82 FR 46668 - Policy on Payment System Risk

FEDERAL RESERVE SYSTEM

Federal Register Volume 82, Issue 193 (October 6, 2017)

The Board of Governors of the Federal Reserve System (Board) has revised part II of the Federal Reserve Policy on Payment System Risk (PSR policy) related to the transaction posting times used for measuring balances intraday in institutions' accounts at the Federal Reserve Banks (Reserve Banks) to conform to amendments to regulations governing the use of the Automated Clearing House (ACH) Network by Federal agencies announced by the Department of the Treasury, Bureau of the Fiscal Service (Fiscal Service). Specifically, the amended posting rules conform to the decision of the Fiscal Service to allow Federal agencies to originate and receive same-day entries beginning September 15, 2017.

[Federal Register Volume 82, Number 193 (Friday, October 6, 2017)]
[Rules and Regulations]
[Pages 46668-46669]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-21602]


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FEDERAL RESERVE SYSTEM

12 CFR Chapter II

[Docket No. OP-1572]


Policy on Payment System Risk

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Policy statement.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
has revised part II of the Federal Reserve Policy on Payment System 
Risk (PSR policy) related to the transaction posting times used for 
measuring balances intraday in institutions' accounts at the Federal 
Reserve Banks (Reserve Banks) to conform to amendments to regulations 
governing the use of the Automated Clearing House (ACH) Network by 
Federal agencies announced by the Department of the Treasury, Bureau of 
the Fiscal Service (Fiscal Service). Specifically, the amended posting 
rules conform to the decision of the Fiscal Service to allow Federal 
agencies to originate and receive same-day entries beginning September 
15, 2017.

DATES: This policy revision is applicable beginning on September 15, 
2017.

FOR FURTHER INFORMATION CONTACT: Jeffrey D. Walker, Assistant Director 
(202-721-4559), Jason Hinkle, Manager, Financial Risk Management (202-
912-7805), or Ian C.B. Spear, Senior Financial Services Analyst (202-
452-3959), Division of Reserve Bank Operations and Payment Systems; for 
users of Telecommunication Devices for

[[Page 46669]]

the Deaf (TDD) only, contact 202-263-4869; Board of Governors of the 
Federal Reserve System, 20th and C Streets NW., Washington, DC 20551.

SUPPLEMENTARY INFORMATION:

Background

    The Board's PSR policy establishes the procedures for measuring 
balances intraday in institutions' accounts at the Reserve Banks by 
setting forth the times at which credits and debits for various types 
of transactions are posted to those accounts (``the posting 
rules'').\1\ The application of these posting rules determines an 
institution's intraday account balance and whether it has incurred a 
negative balance (daylight overdraft).
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    \1\ The Board's PSR policy is available at https://www.federalreserve.gov/paymentsystems/files/psr_policy.pdf.
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    On September 23, 2015, the Board approved enhancements to the 
Reserve Banks' FedACH[supreg] SameDay Service (FedACH SameDay Service) 
in light of amendments to NACHA--The Electronic Payments Association's 
Operating Rules and Guidelines.\2\ The NACHA amendments, as 
incorporated into Operating Circular 4, become effective in three 
phases, beginning with same-day credits in September 2016, same-day 
debits in September 2017, and faster funds availability in March 2018. 
Next-day settlement remains available.
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    \2\ 80 FR 58248 (Sep. 28, 2015). NACHA, whose membership 
consists of insured financial institutions and regional payment 
associations, establishes network-wide ACH rules through its 
Operating Rules and Guidelines. As an ACH operator, the Reserve 
Banks, through Operating Circular 4, incorporate NACHA's Operating 
Rules and Guidelines as rules that govern clearing and settlement of 
commercial ACH items by the Reserve Banks, except for those 
provisions specifically excluded in the Operating Circular.
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    The Board is revising the PSR policy's posting rules for same-day 
ACH transactions to conform to amendments to 31 CFR part 210 (part 210) 
announced on September 11, 2017 by Fiscal Service.\3\ Specifically, the 
amended posting rules conform to the decision of the Fiscal Service to 
allow Federal agencies to originate and receive same-day entries 
beginning September 15, 2017.\4\
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    \3\ The Fiscal Service amended part 210 to address changes to 
the NACHA Operating Rules, including NACHA's same-day amendments. 
See 82 FR 42597 (Sep. 11, 2017). Part 210 governs the use of ACH by 
Federal agencies and incorporates the NACHA Operating Rules, with 
certain exceptions.
    \4\ 31 CFR 210.2(d)(7) (as amended Sept. 11, 2017).
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Policy on Payment System Risk

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

Post at 8:30 a.m. eastern time:
    +/- Term deposit maturities and accrued interest
    +/- Government and commercial ACH transactions, including return 
items \5\
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    \5\ With the exception of paper returns and paper notifications 
of change of prior-dated items that only post at 5:00 p.m.; and 
paper returns of same-day forward items that only post at 5:30 p.m.
     Institutions that are monitored in real time must fund the 
total amount of their commercial ACH credit originations in order 
for the transactions to be processed. If the Federal Reserve 
receives commercial ACH credit transactions from institutions 
monitored in real time after the scheduled close of the Fedwire 
Funds Service, these transactions will be processed at 12:30 a.m. 
the next business day, or by the ACH deposit deadline, whichever is 
earlier. The Account Balance Monitoring System provides intraday 
account information to the Reserve Banks and institutions and is 
used primarily to give authorized Reserve Bank personnel a mechanism 
to control and monitor account activity for selected institutions. 
For more information on ACH transaction processing, refer to the ACH 
Settlement Day Finality Guide available through the Federal Reserve 
Financial Services Web site at http://www.frbservices.org.
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    +/- Commercial check transactions, including returned checks \6\
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    \6\ For the three commercial check transaction posting times, 
the Reserve Banks will post credits and debits to institutions' 
accounts for checks deposited and presented, respectively, at least 
30 minutes before the posting time.
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    + Treasury checks, postal money orders, local Federal Reserve Bank 
checks, and savings bond redemptions in separately sorted deposits; 
these items must be deposited by the latest applicable deposit deadline 
preceding the posting time
    + Advance-notice Treasury investments
    - Penalty assessments for tax payments from the Treasury Investment 
Program (TIP).\7\
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    \7\ The Reserve Banks will identify and notify institutions with 
Treasury-authorized penalties on Thursdays. In the event that 
Thursday is a holiday, the Reserve Banks will identify and notify 
institutions with Treasury-authorized penalties on the following 
business day. Penalties will then be posted on the business day 
following notification.
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Post by 1:00 p.m. eastern time:
    +/- Commercial check transactions, including returned checks
    +/- Government and commercial FedACH SameDay Service transactions, 
including return items \8\
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    \8\ With the exception of paper returns and paper notifications 
of change (NOCs) of prior-dated items that only post at 5:00 p.m.; 
paper returns of same-day forward items that only post at 5:30 p.m.; 
and FedLine Web returns and FedLine Web NOCs that only post at 8:30 
a.m. and 5:00 p.m., depending on when the item is received by 
Reserve Banks.
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    + Same-day Treasury investments.
Post at 5:00 p.m. eastern time:
    +/- Government and commercial FedACH SameDay Service transactions, 
including return items \9\
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    \9\ With the exception of paper returns of same-day forward 
items that only post at 5:30 p.m.
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    + Treasury checks, postal money orders, and savings bond 
redemptions in separately sorted deposits; these items must be 
deposited by the latest applicable deposit deadline preceding the 
posting time
    + Local Federal Reserve Bank checks; these items must be presented 
before 3:00 p.m. eastern time
Post at 5:30 p.m. eastern time:
    +/- Government and commercial FedACH SameDay Service return 
transactions \10\
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    \10\ With the exception of paper returns and paper notifications 
of change (NOCs) of prior-dated items that only post at 5:00 p.m.; 
and FedLine Web returns and FedLine Web NOCs that only post at 8:30 
a.m. and 5:00 p.m., depending on when the item is received by 
Reserve Banks.
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    +/- Commercial check transactions, including returned checks

    By order of the Board of Governors of the Federal Reserve 
System, acting through the Director of the Division of Reserve Bank 
Operations and Payment Systems under delegated authority, October 3, 
2017.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2017-21602 Filed 10-5-17; 8:45 am]
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