems with managing complex technology upgrades. G. FedLine Access--The Reserve Banks charge fees for the electronic connections that depository institutions use to access priced services and allocate the costs and revenue associated with this electronic access to the various priced services. There are currently five FedLine channels through which customers can access the Reserve Banks' priced services: FedMail[supreg], FedLine Web, FedLine Advantage, FedLine Command[supreg], and FedLine Direct.\52\ The Reserve Banks package these channels into nine FedLine packages, described below, that are supplemented by a number of premium (or [agrave] la carte) access and accounting information options. In addition, the Reserve Banks offer FedComplete[supreg] packages, which are bundled offerings of a FedLine Advantage connection and a fixed number of FedACH, Fedwire Funds, and Check 21-enabled services. --------------------------------------------------------------------------- \52\ FedMail, FedLine Web, FedLine Advantage, FedLine Command, and FedLine Direct are registered trademarks of the Federal Reserve Banks. --------------------------------------------------------------------------- Six attended access packages offer access to critical payment and information services via a web-based interface. The FedLine Exchange package provides access to basic information services via email, while two FedLine Web packages offer an email option plus online attended access to a range of services, including cash services, FedACH information services, and check services. Three FedLine Advantage packages expand upon the FedLine Web packages and offer attended access to critical transactional services: FedACH, Fedwire Funds, and Fedwire Securities. Three unattended access packages are computer-to-computer, IP-based interfaces designed for medium- to high-volume customers. The FedLine Command package offers an unattended connection to FedACH, as well as most accounting information services. The two remaining options are FedLine Direct packages, which allow for unattended connections at one of two connection speeds to FedACH, Fedwire Funds, and Fedwire Securities transactional and information services and to most accounting information services.\53\ --------------------------------------------------------------------------- \53\ None of the FedLine packages offer an unattended connection to check services. The Reserve Banks offer an unattended check product, Check 21 Large File Delivery, outside of the FedLine suite that allows a depository institution to upload and download check image cash letters automatically via a direct network connection to the Reserve Banks. --------------------------------------------------------------------------- For the 2016 FedLine fees, the Reserve Banks will make a minor adjustment to existing fees--a $5-per-month increase for the FedLine Exchange subscriber pack--keeping the remaining existing FedLine fees unchanged.\54\ As in previous years, the Reserve Banks will introduce new fees on outdated legacy services in 2016. In particular, the Reserve Banks will implement a $5,000-per-month surcharge for 256K/T1 legacy routers to encourage customers to migrate to more efficient access solutions.\55\ The Reserve Banks will also introduce a new custom implementation fee in 2016 for institutions that request tailored FedLine Direct or WAN router setups. The fee, which will vary from $2,500 to $5,000 based on the complexity of the setup, is intended to help the Reserve Banks recover costs that result from nonstandard installations. --------------------------------------------------------------------------- \54\ FedLine packages do not include user subscriptions for priced services. Depository institutions that wish to access priced services must purchase user subscriptions in packs of five (5- packs). \55\ The $5,000 per month surcharge will be effective July 1, 2016. The price will increase to $10,000 per month on September 1, 2016 and $20,000 per month on November 1, 2016. --------------------------------------------------------------------------- In addition, the Reserve Banks will make two structural changes to existing FedLine packages. First, the Reserve Banks will include two Virtual Private Network (VPN) devices in the FedLine Direct Premier package (rather than one) to help ensure consistency across existing Premier level FedLine packages. Second, the Reserve Banks will modify the availability of the FedPayments Manager Import/Export (FPM) tool within the FedLine Advantage Plus and Premier packages based on Fedwire volume thresholds. In particular, depository institutions with more than 250 Fedwire transactions per month, or more than one routing number, will only have access to the FPM tool via FedLine Advantage Premier. Affected customers will experience a fee increase ranging from $15 to $75 per month to upgrade to FedLine Advantage Premier.\56\ Customers that wish to maintain their FedLine Advantage Plus package will be able to do so by removing the FPM tool from their subscription. --------------------------------------------------------------------------- \56\ The $75 fee increase is the difference in pricing between the corresponding Plus and Premier packages. Affected customers that currently subscribe to the $60-per-month a la carte option for a secondary VPN device will experience only a $15 fee increase because a secondary VPN device is included in Premier packages. Affected customers include FedComplete Plus subscribers with more than 250 Fedwire transactions per month, or more than one routing number, that use the FPM tool because FedComplete Plus packages include a subscription to FedLine Advantage Plus. --------------------------------------------------------------------------- The Reserve Banks estimate that the price changes will result in a 1.5 percent average price increase for FedLine customers. II. 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 ``The Federal Reserve in the Payments System.'' \57\ Under this policy, the Board assesses whether proposed changes 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 [[Page 70796]] constraints or because of a dominant market position deriving from such legal differences. If any proposed changes create such an effect, the Board must further evaluate the changes to assess whether the benefits associated with the changes--such as contributions to payment system efficiency, payment system integrity, or other Board objectives--can be achieved while minimizing the adverse effect on competition. --------------------------------------------------------------------------- \57\ Federal Reserve Regulatory Service (FRRS) 9-1558. --------------------------------------------------------------------------- The 2016 fees, fee structures, and changes in service will not have a direct and material adverse effect on the ability of other service providers to compete effectively with the Reserve Banks in providing similar services.\58\ The changes should permit the Reserve Banks to earn a ROE that is comparable to overall market returns and provide for full cost recovery over the long run. --------------------------------------------------------------------------- \58\ Certain correspondent banks believe that the FedForward Fine Sort ICL product, which the Reserve Banks will eliminate in January 2017, enables them to compete more effectively with the Reserve Banks in the collection of checks destined to paying banks with which the correspondent banks do not have electronic presentment agreements. Paying banks, however, may not have an incentive to accept electronic presentment unless the correspondent bank makes a decision to present checks directly and provides the paying bank the choice of receiving presentments in paper or electronic form (as the Reserve Banks do). We do not believe that the elimination of the product will have a direct and material adverse effect on the ability of such service providers to compete effectively with the Reserve Banks in providing similar services due to legal differences. \59\ Any ODFI incurring less than $45 in forward value and nonvalue item origination fees will be charged a variable amount to reach the minimum. \60\ Any RDFI not originating forward value and nonvalue items and incurring less than $35 in receipt fees will be charged a variable amount to reach the minimum. \61\ The fee includes the item and addenda fees in addition to the conversion fee. \62\ The fee includes the item and addenda fees in addition to the conversion fee. Reserve Banks also assess a $30 fee for every government paper return/NOC they process. \63\ Origination discounts based on monthly volume apply only to those items received by FedACH receiving points and are available only to Premium Receivers (institutions receiving volume above a specified threshold through FedACH). \64\ RDFI originating and receiving items on the same RTN. \65\ This per-item discount is a reduction to the standard receipt fees listed in this fee schedule. --------------------------------------------------------------------------- III. 2016 Fee Schedules FedACH Service 2016 Fee Schedule [Effective January 1, 2016. Bold indicates changes from 2015 prices.] ------------------------------------------------------------------------ Fee ------------------------------------------------------------------------ FedACH minimum monthly fee Originating Depository Financial $45.00. Institution (ODFI) \59\. Receiving Depository Financial 35.00. Institution (RDFI) \60\. Origination (per item or record) Forward or return items......... 0.0032. Addenda record.................. 0.0015. FedLine Web[supreg]-originated 0.35. returns and notification of change (NOC) \61\. Facsimile exception returns/NOC 45.00. \62\. Automated NOC................... 0.20. Volume-based discounts (based on monthly billed origination volume) per item when origination volume is: 750,000 to 1,500,000 items 0.0005 discount. per month. More than 1,500,000 items 0.0007 discount. per month. Volume-based discounts (based on monthly billed receipt volume) \63\ per item when receipt volume is:. 10,000,001 to 15,000,000 items 0.0002 discount. per month. More than 15,000,000 items per 0.0003 discount. month. Receipt (per item or record) Forward Item.................... 0.0032. Return Item..................... 0.0075. Addenda record.................. 0.0015. On-Us Receipt Credit \64\....... 0.0032 discount. Volume-based discounts (forward items excluding FedACH SameDay service items) Non-Premium Receivers--RDFIs receiving less than 90 percent of total network volume through FedACH per item when volume is: 750,001 to 12,500,000 0.0014 discount. items per month \65\. more than 12,500,000 0.0016 discount. items per month \66\. Premium Receivers, Level One--RDFIs receiving at least 90 percent of FedACH- originated volume through FedACH per item when volume is: 750,001 to 1,500,000 0.0014 discount. items per month \65\. 1,500,001 to 2,500,000 0.0014 discount. items per month \66\. 72,500,001 to 12,500,000 0.0015 discount. items per month \66\. more than 12,500,000 0.0017 discount. items per month \66\. Premium Receivers, level two--RDFIs receiving at least 90 percent of ACH volume originated through FedACH or EPN per item when volume is: 750,001 to 1,500,000 0.0014 discount. items per month \65\. 1,500,001 to 2,500,000 0.0014 discount. items per month \66\. 2,500,001 to 12,500,000 0.0016 discount. items per month \66\. more than 12,500,000 0.0018 discount. items per month \66\. FedACH Bundled Service Discount Monthly Bundled Service Package 20.00 discount. Discount \67\. FedACH SameDay Service Origination Forward item \68\........... 0.0035 surcharge. Addenda record \68\......... 0.0015 surcharge. Return item \69\............ 0.0025 discount. Return addenda record \69\.. 0.0015 discount. Receipt Forward item \65\........... 0.0025 discount. Return item \65\............ 0.0075 discount. Addenda record (forward/ 0.0015 discount. return) \65\. Monthly FedACH Risk[supreg] Management fees \70\ Risk Origination Monitoring Service/RDFI Alert Service package pricing For up to 5 criteria sets... 35.00. For 6 through 11 criteria 70.00. sets. For 12 through 23 criteria 125.00. sets. [[Page 70797]] For 24 through 47 criteria 150.00. sets. For 48 through 95 criteria 250.00. sets. For 96 through 191 criteria 425.00. sets. For 192 through 383 criteria 675.00. sets. For 384 through 584 criteria 850.00. sets. For more than 585 criteria 1,100.00. sets. Risk origination monitoring batch (based on total monthly volume) For 1 through 100,000 0.007. batches (per batch). For more than 100,000 0.0035. batches (per batch). Monthly FedPayments Reporter Service FedPayments Reporter Service package pricing includes Standard reports \71\....... ACH volume summary by SEC code report--customer \72\ Daily return ratio report Monthly return ratio report Receiver setup report Report delivery via FedLine file access solution (monthly fee) For up to 50 reports.... 35.00. For 51 through 150 55.00. reports. For 151 through 500 100.00. reports. For 501 through 1,000 180.00. reports. For 1,001 through 1,500 260.00. reports. For 1,501 through 2,500 420.00. reports. For 2,501 through 3,500 580.00. reports. For 3,501 through 4,500 740.00. reports. For 4,501 through 5,500 900.00. reports. For 5,501 through 7,000 1,100.00. reports. For 7,001 through 8,500 1,300.00. reports. For more than 8,501 1,500.00. reports. Premier reports (per report generated) \73\ ACH volume summary by SEC code report--depository financial institution For 1 through 5 reports. 10.00. For 6 through 10 reports 6.00. For more than 11 reports 1.00. On Demand Surcharge..... 1.00 ACH volume summary by SEC code report--customer On Demand Surcharge..... 1.00. Monthly ACH routing number activity report For 1 through 5 reports. 10.00. For 6 through 10 reports 6.00. For more than 11 reports 1.00. On Demand Surcharge..... 1.00. On-us inclusion Participation (monthly fee 10.00. per RTN). Per-item.................... 0.0030. Per-addenda................. 0.0015. Report delivery via encrypted 0.20. email (per email). Other fees Monthly fee (per routing number) Account servicing fee \74\.. 45.00. FedACH settlement \75\...... 55.00. FedACH Information extract 100.00. file. IAT Output File Sort........ 75.00. Automated NOC participation 5.00. fee \76\. Non-electronic input/output fee \77\ CD/DVD (CD or DVD).......... 50.00. Paper (file or report)...... 50.00. FedGlobal ACH Payments \78\ Canada service fee Item originated to Canada 0.62. \79\. Return received from Canada 0.99. \80\. Item trace at receiving 5.50. gateway. Item trace not at receiving 7.00. gateway. Mexico service fee Item originated to Mexico 0.67. \79\. Return received from Mexico 0.91. \80\. Account-to-receiver (A2R) 3.45. item originated to Mexico \79\. Foreign currency to foreign 0.67. currency (F3X) item originated to Mexico \79\. Item trace.................. 13.50. Panama service fee Item originated to Panama 0.72. \79\. Return received from Panama 1.00. \80\. NOC......................... 0.72. Item trace.................. 7.00. Latin America service fee A2R item originated to Latin 4.40. America \79\. Return received from Latin 0.72. America \80\. Item trace.................. 5.00. Europe service fee Item originated to Europe 1.25. \79\. [[Page 70798]] F3X item originated to 1.25. Europe \79\. Return received from Europe 1.35. \80\. Item trace.................. 7.00. ------------------------------------------------------------------------ --------------------------------------------------------------------------- \66\ Receipt volumes at these levels qualify for the waterfall discount which includes all FedACH receipt items. \67\ This monthly billing discount is available for any customer that (1) pays the FedACH minimum monthly fee; (2) purchases a FedLine Web Plus or higher package; and (3) subscribes to either FedACH RDFI Alert, FedACH Risk Origination Monitoring, or FedPayments Reporter. \68\ This per-item surcharge is in addition to the standard origination fees listed in the origination and receipt fee schedule. \69\ This per-item discount is a reduction to the standard origination fees listed in the origination and receipt fee schedule. \70\ Criteria may be set for both the origination monitoring service and the RDFI alert service. Subscribers with no criteria set up will be assessed the $45 monthly package fee. \71\ Standard reports include Customer Transaction Activity, Death Notification, International (IAT), Notification of Change, Payment Data Information File, Remittance Advice Detail, Remittance Advice Summary, Return Item, Return Ratio, Social Security Beneficiary, and Originator Setup Reports. \72\ ACH volume summary by SEC code reports generated on demand are subject to a $1.00 per report surcharge. \73\ Premier reports generated on demand are subject to the package/tiered fees plus a surcharge. \74\ The account servicing fee applies to routing numbers that have received or originated FedACH transactions. Institutions that receive only U.S. government transactions through the Reserve Banks or that elect to use a private sector operator exclusively are not assessed this fee. \75\ The FedACH settlement fee is applied to any routing number with activity during a month, including institutions that elect to use a private sector operator exclusively but also have items routed to or from customers that access the ACH network through FedACH. This fee does not apply to routing numbers that use the Reserve Banks for only U.S. government transactions. \76\ The notification of change fee will be assessed only when automated NOCs are generated. \77\ Limited services are offered in contingency situations. \78\ The international fees and surcharges vary from country to country as these are negotiated with each international gateway operator. \79\ This per-item surcharge is in addition to the standard domestic origination and input file processing fees. \80\ This per-item surcharge is in addition to the standard domestic receipt fees. Fedwire Funds and National Settlement Services 2016 Fee Schedule [Effective January 1, 2016. Bold indicates changes from 2015 prices.] ------------------------------------------------------------------------ Fee ------------------------------------------------------------------------ Fedwire Funds Service ------------------------------------------------------------------------ Monthly Participation Fee............................... $95.00 Basic volume-based pre-incentive transfer fee (originations and receipts)--per transfer for: the first 14,000 transfers per month................ 0.79 additional transfers up to 90,000 per month......... 0.24 every transfer over 90,000 per month................ 0.155 Volume-based transfer fee with the incentive discount (originations and receipts)--per eligible transfer for: \81\ the first 14,000 transfers per month................ 0.158 additional transfers up to 90,000 per month......... 0.048 every transfer over 90,000 per month................ 0.031 Surcharge for Off-line Transfers (Originations and 55.00 Receipts).............................................. Surcharge for End-of-Day Transfer Originations \82\..... 0.26 Monthly FedPayments Manager import/export fee \83\...... 50.00 Surcharge for high-value payments: >$10 million........................................ 0.14 >$100 million....................................... 0.36 Surcharge for Payment Notification: Origination Surcharge \84\.......................... 0.20 Receipt Volume \85\................................. N/A ------------------------------------------------------------------------ National Settlement Service ------------------------------------------------------------------------ Basic Settlement Entry Fee................................ 1.50 Settlement File Fee................................. 30.00 Surcharge for Off-line File Origination \86\ 45.00 Minimum Monthly Fee (account maintenance) \87\ 60.00 Special Settlement Arrangements (fee per day) \88\ 150.00 ------------------------------------------------------------------------ --------------------------------------------------------------------------- \81\ The incentive discounts apply to the volume that exceeds 60 percent of a customer's historic benchmark volume. Historic benchmark volume is based on a customer's average daily activity over the previous five calendar years. If a customer has fewer than five full calendar years of previous activity, its historic benchmark volume is based on its daily activity for as many full calendar years of data as are available. If a customer has less than one year of past activity, then the customer qualifies automatically for incentive discounts for the year. The applicable incentive discounts are as follows: $0.632 for transfers up to 14,000; $0.192 for transfers 14,001 to 90,000; and $0.124 for transfers over 90,000. \82\ This surcharge applies to originators of transfers that are processed by the Reserve Banks after 5:00 p.m. ET. \83\ This fee is charged to any Fedwire Funds participant that originates a transfer message via the FedPayments Manager (FPM) Funds tool and has the import/export processing option setting active at any point during the month. \84\ Payment Notification and End-of-Day Origination surcharges apply to each Fedwire funds transfer message. \85\ Provided on billing statement for informational purposes only. \86\ Off-line files will be accepted only on an exception basis when a settlement agent's primary and backup means of transmitting settlement files are both unavailable. For information, contact the NSS Central Service Support Staff at (800) 758-9403. \87\ This minimum monthly charge is only assessed if total settlement charges during a calendar month are less than $60. \88\ Special settlement arrangements use Fedwire Funds transfers to effect settlement. Participants in arrangements and settlement agents are also charged the applicable Fedwire Funds transfer fee for each transfer into and out of the settlement account. [[Page 70799]] Fedwire Securities Service 2016 Fee Schedule (Non-Treasury Securities) [Effective January 1, 2016. Bold indicates changes from 2015 prices.] ------------------------------------------------------------------------ Fee ------------------------------------------------------------------------ Basic Transfer Fee Transfer or reversal originated or received......... 0.65 Surcharge Offline origination & receipt surcharge............. 66.00 Monthly Maintenance Fees Account maintenance (per account)................... 48.00 Issues maintained (per issue/per account)........... 0.65 Claim Adjustment Fee.................................... 0.75 GNMA Serial Note CUSIP Fee.............................. 9.00 Joint Custody Origination Surcharge \89\................ 44.00 Delivery of Reports--Hard Copy Reports to On-Line 50.00 Customers.............................................. ------------------------------------------------------------------------ --------------------------------------------------------------------------- \89\ Fedwire Securities Service charges customers the Joint Custody Origination Surcharge for both Agency and Treasury securities. \90\ FedComplete packages are all-electronic service options that bundle payment services with an access solution for one monthly fee. \91\ Per-item surcharges are in addition to the standard fees listed in the applicable priced services fee schedules. \92\ New FedComplete package customers with a new FedLine Advantage connection are eligible for a one-time $1,500 credit applied to their Federal Reserve service charges. Customers receiving credit must continue using the FedComplete package for a minimum of six months or forfeit the $1,500 credit. \93\ VPN hardware for FedLine Advantage and FedLine Command is billed directly by the vendor. A list of 2016 vendor fees can be found at https://www.frbservices.org/files/servicefees/pdf/access/2016_vendor_fees.pdf. \94\ These add-on services can be purchased only with a FedLine Customer Access Service option. \95\ There are no priced subscribers contained in the FedLine Exchange or FedLine packages. \96\ Additional FedLine Command Certificates available for FedLine Command and Direct packages only. \97\ Additional FedLine Direct Certificates available for FedLine Direct packages only. \98\ Additional VPNs are available for FedLine Advantage, FedLine Command, and FedLine Direct packages only. \99\ 56K option available to installed base only and is not available for new orders. Effective July 1, 2016, all remaining 56K connections will be disconnected. Network diversity supplemental charge of $2,000 a month may apply in addition to these fees. \100\ The FedLine Custom Implementation Fee will vary from $2,500 to $5,000 based on the complexity of the setup. \101\ FedLine Direct contingency solution is available only for FedLine Direct Plus & Premier packages. \102\ Cash Management Service options are limited to Plus and Premier packages. \103\ End of Day Reconcilement File option is available to FedLine Web Plus and FedLine Advantage Plus and Premier packages. Available for no extra fee in FedLine Command Plus and Direct packages. \104\ Statement of Account Spreadsheet File option is available to FedLine Web Plus and FedLine Advantage Plus and Premier packages. Available for no extra fee in FedLine Command Plus and Direct packages. \105\ Intra-day Download Search File option is available to the FedLine Web Plus package. Available for no extra fee in FedLine Advantage and higher packages. \106\ ACT Report options are limited to FedLine Command Plus and FedLine Direct Plus and Premier packages. FedLine 2016 Fee Schedule [Effective January 1, 2016. Bold indicates changes from 2015 prices. ------------------------------------------------------------------------ Fee ------------------------------------------------------------------------ FedComplete Packages (Monthly) \90\ ------------------------------------------------------------------------ FedComplete 100 Plus................ 775.00. Includes: FedLine Advantage Plus package FedLine subscriber 5-pack FedLine Exchange subscriber 5-pack 7,500 FedForward transactions 70 FedReturn transactions 14,000 FedReceipt[supreg] transactions 35 Fedwire funds origination transfers 35 Fedwire funds receipt transfers Fedwire participation fee 1,000 FedACH origination items FedACH minimum fee 7,500 FedACH receipt items FedACH receipt minimum fee 10 FedACH web return/NOC 500 FedACH addenda originated 1,000 FedACH addenda received FedACH account servicing FedACH settlement FedComplete 100 Premier............. 850.00. Includes: FedLine Advantage Premier package Volumes included in the FedComplete 100 Plus package FedComplete 200 Plus................ 1,300.00. Includes: FedLine Advantage Plus package FedLine subscriber 5-pack FedLine Exchange subscriber 5-pack 25,000 FedForward transactions 225 FedReturn transactions [[Page 70800]] 25,000 FedReceipt transactions 100 Fedwire funds origination transfers 100 Fedwire funds receipt transfers Fedwire participation fee 2,000 FedACH origination items FedACH minimum fee 25,000 FedACH receipt items FedACH receipt minimum fee 20 FedACH web return/NOC 750 FedACH addenda originated 1,500 FedACH addenda received FedACH account servicing FedACH settlement FedComplete 200 Premier............. 1,375.00. Includes: FedLine Advantage Premier package Volumes included in the FedComplete 200 Plus package FedComplete Excess Volume Surcharge \91\ FedForward...................... 0.01/item. FedReturn....................... 0.7500/item. Fedwire Funds Origination....... 0.7000/item. FedACH Origination.............. 0.0025/item. FedComplete package credit incentive (1,500.00). \92\. FedComplete credit adjustment....... various. FedComplete debit adjustment........ various. ------------------------------------------------------------------------ FedLine Customer Access Solutions (Monthly) \93\ ------------------------------------------------------------------------ FedLine Exchange.................... 40.00. Includes: FedMail access channel FedACH Advice and Settlement Information Fedwire Funds Offline Advices Check 21 Services Check 21 Duplicate Notification Service Check Adjustments Accounting Statements Daylight Overdraft Reports Billing Statements FedLine Web 110.00. Includes: FedLine Web access channel Services included in the FedLine Exchange package FedACH Information Services & Derived Returns/NOCs FedACH Risk Services (includes RDFI Alert and Returns Reporting) FedACH information services (includes RDFI file Alert Service) FedCash Services Service Charge Information FedLine Web Plus.................... 140.00. Includes: FedLine Web traditional package FedACH Risk Origination Monitoring Service FedACH FedPayments Reporter Service Check Large Dollar Return Check FedImage Services Account Management Information Various accounting and inquiry services (ABMS inquiry, IAS/PSR inquiry, IAS detailed inquiries, notifications and advices, end-of-day accounting file (PDF)) FedLine Advantage................... 380.00. Includes: FedLine Advantage access channel Services included in the FedLine Web traditional package FedACH transactions Fedwire Funds transactions Fedwire Securities transactions National Settlement Service transactions Check Large Dollar Return Check FedImage Services Account Management Information with Intra-Day Download Search File Various accounting and inquiry services (ABMS inquiry, IAS/PSR inquiry, IAS detailed inquiries, notifications and advices, end-of-day accounting file (PDF)) FedLine Advantage Plus.............. 425.00. Includes: FedLine Advantage traditional package FedACH Risk Origination Monitoring Service FedACH FedPayments Reporter Service Fedwire Funds FedPayments Manager Import/Export (less than 250 Fedwire transactions and one routing number per month) FedTransaction Analyzer[supreg] (less than 250 Fedwire transactions and one routing number per month) FedLine Advantage Premier 500.00. [[Page 70801]] Includes: FedLine Advantage Plus package Secondary VPN device Fedwire Funds FedPayments Manager Import/Export (more than 250 Fedwire transactions or more than one routing number in a given month) FedTransaction Analyzer (more than 250 Fedwire transactions or more than one routing number per month) FedLine Command Plus 1,000.00. Includes: FedLine Command access channel Services included in the FedLine Advantage Plus package Fedwire Statement Services Fedwire Funds FedPayments Manager Import/Export (more than 250 Fedwire transactions or more than one routing number in a given month) FedTransaction Analyzer (more than 250 Fedwire transactions or more than one routing number per month) Intra-Day File (I-Day CI File) Statement of Account Spreadsheet File (SASF) Financial Institution Reconcilement Data File (FIRD) Billing Data Format File (BDFF) FedLine Direct Plus 3,600.00. Includes: FedLine Direct access channel 256K Dedicated WAN Connection Services included in the FedLine Command Plus package Treasury Check Information System (TCIS) FedLine Direct Premier 6,500.00 Includes: FedLine Direct Plus package T1 dedicated WAN connection Secondary VPN device Cash Management Services Plus Own Report (No Respondent/Subaccount activity) A la carte Options (Monthly) \94\ ------------------------------------------------------------------------ Electronic Access FedLine Exchange Subscriber 5- 15.00. pack 95 FedLine Subscriber 5-pack \95\ 80.00. Additional FedLine Command 100.00. Certificate \96\ Additional FedLine Direct 100.00. Certificate \97\ Additional VPNs--Maintenance Fee 60.00. \98\ Additional dedicated connections 56K \99\ effective January 1, 14,000.00. 2016. effective April 1, 2016. 28,000.00. 256K........................ 2,500.00. T1.......................... 3,200.00. FedLine International Setup (one- 5,000.00. time fee) FedLine Custom Implementation various Fee \100\ FedLine Direct Contingency 1,000.00. Solution \101\ Check 21 Large File Delivery various. FedMail Fax 70.00. VPN Device Modification 200.00. VPN Device Missed Activation 175.00. Appointment VPN Device Expedited Hardware 100.00. Surcharge VPN Device Replacement or Move 300.00. Electronic Access Training Learning Center complimentary. Certificate Retrieval Download complimentary. Tutorial Accounting Information Services Cash Management System (CMS) Plus--Own report--up to six files with: \102\ no respondent/sub-account 60.00. activity less than 10 respondent and/ 125.00. or sub-accounts 10-50 respondent and/or sub- 250.00. accounts 51-100 respondents and/or 500.00. sub-accounts 101-500 respondents and/or 750.00. sub-accounts >500 respondents and/or sub- 1,000.00. accounts End-of-Day Financial Institution 150.00. Reconcilement Data File \103\. Statement of Account Spreadsheet 150.00. File \104\. Intra-day Download Search File 150.00. (with AMI) \105\. ACTS Report \106\ <20 sub-accounts............ 500.00. 21-40 sub-accounts.......... 1,000.00. 41-60 sub-accounts.......... 1,500.00. >60 sub-accounts............ 2,000.00. Other Software Certification.......... 0.00 to 8,000.00. Vendor Pass-Through Fee......... various. Electronic Access Credit various. Adjustment. Electronic Access Debit various. Adjustment. Legacy Connection Service Fee (effective July 1, 2016).... 5,000.00. (effective September 1, 10,000.00. 2016). (effective November 1, 2016) 20,000.00. ------------------------------------------------------------------------ [[Page 70802]] By order of the Board of Governors of the Federal Reserve System, November 2, 2015. Robert deV. Frierson, Secretary of the Board. [FR Doc. 2015-28932 Filed 11-13-15; 8:45 am] BILLING CODE 6210-01-P
![Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices 70783
DATE & TIME: Tuesday, November 10, ACTION: Notice. Reserve Banks’ financial services Web
2015 at 10:00 a.m. site at www.frbservices.org.
SUMMARY: The Board of Governors of the
PLACE: 999 E Street NW., Washington,
Federal Reserve System (Board) has SUPPLEMENTARY INFORMATION:
DC (Ninth Floor)
approved the private sector adjustment
STATUS: This meeting will be open to I. Private Sector Adjustment Factor,
factor (PSAF) for 2016 of $13.1 million
the public. and the 2016 fee schedules for Federal Priced Services Cost Recovery, and
Reserve priced services and electronic Overview of 2016 Price Changes
Federal Register Notice of Previous
Announcement—80 FR 68539 access. These actions were taken in A. Overview—Each year, as required
accordance with the Monetary Control by the Monetary Control Act of 1980,
CHANGE IN THE MEETING: The meeting Act of 1980, which requires that, over
will continue on Tuesday, November the Reserve Banks set fees for priced
the long run, fees for Federal Reserve
17, 2015 at 10:00 a.m. services provided to depository
priced services be established on the
Individuals who plan to attend and basis of all direct and indirect costs, institutions. These fees are set to
require special assistance, such as sign including the PSAF. recover, over the long run, all direct and
language interpretation or other indirect costs and imputed costs,
DATES: The new fee schedules become
reasonable accommodations, should including financing costs, taxes, and
contact Shawn Woodhead Werth, effective January 1, 2016.
certain other expenses, as well as the
Secretary and Clerk, at (202) 694–1040, FOR FURTHER INFORMATION CONTACT: For
questions regarding the fee schedules: return on equity (profit) that would have
at least 72 hours prior to the meeting been earned if a private business firm
date. Susan V. Foley, Senior Associate
Director, (202) 452–3596; Slavea A. provided the services. The imputed
PERSON TO CONTACT FOR INFORMATION: costs and imputed profit are collectively
Judith Ingram, Press Officer, Telephone: Assenova, Financial Services Analyst,
(202) 452–2087, Division of Reserve referred to as the PSAF. From 2005
(202) 694–1220. through 2014, the Reserve Banks
Bank Operations and Payment Systems.
Shelley E. Garr, For questions regarding the PSAF: recovered 102.9 percent of their total
Deputy Secretary of the Commission. Gregory L. Evans, Deputy Associate expenses (including imputed costs) and
[FR Doc. 2015–29278 Filed 11–12–15; 11:15 am] Director, (202) 452–3945; Lawrence targeted after-tax profits or return on
BILLING CODE 6715–01–P Mize, Deputy Associate Director, (202) equity (ROE) for providing priced
452–5232; Manuel Garcia, Senior services.1
Financial Analyst, (202) 452–3480, Table 1 summarizes 2014 actual, 2015
FEDERAL RESERVE SYSTEM Division of Reserve Bank Operations estimated, and 2016 budgeted cost-
and Payment Systems. For users of recovery rates for all priced services.
[Docket No. OP–1522] Telecommunications Device for the Deaf
Cost recovery is estimated to be 104.1
(TDD) only, please call (202) 263–4869.
Federal Reserve Bank Services percent in 2015 and budgeted to be
Copies of the 2016 fee schedules for the
101.9 percent in 2016.
AGENCY: Board of Governors of the check service are available from the
Federal Reserve System. Board, the Federal Reserve Banks, or the
TABLE 1—AGGREGATE PRICED SERVICES PRO FORMA COST AND REVENUE PERFORMANCE a
[Dollars in millions]
Recovery rate
after targeted
Year Revenue Total expense Net income Targeted ROE ROE
[1/(2+4)]
1b 2c 3 4d 5e
2014 (actual) ........................................................................ 433.1 418.7 14.5 5.5 102.1%
2015 (estimate) .................................................................... 427.1 404.6 22.6 5.6 104.1%
2016 (budget) ....................................................................... 426.9 414.9 12.0 4.1 101.9%
a Calculationsin this table and subsequent pro forma cost and revenue tables may be affected by rounding.
b Revenue includes imputed income on investments when equity is imputed at a level that meets minimum capital requirements and, when
combined with liabilities, exceeds total assets (attachment 1).
c The calculation of total expense includes operating, imputed, and other expenses. Imputed and other expenses include taxes, Board of Gov-
ernors’ priced services expenses, the cost of float, and interest on imputed debt, if any. Credits or debits related to the accounting for pension
plans under FAS 158 [ASC 715] are also included.
d Targeted ROE is the after-tax ROE included in the PSAF.
e The recovery rates in this and subsequent tables do not reflect the unamortized gains or losses that must be recognized in accordance with
FAS 158 [ASC 715]. Future gains or losses, and their effect on cost recovery, cannot be projected.
Table 2 provides an overview of cost- 2015 budget, 2015 estimate, and 2016
recovery performance for the ten-year budget by priced service.
period from 2005 to 2014, 2014 actual,
tkelley on DSK3SPTVN1PROD with NOTICES
1 The ten-year recovery rate is based on the pro for Defined Benefit Pension and Other reduction in equity from 2005 to 2014 results in
forma income statement for Federal Reserve priced Postretirement Plans [Accounting Standards cost recovery of 95.1 percent for the ten-year period.
services published in the Board’s Annual Report. Codification (ASC) 715 Compensation—Retirement This measure of long-run cost recovery is also
Effective December 31, 2006, the Reserve Banks Benefits], which resulted in recognizing a published in the Board’s Annual Report.
implemented Statement of Financial Accounting cumulative reduction in equity related to the priced
Standards (SFAS) No. 158: Employers’ Accounting services’ benefit plans. Including this cumulative
VerDate Sep<11>2014 19:47 Nov 13, 2015 Jkt 238001 PO 00000 Frm 00037 Fmt 4703 Sfmt 4703 E:\FR\FM\16NON1.SGM 16NON1](https://thefederalregister.org/doc/80_FR_71003/page/1.svg)
![70784 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices
TABLE 2—PRICED SERVICES COST RECOVERY
[Percent]
2014 2015 2015 2016
Priced service 2005–2014 actual budget a estimate budget b
All services ........................................................................... 102.9 102.1 102.0 104.1 101.9
Check ................................................................................... 103.7 115.6 105.2 110.1 106.7
FedACH ............................................................................... 100.0 86.7 100.4 100.0 99.0
Fedwire Funds and NSS ..................................................... 101.9 103.2 100.7 100.7 100.0
Fedwire Securities ............................................................... 102.3 104.1 97.5 105.7 98.7
a The
2015 budget figures reflect the final budgets as approved by the Board in December 2014.
b The2016 budget figures reflect preliminary budget information from the Reserve Bank. The Reserve Banks will submit final budget data to
the Board in November 2015, for Board consideration in December 2015.
1. 2015 Estimated Performance—The investments are expected to enhance outgoing retrievals within FedImage®
Reserve Banks estimate that they will efficiency, the overall quality of Services.4
recover 104.1 percent of the costs of operations, and the Reserve Banks’ • The Reserve Banks will introduce
providing priced services in 2015, ability to offer additional services to Select Mixed Level 3 to the Select
including total expense and targeted depository institutions. Mixed image cash letter (ICL) product.5
ROE, compared with a 2015 budgeted The new level will have a daily fee of
The primary risks to the Reserve
recovery rate of 102.0 percent, as shown $3,000 and per-item fees from $0.002 to
Banks’ ability to achieve their targeted
in table 2. Overall, the Reserve Banks $0.350.
cost-recovery rates are unanticipated • The Reserve Banks will eliminate
estimate that they will fully recover
volume and revenue reductions and the the FedForward® Fine Sort (ICL)
actual and imputed costs and earn net
potential for cost overruns with the product in January 2017 as part of the
income of $22.6 million, compared with
technology modernization initiatives. In Reserve Banks’ effort to reflect today’s
the targeted ROE of $5.6 million. The
light of these risks, the Reserve Banks electronic check processing
Reserve Banks estimate that all services
will achieve full cost recovery, despite will continue to refine their business environment in their check fee
higher-than-budgeted pension expenses. and operational strategies to manage schedule.6 To encourage depositors to
Greater-than-expected check volume operating costs, to increase product shift volume from the fine-sort products
processed by the Reserve Banks has revenue, and to capitalize on to mixed deposit options in advance of
been the single most significant factor efficiencies gained from technology this elimination, the Reserve Banks will
influencing priced services cost initiatives. increase the FedForward Fine Sort ICL
recovery. 4. 2016 Pricing—The following product per-item fees at the 9 p.m., 1
2. 2016 Private-Sector Adjustment summarizes the Reserve Banks’ changes a.m., and 5 a.m. deadlines by $0.002,
Factor—The 2016 PSAF for Reserve in fee schedules for priced services in $0.004, and $0.006, respectively.7 The
Bank priced services is $13.1 million. 2016: Reserve Banks will increase the
This amount represents a decrease of FedForward Deferred Fine Sort ICL
$4.9 million from the 2015 PSAF of Check product per-item fees at the 1 a.m., 5
$18.0 million. This decrease is primarily • The Reserve Banks will increase the
the result of a reduction in the assets to per-item fee for FedReturn® items that
4 FedImage Services offer depository institutions
be financed on the imputed priced- products for the capture, archive, and retrieval of
are qualified to the Reserve Bank in check images. A current list of services can be
services balance sheet and an associated instances in which the bank of first found at https://www.frbservices.org/
decline in the cost of debt and equity. deposit cannot be identified from $8 to serviceofferings/check/fed_image_services.html.
3. 2016 Projected Performance—The $15.
5 A current list of Select Mixed endpoints can be
Reserve Banks project a priced services found at https://www.frbservices.org/servicefees/
cost-recovery rate of 101.9 percent in • The Reserve Banks will increase the check21_endpoint_listing.html.
6 In a paper check processing environment, the
2016, with net income of $12.0 million, fees for traditional paper check forward
fine sort product allowed the Reserve Banks to gain
compared with a targeted ROE of $4.1 and return collection deposits. The efficiencies because the checks did not require
million. The Reserve Banks project that Reserve Banks will increase the per-item processing on reader-sorters. In today’s electronic
the check service and the Fedwire® fee for paper forward deposits from check processing environment, all image cash
$2.00 to $2.50 and the per-item fee for letters are processed through the Reserve Banks’
Funds and National Settlement Service electronic system in the same manner, and the
will fully recover their costs; however, each unencoded item from $1.00 to Reserve Banks do not gain any efficiencies by
the Reserve Banks project that the $1.50.3 The Reserve Banks will increase having the depositing bank fine sort electronic
FedACH® Service and the Fedwire the per-item fee for paper return- checks prior to deposit.
7 All times are stated in the Eastern Time zone
Securities Service will not achieve full collection deposits from $5.00 to $5.50
(ET).
cost recovery because of investment and the per-item fee for unqualified
Depository institutions may deposit image cash
costs associated with multiyear paper returns from $7.00 to $7.50. The letters using nine deposit options within the
technology initiatives to modernize Reserve Banks will discontinue image FedForward product line; the options vary in price
their processing platforms.2 These retrievals by fax for both incoming and structure and funds availability. The Reserve Banks
offer customers the option of sending FedForward
ICLs for items drawn on specific endpoints in a
tkelley on DSK3SPTVN1PROD with NOTICES
2 The Reserve Banks have been engaged in a program and began to investigate the use of other separate cash letter, which combines a high fixed
multiyear technology initiative to modernize the technology solutions. In 2015, the Reserve Banks fee with a lower variable fee. All eligible items in
FedACH processing platform by migrating the evaluated alternative processing solutions, the cash letter receive immediate availability, while
service from a mainframe system to a distributed including commercially available options. ineligible items receive deferred availability of the
computing environment. In late 2013, the Reserve 3 Unencoded items are those items deposited next business day. A current list of FedForward
Banks conducted an assessment focused on the without encoding of certain elements, such as deposit options can be found at https://
viability and cost-effectiveness of the program. As amount, added to the magnetic ink character www.frbservices.org/servicefees/check_services_
a result, the Reserve Banks in 2014 suspended the recognition (MICR) line. 2015.html.
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![Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices 70787
Capital structure. The capital or orderly wind-down of critical Projected 2016 Federal Reserve
structure is imputed based on the operations and services. The Fedwire priced-services assets, reflected in table
imputed funding need (assets less Services do not face the risk that a 3, have decreased $486.3 million from
liabilities), subject to minimum equity business shock would cause the service 2015. This reduction is primarily due to
constraints. Short-term debt is imputed to wind down in a disorderly manner a $589.0 million decrease in the balance
to fund the imputed short-term funding and disrupt the stability of the financial of imputed investments in federal
need. Long-term debt and equity are system. In order to foster competition funds, driven by recent changes in the
imputed to meet the priced services with private-sector FMIs, however, the PSR policy resulting in a decrease in
long-term funding need at a ratio based Reserve Banks’ priced services will hold daily float balances and a corresponding
on the capital structure of the U.S. six months of the Fedwire Funds effect on imputed investments. The
publicly traded firm market. The level Service’s current operating expenses as reduction is offset by an increase of
of equity must meet the minimum liquid financial assets and equity on the $170.0 million from 2015 in items in
equity constraints, which follow the pro forma balance sheet.20 Current process of collection. As shown in table
FDIC requirements for a well-capitalized operating expenses are defined as 3, imputed equity for 2016 is $53.8
institution. The priced services must normal business operating expenses on million, a decrease of $18.1 million
maintain equity of at least 5 percent of the income statement less depreciation, from the equity imputed for 2015. In
total assets and 10 percent of risk- amortization, taxes, and interest on accordance with FAS 158 [ASC 715],
weighted assets.19 Any equity imputed debt. The Fedwire Funds Service’s six this amount includes an accumulated
that exceeds the amount needed to fund months of current operating expenses other comprehensive loss of $666.1
the priced services’ assets and meet the are computed based on its preliminary
million.
minimum equity constraints is offset by 2016 budget at $53.8 million. In 2016,
a reduction in imputed long-term debt. $51.1 million of equity was imputed to Table 4 reflects the portion of short-
When imputed equity is larger than meet the FDIC capital requirements; and long-term assets that must be
what can be offset by imputed debt, the however, an additional $2.7 million of financed with actual or imputed
excess is imputed as investments in equity was imputed to meet the PSR liabilities and equity. Debt and equity
Treasury securities; income imputed on policy requirement. The additional imputed to fund the 2016 priced
these investments reduces the PSAF. equity is solely allocated to Fedwire services assets within the observed
Application of the Payment System Funds Service. market leverage ratio produced an
Risk (PSR) Policy to the Fedwire Effective tax rate. Like the imputed equity level that did not meet the FDIC
Services. The Board’s PSR policy capital structure, the effective tax rate is minimum equity requirements. As a
reflects the new international standards calculated based on data from U.S. result, additional equity was imputed to
for financial market infrastructures publicly traded firms. The tax rate is the meet the FDIC requirements, and
(FMIs) developed by the Committee on mean of the weighted average rates of imputed long-term debt was reduced.
Payment and Settlement Systems and the U.S. publicly traded firm market The ratio of capital to risk-weighted
the Technical Committee of the over the past 5 years. assets exceeds the required 10 percent
International Organization of Securities Debt and equity financing. The of risk-weighted assets and equity
Commissions in the Principles for imputed short- and long-term debt exceeds 5 percent of total assets (table
Financial Market Infrastructures. The financing rates are derived from the 6). In 2015, long-term debt and equity
revised policy retains the expectation nonfinancial commercial paper rates was imputed to meet the asset funding
that the Fedwire Services meet or from the Federal Reserve Board’s H.15 requirements and reflects the leverage
exceed the applicable risk-management Selected Interest Rates release (AA and ratio observed in the market; additional
standards. Principle 15 states that an A2/P2) and the annual Merrill Lynch equity of $7.6 million was required
FMI should identify, monitor, and Corporate & High Yield Index rate, (table 5) to meet the market leverage
manage general business risk and hold respectively. The rates for debt and ratio.
sufficient liquid net assets funded by equity financing are applied to the
equity to cover potential general Table 5 shows the derivation of the
priced services estimated imputed
business losses so that it can continue 2016 and 2015 PSAF. Financing costs
short-term debt, long-term debt, and
operations and services as a going for 2016 are $6.1 million lower than in
equity needed to finance short- and
concern if those losses materialize. 2015. In addition to the decline in the
long-term assets and meet equity
Further, liquid net assets should at all levels of debt and equity mentioned
requirements.
times be sufficient to ensure a recovery The decrease in the 2016 PSAF is above, the cost of equity declined 3
primarily due to lower financing costs basis points. The reduced equity
19 The FDIC rule, which was adopted as final on
as a result of fewer priced services balance and the lower cost of equity
April 8, 2014, requires that well-capitalized
assets to be financed than in 2015. Debt result in a pretax ROE that is $2.0
institutions meet or exceed the following standards: million lower than the 2015 pretax ROE.
(1) Total capital to risk-weighted assets ratio of at and equity financing rates declined and
least 10 percent, (2) tier 1 capital to risk-weighted less debt and equity was imputed to Imputed sales taxes declined to $2.8
assets ratio of at least 8 percent, (3) common equity fund priced services assets. million in 2016 from $3.3 million in
tier 1 capital to risk-weighted assets ratio of at least 2015. The priced services portion of the
6.5 percent, and (4) a leverage ratio (tier 1 capital
to total assets) of at least 5 percent. Because all of 20 This requirement does not apply to the Fedwire Board’s expenses increased $1.7 million
the Federal Reserve priced services’ equity on the Securities Service. There are no competitors to the to $5.0 million in 2016 from $3.3
pro forma balance sheet qualifies as tier 1 capital, Fedwire Securities Service that will face such a million in 2015. The effective income
only requirements 1 and 4 are binding. The FDIC requirement, and imposing such a requirement
rule can be located at https://www.fdic.gov/news/ when pricing securities services could artificially
tax rate used in 2016 decreased to 21.6
tkelley on DSK3SPTVN1PROD with NOTICES
board/2014/2014-04-08_notice_dis_c_fr.pdf. increase the cost of these services. percent from 22.4 percent in 2015.
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![70788 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices
TABLE 3—COMPARISON OF PRO FORMA BALANCE SHEETS FOR BUDGETED FEDERAL RESERVE PRICED SERVICES
[Millions of dollars—projected average for year]
2016 2015 Change
Short-term assets:
Receivables .......................................................................................................................... $35.6 $34.5 $1.0
Materials and supplies .......................................................................................................... 0.5 0.6 (0.1)
Prepaid expenses ................................................................................................................. 10.2 11.0 (0.9)
Items in process of collection 21 ........................................................................................... 321.0 151.0 170.0
Total short-term assets ................................................................................................. 367.2 197.2 170.1
Imputed investments: 22
Imputed investment in Treasury Securities .......................................................................... 55.8 ........................ 55.8
Imputed investment in Fed Funds ........................................................................................ 11.0 600.00 (589.0)
Total imputed investments ............................................................................................ 66.8 600.00 (533.2)
Long-term assets:
Premises 23 ........................................................................................................................... 111.0 116.2 (5.2)
Furniture and equipment ...................................................................................................... 38.5 39.9 (1.5)
Leasehold improvements and long-term prepayments ........................................................ 89.5 91.5 (2.0)
Pension asset ....................................................................................................................... ........................ 79.6 (79.6)
Deferred tax asset ................................................................................................................ 187.9 222.8 (35.0)
Total long-term assets ................................................................................................... 426.8 550.0 (123.2)
Total assets ................................................................................................................... 860.9 1,347.2 (486.3)
Short-term liabilities:
Deferred credit items ............................................................................................................ 332.0 751.0 (419.0)
Short-term debt ..................................................................................................................... 19.0 18.5 0.5
Short-term payables ............................................................................................................. 27.2 27.6 (0.4)
Total short-term liabilities .............................................................................................. 378.2 797.2 (418.9)
Long-term liabilities:
Pension liability ..................................................................................................................... 17.6 ........................ 17.6
Long-term debt ..................................................................................................................... ........................ 81.9 (81.9)
Postemployment/postretirement benefits and net pension liabilities 24 ....................................... 411.3 396.3 15.0
Total liabilities ................................................................................................................ 807.1 1,275.3 (468.3)
Equity 25 ....................................................................................................................................... 53.8 71.9 (18.1)
Total liabilities and equity .............................................................................................. 860.9 1,347.2 (486.3)
TABLE 4—IMPUTED FUNDING FOR PRICED-SERVICES ASSETS
[Millions of dollars]
2016 2015
A. Short-term asset financing
Short-term assets to be financed:
Receivables ...................................................................................................................................................... $35.6 $34.5
Materials and supplies ...................................................................................................................................... 0.5 0.6
Prepaid expenses ............................................................................................................................................. 10.2 11.0
Total short-term assets to be financed ..................................................................................................... 46.2 46.2
Short-term payables ......................................................................................................................................... 27.2 27.6
Net short-term assets to be financed ........................................................................................................ 19.0 18.5
21 Credit float, which represents the difference Fedwire Funds Service’s projected current 25 Includes an accumulated other comprehensive
between items in process of collection and deferred operating expenses is $53.8 million. In 2016, $51.1 loss of $666.1 million for 2016 and $523.7 million
tkelley on DSK3SPTVN1PROD with NOTICES
credit items, occurs when the Reserve Banks debit million of equity was imputed to meet the for 2015, which reflects the ongoing amortization of
the paying bank for transactions prior to providing regulatory capital requirements; however, an the accumulated loss in accordance with FAS 158
additional $2.7 million of equity was imputed to
credit to the depositing bank. Float is directly [ASC 715]. Future gains or losses, and their effects
meet the PSR policy requirement.
estimated at the service level. 23 Includes the allocation of Board of Governors on the pro forma balance sheet, cannot be projected.
22 Consistent with the Board’s PSR policy, the
assets to priced services of $1.3 and $0.7 million See table 5 for calculation of required imputed
Reserve Banks’ priced services will hold six months for 2016 and 2015, respectively. equity amount.
of the Fedwire Funds Service’s current operating 24 Includes the allocation of Board of Governors
expenses as liquid net financial assets and equity liabilities to priced services of $0.6 million for 2016
on the pro forma balance sheet. Six months of the and 2015.
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![Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices 70789
TABLE 4—IMPUTED FUNDING FOR PRICED-SERVICES ASSETS—Continued
[Millions of dollars]
2016 2015
Imputed short-term debt financing 26 ........................................................................................................ 19.0 18.5
B. Long-term asset financing
Long-term assets to be financed:
Premises ........................................................................................................................................................... 111.0 116.2
Furniture and equipment .................................................................................................................................. 38.5 39.9
Leasehold improvements and long-term prepayments .................................................................................... 89.5 91.5
Pension asset ................................................................................................................................................... ........................ 79.6
Deferred tax asset ............................................................................................................................................ 187.9 222.8
Total long-term assets to be financed ...................................................................................................... 426.8 550.0
Pension liability ................................................................................................................................................. 17.6 ........................
Postemployment/postretirement benefits and net pension liabilities ............................................................... 411.3 396.3
Net long-term assets to be financed ......................................................................................................... (2.0) 153.8
Imputed long-term debt 26 ................................................................................................................................ ........................ 81.9
Imputed equity 26 .............................................................................................................................................. 53.8 71.9
Total long-term financing ........................................................................................................................... 53.8 153.8
TABLE 5—DERIVATION OF THE 2016 AND 2015 PSAF
[Dollars in millions]
2016 2015
Debt Equity Debt Equity
A. Imputed long-term debt and equity
Net long-term assets to finance ............................................................... $(2.0) $(2.0) $153.8 $153.8
Capital structure observed in market ....................................................... 58.5% 41.5% 58.2% 41.8%
Pre-adjusted long-term debt and equity ................................................... $(1.2) $(0.8) $89.5 $64.3
Equity adjustments 27:
Equity to meet capital requirements .................................................. ........................ 51.1 ........................ 71.9
Adjustment to debt and equity funding given capital require-
ments 28 .......................................................................................... 1.2 (1.2) (7.6) 7.6
Adjusted equity balance .................................................................... ........................ (2.0) ........................ 71.9
Equity to meet capital requirements 29 .............................................. ........................ 53.1 ........................ ........................
........................ $51.1 $81.9 $71.9
B. Cost of capital:
Elements of capital costs
Short-term debt 30 .............................................................................. $19.0 × 0.3% = $0.1 $18.5 × 0.2% = $0.0
Long-term debt 30 ...................................................................................... × 4.2% = 81.9 × 5.0% = 4.1
Equity 31 .................................................................................................... 51.1 × 9.8% = 5.0 71.9 × 10.1% =7.3
........................ 5.1 ........................ 11.4
C. Incremental cost of PSR policy:
Equity to meet policy ................................................................................ $2.7 × 9.8% = $0.3 × 10.1% = $
D. Other required PSAF costs:
Sales taxes ............................................................................................... ........................ $2.8 ........................ $3.3
Board of Governors expenses .................................................................. ........................ 5.0 ........................ 3.3
........................ ........................ 7.8 6.6
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........................ ........................ $13.1 $18.0
E. Total PSAF:
As a percent of assets ............................................................................. ........................ 1.5% ........................ 1.0%
As a percent of expenses ........................................................................ ........................ 3.6% ........................ 4.5%
26 See table 5 for calculation.
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![70790 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices
TABLE 5—DERIVATION OF THE 2016 AND 2015 PSAF—Continued
[Dollars in millions]
2016 2015
Debt Equity Debt Equity
F. Tax rates ..................................................................................................... ........................ 21.6% ........................ 22.4%
27 Ifminimum equity constraints are not met after imputing equity based on the capital structure observed in the market, additional equity is im-
puted to meet these constraints. The long-term funding need was met by imputing long-term debt and equity based on the capital structure ob-
served in the market (see tables 4 and 6). In 2016, the amount of imputed equity exceeded the minimum equity requirements for risk-weighted
assets.
28 Equity adjustment offsets due to a shift of long-term debt funding to equity in order to meet FDIC capital requirements for well-capitalized in-
stitutions.
29 Additional equity in excess of that needed to fund priced services assets is offset by an asset balance of imputed investments in treasury se-
curities.
30 Imputed short-term debt and long-term debt are computed at table 4.
31 The 2016 ROE is equal to a risk-free rate plus a risk premium (beta * market risk premium). The 2016 after-tax CAPM ROE is calculated as
0.03% + (1.0 * 7.62%) = 7.65%. Using a tax rate of 21.6%, the after-tax ROE is converted into a pretax ROE, which results in a pretax ROE of
(7.65%/(1–21.6%)) = 9.76%. Calculations may be affected by rounding.
TABLE 6—COMPUTATION OF 2016 CAPITAL ADEQUACY FOR FEDERAL RESERVE PRICED SERVICES
[Dollars in millions]
Weighted
Assets Risk weight assets
Imputed investments:
1-Year Treasury securities 32 ................................................................................................ $55.8 ........................ ........................
Federal funds 33 .................................................................................................................... 11.0 0.2 2.2
Total imputed investments ............................................................................................ 66.8 ........................ 2.2
Receivables ................................................................................................................................. $35.6 0.2 $7.1
Materials and supplies ................................................................................................................. 0.5 1.0 0.5
Prepaid expenses ........................................................................................................................ 10.2 1.0 10.2
Items in process of collection ...................................................................................................... 321.0 0.2 64.2
Premises ...................................................................................................................................... 111.0 1.0 111.0
Furniture and equipment ............................................................................................................. 38.5 1.0 38.5
Leasehold improvements and long-term prepayments ............................................................... 89.5 1.0 89.5
Pension asset .............................................................................................................................. ........................ 1.0 ........................
Deferred tax asset ....................................................................................................................... 187.9 1.0 187.9
Total ............................................................................................................................... 860.9 ........................ 511.0
Imputed equity ............................................................................................................................. $53.8
Capital to risk-weighted assets .................................................................................................... 10.5%
Capital to total assets .................................................................................................................. 6.2%
32 If minimum equity constraints are not met after imputing equity based on all other financial statement components, additional equity is im-
puted to meet these constraints. Additional equity imputed to meet minimum equity requirements is invested solely in Treasury securities. The
imputed investments are similar to those for which rates are available on the Federal Reserve’s H.15 statistical release, which can be located at
http://www.federalreserve.gov/releases/h15/data.htm.
33 The investments are imputed based on the amounts arising from the collection of items prior to providing credit according to established
availability schedules.
C. Check Service—Table 7 shows the budgeted cost-recovery performance for
2014 actual, 2015 estimated, and 2016 the commercial check service.
TABLE 7—CHECK SERVICE PRO FORMA COST AND REVENUE PERFORMANCE
[Dollars in millions]
Recovery rate
Net income after targeted
Year Revenue Total expense Targeted ROE
(ROE) ROE
[1/(2 + 4)]
1 2 3 4 5
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2014 (actual) ........................................................................ 174.7 149.3 25.4 1.8 115.6%
2015 (estimate) .................................................................... 159.3 142.7 16.5 2.0 110.1
2016 (budget) ....................................................................... 149.9 139.1 10.7 1.3 106.7
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![70792 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices
TABLE 9
FedForward Fine Sort Image Cash Letter a b
Deadline ....................................................................................................................................... 9 p.m. 1 a.m. 5 a.m.
Cash letter fee ............................................................................................................................. $3.50 $6.50 $12.50
Tier 1 .................................................................................................................................... 0.0080 0.0120 0.0250
Tier 2 .................................................................................................................................... 0.0120 0.0170 0.0290
Tier 3 .................................................................................................................................... 0.0210 0.0260 0.0380
Tier 4 .................................................................................................................................... 0.0310 0.0360 0.0480
FedForward Fine Deferred Sort Image Cash Letter a b
Deadline ....................................................................................................................................... 1 a.m. 5 a.m. 10 a.m.
Cash letter fee ............................................................................................................................. $3.50 $3.50 $3.50
Tier 1 .................................................................................................................................... 0.0100 0.0130 0.0160
Tier 2 .................................................................................................................................... 0.0130 0.0160 0.0190
Tier 3 .................................................................................................................................... 0.0220 0.0250 0.0280
Tier 4 .................................................................................................................................... 0.0320 0.0350 0.0380
a All deadlines are Monday through Friday.
bA current list of FedForward endpoint tier listings can be found at http://www.frbservices.org/servicefees/check21_endpoint_listing.html.
The Reserve Banks estimate that the environment. The new schedule may reductions in check writing overall and
price changes will result in a 0.5 percent include elimination of certain sorted competition from correspondent banks,
average price increase for check deposit options and modifications to the aggregators, and direct exchanges,
customers. In addition to the above current endpoint-based tiered pricing which will result in lower-than-
changes, the Reserve Banks plan to structure. anticipated revenue.
announce further modifications to the Risks to the Reserve Banks’ ability to D. FedACH Service—Table 10 shows
check fee schedule during 2016 that achieve budgeted 2016 cost recovery for the 2014 actual, 2015 estimate, and 2016
reflect the efficiencies of today’s the check service include lower-than- budgeted cost-recovery performance for
electronic check processing expected check volume due to the commercial FedACH service.
TABLE 10—FEDACH SERVICE PRO FORMA COST AND REVENUE PERFORMANCE
[Dollars in millions]
Year Revenue Total expense Net income Targeted ROE Recovery rate
(ROE) after targeted
ROE
[1/(2 + 4)]
1 2 4
3
5
2014 (actual) ........................................................................ 124.4 141.4 ¥17.0 2.0 86.7%
2015 (estimate) .................................................................... 125.5 123.7 1.8 1.7 100.0
2016 (budget) ....................................................................... 129.8 129.9 ¥0.0 1.2 99.0
1. 2015 Estimate—The Reserve Banks and receipt volume will increase 5.5 minimum monthly fee for receipt from
estimate that the FedACH service will percent, compared with a budgeted $25 to $35.43
recover 100.0 percent of total expenses increase of 3.5 percent. The Reserve Banks will eliminate
and targeted ROE, compared with a 2. 2016 Pricing—The Reserve Banks large- and small-file per-item origination
2015 final budgeted recovery rate of fees and introduce a single base fee of
expect the FedACH service to recover
100.4 percent.42 Through August, $0.0032 for all origination files with a
99.0 percent of total expenses and
FedACH commercial origination and discount of $0.0005 for origination
receipt volume was 5.1 percent higher- targeted ROE in 2016. FedACH
volume between 750,000 to 1,500,000
than the same period last year. For full- commercial origination and receipt
year 2015 the Reserve Banks estimate volume is projected to grow 4.5 percent 43 Any originating depository financial institution
that FedACH commercial origination contributing to an increase of $4.4 (ODFI) incurring less than $45 for the following fees
million in total revenue from the 2015 will be charged the difference to reach the
42 The Reserve Banks have been engaged in a estimate. Total expenses are budgeted to minimum: Forward value and nonvalue item
origination fees, FedGlobal ACH origination
multiyear technology initiative to modernize the increase $7.2 million from 2015 surcharges, and FedACH SameDay forward
FedACH processing platform by migrating the
budgeted expenses of $122.6 million, origination surcharges.
tkelley on DSK3SPTVN1PROD with NOTICES
service from a mainframe system to a distributed
computing environment. In late 2013, the Reserve primarily because of costs associated Any receiving depository financial institution
Banks conducted an assessment focused on the with the development of a new FedACH (RDFI) originating forward value and nonvalue
viability and cost-effectiveness of the program. As items below the minimum level and incurring less
a result, the Reserve Banks in 2014 suspended the
technology platform. than $35 in receipt fees will be charged the
program and began to investigate the use of other The Reserve Banks will increase the difference to reach the minimum based on
technology solutions. In 2015, the Reserve Banks origination. RDFIs not originating forward value
evaluated alternative processing solutions,
minimum monthly fee for forward and nonvalue items will incur the $35 minimum
including commercially available options. origination from $35 to $45 and the monthly fee for receipt.
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will decrease 15.6 percent from 2014 to $0.155. The Reserve Banks will keep strengthen operational resiliency. The
levels (compared with a budgeted 7.2 the Tier 2 per-item pre-incentive fee Reserve Banks recently completed a
percent decrease). unchanged.45 significant milestone in the Fedwire
2. 2016 Pricing—The Reserve Banks The Reserve Banks will increase the Funds portion of its modernization
expect the Fedwire Funds Service to surcharge for offline transactions from initiative by migrating its back-end
recover 100.0 percent of total expenses $50 to $55. In addition, the Reserve settlement system from a mainframe to
and targeted ROE. Revenue is projected Banks will increase the monthly a distributed platform, although key
to be $121.4 million, an increase of 5.5 participation fee from $90 to $95. work to complete the initiative remains
percent from the 2015 estimate. The The Reserve Banks estimate that the in progress.
Reserve Banks project total expenses to price changes will result in a 5.8 percent The primary risk to the Reserve
be $7.4 million higher than the 2015 average price increase for Fedwire Banks’ ability to achieve budgeted 2016
estimate. The Reserve Banks expect Funds customers. cost recovery for these services is cost
volume to grow 1.5 percent in 2016. The Reserve Banks will not change overruns from unanticipated problems
The Reserve Banks will adjust the National Settlement Service fees for with completing the final stages of
incentive pricing fees for the Fedwire 2016. The Reserve Banks’ Fedwire complex technology programs.
Funds Service by increasing the Tier 1 Funds and National Settlement Services F. Fedwire Securities Service—Table
per item pre-incentive fee (the fee before fees are consistent with their multiyear 13 shows the 2014 actual, 2015
volume discounts are applied) from strategy to minimize pricing volatility estimate, and 2016 budgeted cost
$0.73 to $0.79 and increasing the Tier 3 while undertaking ongoing technology recovery performance for the Fedwire
per item pre-incentive fee from $0.150 upgrades and projects to further Securities Service.46
TABLE 13—FEDWIRE SECURITIES SERVICE PRO FORMA COST AND REVENUE PERFORMANCE
[Dollars in millions]
Year Revenue Total expense Net income Targeted ROE Recovery rate
(ROE) after targeted
[1–2] ROE
[1/(2 + 4)]
1 2 4
3 5
2014 (actual) ........................................................................ 24.0 22.7 1.2 0.3 104.1%
2015 (estimate) .................................................................... 27.3 25.5 1.8 0.4 105.7
2016 (budget) ....................................................................... 25.8 25.9 ¥0.1 0.2 98.7
1. 2015 Estimate—The Reserve Banks with a budgeted decline of 12.9 percent. 2. 2016 Pricing—The Reserve Banks
estimate that the Fedwire Securities The higher-than-expected online agency expect the Fedwire Securities Service to
Service will recover 105.7 percent of transfer volume resulted from the recover 98.7 percent of total expenses
total expenses and targeted ROE, continued low interest-rate and targeted ROE in 2016. The Reserve
compared with a 2015 final budgeted environment, which has supported Banks project that 2016 revenue will
recovery rate of 97.5 percent. The mortgage underwriting activity and decrease by $1.5 million and expenses
higher-than-expected cost recovery is mortgage-backed securities issuance, will increase by $0.4 million, compared
primarily due to not spending and is generally associated with with 2015 estimates.
contingency funds that were budgeted increased online agency transfer activity The Reserve Banks project that online
for the Fedwire Modernization Program. over the Fedwire Securities Service. transfer activity will decline 7.7 percent
Increased revenues generated from Through August, account maintenance in 2016, the number of accounts
higher-than-expected volumes from volume was 9.1 percent lower than maintained will decrease 8.5 percent,
online agency transfers and account during the same period last year. For the and the number of agency securities
maintenance also increased cost full year, the Reserve Banks estimate maintained will decrease 3.3 percent.47
recovery. that account maintenance volume will The projected decline in account
Through August, Fedwire Securities decline 8.4 percent over 2014 levels, maintenance activity reflects customer
Service online volume was 8.0 percent compared with a budgeted decline of closures of empty accounts to avoid
lower than during the same period last 14.1 percent. The higher account unnecessary expenses and increased
year. For full-year 2015, the Reserve maintenance volume is the result of competition in collateral management
Banks estimate Fedwire Securities conservative estimates for customer services.48 The Reserve Banks project a
Service online volume will decline 5.4 account closures that have not decrease in online transfers as gradually
percent from 2014 levels, compared materialized. increasing interest rates lead to less
45 The per-item pre-incentive fee is the fee that enterprises, and certain international institutions. Fedwire Securities Service revenue through June
the Reserve Banks charge for transfers that do not The priced component of this service, reflected in 2015.
qualify for incentive discounts. The Tier 1 per-item this memorandum, consists of revenues, expenses, 48 Specifically, collateral management services
pre-incentive fee applies to the first 14,000 and volumes associated with the transfer of all non-
refers to the Fedwire Securities Joint Custody
transfers, the Tier 2 per-item pre-incentive fee Treasury securities. For Treasury securities, the
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applies to the next 76,000 transfers, and the Tier 3 U.S. Treasury assesses fees for the securities Service, which facilitates the collateralization of
per-item pre-incentive fee applies to any additional transfer component of the service. The Reserve deposits made by a government entity, through the
transfers. The Reserve Banks apply an 80 percent Banks assess a fee for the funds settlement pledging of book-entry securities by its depository
incentive discount to transfers over 60 percent of component of a Treasury securities transfer; this institution. Approximately 72 percent of Fedwire
a customer’s its historic benchmark volume. component is not treated as a priced service. Securities priced accounts are collateral accounts
46 The Reserve Banks provide transfer services for 47 The online transfer fee, monthly account
related to the Joint Custody Service.
securities issued by the U.S. Treasury, federal maintenance fee, and monthly issue maintenance
government agencies, government-sponsored fee accounted for approximately 92 percent of total
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![70796 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices
constraints or because of a dominant system integrity, or other Board compete effectively with the Reserve
market position deriving from such legal objectives—can be achieved while Banks in providing similar services.58
differences. If any proposed changes minimizing the adverse effect on The changes should permit the Reserve
create such an effect, the Board must competition. Banks to earn a ROE that is comparable
further evaluate the changes to assess The 2016 fees, fee structures, and to overall market returns and provide
whether the benefits associated with the changes in service will not have a direct for full cost recovery over the long run.
changes—such as contributions to and material adverse effect on the
payment system efficiency, payment ability of other service providers to III. 2016 Fee Schedules
FEDACH SERVICE 2016 FEE SCHEDULE
[Effective January 1, 2016. Bold indicates changes from 2015 prices.]
Fee
FedACH minimum monthly fee
Originating Depository Financial Institution (ODFI) 59 ............................................................................................... $45.00.
Receiving Depository Financial Institution (RDFI) 60 .................................................................................................. 35.00.
Origination (per item or record)
Forward or return items ................................................................................................................................................. 0.0032.
Addenda record ................................................................................................................................................................ 0.0015.
FedLine Web®-originated returns and notification of change (NOC) 61 .......................................................................... 0.35.
Facsimile exception returns/NOC 62 ................................................................................................................................. 45.00.
Automated NOC ............................................................................................................................................................... 0.20.
Volume-based discounts (based on monthly billed origination volume) per item when origination volume is:
750,000 to 1,500,000 items per month .................................................................................................................. 0.0005 discount.
More than 1,500,000 items per month .................................................................................................................. 0.0007 discount.
Volume-based discounts (based on monthly billed receipt volume) 63 per item when receipt volume is:.
10,000,001 to 15,000,000 items per month ..................................................................................................................... 0.0002 discount.
More than 15,000,000 items per month ........................................................................................................................... 0.0003 discount.
Receipt (per item or record)
Forward Item .................................................................................................................................................................... 0.0032.
Return Item ....................................................................................................................................................................... 0.0075.
Addenda record ................................................................................................................................................................ 0.0015.
On-Us Receipt Credit 64 ................................................................................................................................................... 0.0032 discount.
Volume-based discounts (forward items excluding FedACH SameDay service items)
Non-Premium Receivers—RDFIs receiving less than 90 percent of total network volume through
FedACH per item when volume is:
750,001 to 12,500,000 items per month 65 ..................................................................................................... 0.0014 discount.
more than 12,500,000 items per month 66 ..................................................................................................... 0.0016 discount.
Premium Receivers, Level One—RDFIs receiving at least 90 percent of FedACH-originated volume
through FedACH per item when volume is:
750,001 to 1,500,000 items per month 65 ....................................................................................................... 0.0014 discount.
1,500,001 to 2,500,000 items per month 66 .................................................................................................... 0.0014 discount.
72,500,001 to 12,500,000 items per month 66 ................................................................................................ 0.0015 discount.
more than 12,500,000 items per month 66 ..................................................................................................... 0.0017 discount.
Premium Receivers, level two—RDFIs receiving at least 90 percent of ACH volume originated through
FedACH or EPN per item when volume is:
750,001 to 1,500,000 items per month 65 ....................................................................................................... 0.0014 discount.
1,500,001 to 2,500,000 items per month 66 .................................................................................................... 0.0014 discount.
2,500,001 to 12,500,000 items per month 66 .................................................................................................. 0.0016 discount.
more than 12,500,000 items per month 66 ..................................................................................................... 0.0018 discount.
FedACH Bundled Service Discount
Monthly Bundled Service Package Discount 67 .......................................................................................................... 20.00 discount.
FedACH SameDay Service
Origination
Forward item 68 .......................................................................................................................................................... 0.0035 surcharge.
Addenda record 68 ..................................................................................................................................................... 0.0015 surcharge.
Return item 69 ............................................................................................................................................................ 0.0025 discount.
Return addenda record 69 ......................................................................................................................................... 0.0015 discount.
Receipt
Forward item 65 .......................................................................................................................................................... 0.0025 discount.
Return item 65 ............................................................................................................................................................ 0.0075 discount.
Addenda record (forward/return) 65 ........................................................................................................................... 0.0015 discount.
Monthly FedACH Risk® Management fees 70
Risk Origination Monitoring Service/RDFI Alert Service package pricing
For up to 5 criteria sets ............................................................................................................................................. 35.00.
For 6 through 11 criteria sets .................................................................................................................................... 70.00.
For 12 through 23 criteria sets .................................................................................................................................. 125.00.
58 Certain correspondent banks believe that the have a direct and material adverse effect on the 62 The fee includes the item and addenda fees in
FedForward Fine Sort ICL product, which the ability of such service providers to compete addition to the conversion fee. Reserve Banks also
Reserve Banks will eliminate in January 2017, effectively with the Reserve Banks in providing assess a $30 fee for every government paper return/
enables them to compete more effectively with the similar services due to legal differences. NOC they process.
Reserve Banks in the collection of checks destined 59 Any ODFI incurring less than $45 in forward 63 Origination discounts based on monthly
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to paying banks with which the correspondent value and nonvalue item origination fees will be volume apply only to those items received by
banks do not have electronic presentment
charged a variable amount to reach the minimum. FedACH receiving points and are available only to
agreements. Paying banks, however, may not have 60 Any RDFI not originating forward value and Premium Receivers (institutions receiving volume
an incentive to accept electronic presentment
unless the correspondent bank makes a decision to nonvalue items and incurring less than $35 in above a specified threshold through FedACH).
present checks directly and provides the paying receipt fees will be charged a variable amount to 64 RDFI originating and receiving items on the
bank the choice of receiving presentments in paper reach the minimum. same RTN.
or electronic form (as the Reserve Banks do). We do 61 The fee includes the item and addenda fees in 65 This per-item discount is a reduction to the
not believe that the elimination of the product will addition to the conversion fee. standard receipt fees listed in this fee schedule.
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FEDACH SERVICE 2016 FEE SCHEDULE—Continued
[Effective January 1, 2016. Bold indicates changes from 2015 prices.]
Fee
For 24 through 47 criteria sets .................................................................................................................................. 150.00.
For 48 through 95 criteria sets .................................................................................................................................. 250.00.
For 96 through 191 criteria sets ................................................................................................................................ 425.00.
For 192 through 383 criteria sets .............................................................................................................................. 675.00.
For 384 through 584 criteria sets .............................................................................................................................. 850.00.
For more than 585 criteria sets ................................................................................................................................. 1,100.00.
Risk origination monitoring batch (based on total monthly volume)
For 1 through 100,000 batches (per batch) .............................................................................................................. 0.007.
For more than 100,000 batches (per batch) ............................................................................................................. 0.0035.
Monthly FedPayments Reporter Service
FedPayments Reporter Service package pricing includes
Standard reports 71.
ACH volume summary by SEC code report—customer 72
Daily return ratio report
Monthly return ratio report
Receiver setup report
Report delivery via FedLine file access solution (monthly fee)
For up to 50 reports ........................................................................................................................................... 35.00.
For 51 through 150 reports ................................................................................................................................ 55.00.
For 151 through 500 reports .............................................................................................................................. 100.00.
For 501 through 1,000 reports ........................................................................................................................... 180.00.
For 1,001 through 1,500 reports ........................................................................................................................ 260.00.
For 1,501 through 2,500 reports ........................................................................................................................ 420.00.
For 2,501 through 3,500 reports ........................................................................................................................ 580.00.
For 3,501 through 4,500 reports ........................................................................................................................ 740.00.
For 4,501 through 5,500 reports ........................................................................................................................ 900.00.
For 5,501 through 7,000 reports ........................................................................................................................ 1,100.00.
For 7,001 through 8,500 reports ........................................................................................................................ 1,300.00.
For more than 8,501 reports .............................................................................................................................. 1,500.00.
Premier reports (per report generated) 73
ACH volume summary by SEC code report—depository financial institution
For 1 through 5 reports ...................................................................................................................................... 10.00.
For 6 through 10 reports .................................................................................................................................... 6.00.
For more than 11 reports ................................................................................................................................... 1.00.
On Demand Surcharge ...................................................................................................................................... 1.00
ACH volume summary by SEC code report—customer
On Demand Surcharge ...................................................................................................................................... 1.00.
Monthly ACH routing number activity report
For 1 through 5 reports ...................................................................................................................................... 10.00.
For 6 through 10 reports .................................................................................................................................... 6.00.
For more than 11 reports ................................................................................................................................... 1.00.
On Demand Surcharge ...................................................................................................................................... 1.00.
On-us inclusion
Participation (monthly fee per RTN) ......................................................................................................................... 10.00.
Per-item ..................................................................................................................................................................... 0.0030.
Per-addenda .............................................................................................................................................................. 0.0015.
Report delivery via encrypted email (per email) .............................................................................................................. 0.20.
Other fees
Monthly fee (per routing number)
Account servicing fee 74 ............................................................................................................................................ 45.00.
FedACH settlement 75 ............................................................................................................................................... 55.00.
FedACH Information extract file ................................................................................................................................ 100.00.
IAT Output File Sort .................................................................................................................................................. 75.00.
Automated NOC participation fee 76 ......................................................................................................................... 5.00.
Non-electronic input/output fee 77
CD/DVD (CD or DVD) ............................................................................................................................................... 50.00.
Paper (file or report) .................................................................................................................................................. 50.00.
FedGlobal ACH Payments 78
Canada service fee
Item originated to Canada 79 ..................................................................................................................................... 0.62.
Return received from Canada 80 ............................................................................................................................... 0.99.
Item trace at receiving gateway ................................................................................................................................ 5.50.
Item trace not at receiving gateway .......................................................................................................................... 7.00.
Mexico service fee
Item originated to Mexico 79 ...................................................................................................................................... 0.67.
Return received from Mexico 80 ................................................................................................................................ 0.91.
Account-to-receiver (A2R) item originated to Mexico 79 ........................................................................................... 3.45.
Foreign currency to foreign currency (F3X) item originated to Mexico 79 ................................................................ 0.67.
Item trace .................................................................................................................................................................. 13.50.
Panama service fee
Item originated to Panama 79 .................................................................................................................................... 0.72.
Return received from Panama 80 .............................................................................................................................. 1.00.
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NOC ........................................................................................................................................................................... 0.72.
Item trace .................................................................................................................................................................. 7.00.
Latin America service fee
A2R item originated to Latin America 79 ................................................................................................................... 4.40.
Return received from Latin America 80 ..................................................................................................................... 0.72.
Item trace .................................................................................................................................................................. 5.00.
Europe service fee
Item originated to Europe 79 ...................................................................................................................................... 1.25.
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FEDACH SERVICE 2016 FEE SCHEDULE—Continued
[Effective January 1, 2016. Bold indicates changes from 2015 prices.]
Fee
F3X item originated to Europe 79 .............................................................................................................................. 1.25.
Return received from Europe 80 ................................................................................................................................ 1.35.
Item trace .................................................................................................................................................................. 7.00.
FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES 2016 FEE SCHEDULE
[Effective January 1, 2016. Bold indicates changes from 2015 prices.]
Fedwire Funds Service
Monthly Participation Fee ................................................................................................................................................................. $95.00
Basic volume-based pre-incentive transfer fee (originations and receipts)—per transfer for:
the first 14,000 transfers per month ......................................................................................................................................... 0.79
additional transfers up to 90,000 per month ................................................................................................................................ 0.24
every transfer over 90,000 per month ...................................................................................................................................... 0.155
Volume-based transfer fee with the incentive discount (originations and receipts)—per eligible transfer for: 81
the first 14,000 transfers per month ......................................................................................................................................... 0.158
additional transfers up to 90,000 per month ................................................................................................................................ 0.048
every transfer over 90,000 per month ...................................................................................................................................... 0.031
Surcharge for Off-line Transfers (Originations and Receipts) ..................................................................................................... 55.00
Surcharge for End-of-Day Transfer Originations 82 ............................................................................................................................. 0.26
Monthly FedPayments Manager import/export fee 83 ......................................................................................................................... 50.00
Surcharge for high-value payments:
>$10 million .................................................................................................................................................................................. 0.14
>$100 million ................................................................................................................................................................................ 0.36
Surcharge for Payment Notification:
Origination Surcharge 84 ............................................................................................................................................................... 0.20
Receipt Volume 85 ........................................................................................................................................................................ N/A
National Settlement Service
Basic
Settlement Entry Fee .................................................................................................................................................................... 1.50
Settlement File Fee ...................................................................................................................................................................... 30.00
Surcharge for Off-line File Origination 86 45.00
Minimum Monthly Fee (account maintenance) 87 60.00
Special Settlement Arrangements (fee per day) 88 150.00
66 Receipt volumes at these levels qualify for the transactions. Institutions that receive only U.S. data as are available. If a customer has less than one
waterfall discount which includes all FedACH government transactions through the Reserve Banks year of past activity, then the customer qualifies
receipt items. or that elect to use a private sector operator automatically for incentive discounts for the year.
67 This monthly billing discount is available for exclusively are not assessed this fee. The applicable incentive discounts are as follows:
any customer that (1) pays the FedACH minimum 75 The FedACH settlement fee is applied to any
$0.632 for transfers up to 14,000; $0.192 for
monthly fee; (2) purchases a FedLine Web Plus or routing number with activity during a month, transfers 14,001 to 90,000; and $0.124 for transfers
higher package; and (3) subscribes to either including institutions that elect to use a private over 90,000.
FedACH RDFI Alert, FedACH Risk Origination sector operator exclusively but also have items 82 This surcharge applies to originators of
Monitoring, or FedPayments Reporter. routed to or from customers that access the ACH transfers that are processed by the Reserve Banks
68 This per-item surcharge is in addition to the network through FedACH. This fee does not apply after 5:00 p.m. ET.
standard origination fees listed in the origination to routing numbers that use the Reserve Banks for 83 This fee is charged to any Fedwire Funds
and receipt fee schedule. only U.S. government transactions.
69 This per-item discount is a reduction to the 76 The notification of change fee will be assessed
participant that originates a transfer message via the
FedPayments Manager (FPM) Funds tool and has
standard origination fees listed in the origination only when automated NOCs are generated.
the import/export processing option setting active
and receipt fee schedule. 77 Limited services are offered in contingency
70 Criteria may be set for both the origination
at any point during the month.
situations. 84 Payment Notification and End-of-Day
monitoring service and the RDFI alert service. 78 The international fees and surcharges vary from
Subscribers with no criteria set up will be assessed Origination surcharges apply to each Fedwire funds
country to country as these are negotiated with each
the $45 monthly package fee. transfer message.
international gateway operator.
85 Provided on billing statement for informational
71 Standard reports include Customer Transaction 79 This per-item surcharge is in addition to the
Activity, Death Notification, International (IAT), standard domestic origination and input file purposes only.
86 Off-line files will be accepted only on an
Notification of Change, Payment Data Information processing fees.
File, Remittance Advice Detail, Remittance Advice 80 This per-item surcharge is in addition to the exception basis when a settlement agent’s primary
Summary, Return Item, Return Ratio, Social standard domestic receipt fees. and backup means of transmitting settlement files
tkelley on DSK3SPTVN1PROD with NOTICES
Security Beneficiary, and Originator Setup Reports. 81 The incentive discounts apply to the volume are both unavailable. For information, contact the
72 ACH volume summary by SEC code reports
that exceeds 60 percent of a customer’s historic NSS Central Service Support Staff at (800) 758–
generated on demand are subject to a $1.00 per benchmark volume. Historic benchmark volume is 9403.
report surcharge. based on a customer’s average daily activity over
87 This minimum monthly charge is only assessed
73 Premier reports generated on demand are
the previous five calendar years. If a customer has if total settlement charges during a calendar month
subject to the package/tiered fees plus a surcharge. fewer than five full calendar years of previous are less than $60.
74 The account servicing fee applies to routing activity, its historic benchmark volume is based on 88 Special settlement arrangements use Fedwire
numbers that have received or originated FedACH its daily activity for as many full calendar years of Funds transfers to effect settlement. Participants in
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![Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices 70799
FEDWIRE SECURITIES SERVICE 2016 FEE SCHEDULE (NON-TREASURY SECURITIES)
[Effective January 1, 2016. Bold indicates changes from 2015 prices.]
Fee
Basic Transfer Fee
Transfer or reversal originated or received .................................................................................................................................. 0.65
Surcharge
Offline origination & receipt surcharge ......................................................................................................................................... 66.00
Monthly Maintenance Fees
Account maintenance (per account) ............................................................................................................................................ 48.00
Issues maintained (per issue/per account) .................................................................................................................................. 0.65
Claim Adjustment Fee ......................................................................................................................................................................... 0.75
GNMA Serial Note CUSIP Fee ........................................................................................................................................................... 9.00
Joint Custody Origination Surcharge 89 ............................................................................................................................................... 44.00
Delivery of Reports—Hard Copy Reports to On-Line Customers ...................................................................................................... 50.00
FEDLINE 2016 FEE SCHEDULE
[Effective January 1, 2016. Bold indicates changes from 2015 prices.
Fee
FedComplete Packages (Monthly) 90
FedComplete 100 Plus .......................................................................................................................................................... 775.00.
Includes:
FedLine Advantage Plus package
FedLine subscriber 5-pack
FedLine Exchange subscriber 5-pack
7,500 FedForward transactions
70 FedReturn transactions
14,000 FedReceipt® transactions
35 Fedwire funds origination transfers
35 Fedwire funds receipt transfers
Fedwire participation fee
1,000 FedACH origination items
FedACH minimum fee
7,500 FedACH receipt items
FedACH receipt minimum fee
10 FedACH web return/NOC
500 FedACH addenda originated
1,000 FedACH addenda received
FedACH account servicing
FedACH settlement
FedComplete 100 Premier .................................................................................................................................................... 850.00.
Includes:
FedLine Advantage Premier package
Volumes included in the FedComplete 100 Plus package
FedComplete 200 Plus .......................................................................................................................................................... 1,300.00.
Includes:
FedLine Advantage Plus package
FedLine subscriber 5-pack
FedLine Exchange subscriber 5-pack
25,000 FedForward transactions
225 FedReturn transactions
arrangements and settlement agents are also www.frbservices.org/files/servicefees/pdf/access/ 101 FedLine Direct contingency solution is
charged the applicable Fedwire Funds transfer fee 2016_vendor_fees.pdf. available only for FedLine Direct Plus & Premier
for each transfer into and out of the settlement 94 These add-on services can be purchased only packages.
account. with a FedLine Customer Access Service option. 102 Cash Management Service options are limited
89 Fedwire Securities Service charges customers 95 There are no priced subscribers contained in
to Plus and Premier packages.
the Joint Custody Origination Surcharge for both the FedLine Exchange or FedLine packages. 103 End of Day Reconcilement File option is
Agency and Treasury securities. 96 Additional FedLine Command Certificates
available to FedLine Web Plus and FedLine
90 FedComplete packages are all-electronic available for FedLine Command and Direct Advantage Plus and Premier packages. Available for
service options that bundle payment services with packages only. no extra fee in FedLine Command Plus and Direct
an access solution for one monthly fee. 97 Additional FedLine Direct Certificates available
packages.
91 Per-item surcharges are in addition to the for FedLine Direct packages only. 104 Statement of Account Spreadsheet File option
standard fees listed in the applicable priced 98 Additional VPNs are available for FedLine
is available to FedLine Web Plus and FedLine
services fee schedules. Advantage, FedLine Command, and FedLine Direct
Advantage Plus and Premier packages. Available for
92 New FedComplete package customers with a packages only.
no extra fee in FedLine Command Plus and Direct
new FedLine Advantage connection are eligible for 99 56K option available to installed base only and
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a one-time $1,500 credit applied to their Federal packages.
is not available for new orders. Effective July 1,
105 Intra-day Download Search File option is
Reserve service charges. Customers receiving credit 2016, all remaining 56K connections will be
must continue using the FedComplete package for disconnected. Network diversity supplemental available to the FedLine Web Plus package.
a minimum of six months or forfeit the $1,500 charge of $2,000 a month may apply in addition to Available for no extra fee in FedLine Advantage and
credit. these fees. higher packages.
93 VPN hardware for FedLine Advantage and 100 The FedLine Custom Implementation Fee will 106 ACT Report options are limited to FedLine
FedLine Command is billed directly by the vendor. vary from $2,500 to $5,000 based on the complexity Command Plus and FedLine Direct Plus and
A list of 2016 vendor fees can be found at https:// of the setup. Premier packages.
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![70802 Federal Register / Vol. 80, No. 220 / Monday, November 16, 2015 / Notices
By order of the Board of Governors of the c) Legislative Report. Hart-Scott-Rodino Antitrust
Federal Reserve System, November 2, 2015. 3. Office of Investments Report. Improvements Act of 1976, requires
Robert deV. Frierson, 4. Investment Manager Annual persons contemplating certain mergers
Secretary of the Board. Service Review. or acquisitions to give the Federal Trade
[FR Doc. 2015–28932 Filed 11–13–15; 8:45 am] 5. 2016 Proposed Internal Audit Commission and the Assistant Attorney
BILLING CODE 6210–01–P Schedule. General advance notice and to wait
Closed Session designated periods before
consummation of such plans. Section
FEDERAL RETIREMENT THRIFT Security
7A(b)(2) of the Act permits the agencies,
INVESTMENT BOARD Adjourn
in individual cases, to terminate this
CONTACT PERSON FOR MORE INFORMATION: waiting period prior to its expiration
Sunshine Act Meeting Kimberly Weaver, Director, Office of and requires that notice of this action be
External Affairs, (202) 942–1640. published in the Federal Register.
TIME AND DATE: November 19, 2015, 8:30
a.m., In-Person Meeting. Dated: November 10, 2015.
The following transactions were
PLACE: Le Meridien, 333 Battery Street,
James B. Petrick,
granted early termination—on the dates
Mercantile Room, San Francisco, CA Secretary, Federal Retirement Thrift indicated—of the waiting period
94111. Investment Board.
provided by law and the premerger
[FR Doc. 2015–29242 Filed 11–12–15; 11:15 am]
STATUS: Open to the public. notification rules. The listing for each
BILLING CODE 6760–01–P
MATTERS TO BE CONSIDERED: transaction includes the transaction
number and the parties to the
Open to the Public
transaction. The grants were made by
Open Session FEDERAL TRADE COMMISSION the Federal Trade Commission and the
1. Approval of the Minutes for the Granting of Request for Early Assistant Attorney General for the
October 27, 2015 Board Member Termination of the Waiting Period Antitrust Division of the Department of
Meeting. Under the Premerger Notification Justice. Neither agency intends to take
2. Monthly Reports Rules any action with respect to these
a) Monthly Participant Activity proposed acquisitions during the
Report. Section 7A of the Clayton Act, 15 applicable waiting period.
b) Monthly Investment Report. U.S.C. § 18a, as added by Title II of the
20151508 ...... G Envision Healthcare Holdings, Inc.; WP Rocket Holdings Inc.; Envision Healthcare Holdings, Inc.
10/02/2015
20151506 ...... G Sensata Technologies Holding N.V.; Custom Sensors & Technologies Topco Ltd.; Sensata Technologies Holding N.V.
20151737 ...... G GSO Special Situations Fund L.P.; Upstate New York Power Producers, Inc.; GSO Special Situations Fund L.P.
20151739 ...... G B&G Foods, Inc.; General Mills, Inc.; B&G Foods, Inc.
20151740 ...... Y Agilent Technologies, Inc.; Seahorse Bioscience, Inc.; Agilent Technologies, Inc.
20151751 ...... G Parthenon Investors IV, L.P.; Millennium Trust Company, LLC; Parthenon Investors IV, L.P.
20151760 ...... G Omron Corporation; Adept Technology, Inc.; Omron Corporation.
20151764 ...... G Chih-Yaung Chu; MAG IAS Holdings, Inc.; Chih-Yaung Chu.
20151775 ...... G Roger S. Penske; R. Jerry Nelson; Roger S. Penske.
20151776 ...... G Roger S. Penske; Philip C. Schneider, Jr.; Roger S. Penske.
20151779 ...... G Dr. Ge Li; WuXi PharmaTech (Cayman) Inc.; Dr. Ge Li.
20151780 ...... G Investor AB; The Braun Corporation; Investor AB.
20151782 ...... G Phillips 66; DCP Southern Hills Pipeline, LLC; Phillips 66.
20151783 ...... G Phillips 66; DCP Sand Hills Pipeline, LLC; Phillips 66.
20151787 ...... G Audax Private Equity Fund IV, L.P.; CPC Holdco, Inc.; Audax Private Equity Fund IV, L.P.
10/05/2015
20151671 ...... Y Medivation, Inc.; BioMarin Pharmaceutical, Inc.; Medivation, Inc.
20151761 ...... G Valeant Pharmaceuticals International, Inc.; Synergetics USA, Inc.; Valeant Pharmaceuticals International, Inc.
20151792 ...... G GlaxoSmithKline plc; Theravance Biopharma, Inc.; GlaxoSmithKline plc.
10/06/2015
20151699 ...... Y Greatbatch, Inc.; KKR Millennium Fund L.P.; Greatbatch, Inc.
20151762 ...... G Telefonaktiebolaget LM Ericsson; Envivio, Inc.; Telefonaktiebolaget LM Ericsson.
10/07/2015
20151716 ...... G Amazon.com, Inc.; Elemental Technologies, Inc.; Amazon.com, Inc.
20151726 ...... G GTT Communications, Inc.; One Source Networks Inc.; GTT Communications, Inc.
20151774 ...... G Pangea Private Holdings I, LLC; Premiere Global Services, Inc.; Pangea Private Holdings I, LLC.
tkelley on DSK3SPTVN1PROD with NOTICES
10/08/2015
20151753 ...... Y Allergan plc; AqueSys, Inc.; Allergan plc.
20151763 ...... Y Amgen Inc.; Forbion Capital Fund II C.V.; Amgen Inc.
20151735 ...... G Lannett Company, Inc.; UCB S.A.; Lannett Company, Inc.
20151745 ...... G Blackstone Capital Partners VI NQ/NF L.P.; Glenn B. Stearns; Blackstone Capital Partners VI NQ/NF L.P.
VerDate Sep<11>2014 22:10 Nov 13, 2015 Jkt 238001 PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 E:\FR\FM\16NON1.SGM 16NON1](https://thefederalregister.org/doc/80_FR_71003/page/20.svg)
Document Created: 2015-12-14 14:12:26
Document Modified: 2015-12-14 14:12:26
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice. | |
| Dates | The new fee schedules become effective January 1, 2016. | |
| Contact | For questions regarding the fee schedules: Susan V. Foley, Senior Associate Director, (202) 452-3596; Slavea A. Assenova, Financial Services Analyst, (202) 452-2087, Division of Reserve Bank Operations and Payment Systems. For questions regarding the PSAF: Gregory L. Evans, Deputy Associate Director, (202) 452-3945; Lawrence Mize, Deputy Associate Director, (202) 452-5232; Manuel Garcia, Senior Financial Analyst, (202) 452-3480, Division of Reserve Bank Operations and Payment Systems. For users of Telecommunications Device for the Deaf (TDD) only, please call (202) 263-4869. Copies of the 2016 fee schedules for the check service are available from the Board, the Federal Reserve Banks, or the Reserve Banks' financial services Web site at www.frbservices.org. | |
| FR Citation | 80 FR 70783 |
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