82 FR 52906 - Federal Reserve Bank Services
FEDERAL RESERVE SYSTEM Federal Register Volume 82, Issue 219 (November 15, 2017)
Federal Register Volume 82, Issue 219 (November 15, 2017)
| Page Range | 52906-52926 | |
| FR Document | 2017-24736 |
[Federal Register Volume 82, Number 219 (Wednesday, November 15, 2017)] [Notices] [Pages 52906-52926] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-24736] ======================================================================= ----------------------------------------------------------------------- FEDERAL RESERVE SYSTEM [Docket No. OP-1583] 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 2018 of $18.9 million and the 2018 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 2, 2018. FOR FURTHER INFORMATION CONTACT: For questions regarding the fee schedules: David C. Mills, Deputy Associate Director, (202) 530-6265; Emily Massaro, Financial Services Analyst, (202) 452-2493, Division of Reserve Bank Operations and Payment Systems. For questions regarding the PSAF: Lawrence Mize, Deputy Associate Director, (202) 452-5232; Max Sinthorntham, Senior Financial Analyst, (202) 452-2864, 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 2018 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. I. Supplementary Information Private Sector Adjustment Factor, Priced Services Cost Recovery, and Overview of 2017 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 will have been earned if a private business firm provided the services. The imputed costs and imputed profit are collectively referred to as the private-sector adjustment factor (PSAF). From 2007 through 2016, the Reserve Banks recovered 101.8 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 10-year recovery rate is based on the pro forma income statements 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 2007 to 2016 results in cost recovery of 95.6 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 2016 actual, 2017 estimated, and 2018 budgeted cost-recovery rates for all priced services. Cost recovery is estimated to be 102.6 percent in 2017 and budgeted to be 100.0 percent in 2018. Table 1--Aggregate Priced Services Pro Forma Cost and Revenue Performance \a\ [Dollars in millions] -------------------------------------------------------------------------------------------------------------------------------------------------------- Recovery rate Year Revenue Total expense Net income (ROE) Targeted ROE after targeted ROE (%) 1 \b\ 2 \c\ 3 4 \d\ 5 \e\ [1-2] [1/(2 + 4)] -------------------------------------------------------------------------------------------------------------------------------------------------------- 2016 (actual)............................................ 434.1 410.5 23.7 4.1 104.7 2017 (estimate).......................................... 442.3 426.3 16.0 4.6 102.6 [[Page 52907]] 2018 (budget)............................................ 441.7 436.5 5.2 5.2 100.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- \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. \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 budgets, estimates, and performance for the 10-year period from 2007 to 2016, 2016 actual, 2017 budget, 2017 estimate, and 2018 budget by priced service. Table 2--Priced Services Cost Recovery [Percent] ---------------------------------------------------------------------------------------------------------------- 2017 budget 2018 budget Priced service 2007-2016 2016 actual \a\ 2017 estimate \b\ ---------------------------------------------------------------------------------------------------------------- All services.................... 101.8 104.7 100.0 102.6 100.0 Check........................... 102.7 112.7 104.1 104.8 101.2 FedACH.......................... 99.1 98.8 95.7 97.8 96.2 Fedwire Funds and NSS........... 101.3 103.3 101.1 105.9 104.0 Fedwire Securities.............. 102.2 99.2 97.8 103.1 97.2 ---------------------------------------------------------------------------------------------------------------- \a\ The 2017 budget figures reflect the final budgets as approved by the Board in December 2016. \b\ The 2018 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks will submit final budget data to the Board in November 2017, for Board consideration in December 2017. 1. 2017 Estimated Performance--The Reserve Banks estimate that they will recover 102.6 percent of the costs of providing priced services in 2017, including total expense and targeted ROE, compared with a 2017 budgeted recovery rate of 100.0 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 $16.0 million, compared with the targeted ROE of $4.6 million. The Reserve Banks estimate that the check service, the Fedwire[supreg] Funds and National Settlement Services, and the Fedwire Securities Service will achieve full cost recovery; however, the Reserve Banks continue to estimate that the FedACH[supreg] Service will not achieve full cost recovery because of investment costs associated with the multiyear technology initiative to modernize its processing platform.\2\ This investment is 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. --------------------------------------------------------------------------- 2. 2018 Private-Sector Adjustment Factor--The 2018 PSAF for Reserve Bank priced services is $18.9 million. This amount represents an increase of $2.3 million from the 2017 PSAF of $16.6 million. This increase is primarily the result of an increase in the total cost of capital and sales taxes offset by a decrease in Board of Governors expenses. 3. 2018 Projected Performance--The Reserve Banks project a priced services cost recovery rate of 100.0 percent in 2018, with both net income and targeted ROE of $5.2 million. The Reserve Banks project that the price changes will result in a 1.4 percent average price increase for customers. The Reserve Banks project that the check service and the Fedwire Funds and National Settlement Services will fully recover their costs; however, the Reserve Banks project that the FedACH Service and the Fedwire Securities Service will not achieve full cost recovery. Although FedACH is not budgeted to fully recover its costs in 2018, the Reserve Banks are expected to fully recover FedACH costs once the FedACH technology modernization project is complete, as well as over the long run. In addition, the Board believes the Reserve Banks' 2018 FedACH fee increases are consistent with a multiyear strategy of providing long-term price stability for customers during a period of high expenses in the short-term as the technology is upgraded. Although Fedwire Securities Service is not budgeted to fully cover its costs in 2018, the Board believes the Reserve Banks will recover Fedwire Securities Service costs in the long run. In 2018 Fedwire Securities Service is projected to underrecover, due to volume declines driven by market changes.\3\ --------------------------------------------------------------------------- \3\ Fedwire Securities Service's ten-year average recovery rate in 2018 is 101.6 percent. --------------------------------------------------------------------------- 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 from new and ongoing improvement initiatives. In light of these risks, the Reserve Banks will continue to refine their business and operational strategies to manage operating costs, increase product [[Page 52908]] revenue, and to capitalize on efficiencies gained from technology initiatives. 4. 2018 Pricing--The following summarizes the Reserve Banks' changes in fee schedules for priced services in 2018: CheckThe Reserve Banks will reassign the tier placement of 478 forward and 977 return endpoints in the FedForward[supreg] and FedReturn[supreg] products, respectively.\4\ --------------------------------------------------------------------------- \4\ The Reserve Banks evaluate and set tier assignments annually based on changes in the volume of items received by endpoints. --------------------------------------------------------------------------- The Reserve Banks will increase all per-item fees for the FedReturn product, except substitute check fees, by 3 percent, rounded to the nearest penny, based on the 2018 tier assignments. The Reserve Banks will lower the average daily forward receipt volume thresholds for tiers 1, 2, and 3 of the FedForward product Premium Daily Fee A, B, and C deposit options based on 2018 tier assignments. The Reserve Banks will increase fees for their paper check forward and return collection products to encourage depositors to shift volume away from legacy paper-related products. The Reserve Banks will increase the cash letter fee for paper forward deposits from $10 to $15, and increase the per-item fee for paper forward deposits and paper return deposits by $1 to $3.50 and $6.50 respectively. The Reserve Banks will increase all fees for the FedImage[supreg] product by 10 percent (rounded to the nearest increment based upon the number of decimal places of the current fee). FedACH The Reserve Banks will increase the base origination and receipt per-item fees from $0.0032 to $0.0035. The Reserve Banks also will increase per-item volume-based discounts by $0.0003 for certain origination discounts (depending on origination volume) and all receipt discounts. The Reserve Banks will increase the monthly FedACH Participation Fee from $58 to $65. Fedwire Funds The Reserve Banks will decrease the Tier 3 per-item pre- incentive fee from $0.17 to $0.16 per transaction.\5\ --------------------------------------------------------------------------- \5\ 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 that are more than 60 percent of a customer's historic benchmark volume. --------------------------------------------------------------------------- The Reserve Banks will decrease the Tier 3 per-item incentive fee, which is derived from the Tier 3 per-item pre-incentive fee, from $0.034 to $0.032. The Reserve Banks will decrease the payment notification origination surcharge from $0.20 to $0.01. National Settlement Service (NSS) The Reserve Banks will keep prices at existing levels for the priced NSS products. Fedwire Securities The Reserve Banks will keep prices at existing levels for the priced Fedwire Securities products. FedLine[supreg] Access Solutions The Reserve Banks will provide VPN devices directly to customers and include the provision of the devices in all FedLine Advantage[supreg], FedLine Command[supreg], and both FedLine Direct[supreg] packages.\6\ As a result, the $1,500 new customer credit will be eliminated and the monthly access fees will increase, ranging from $35 to $100, but include the VPN devices. --------------------------------------------------------------------------- \6\ Historically, customers purchased their VPNs directly from a vendor. --------------------------------------------------------------------------- The Reserve Banks will introduce two new FedComplete[supreg] packages: FedComplete 100C Plus and FedComplete 200C Plus. The new FedComplete 100C Plus and 200C Plus packages, which use the same threshold volumes as the existing FedComplete packages, will include the FedLine Command access solution, rather than FedLine Advantage. FedComplete 100C Plus will be priced at $1,375 per month and FedComplete 200C Plus will be priced at $1,900 per month. The Reserve Banks will make six additional FedComplete package changes: (1) Add the SameDay ACH origination participation fee and surcharge; (2) remove the FedMail[supreg]-FedLine Exchange[supreg] Subscriber 5-pack, consistent with the previously announced unbundling of the FedMail service; (3) increase the price of the existing volume overage monthly surcharges for FedForward, from $0.01 to $0.037, FedReturn, from $0.75 to $0.82, FedACH origination, from $0.0025 to $0.0035, and Fedwire Funds origination, from $0.70 to $0.82; (4) implement FedReceipt[supreg], FedACH receipt, and Fedwire Funds receipt monthly surcharges of $0.00005, $0.00035, and $0.082, respectively; (5) implement a threshold limit of 46 items for FedForward Cash Letters; and (6) adjust FedComplete package prices to maintain an effective discount of less than 20 percent compared to the cost of purchasing services separately. The Reserve Banks will increase the legacy software fee for FedLine Direct customers that have not converted to new IBM[supreg] MQ software. The fee will vary based on the number of customers remaining on the legacy system. 5. 2018 Price Index--Figure 1 compares indexes of fees for the Reserve Banks' priced services with the GDP price index.\7\ The price index for Reserve Bank priced services is projected to decrease approximately 1 percent in 2018 from 2017. The price index for Check 21 services is projected to decrease less than 1 percent. The price index for the FedACH Service is projected to decrease less than 1 percent. The price index for the Fedwire Funds and National Settlement Services is projected to decrease nearly 4 percent. The price index for the Fedwire Securities Services is projected to decrease approximately 2 percent. For the period 2008 to 2018, the price index for total priced services is expected to decrease nearly 7 percent. --------------------------------------------------------------------------- \7\ For the period 2008 to 2016, the GDP price index increased 12.3 percent. --------------------------------------------------------------------------- [[Page 52909]] [GRAPHIC] [TIFF OMITTED] TN15NO17.082 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.\8\ 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 will 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. --------------------------------------------------------------------------- \8\ 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.\9\ --------------------------------------------------------------------------- \9\ 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 will 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 will 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. 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 [[Page 52910]] 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.\10\ 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. --------------------------------------------------------------------------- \10\ The FDIC rule, which was adopted as final on April 14, 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.\11\ The revised policy retains the expectation that the Fedwire Services meet or exceed the applicable risk-management standards. Principle 15 states that an FMI will 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 will 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 will 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.\12\ Current operating expenses are defined as normal business operating expenses on the income statement, less depreciation, amortization, taxes, and interest on debt. Using the Fedwire Funds Service's preliminary 2018 budget, six months of current operating expenses will be $51.4 million. In 2018, $1.5 million of equity was imputed to meet the FDIC capital requirements. No additional imputed equity was necessary to meet the PSR policy requirement. --------------------------------------------------------------------------- \11\ See, Bank For International Settlements, https://www.bis.org/cpmi/publ/d101a.pdf. \12\ 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 the 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 increase in the 2018 PSAF to $18.9 million from $16.6 million in 2017 is primarily attributable to a $1.1 million increase in the cost of debt and a $0.8 million increase in the return on equity, both driven by increased imputed funding needs for long-term assets arising from a higher net pension asset balance. System sales tax expenses increased by $0.7 million and were offset, in part, by a $0.3 million decrease in Board of Governors expenses. Projected 2018 Federal Reserve priced services assets, reflected in table 3, have decreased $186.8 million from 2017. This decrease is primarily due to a $154.0 million decrease in the balance of items in process of collection and a $70.2 million decrease in imputed investments in federal funds, offset by a net increase of $35.7 million in the long-term assets inclusive of net pension asset; Bank premises, furniture, and equipment; and deferred charges. The decrease in net short-term assets to be financed of $3.6 million had a minimal effect on the PSAF. Net credit float (items in process of collection less deferred credit items) decreased by $154.0 million, primarily attributable to the continued effect of new deposit deadlines associated with the Endpoint Cut service deposit deadlines implemented in July 2016, which were intended to reduce float and items in process of collection. The decrease in net credit float had an equivalent effect on the balance of imputed investments in Treasury securities. The resulting balance of 2018 imputed investments in federal funds was sufficient to comply with the PSR policy expectations for Fedwire Funds, and no additional costs were incurred. As shown in table 3, imputed equity for 2018 is $57.8 million, a decrease of $0.7 million from the equity imputed for 2017. In accordance with ASC 715, this amount includes an accumulated other comprehensive loss of $637.2 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 2018 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 meets the required 10 percent of risk-weighted assets, and equity exceeds 5 percent of total assets (table 6). In 2018, 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 $1.5 million was required (table 5) to meet the market leverage ratio. Table 5 shows the derivation of the 2018 and 2017 PSAF. Financing costs for 2018 are $1.9 million higher than in 2017. The allocation of equity based on the capital structure observed in the market increased in 2018 to 41.8 percent from 41.6 percent in 2017. The increased equity balance and the slightly higher cost of equity result in a pretax ROE that is $0.7 million higher than the 2017 pretax ROE. Imputed sales taxes increased to $3.9 million in 2018 from $3.2 million in 2017. The priced services portion of the Board's expenses decreased $0.3 million to $5.1 million in 2018. The effective income tax rate used in 2018 was 22.7 percent, the same rate used in 2017. [[Page 52911]] Table 3--Comparison of Pro Forma Balance Sheets for Budgeted Federal Reserve Priced Services [Millions of dollars--projected average for year] ---------------------------------------------------------------------------------------------------------------- 2018 2017 Change ---------------------------------------------------------------------------------------------------------------- Short-term assets: Receivables................................................ $36.6 $36.6 $0.0 Materials and supplies..................................... 0.5 0.6 (0.1) Prepaid expenses........................................... 13.0 11.2 1.8 Items in process of collection \13\........................ 87.0 241.0 (154.0) ------------------------------------------------ Total short-term assets................................ 137.1 289.4 (152.3) Imputed investments: \14\ Imputed investment in Treasury Securities.................. .............. .............. ............... Imputed investment in Fed Funds............................ 174.8 245.0 (70.2) ------------------------------------------------ Total imputed investments.............................. 174.8 245.0 (70.2) Long-term assets: Premises \15\.............................................. 103.9 128.7 (24.8) Furniture and equipment.................................... 38.9 39.0 (0.1) Leasehold improvements and long-term prepayments........... 100.3 104.8 (4.5) Net pension asset.......................................... 76.6 10.9 65.7 Deferred tax asset......................................... 185.6 186.1 (0.5) ------------------------------------------------ Total long-term assets................................. 505.3 469.6 35.7 ------------------------------------------------ Total assets....................................... 817.2 1,003.9 (186.8) ================================================ Short-term liabilities: Deferred credit items...................................... 261.8 486.0 (224.2) Short-term debt............................................ 14.5 18.1 (3.6) Short-term payables........................................ 35.6 30.2 5.3 ------------------------------------------------ Total short-term liabilities........................... 311.9 534.4 (222.5) Long-term liabilities: Pension liability.......................................... .............. .............. ............... Long-term debt............................................. 76.9 48.4 28.5 Postemployment/postretirement benefits and net pension 370.5 362.5 8.0 liabilities \16\.......................................... ------------------------------------------------ Total liabilities...................................... 759.3 945.3 (186.0) Equity \17\............................................ 57.8 58.6 (0.7) ------------------------------------------------ Total liabilities and equity....................... 817.2 1,003.9 (186.8) ---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------- \13\ 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. \14\ 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 $51.4 million. In 2018, $57.8 million of equity was imputed to meet the regulatory capital requirements. \15\ Includes the allocation of Board of Governors assets to priced services of $1.1 million for 2018 and $1.2 million for 2017. \16\ Includes the allocation of Board of Governors liabilities to priced services of $0.6 million for 2018 and 2017. \17\ Includes an accumulated other comprehensive loss of $637.2 million for 2018 and $635.1 million for 2017, 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. [[Page 52912]] Table 4--Imputed Funding for Priced-Services Assets [Millions of dollars] ------------------------------------------------------------------------ 2018 2017 ------------------------------------------------------------------------ A. Short-term asset financing: Short-term assets to be financed: Receivables............... $36.6 $36.6 Materials and supplies.... 0.5 0.6 Prepaid expenses.......... 13.0 11.2 ------------------------------------- Total short-term assets to be 50.1 48.4 financed..................... Short-term payables....... 35.6 30.2 ------------------------------------- Net short-term assets to be 14.5 18.1 financed..................... ===================================== Imputed short-term debt 14.5 18.1 financing \18\............... ===================================== B. Long-term asset financing: Long-term assets to be financed: Premises.................. 103.9 128.7 Furniture and equipment... 38.9 39.0 Leasehold improvements and 100.3 104.8 long-term prepayments.... Net pension asset......... 76.6 10.9 Deferred tax asset........ 185.6 186.1 ------------------------------------- Total long-term assets to be 505.3 469.6 financed..................... Net pension liability..... ................. ................. Postemployment/ 370.5 362.5 postretirement benefits and net pension liabilities.............. ------------------------------------- Net long-term assets to be 134.8 107.0 financed................. ===================================== Imputed long-term debt 76.9 48.4 \18\..................... Imputed equity \18\....... 57.8 58.6 ------------------------------------- Total long-term 134.8 107.0 financing............ ------------------------------------------------------------------------ --------------------------------------------------------------------------- \18\ See table 5 for calculation. Table 5--Derivation of the 2018 and 2017 PSAF [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- 2018 2017 --------------------------------------------------------------------------- Debt Equity Debt Equity ---------------------------------------------------------------------------------------------------------------- A. Imputed long-term debt and equity: Net long-term assets to finance. $134.8 $134.8 $107.0 $107.0 Capital structure observed in 58.2% 41.8% 58.4% 41.6% market......................... --------------------------------------------------------------------------- Pre-adjusted long-term debt and $ 78.4 $ 56.4 $ 62.5 $ 44.5 equity......................... Equity adjustments: \19\ Equity to meet capital ................. 57.8 ................. 58.6 requirements............... Adjustment to debt and (1.5) 1.5 (14.1) 14.1 equity funding given capital requirements \20\.. Adjusted equity balance..... ................. 57.8 ................. 58.6 Equity to meet capital ................. ................. ................. ................. requirements \21\.......... --------------------------------------------------------------------------- Total imputed long-term $ 76.9 $ 57.8 $ 48.4 $ 58.6 debt and equity........ =========================================================================== B. Cost of capital: Elements of capital costs: Short-term debt \22\........ $ 14.5 x 1.3% = $ 0.2 $ 18.1 x 0.6% = $ 0.1 Long-term debt \22\......... 76.9 x 3.8% = 3.0 48.4 x 4.0% = 1.9 Equity \23\................. 57.8 x 11.7% = 6.7 58.6 x 10.2% = 6.0 --------------------------------------------------------------------------- $ 9.9 $ 8.0 C. Incremental cost of PSR policy: Equity to meet policy........... -- x 11.7% = ................. -- x 10.2% = ................. D. Other required PSAF costs: Sales taxes..................... $ 3.9 ................. $ 3.2 ................. [[Page 52913]] Board of Governors expenses..... 5.1 ................. 5.4 ................. --------------------------------------------------------------------------- ................. 9.0 ................. 8.6 --------------------------------------------------------------------------- ................. $ 18.9 ................. $ 16.6 =========================================================================== E. Total PSAF As a percent of assets.......... ................. 2.3% ................. 1.5% As a percent of expenses........ ................. 4.1% ................. 3.9% F. Tax rates........................ ................. 22.7% ................. 22.7% ---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------- \19\ 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 2018, the amount of imputed equity met the minimum equity requirements for risk-weighted assets. \20\ Equity adjustment offsets are due to a shift of long-term debt funding to equity in order to meet FDIC capital requirements for well-capitalized institutions. \21\ Additional equity in excess of that needed to fund priced services assets is offset by an asset balance of imputed investments in treasury securities. \22\ Imputed short-term debt and long-term debt are computed at table 4. \23\ The 2017 ROE is equal to a risk-free rate plus a risk premium (beta * market risk premium). The 2017 after-tax CAPM ROE is calculated as 1.09% + (1.0 * 7.93%) = 9.03%. Using a tax rate of 22.7%, the after-tax ROE is converted into a pretax ROE, which results in a pretax ROE of (9.03%/(1-22.7%)) = 11.67%. Calculations may be affected by rounding. Table 6--Computation of 2018 Capital Adequacy for Federal Reserve Priced Services [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Assets Risk weight Weighted assets ---------------------------------------------------------------------------------------------------------------- Imputed investments: 1-Year Treasury securities \24\ Federal funds \25\................................. $174.8 0.2 $35.0 -------------------------------------------------------- Total imputed investments...................... 174.8 ................. 35.0 Receivables............................................ 36.6 0.2 7.3 Materials and supplies................................. 0.5 1.0 0.5 Prepaid expenses....................................... 13.0 1.0 13.0 Items in process of collection......................... 87.0 0.2 17.4 Premises............................................... 103.9 1.0 103.9 Furniture and equipment................................ 38.9 1.0 38.9 Leasehold improvements and long-term prepayments....... 100.3 1.0 100.3 Net pension asset...................................... 76.6 1.0 76.6 Deferred tax asset..................................... 185.6 1.0 185.6 -------------------------------------------------------- Total.............................................. $817.2 ................. $578.4 ======================================================== Imputed equity: Capital to risk-weighted assets.................... 10.0% ................. ................. Capital to total assets............................ 7.1% ................. ................. ---------------------------------------------------------------------------------------------------------------- C. Check Service--Table 7 shows the 2016 actual, 2017 estimated, and 2018 budgeted cost-recovery performance for the commercial check service. --------------------------------------------------------------------------- \24\ 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. \25\ The investments are imputed based on the amounts arising from the collection of items prior to providing credit according to established availability schedules. [[Page 52914]] Table 7--Check Service Pro Forma Cost and Revenue Performance [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Recovery rate Year Revenue Total expense Met income Targeted ROE after targeted (ROE) ROE (%) 1 2 3 4 5 [1-2] [1/(2 + 4)] ---------------------------------------------------------------------------------------------------------------- 2016 (actual)................... 154.2 135.6 18.6 1.3 112.7 2017 (estimate)................. 142.6 134.7 7.9 1.4 104.8 2018 (budget)................... 135.4 132.2 3.1 1.6 101.2 ---------------------------------------------------------------------------------------------------------------- 1. 2017 Estimate--The Reserve Banks estimate that the check service will recover 104.8 percent of total expenses and targeted ROE, compared with a 2017 budgeted recovery rate of 104.1 percent. Greater-than- expected check volumes processed by the Reserve Banks and lower-than- expected costs have influenced the check service's cost recovery. The decline in Reserve Bank check volume was not as great as previously anticipated. Through August, both total commercial forward and total commercial return check volumes were only 0.4 percent lower than they were during the same period last year. Consistent with anticipated fourth quarter declines, for full-year 2017, the Reserve Banks estimate that their total forward check volume will decline 1.3 percent (compared with a budgeted decline of 5.0 percent) and their total return check volume will decline 1.0 percent (compared with a budgeted decline of 10.1 percent) from 2016 levels.\26\ --------------------------------------------------------------------------- \26\ Total Reserve Bank forward check volumes are expected to be 5.2 billion in 2017. Total Reserve Bank return check volumes are expected to be 31.8 million in 2017. --------------------------------------------------------------------------- 2. 2018 Pricing--The Reserve Banks expect the check service to recover 101.2 percent of total expenses and targeted ROE in 2018. The Reserve Banks project revenue to be $135.4 million, a decline of 5.0 percent from the 2017 estimate. This decline is driven in part by an anticipated continued general decline in the number of checks written and competition from correspondent banks, aggregators, and direct exchanges.\27\ Total expenses for the check service are projected to be $132.2 million, a decrease of $2.5 million, or 1.9 percent, from 2017 expenses, primarily because of reduced operating costs, including cost savings associated with increased efficiencies of the Reserve Banks' customer support services. --------------------------------------------------------------------------- \27\ The Reserve Banks estimate that total commercial forward check volumes in 2018 will decline 4.7 percent, to 4.9 billion, and total commercial return check volumes will decline 3.5 percent, to 30.7 million in 2018. --------------------------------------------------------------------------- The Reserve Banks evaluate and set tier assignments annually based on changes in the volume of items received by endpoints. In 2018, the Reserve Banks will reassign the tier placement of 478 forward and 977 return endpoints in the FedForward and FedReturn products, respectively.\28\ --------------------------------------------------------------------------- \28\ The tiers for 2018 are available at https://www.frbservices.org/resources/fees/check-2018.html. --------------------------------------------------------------------------- Based on these 2018 tier assignments, the Reserve Banks will for the FedReturn deposit options (FedReturn Standard ICL and FedReturn Premium Daily Fee A) increase all per-item fees, except substitute checks, by 3 percent, rounded to the nearest penny. Table 8 shows the 2018 fees. Table 8--FedReturn Per-Item Fees ---------------------------------------------------------------------------------------------------------------- 9:00 p.m. 1:00 a.m. 12:30 p.m. -------------------------------------------------------------------------------------------------- FedReturn Standard ICL: Tier 1........................................ $0.15 $0.45 $0.15 Tier 2........................................ 0.21 0.51 0.21 Tier 3........................................ 0.62 0.92 0.62 Tier 4........................................ 0.82 1.12 0.82 PDF........................................... 1.03 1.33 1.03 Substitute Check.............................. 1.50 1.50 1.50 FedReturn Premium Daily Fee A: Tier 0........................................ .............. 0.01 0.03 Tier 1........................................ .............. 0.05 0.07 Tier 2........................................ .............. 0.10 0.12 Tier 3........................................ .............. 0.52 0.54 Tier 4........................................ .............. 0.72 0.74 PDF........................................... .............. 0.93 0.95 Substitute Check.............................. .............. 1.50 1.50 ---------------------------------------------------------------------------------------------------------------- The Reserve Banks will also lower the average daily receipt volume thresholds for tiers 1, 2, and 3 of the FedForward daily subscription fee premium deposit options (FedForward Premium Daily Fee A, B, and C).\29\ Table 9 shows the [[Page 52915]] 2017 volume thresholds and the 2018 thresholds. --------------------------------------------------------------------------- \29\ As part of the Reserve Banks 2016 restructured FedForward and FedReturn fee schedules, the Reserve Banks use a volume-based tiered pricing structure to determine per-item fees based on the average daily receipt volume an endpoint receives from chartered institutions through the Reserve Banks. Tiers for the three premium variations of the Reserve Banks' daily subscription fee deposit options (FedForward Premium Daily Fee A, B, and C) are based only on volume received by the Reserve Banks' top 15 customers, which represent the likely users of the deposit options. These premium daily fee options include a fifth tier, Tier 0, composed of routing numbers for which the Reserve Banks currently receive little to no volume from the specified subset of Reserve Bank customers (and which therefore cannot currently be assigned to the other tiers with sufficient predictability). Tier 0 is evaluated annually, along with all other tiers and endpoints, and endpoints cannot be placed in Tier 0 if they have previously been assigned to one of the other tiers. Table 9--Forward Premium Daily Deposit Option Tier Volume Thresholds ------------------------------------------------------------------------ 2017 average daily 2018 average daily Tier forward receipt forward receipt volume items/day volume items/day ------------------------------------------------------------------------ 0......................... See explanation below See explanation *. below.* 1......................... Over 30,000.......... Over 25,000. 2......................... 4,000-30,000......... 3,301-25,000. 3......................... 750-4,000............ 750-3,300. 4......................... Less than 750........ Less than 750. ------------------------------------------------------------------------ * Tier 0 consists of financial institutions that meet both of the following criteria: 1. Less than 10 percent of their Reserve Bank forward receipt volume was deposited with the Reserve Banks by Premium Daily Fee depositors during the sample period, and 2. Their average daily Reserve Bank forward receipt volume exceeded 150 items per day during the sample period. Together, these changes to the Reserve Banks' FedReturn pricing and FedForward Premium Daily Fee volume thresholds are intended to facilitate longer-term cost recovery for the check service while providing price stability for customers that may otherwise experience significant price fluctuations as a result of the Reserve Banks' 2018 tier assignments. Finally, in light of today's electronic check-processing environment, the Reserve Banks will increase fees to encourage depositors to shift volume away from legacy paper-related products. The Reserve Banks will increase the cash letter fee for paper forward deposits from $10 to $15, and increase the per-item fee for paper forward deposits and paper return deposits by $1 from $2.50 to $3.50 and from $5.50 to $6.50, respectively.\30\ The Reserve Banks will also increase all fees for the FedImage product 10 percent, rounded to the nearest decimal place.\31\ Table 10 shows the 2018 FedImage fees. --------------------------------------------------------------------------- \30\ Increases apply to both unencoded and encoded forward deposits, and qualified and unqualified return deposits. Unencoded forward items are those items deposited without encoding of certain elements, such as amount, added to the MICR line. Unqualified items are those return items that have not been prepared for automated processing. \31\ Because of rounding, the individual price increases range from 9 percent to 12.5 percent. Table 10--FedImage Service Fees ------------------------------------------------------------------------ Fixed fee Per item fee ------------------------------------------------------------------------ Image Archive: Image Capture + 7 business day $5.50 $0.0080 archive............................ Image Capture On-Us Surcharge....... .............. 0.0193 30 business day archive............. .............. 0.0010 60 business day archive............. .............. 0.0012 7-year archive/11-year archive...... .............. 0.0018 Dual archive (Transition period up .............. 0.0011 to 120 days)....................... Extended dual archive (More than 120 .............. 0.0110 days).............................. Back File Conversion................ 3.85 0.0110 Electronic On-Us Service............ 3.85 0.0110 Extended RAID Storage: 61 days to 6 months............. .............. 0.0009 61 days to 12 months............ .............. 0.0022 61 days to 24 months............ .............. 0.0055 Image Retrievals: Retrievals to view via FedLine .............. 0.3900 Web[supreg] inquiry................ Retrievals to email via FedLine Web: Request via FedLine Web inquiry. .............. 0.3900 Recurring request............... .............. 0.3900 Image Access and Retrievals .............. 0.3900 through a Gateway.............. Subscription Retrievals......... .............. 0.0024 Manual FedImage Requests .............. 6.6000 (requests performed by FRB staff)......................... Image Delivery: Physical Media: CD-ROM Select Accounts Service-- 16.50 0.0170 RAID........................... CD-ROM--Tape.................... 16.50 0.1100 ------------------------------------------------------------------------ The Reserve Banks estimate that the announced price changes will result in a 0.4 percent average price increase for check customers. The primary risks to the Reserve Banks' ability to achieve budgeted 2018 cost recovery for the check service include greater-than-expected declines in check volume due to the general reduction in check writing and increased competition from correspondent banks, aggregators, and direct exchanges, which will result in lower-than-anticipated revenue. D. FedACH Service--Table 11 shows the 2016 actual, 2017 estimate, and 2018 budgeted cost-recovery performance for the commercial FedACH service. [[Page 52916]] Table 11--FedACH Service Pro Forma Cost and Revenue Performance [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- 5 Recovery 2 Total 3 Net income rate after Year 1 Revenue expense (ROE) 4 Targeted ROE targeted ROE (%) 1 2 3 4 5 [1-2] [1/(2 + 4)] ---------------------------------------------------------------------------------------------------------------- 2016 (actual)................... 131.0 131.4 -0.3 1.3 98.8 2017 (estimate)................. 141.3 142.9 -1.6 1.6 97.8 2018 (budget)................... 148.5 152.4 -4.0 1.9 96.2 ---------------------------------------------------------------------------------------------------------------- 1. 2017 Estimate--The Reserve Banks estimate that the FedACH service will recover 97.8 percent of total expenses and targeted ROE, compared with a 2017 budgeted recovery rate of 95.7 percent, as the 2017 hiring freeze resulted in lower-than budgeted operating costs. Through August, FedACH commercial origination and receipt volume was 6.0 percent higher than it was during the same period last year. For full-year 2017, the Reserve Banks estimate that FedACH commercial origination and receipt volume will increase 5.8 percent from 2016 levels, in line with the budgeted increase of 5.7 percent. 2. 2018 Pricing--The Reserve Banks expect the FedACH service to recover 96.2 percent of total expenses and targeted ROE in 2018. FedACH commercial origination and receipt volume is projected to grow 5.2 percent, contributing to an increase of $7.2 million in total revenue, from the 2017 estimate. Total expenses are projected increase $9.5 million from 2017 expenses, primarily because of costs associated with the development of the new FedACH technology platform. The Reserve Banks will increase the base per-item fees for origination and receipt from $0.0032 to $0.0035. The Reserve Banks will also increase per-item volume-based discounts by $0.0003 for origination discounts based on origination volume and all receipt discounts. There are no changes to the existing origination volume discounts based on receipt volume. These changes provide an effective offset with no price change for customers meeting the volume discount thresholds. The Reserve Banks will also increase the monthly FedACH Participation Fee from $58 to $65. The Reserve Banks estimate that the combined price changes will result in a 3.6 percent average price increase for FedACH customers. While the Reserve Banks are not budgeted to fully recover costs in 2018, they are expected to fully recover costs following the finalization of the FedACH technology modernization project. To fully recover costs in 2018, fees will need to be significantly increased to cover the increased costs associated with the technology upgrade, which will result in significant overrecovery once the upgrade is complete. Instead the Reserve Banks continue to moderately increase FedACH fees to minimize pricing volatility and promote long-term price stability for customers. The primary risks to the Reserve Banks' ability to achieve budgeted 2018 cost recovery for the FedACH service are unanticipated cost overruns associated with the FedACH technology modernization project 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 exchanges directly between banks and volume shifts to the private- sector operator. E. Fedwire Funds and National Settlement Services--Table 12 shows the 2016 actual, 2017 estimate, and 2018 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] ---------------------------------------------------------------------------------------------------------------- 5 Recovery 2 Total 3 Net income 4 Targeted rate after Year 1 Revenue expense (ROE) ROE targeted ROE (%) 1 2 3 4 5 [1-2] [1/(2 + 4)] ---------------------------------------------------------------------------------------------------------------- 2016 (actual)................... 123.0 117.8 5.3 1.3 103.3 2017 (estimate)................. 130.0 121.6 8.5 1.3 105.9 2018 (budget)................... 130.6 124.1 6.5 1.4 104.0 ---------------------------------------------------------------------------------------------------------------- 1. 2017 Estimate--The Reserve Banks estimate that the Fedwire Funds and National Settlement Services will recover 105.9 percent of total expenses and targeted ROE, compared with a 2017 budgeted recovery rate of 101.1 percent. Through August, Fedwire Funds Service online volume was 3.4 percent higher than it was during the same period last year. For full-year 2017, the Reserve Banks estimate that Fedwire Funds Services online volume will increase 1.1 percent from 2016 levels, compared with the 1.1 percent volume decrease that had been budgeted. Through August, the National Settlement Service (NSS) settlement file volume was 0.8 percent higher than it was during the same period last year, and settlement entry volume was 5.3 percent higher. For the full year, the [[Page 52917]] Reserve Banks estimate that settlement file volume will increase 0.3 percent (compared with a budgeted 5.7 percent increase) and settlement entry volume will increase 4.0 percent from 2016 levels (compared with a budgeted 0.6 percent increase). The 2017 estimate for the NSS settlement file volume is lower than budgeted because the 2017 budget included an assumption of additional arrangements that never materialized. The NSS settlement entry volume grew more than expected due to an existing arrangement that increased entries submitted by 50 percent. 2. 2018 Pricing--The Reserve Banks expect the Fedwire Funds and National Settlement Services to recover 104.0 percent of total expenses and targeted ROE. Revenue is projected to be $130.6 million, an increase of 0.5 percent from the 2017 estimate. The Reserve Banks project total expenses to be $2.5 million higher than the 2017 expenses, primarily reflecting investments in new initiatives to improve resiliency and operational functionality as well as other business and technology initiatives. The Reserve Banks will adjust the incentive pricing fees for the Fedwire Funds Service by decreasing the Tier 3 per-item pre-incentive fee from $0.17 to $0.16.\32\ The Tier 3 per-item incentive fee, which is derived from the Tier 3 per-item pre-incentive fee, will decrease from $0.034 to $0.032. The Reserve Banks will also decrease the payment notification origination surcharge from $0.20 to $0.01. The Reserve Banks estimate that the price changes will result in a 1.2 percent average price decrease for Fedwire Funds customers. --------------------------------------------------------------------------- \32\ 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 once the volume of transfers is greater than 60 percent of a customer's historic benchmark volume. --------------------------------------------------------------------------- The Reserve Banks will not change NSS fees for 2018. The primary risks to the Reserve Banks' ability to achieve budgeted 2018 cost recovery for these services are cost overruns from new initiatives to improve resiliency and operational functionality. F. Fedwire Securities Service--Table 13 shows the 2016 actual, 2017 estimate, and 2018 budgeted cost recovery performance for the Fedwire Securities Service.\33\ --------------------------------------------------------------------------- \33\ 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] ---------------------------------------------------------------------------------------------------------------- 5 Recovery 2 Total 3 Net income 4 Targeted rate after Year 1 Revenue expense (ROE) ROE targeted ROE (%) 1 2 3 4 5 [1-2] [1/(2 + 4)] ---------------------------------------------------------------------------------------------------------------- 2016 (actual)................... 25.9 25.8 0.0 0.2 99.2 2017 (estimate)................. 28.4 27.3 1.1 0.3 103.1 2018 (budget)................... 27.3 27.7 -0.4 0.3 97.2 ---------------------------------------------------------------------------------------------------------------- 1. 2017 Estimate--The Reserve Banks estimate that the Fedwire Securities Service will recover 103.1 percent of total expenses and targeted ROE, compared with a 2017 budgeted recovery rate of 97.8 percent. The Reserve Banks incurred lower-than-budgeted operating costs, offsetting lower-than-budgeted volume estimates in key services, which led to a higher-than-expected recovery. Through August, Fedwire Securities Service online agency transfer volume was 7.9 percent lower than it was during the same period last year. For full-year 2017, the Reserve Banks estimate that Fedwire Securities Service online agency transfer volume will decline 14.7 percent from 2016 levels, compared with a budgeted decline of 11.8 percent. The reduction in volume primarily reflects three market trends. First, JP Morgan Chase is exiting the U.S. government securities clearing and settlement business for its broker-dealer services, which began gradually in 2017 and is targeted to be complete by the end of 2018.\34\ Second, increase interest rates have led to less prepayment on mortgages and decreasing issuance, which in turn have led to a decrease in settlement activity for agency mortgage- backed securities over Fedwire Securities. Third, the Fixed Income Clearing Corporation launched a new netting settlement logic in January 2016 and launched the Mortgage-Backed Securities (MBS) novation project in mid-2017, in a phased- in approach, which led to the reduction in the number of Agency securities transfers over the Fedwire Securities Service.\35\ --------------------------------------------------------------------------- \34\ JP Morgan Chase announced in July 2016, its intent to exit the government securities clearing and settlement business. In light of JP Morgan Chase's exit, broker-dealer services are housed almost exclusively at BNY Mellon. \35\ Information on the Fixed Income Clearing Corporation's new settlement logic and the MBS novation project can be found at http://www.dtcc.com/. --------------------------------------------------------------------------- Through August, account maintenance volume was 5.5 percent lower than it was during the same period last year. For full-year 2017, the Reserve Banks estimate that account maintenance volume will decline 5.5 percent from 2016 levels, compared with a budgeted decline of 7.6 percent. The higher-than-expected account maintenance volume is the result of estimated customer account closures not materializing. Through August, the number of agency issues maintained was 3.8 percent lower than the same period last year. For full-year 2017, the Reserve Banks estimate that the number of agency issues maintained will decline 3.1 percent from 2016 levels, compared with a budgeted decline of 2.1 percent. 2. 2018 Pricing--The Reserve Banks expect the Fedwire Securities Service to recover 97.2 percent of total expenses and targeted ROE in 2018. The Reserve Banks project that online agency transfer activity will decline 11.0 percent in 2018, the number of accounts maintained will decrease 3.5 percent, [[Page 52918]] and the number of agency issues maintained will decrease 1.7 percent.\36\ The Reserve Banks continue to project a decrease in online transfers as JP Morgan Chase's exit from the U.S. government securities clearing and settlement business for its broker-dealer services continues and reaches steady state by the end of 2018 and FICC's netting changes are fully adopted. In addition, if interest rates continue to increase, rate increases may lead to less mortgage refinancing, and, in turn, less issuance and settlement activity for mortgage-backed securities over Fedwire Securities. Moreover, the reduction in Agency debt issuance, reflecting the U.S. Treasury and the Federal Housing Finance Agency's requirement for a reduction in government-sponsored enterprise portfolios, will lead to reduced funding needed for new debt issuance.\37\ --------------------------------------------------------------------------- \36\ The online transfer fee, monthly account maintenance fee, and monthly issue maintenance fee accounted for approximately 94 percent of total Fedwire Securities Service revenue through August 2017. \37\ Government-sponsored enterprises are reducing their retained portfolio 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 https://www.fhfa.gov/senior-preferred-stock-purchase-agreements. --------------------------------------------------------------------------- Revenue is projected to be $27.3 million, a decrease of 3.9 percent from the 2017 estimate. The Reserve Banks also project that 2018 expenses will increase by $0.4 million compared with 2017 expenses, reflecting higher expected operating costs. Higher operating costs in 2018 primarily reflect investments to advance new initiatives to improve resiliency and operational functionality as well as other business and technology initiatives. The Reserve Banks will not change Fedwire Securities fees for 2018. The primary risks to the Reserve Banks' ability to achieve budgeted 2018 cost recovery for these services are lower-than-expected volume resulting from the pace of structural changes in government securities settlement, and cost overruns from new initiatives to improve resiliency and operational functionality. 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 six FedLine channels through which customers can access the Reserve Banks' priced services: FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, FedLine Command, and FedLine Direct.\38\ The Reserve Banks package these channels into eleven FedLine packages, described below, that are supplemented by a number of premium (or [aacute] la carte) access and accounting information options. In addition, the Reserve Banks offer FedComplete packages, which are bundled offerings of FedLine connections and a fixed number of FedACH, Fedwire Funds, and Check 21- enabled services. --------------------------------------------------------------------------- \38\ FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, FedLine Command, and FedLine Direct are registered trademarks of the Federal Reserve Banks. --------------------------------------------------------------------------- Eight attended access packages offer manual access to critical payment and information services via a web-based interface. The FedMail package provides access to basic information services via email, while the two FedLine Exchange packages are designed to provide certain services, such as the E-Payments Routing Directory, to customers that otherwise do not use FedLine for Federal Reserve Financial Services. The two FedLine Web packages offer 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. The FedLine Command package offers an unattended connection to FedACH as well as to 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.\39\ --------------------------------------------------------------------------- \39\ 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 FedLine that allows a depository institution to upload and download check image cash letters automatically via a direct network connection to the Reserve Banks. --------------------------------------------------------------------------- The Reserve Banks will modify the existing monthly fees for FedLine Advantage, Command, and Direct and FedComplete packages to include the price of one or two VPN devices, depending on the package, plus the cost of associated vendor maintenance activities.\40\ Historically, customers purchased their VPNs directly from a vendor. As a result, the $1,500 new customer credit for FedComplete customers will be eliminated. This credit was originally designed to offset the one-time startup costs associated largely with the VPN device purchase. The price modifications to include one VPN device is a price increase of $35 for FedLine Advantage, FedLine Advantage Plus, and FedLine Command Plus and a price increase of $50 for FedLine Direct Plus. The price modifications to include two VPN devices is a price increase of $70 for FedLine Advantage Premier and a price increase of $100 for FedLine Direct Premier packages. Reserve Bank provisioning of VPN devices will improve resiliency and increase billing efficiency. --------------------------------------------------------------------------- \40\ For FedLine Advantage and Command, this hardware is Customer Premises Equipment (CPE) or a Virtual Private Network (VPN) device. For FedLine Direct, the hardware is commonly a Wide Area Network (WAN) router. VPN devices are being upgraded to Sprint's VPN Managed Solution starting 2018 through 2020 as part of a three-year refresh cycle. New devices will be provisioned to customers, in waves, starting mid-2018. --------------------------------------------------------------------------- The Reserve Banks will also introduce two FedComplete packages, FedComplete 100C Plus and FedComplete 200C Plus, priced at $1,375 and $1,900 per month, respectively.\41\ These packages will capitalize on existing FedComplete pricing discounts and include the FedLine Command access solution. The packages are targeted toward lower-volume customers to help automate their processing of SameDay ACH transactions and reduce their overall fees. These new packages will simplify service selection and increase fee predictability. --------------------------------------------------------------------------- \41\ All changes to the existing FedComplete packages for 2018 will also be incorporated in the FedComplete 100C Plus and FedComplete 200C Plus packages. --------------------------------------------------------------------------- In addition to the changes above for the 2018 FedComplete packages, the Reserve Banks will make six other package changes to maintain consistency with other product offices' product and pricing changes: (1) Add the SameDay ACH origination participation fee and surcharge; (2) remove FedMail-FedLine Exchange Subscriber 5-pack, consistent with the previously announced unbundling of the FedMail service; (3) increase volume overage surcharges for FedForward, from $0.01 to $0.037, FedReturn from $0.75 to $0.82, FedACH origination from $0.0025 to $0.0035, and Fedwire Funds origination from $0.70 to $0.82; (4) implement FedReceipt, FedACH receipt and Fedwire Funds transaction receipt surcharges of $0.00005, $0.00035, and $0.082, respectively; (5) implement a threshold limit of 46 items for FedForward Cash Letters; and (6) [[Page 52919]] adjust FedComplete package prices to maintain an effective discount of less than 20 percent compared to the cost of purchasing services separately.\42\ --------------------------------------------------------------------------- \42\ Customers that use priced FedMail services will be required to purchase the FedMail-FedLine Exchange Subscriber 5-pack separately. --------------------------------------------------------------------------- Finally, the Reserve Banks will increase the legacy software fee for FedLine Direct customers that have not converted to new IBM[supreg] MQ software. The fee will vary based on the number of customers remaining on the legacy system, up to $80,000/month through 3/31/18 and up to $150,000/month thereafter. The Reserve Banks estimate that the price changes will result in a 4.3 percent average price increase for FedLine customers. This is primarily driven by the VPN device billing changes. 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.'' \43\ Under this policy, the Board assesses whether proposed changes will have a direct and material adverse effect on the ability of other service providers to compete effectively with the Federal Reserve in providing similar services because of differing legal powers or 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. --------------------------------------------------------------------------- \43\ Federal Reserve Regulatory Service (FRRS) 9-1558. --------------------------------------------------------------------------- The 2018 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. 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. III. 2018 Fee Schedules FedACH Service 2018 Fee Schedule [Effective January 2, 2018. Bold indicates changes from 2017 prices.] ------------------------------------------------------------------------ Fee ------------------------------------------------------------------------ FedACH minimum monthly fee: Originating Depository Financial Institution $50.00. (ODFI) \44\. Receiving Depository Financial Institution 40.00. (RDFI) \45\. Origination (per item or record): Forward or return items..................... 0.0035. SameDay Service--forward item \46\.......... 0.0010 surcharge. Addenda record.............................. 0.0015. FedLine Web-originated returns and 0.35. notification of change (NOC) \47\. Facsimile Exception Return/NOC \48\......... 45.00. SameDay Exception Return.................... 45.00. Automated NOC............................... 0.20. Volume-based discounts (based on monthly billed origination volume) \49\ per item when origination volume is: 750,001 to 1,500,000 items per month.... 0.0008 discount. more than 1,500,000 items per month..... 0.0010 discount. Volume-based discounts (based on monthly billed receipt volume) \50\ 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................................ 0.0035. Return Item................................. 0.0075. Addenda record.............................. 0.0015. Volume-based discounts:..................... Non-Premium Receivers \51\ per item when volume is: 750,001 to 12,500,000 items per 0.0017 discount. month \52\. more than 12,500,000 items per month 0.0019 discount. \53\. Premium Receivers, Level One \54\ per item when volume is: 750,001 to 1,500,000 items per month 0.0017 discount. \52\. 1,500,001 to 2,500,000 items per 0.0017 discount. month \53\. 2,500,001 to 12,500,000 items per 0.0018 discount. month \53\. more than 12,500,000 items per month 0.0020 discount. \53\. Premium Receivers, Level Two \55\ per item when volume is: 750,001 to 1,500,000 items per month 0.0017 discount. \52\. 1,500,001 to 2,500,000 items per 0.0017 discount. month \53\. 2,500,001 to 12,500,000 items per 0.0019 discount. month \53\. more than 12,500,000 items per month 0.0021 discount. \53\. FedACH Bundled Package Pricing Discount: Monthly Bundled Service Package Discount 20.00 discount. \56\. Monthly FedACH Risk[supreg] Management fees: \57\ For up to 5 criteria sets................... 35.00. For 6 through 11 criteria sets.............. 70.00. For 12 through 23 criteria sets............. 125.00. For 24 through 47 criteria sets............. 150.00. For 48 through 95 criteria sets............. 250.00. [[Page 52920]] 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[supreg] Reporter Service: FedPayments Reporter Service package pricing includes: ACH Received Entries Detail--Customer and Depository Financial Institution. ACH Return Reason Report--Customer and Depository Financial Institution. ACH Volume Summary by SEC Code-- Customer. 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. Originator Setup. Report Delivery via FedLine Access Solution. On Demand Surcharge..................... 1.00. Report delivery via FedLine file access solution (monthly fee): For up to 50 reports................ 40.00. For 51 through 150 reports.......... 60.00. For 151 through 500 reports......... 110.00. For 501 through 1,000 reports....... 200.00. For 1,001 through 1,500 reports..... 285.00. For 1,501 through 2,500 reports..... 460.00. For 2,501 through 3,500 reports..... 640.00. For 3,501 through 4,500 reports..... 820.00. For 4,501 through 5,500 reports..... 995.00. For 5,501 through 7,000 reports..... 1,225.00. For 7,001 through 8,500 reports..... 1,440.00. For 8,501 through 10,000 reports.... 1,650.00. For more than 10,000 reports........ 1,800.00. Premier reports (per report generated): \58\ For 1 through 5 reports............. 10.00. For 6 through 10 reports............ 6.00. For 11 or more reports.............. 1.00. On Demand Surcharge................. 1.00. ACH Routing Number Activity Report: For 1 through 5 reports............. 10.00. For 6 through 10 reports............ 6.00. For 11 or more 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 0.20. (per email). Other Fees and Discounts: Monthly fee (per routing number): FedACH Participation Fee \59\........... 65.00. SameDay Service Origination 10.00 surcharge. Participation Fee \60\. FedACH Settlement Fee \61\.............. 55.00. FedACH Information File Extract Fee..... 150.00. IAT Output File Sort Fee................ 75.00. Fixed Participation Fee--Automated NOCs 5.00. \62\. Non-Electronic Input/Output fee \63\ CD/DVD (CD or DVD)...................... 50.00. Paper (file or report).................. 50.00. Fees and Credits Established by NACHA: \64\ NACHA Same Day Entry fee (per item)..... 0.052. NACHA Same Day Entry credit (per item).. 0.052 (credit). NACHA Unauthorized Entry fee (per item). 4.50. NACHA Unauthorized Entry credit (per 4.50 (credit). item). NACHA Admin Network fee (monthly fee per 22.00. RTN). [[Page 52921]] NACHA Admin Network fee (per entry)..... 0.000185. FedGlobal[supreg] ACH Payments: \65\ Fixed Monthly Fee: \66\ Monthly origination volume more than 500 185.00. items. Monthly origination volume between 161 60.00. and 500 items. Monthly origination volume less than 161 20.00. items. Per-item Origination Fee for Monthly Volume more than 500 Items (surcharge) \67\ Canada service.......................... 0.50. Mexico service.......................... 0.55. Panama service.......................... 0.60. Europe service.......................... 1.13. Per-item Origination Fee for Monthly Volume between 161 and 500 items (surcharge) \67\ Canada service.......................... 0.75. Mexico service.......................... 0.80. Panama service.......................... 0.85. Europe service.......................... 1.38. Per-item Origination Fee for Monthly Volume Less than 160 items (surcharge) \67\ Canada service.......................... 1.00. Mexico service.......................... 1.05. Panama service.......................... 1.10. Europe service.......................... 1.63. Other FedGlobal ACH Payments Fees: Canada service Return received from Canada \68\........ 0.99 (surcharge). Trace of item at receiving gateway...... 5.50. Trace of item not at receiving gateway.. 7.00. Mexico service Return received from Mexico \68\........ 0.91 (surcharge). Item trace.............................. 13.50. Foreign currency to foreign currency 0.67 (surcharge). (F3X) item originated to Mexico \67\. Panama service Return received from Panama \68\........ 1.00 (surcharge). Item trace.............................. 7.00. NOC..................................... 0.72. Europe service F3X item originated to Europe \67\...... 1.25 (surcharge). Return received from Europe \68\........ 1.35 (surcharge). Item trace.............................. 7.00. ------------------------------------------------------------------------ --------------------------------------------------------------------------- \44\ Any ODFI incurring less than $50 for the following fees will be charged a variable amount to reach the minimum: Forward value and non-value item origination fees, and FedGlobal ACH origination surcharges. \45\ Any RDFI not originating forward value and non-value items and incurring less than $40 in receipt fees will be charged a variable amount to reach the minimum. Any RDFI that originates forward value and nonvalue items incurring less than $50 in forward value and nonvalue item origination fees will only be charged a variable amount to reach the minimum monthly origination fee. \46\ This surcharge is assessed on all forward items that qualify for same day processing and settlement and is incremental to the standard origination item fee. \47\ The fee includes the item and addenda fees in addition to the conversion fee. \48\ 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. \49\ Origination volumes at these levels qualify for a waterfall discount which includes all FedACH origination items. \50\ Origination discounts based on monthly billed receipt volume apply only to those items received by FedACH receiving points and are available only to Premium Receivers. \51\ RDFIs receiving through FedACH less than 90 percent of their FedACH-originated items. \52\ This per-item discount is a reduction to the standard receipt fees listed in this fee schedule. \53\ Receipt volumes at these levels qualify for a waterfall discount which includes all FedACH receipt items. \54\ RDFIs receiving through FedACH at least 90 percent of their FedACH-originated items, but less than 90 percent of all of their ACH items originated through any operator. \55\ RDFIs receiving through FedACH at least 90 percent of all of their ACH items originated through any operator. \56\ To qualify for the discount, a financial institution must meet all of the following criteria in a given month: (1) Be charged the minimum monthly fee--forward origination (57208); (2) subscribe to FedLine Web Plus or any higher FedLine[supreg] access solution; and (3) subscribe to the FedPayments Reporter service, the FedACH RDFI Alert service, or the FedACH Risk Origination Monitoring service. \57\ 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 $35 monthly package fee. \58\ Premier reports generated on demand are subject to the package/tiered fees plus a surcharge. \59\ The fee applies to routing numbers that have received or originated FedACH transactions during a month. Institutions that receive only U.S. government transactions or that elect to use a private sector operator exclusively are not assessed the fee. \60\ This surcharge is assessed to any routing number that originates at least one item meeting the criteria for same day processing and settlement in a given month. \61\ The fee is applied to any routing number with activity during a month, including routing numbers of 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. \62\ Fee will be assessed only when automated NOCs are generated. \63\ Limited services are offered in contingency situations. \64\ The fees and credits listed are collected from the ODFI and credited to NACHA (admin network) or to the RDFI (same day entry and unauthorized entry) in accordance with the ACH Rules. \65\ The international fees and surcharges vary from country to country as these are negotiated with each international gateway operator. \66\ A single monthly fee based on total FedGlobal ACH Payments origination volume. \67\ This per-item surcharge is in addition to the standard domestic origination fees listed in this fee schedule. \68\ This per-item surcharge is in addition to the standard domestic receipt fees listed in this fee schedule. [[Page 52922]] Fedwire Funds and National Settlement Services 2018 Fee Schedule [Effective January 2, 2018. Bold indicates changes from 2017 prices.] ------------------------------------------------------------------------ Fee ------------------------------------------------------------------------ Fedwire Funds Service ------------------------------------------------------------------------ Monthly Participation Fee............................. $95.00. Basic volume-based pre-incentive transfer fee 0.820. (originations and receipts)--per transfer for the first 14,000 transfers per month................. additional transfers up to 90,000 per month....... 0.245. every transfer over 90,000 per month.............. 0.160. Volume-based transfer fee with the incentive discount (originations and receipts)--per eligible transfer for: \69\ the first 14,000 transfers per month.............. 0.164. additional transfers up to 90,000 per month....... 0.049. every transfer over 90,000 per month.............. 0.032. Surcharge for Off-line Transfers (Originations and 60.00. Receipts)............................................ Surcharge for End-of-Day Transfer Originations \70\... 0.26. Monthly FedPayments Manager import/export fee \71\.... 50.00. Surcharge for high-value payments: >$10 million...................................... 0.14. >$100 million..................................... 0.36. Surcharge for Payment Notification: Origination Surcharge \72\........................ 0.01. Receipt Volume \72\ \73\.......................... N/A. Delivery of Reports--Hard Copy Reports to On-Line 50.00. Customers........................................ Special Settlement Arrangements (charge per 150.00. settlement day)\74\.............................. ------------------------------------------------------------------------ National Settlement Service ------------------------------------------------------------------------ Basic: Settlement Entry Fee.............................. 1.50. Settlement File Fee............................... 30.00. Surcharge for Off-line File Origination \75\...... 45.00. Minimum Monthly Fee \76\.......................... 60.00. ------------------------------------------------------------------------ --------------------------------------------------------------------------- \69\ 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: $0.656 for transfers up to 14,000; $0.196 for transfers 14,001 to 90,000; and $0.128 for transfers over 90,000. \70\ This surcharge applies to originators of transfers that are processed by the Reserve Banks after 5:00 p.m. eastern time. \71\ 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. \72\ Payment Notification and End-of-Day Origination surcharges apply to each Fedwire funds transfer message. \73\ Provided on billing statement for informational purposes only. \74\ This charge is assessed to settlement arrangements that use the Fedwire Funds Service to effect the settlement of interbank obligations (as opposed to those that use the National Settlement Service). With respect to such special settlement arrangements, other charges may be assessed for each funds transfer into or out of the accounts used in connection with such arrangements. \75\ Offline 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. \76\ Any settlement arrangement that accrues less than $60 of charges during a calendar month will be assessed a variable amount to reach the minimum monthly fee. Fedwire Securities Service 2018 Fee Schedule (Non-Treasury Securities) [Effective January 2, 2018. Bold indicates changes from 2017 prices.] ------------------------------------------------------------------------ Fee ------------------------------------------------------------------------ Basic Transfer Fee: Transfer or reversal originated or received....... $0.77 Surcharge: \77\ Offline origination & receipt surcharge........... 80.00 Monthly Maintenance Fees: Account maintenance (per account)................. 57.50 Issues maintained (per issue/per account)......... 0.77 Claim Adjustment Fee \78\......................... 0.80 GNMA Serial Note Stripping or Reconstitution Fee 9.00 \79\............................................. Joint Custody Origination Surcharge \80\.......... 46.00 Delivery of Reports--Hard Copy Reports to On-Line 50.00 Customers........................................ ------------------------------------------------------------------------ [[Page 52923]] --------------------------------------------------------------------------- \77\ This surcharge is set by the Federal Reserve Banks. It is in addition to any basic transfer or reversal fee. \78\ The Federal Reserve Banks offer an automated claim adjustment process only for Agency mortgage-backed securities. \79\ This fee is set by and remitted to the Government National Mortgage Association (GNMA). \80\ The Federal Reserve Banks charge participants a Joint Custody Origination Surcharge for both Agency and Treasury securities. FedLine 2018 Fee Schedule [Effective January 2, 2018. Bold indicates changes from 2017 prices.] ------------------------------------------------------------------------ Fee ------------------------------------------------------------------------ FedComplete Packages (monthly) 81 82 83 ------------------------------------------------------------------------ FedComplete 100A Plus........................... $825.00. includes: FedLine Advantage Plus package. FedLine subscriber 5-pack. 7,500 FedForward transactions. 46 FedForward Cash Letter items. 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. 100 FedACH Same-Day origination items. FedACH account servicing. FedACH settlement. FedACH Same-Day origination participation fee. FedComplete 100A Premier........................ $900.00. includes: FedLine Advantage Premier package. Volumes included in the FedComplete 100A Plus package. FedComplete 100C Plus........................... $1,375.00. includes: FedLine Command Plus package. Volumes included in the FedComplete 100A Plus package. FedComplete 200A Plus........................... $1,350.00. includes: FedLine Advantage Plus package. FedLine subscriber 5-pack. 25,000 FedForward transactions. 46 FedForward Cash Letter items. 225 FedReturn transactions. 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. 200 FedACH Same-Day origination items. FedACH account servicing. FedACH settlement. FedACH Same-Day origination participation fee. FedComplete 200A Premier........................ $1,425.00. includes: FedLine Advantage Premier package. Volumes included in the FedComplete 200A Plus package. FedComplete 200C Plus........................... $1,900.00. includes: FedLine Command Plus package. Volumes included in the FedComplete 200A Plus package. [[Page 52924]] FedComplete Excess Volume and Receipt Surcharge:\84\ FedForward.................................. $0.037/item. FedReturn................................... $0.8200/item. FedReceipt.................................. $0.00005/item. Fedwire Funds Origination................... $0.8200/item. Fedwire Funds Receipt....................... $0.082/item. FedACH Origination.......................... $0.0035/item. FedACH Receipt.............................. $0.00035/item. FedComplete credit adjustment................... various. FedComplete debit adjustment.................... various. ------------------------------------------------------------------------ FedLine Customer Access Solutions (monthly) ------------------------------------------------------------------------ FedMail \85\.................................... $85.00. 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 Exchange \85\........................... $40.00. includes: E-Payments Routing Directory (manual download). FedLine Exchange Premier.\85\ $125.00. includes: FedLine Exchange package. E-Payments Routing Directory (auto download). FedLine Web \86\................................ $110.00. includes: FedLine Web access channel. Services included in the FedLine Exchange package. Check FedForward, FedReturn and FedReceipt services. Check Adjustments. FedACH Information Services & Derived Returns/NOCs. FedACH Risk Services (includes RDFI Alert and Returns Reporting). FedCash[supreg] Services. Service Charge Information. FedLine Web Plus \86\........................... $160.00. includes: FedLine Web 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)). E-Payments Routing Directory (auto download). FedLine Advantage \86\.......................... $415.00. includes: FedLine Advantage access channel. One VPN device. Services included in the FedLine Web 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 \86\..................... $460.00. includes: FedLine Advantage package. One VPN device. FedACH Risk Origination Monitoring Service. [[Page 52925]] 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). E-Payments Routing Directory (auto download). FedLine Advantage Premier \85\.................. $570.00. includes: FedLine Advantage Plus package. Two VPN devices. 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............................ $1,035.00. includes: FedLine Command access channel. Services included in the FedLine Advantage Plus package. One VPN device. Two FedLine Command server certificates. Fedwire Statement Services. Fedwire Funds FedPayments Manager Import/ Export. FedTransaction Analyzer. 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............................. $3,650.00. includes: FedLine Direct access channel. One VPN device. 256K Dedicated WAN Connection. Services included in the FedLine Command Plus package. Two FedLine Direct server certificates. Treasury Check Information System (TCIS). FedLine Direct Premier.......................... $6,800.00. includes: FedLine Direct Plus package. T1 dedicated WAN connection. Two VPN devices. ------------------------------------------------------------------------ A la carte options (monthly) \87\ ------------------------------------------------------------------------ Electronic Access: FedMail--FedLine Exchange Subscriber 5-pack. $15.00. FedLine Subscriber 5-pack (access to Web and $80.00. Advantage). Additional FedLine Command Certificate \88\. $100.00. Additional FedLine Direct Certificate \89\.. $100.00. Additional VPNs \90\........................ $100.00. Additional dedicated connections............ 256K.................................... $2,500.00. T1...................................... $3,200.00. FedLine International Setup (one-time fee).. $5,000.00. FedLine Custom Implementation Fee \91\...... various. Network Diversity........................... $2,000.00. FedLine Direct Contingency Solution......... $1,000.00. Check 21 Large File Delivery \92\........... various. FedMail Email (for FedLine customers)....... $20.00. FedMail Fax................................. $100.00. VPN Device Modification..................... $200.00. VPN Device Missed Activation Appointment.... $175.00. VPN Device Expedited Hardware Surcharge..... $100.00. VPN Device Replacement or Move.............. $300.00. E-Payments Automated Download (1-5 Add'l $75. Codes). E-Payments Automated Download (6-20 Add'l $150. Codes). E-Payments Automated Download (21-50 Add'l $300. Codes). E-Payments Automated Download (51-100 Add'l $500. Codes). E-Payments Automated Download (101-250 Add'l $1,000. Codes). E-Payments Automated Download (>250 Add'l $2,000. Codes). Electronic Access Training: Learning Center............................. complimentary. Certificate Retrieval Download Tutorial..... complimentary. Accounting Information Services: [[Page 52926]] Cash Management System (CMS) Plus--Own report--up to six files with: \93\ no respondent/sub-account activity...... $60.00. less than 10 respondent and/or sub- $125.00. accounts. 10-50 respondent and/or sub-accounts.... $250.00. 51-100 respondents and/or sub-accounts.. $500.00. 101-500 respondents and/or sub-accounts. $750.00. >500 respondents and/or sub-accounts.... $1,000.00. End-of-Day Financial Institution $150.00. Reconcilement Data File \94\. Statement of Account Spreadsheet File \95\.. $150.00. Intra-day Download Search File (with AMI) $150.00. \96\. ACTS Report: \97\ <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...................... Vendor Pass-Through Fee..................... various. Electronic Access Credit Adjustment......... various. Electronic Access Debit Adjustment.......... various. Legacy Software Fee \98\.................... various. ------------------------------------------------------------------------ --------------------------------------------------------------------------- \81\ FedComplete packages are all-electronic service options that bundle payment services with an access solution for one monthly fee. \82\ Packages with an `A' include the FedLine Advantage channel, while packages with `C' include the FedLine Command channel. \83\ FedComplete customers that use the email service would be charged the FedMail Email a la carte fee and for all FedMail-FedLine Exchange Subscriber 5-packs. \84\ Per-item surcharges are in addition to the standard fees listed in the applicable priced services fee schedules. \85\ FedMail and FedLine Exchange packages do not include user credentials, which are required to access priced services and certain informational services. Credentials are sold separately in packs of five via the FedMail-FedLine Exchange Subscriber 5-pack. \86\ FedLine Web and Advantage packages do not include user credentials, which are required to access priced services and certain informational services. Credentials are sold separately in packs of five via the FedLine Subscriber 5-pack. \87\ These add-on services can be purchased only with a FedLine Customer Access Service option. \88\ Additional FedLine Command Certificates available for FedLine Command and Direct packages only. \89\ Additional FedLine Direct Certificates available for FedLine Direct packages only. \90\ Additional VPNs are available for FedLine Advantage, FedLine Command, and FedLine Direct packages only. \91\ The FedLine Custom Implementation Fee is $2,500 or $5,000 based on the complexity of the setup. \92\ The fee ranges from $1,400 to $20,725 depending on the size, speed, and location of the connection. \93\ Cash Management Service options are limited to plus and premier packages. \94\ The End of Day Reconcilement File option is available for FedLine Web Plus, FedLine Advantage Plus, and Premier packages. It is available for no extra fee in FedLine Command Plus and Direct packages. \95\ The Statement of Account Spreadsheet File option is available for FedLine Web Plus, FedLine Advantage Plus, and Premier packages. It is available for no extra fee in FedLine Command Plus and Direct packages. \96\ The Intra-day Download Search File option is available for the FedLine Web Plus package. It is available for no extra fee in FedLine Advantage and higher packages. \97\ ACT Report options are limited to FedLine Command Plus, FedLine Direct Plus, and FedLine Direct Premier packages. \98\ The fee will vary based on the number of customers remaining on the legacy system, up to $80,000/month through 3/31/18 and up to $150,000/month thereafter. By order of the Board of Governors of the Federal Reserve System, November 6, 2017. Margaret McCloskey Shanks, Deputy Secretary of the Board. [FR Doc. 2017-24736 Filed 11-14-17; 8:45 am] BILLING CODE 6210-01-P
![52906 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
Type of Respondents: Persons Synopsis: The agreement authorizes Lawrence Mize, Deputy Associate
desiring to operate as common carriers the parties to charter space from one Director, (202) 452–5232; Max
or conferences. another in the trade between the U.S. Sinthorntham, Senior Financial Analyst,
Number of Annual Respondents: The East and Gulf Coast on the one hand, (202) 452–2864, Division of Reserve
Commission estimates there are 5,365 and certain countries in Africa on the Bank Operations and Payment Systems.
Carrier Automated Tariffs. It is other hand. For users of Telecommunications
estimated that the number of annual Dated: November 9, 2017. Device for the Deaf (TDD) only, please
respondents will be 1,425. call (202) 263–4869. Copies of the 2018
Estimated Time Per Response: The By Order of the Federal Maritime
time per response ranges from 0.1 to 2
Commission. fee schedules for the check service are
hours for reporting and recordkeeping JoAnne D. O’Bryant, available from the Board, the Federal
requirements contained in the rules, and Program Analyst. Reserve Banks, or the Reserve Banks’
0.5 hours for completing Form FMC–1. [FR Doc. 2017–24708 Filed 11–14–17; 8:45 am] financial services Web site at
Total Annual Burden: The BILLING CODE 6731–AA–P www.frbservices.org.
Commission estimates the total hour I. Supplementary Information
burden at 2,408 hours.
FEDERAL RESERVE SYSTEM Private Sector Adjustment Factor,
JoAnne D. O’ Bryant,
Priced Services Cost Recovery, and
Program Analyst. [Docket No. OP–1583]
Overview of 2017 Price Changes
[FR Doc. 2017–24705 Filed 11–14–17; 8:45 am]
BILLING CODE 6731–AA–P Federal Reserve Bank Services A. Overview—Each year, as required
AGENCY: Board of Governors of the by the Monetary Control Act of 1980,
Federal Reserve System. the Reserve Banks set fees for priced
FEDERAL MARITIME COMMISSION services provided to depository
ACTION: Notice.
Notice of Agreement Filed institutions. These fees are set to
SUMMARY: The Board of Governors of the recover, over the long run, all direct and
The Commission hereby gives notice Federal Reserve System (Board) has indirect costs and imputed costs,
of the filing of the following agreement approved the private sector adjustment including financing costs, taxes, and
under the Shipping Act of 1984. factor (PSAF) for 2018 of $18.9 million certain other expenses, as well as the
Interested parties may submit comments and the 2018 fee schedules for Federal return on equity (profit) that will have
on the agreement to the Secretary, Reserve priced services and electronic been earned if a private business firm
Federal Maritime Commission, access. These actions were taken in provided the services. The imputed
Washington, DC 20573, within twelve accordance with the Monetary Control costs and imputed profit are collectively
days of the date this notice appears in Act of 1980, which requires that, over
the Federal Register. A copy of the referred to as the private-sector
the long run, fees for Federal Reserve adjustment factor (PSAF). From 2007
agreement is available through the priced services be established on the
Commission’s Web site (www.fmc.gov) through 2016, the Reserve Banks
basis of all direct and indirect costs, recovered 101.8 percent of their total
or by contacting the Office of including the PSAF.
Agreements at (202) 523–5793 or expenses (including imputed costs) and
DATES: The new fee schedules become targeted after-tax profits or return on
tradeanalysis@fmc.gov.
Agreement No.: 201236. effective January 2, 2018. equity (ROE) for providing priced
Title: MACS–CSAL Shipping FOR FURTHER INFORMATION CONTACT: For services.1
Agreement. questions regarding the fee schedules:
Table 1 summarizes 2016 actual, 2017
Parties: MACS Maritime Carrier David C. Mills, Deputy Associate
Director, (202) 530–6265; Emily estimated, and 2018 budgeted cost-
Shipping Pte. Ltd. and CSAL Canada-
Massaro, Financial Services Analyst, recovery rates for all priced services.
States-Africa Line Inc.
Filing Party: Steven B. Chameides; (202) 452–2493, Division of Reserve Cost recovery is estimated to be 102.6
Foley & Lardner LLP; 3000 K Street Bank Operations and Payment Systems. percent in 2017 and budgeted to be
NW.; Washington, DC 20007. For questions regarding the PSAF: 100.0 percent in 2018.
TABLE 1—AGGREGATE PRICED SERVICES PRO FORMA COST AND REVENUE PERFORMANCE a
[Dollars in millions]
Recovery rate
Net income after targeted
Year Revenue Total expense Targeted ROE
(ROE) ROE
(%)
1b 2c 3 4d 5e
[1¥2] [1/(2 + 4)]
2016 (actual) .......................................... 434.1 410.5 23.7 4.1 104.7
2017 (estimate) ...................................... 442.3 426.3 16.0 4.6 102.6
sradovich on DSK3GMQ082PROD with NOTICES
1 The 10-year recovery rate is based on the pro for Defined Benefit Pension and Other reduction in equity from 2007 to 2016 results in
forma income statements for Federal Reserve priced Postretirement Plans [Accounting Standards cost recovery of 95.6 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
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![Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices 52907
TABLE 1—AGGREGATE PRICED SERVICES PRO FORMA COST AND REVENUE PERFORMANCE a—Continued
[Dollars in millions]
Recovery rate
Net income after targeted
Year Revenue Total expense Targeted ROE
(ROE) ROE
(%)
1b 2c 3 4d 5e
[1¥2] [1/(2 + 4)]
2018 (budget) ........................................ 441.7 436.5 5.2 5.2 100.0
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.
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- performance for the 10-year period from 2017 estimate, and 2018 budget by
recovery budgets, estimates, and 2007 to 2016, 2016 actual, 2017 budget, priced service.
TABLE 2—PRICED SERVICES COST RECOVERY
[Percent]
2016 2017 2017 2018
Priced service 2007–2016 actual budget a estimate budget b
All services ........................................................................... 101.8 104.7 100.0 102.6 100.0
Check ................................................................................... 102.7 112.7 104.1 104.8 101.2
FedACH ............................................................................... 99.1 98.8 95.7 97.8 96.2
Fedwire Funds and NSS ..................................................... 101.3 103.3 101.1 105.9 104.0
Fedwire Securities ............................................................... 102.2 99.2 97.8 103.1 97.2
a The2017 budget figures reflect the final budgets as approved by the Board in December 2016.
b The 2018 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks will submit final budget data to
the Board in November 2017, for Board consideration in December 2017.
1. 2017 Estimated Performance—The Reserve Banks’ ability to offer additional FedACH technology modernization
Reserve Banks estimate that they will services to depository institutions. project is complete, as well as over the
recover 102.6 percent of the costs of 2. 2018 Private-Sector Adjustment long run. In addition, the Board believes
providing priced services in 2017, Factor—The 2018 PSAF for Reserve the Reserve Banks’ 2018 FedACH fee
including total expense and targeted Bank priced services is $18.9 million. increases are consistent with a
ROE, compared with a 2017 budgeted This amount represents an increase of multiyear strategy of providing long-
recovery rate of 100.0 percent, as shown $2.3 million from the 2017 PSAF of term price stability for customers during
in table 2. Overall, the Reserve Banks $16.6 million. This increase is primarily a period of high expenses in the short-
estimate that they will fully recover the result of an increase in the total cost term as the technology is upgraded.
actual and imputed costs and earn net of capital and sales taxes offset by a Although Fedwire Securities Service is
income of $16.0 million, compared with decrease in Board of Governors not budgeted to fully cover its costs in
the targeted ROE of $4.6 million. The expenses. 2018, the Board believes the Reserve
Reserve Banks estimate that the check 3. 2018 Projected Performance—The Banks will recover Fedwire Securities
service, the Fedwire® Funds and Reserve Banks project a priced services Service costs in the long run. In 2018
National Settlement Services, and the cost recovery rate of 100.0 percent in Fedwire Securities Service is projected
Fedwire Securities Service will achieve 2018, with both net income and targeted to underrecover, due to volume declines
full cost recovery; however, the Reserve ROE of $5.2 million. The Reserve Banks driven by market changes.3
Banks continue to estimate that the project that the price changes will result The primary risks to the Reserve
FedACH® Service will not achieve full in a 1.4 percent average price increase Banks’ ability to achieve their targeted
cost recovery because of investment for customers. The Reserve Banks cost recovery rates are unanticipated
costs associated with the multiyear project that the check service and the volume and revenue reductions and the
technology initiative to modernize its Fedwire Funds and National Settlement potential for cost overruns from new
processing platform.2 This investment is Services will fully recover their costs;
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and ongoing improvement initiatives. In
expected to enhance efficiency, the however, the Reserve Banks project that light of these risks, the Reserve Banks
overall quality of operations, and the the FedACH Service and the Fedwire will continue to refine their business
Securities Service will not achieve full and operational strategies to manage
2 The Reserve Banks have been engaged in a
cost recovery. Although FedACH is not operating costs, increase product
multiyear technology initiative to modernize the budgeted to fully recover its costs in
FedACH processing platform by migrating the
service from a mainframe system to a distributed 2018, the Reserve Banks are expected to 3 Fedwire Securities Service’s ten-year average
computing environment. fully recover FedACH costs once the recovery rate in 2018 is 101.6 percent.
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![Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices 52911
TABLE 3—COMPARISON OF PRO FORMA BALANCE SHEETS FOR BUDGETED FEDERAL RESERVE PRICED SERVICES
[Millions of dollars—projected average for year]
2018 2017 Change
Short-term assets:
Receivables ........................................................................................................................ $36.6 $36.6 $0.0
Materials and supplies ........................................................................................................ 0.5 0.6 (0.1)
Prepaid expenses ............................................................................................................... 13.0 11.2 1.8
Items in process of collection 13 ......................................................................................... 87.0 241.0 (154.0)
Total short-term assets ............................................................................................... 137.1 289.4 (152.3)
Imputed investments: 14
Imputed investment in Treasury Securities ........................................................................ ........................ ........................ ..........................
Imputed investment in Fed Funds ...................................................................................... 174.8 245.0 (70.2)
Total imputed investments .......................................................................................... 174.8 245.0 (70.2)
Long-term assets:
Premises 15 ......................................................................................................................... 103.9 128.7 (24.8)
Furniture and equipment .................................................................................................... 38.9 39.0 (0.1)
Leasehold improvements and long-term prepayments ...................................................... 100.3 104.8 (4.5)
Net pension asset ............................................................................................................... 76.6 10.9 65.7
Deferred tax asset .............................................................................................................. 185.6 186.1 (0.5)
Total long-term assets ................................................................................................. 505.3 469.6 35.7
Total assets .......................................................................................................... 817.2 1,003.9 (186.8)
Short-term liabilities:
Deferred credit items .......................................................................................................... 261.8 486.0 (224.2)
Short-term debt ................................................................................................................... 14.5 18.1 (3.6)
Short-term payables ........................................................................................................... 35.6 30.2 5.3
Total short-term liabilities ............................................................................................ 311.9 534.4 (222.5)
Long-term liabilities:
Pension liability ................................................................................................................... ........................ ........................ ..........................
Long-term debt ................................................................................................................... 76.9 48.4 28.5
Postemployment/postretirement benefits and net pension liabilities 16 .............................. 370.5 362.5 8.0
Total liabilities .............................................................................................................. 759.3 945.3 (186.0)
Equity 17 ....................................................................................................................... 57.8 58.6 (0.7)
Total liabilities and equity ..................................................................................... 817.2 1,003.9 (186.8)
expenses as liquid net financial assets and equity
on the pro forma balance sheet. Six months of the
Fedwire Funds Service’s projected current
13 Credit float, which represents the difference
operating expenses is $51.4 million. In 2018, $57.8
between items in process of collection and deferred million of equity was imputed to meet the 17 Includes an accumulated other comprehensive
credit items, occurs when the Reserve Banks debit regulatory capital requirements. loss of $637.2 million for 2018 and $635.1 million
the paying bank for transactions prior to providing 15 Includes the allocation of Board of Governors
for 2017, which reflects the ongoing amortization of
credit to the depositing bank. Float is directly assets to priced services of $1.1 million for 2018 the accumulated loss in accordance with FAS 158
estimated at the service level. and $1.2 million for 2017.
14 Consistent with the Board’s PSR policy, the 16 Includes the allocation of Board of Governors
[ASC 715]. Future gains or losses, and their effects
on the pro forma balance sheet, cannot be projected.
Reserve Banks’ priced services will hold six months liabilities to priced services of $0.6 million for 2018
of the Fedwire Funds Service’s current operating and 2017. See table 5 for calculation of required imputed
equity amount.
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![52912 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
TABLE 4—IMPUTED FUNDING FOR PRICED-SERVICES ASSETS
[Millions of dollars]
2018 2017
A. Short-term asset financing:
Short-term assets to be financed:
Receivables ................................................................................................................................... $36.6 $36.6
Materials and supplies .................................................................................................................. 0.5 0.6
Prepaid expenses .......................................................................................................................... 13.0 11.2
Total short-term assets to be financed ................................................................................................ 50.1 48.4
Short-term payables ...................................................................................................................... 35.6 30.2
Net short-term assets to be financed ................................................................................................... 14.5 18.1
Imputed short-term debt financing 18 .................................................................................................... 14.5 18.1
B. Long-term asset financing:
Long-term assets to be financed:
Premises ........................................................................................................................................ 103.9 128.7
Furniture and equipment ............................................................................................................... 38.9 39.0
Leasehold improvements and long-term prepayments ................................................................. 100.3 104.8
Net pension asset ......................................................................................................................... 76.6 10.9
Deferred tax asset ......................................................................................................................... 185.6 186.1
Total long-term assets to be financed .................................................................................................. 505.3 469.6
Net pension liability ....................................................................................................................... .............................. ..............................
Postemployment/postretirement benefits and net pension liabilities ............................................ 370.5 362.5
Net long-term assets to be financed ............................................................................................. 134.8 107.0
Imputed long-term debt 18 ............................................................................................................. 76.9 48.4
Imputed equity 18 ........................................................................................................................... 57.8 58.6
Total long-term financing ....................................................................................................... 134.8 107.0
TABLE 5—DERIVATION OF THE 2018 AND 2017 PSAF
[Dollars in millions]
2018 2017
Debt Equity Debt Equity
A. Imputed long-term debt and equity:
Net long-term assets to finance ........................................ $134.8 $134.8 $107.0 $107.0
Capital structure observed in market ................................ 58.2% 41.8% 58.4% 41.6%
Pre-adjusted long-term debt and equity ........................... $ 78.4 $ 56.4 $ 62.5 $ 44.5
Equity adjustments: 19
Equity to meet capital requirements .......................... .............................. 57.8 .............................. 58.6
Adjustment to debt and equity funding given capital
requirements 20 ....................................................... (1.5) 1.5 (14.1) 14.1
Adjusted equity balance ............................................. .............................. 57.8 .............................. 58.6
Equity to meet capital requirements 21 ...................... .............................. .............................. .............................. ..............................
Total imputed long-term debt and equity ........... $ 76.9 $ 57.8 $ 48.4 $ 58.6
B. Cost of capital:
Elements of capital costs:
Short-term debt 22 ...................................................... $ 14.5 × 1.3% = $ 0.2 $ 18.1 × 0.6% = $ 0.1
Long-term debt 22 ....................................................... 76.9 × 3.8% = 3.0 48.4 × 4.0% = 1.9
Equity 23 ..................................................................... 57.8 × 11.7% = 6.7 58.6 × 10.2% = 6.0
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$ 9.9 $ 8.0
C. Incremental cost of PSR policy:
Equity to meet policy ......................................................... — × 11.7% = .............................. — × 10.2% = ..............................
D. Other required PSAF costs:
Sales taxes ........................................................................ $ 3.9 .............................. $ 3.2 ..............................
18 See table 5 for calculation.
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![Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices 52913
TABLE 5—DERIVATION OF THE 2018 AND 2017 PSAF—Continued
[Dollars in millions]
2018 2017
Debt Equity Debt Equity
Board of Governors expenses .......................................... 5.1 .............................. 5.4 ..............................
.............................. 9.0 .............................. 8.6
.............................. $ 18.9 .............................. $ 16.6
E. Total PSAF
As a percent of assets ...................................................... .............................. 2.3% .............................. 1.5%
As a percent of expenses ................................................. .............................. 4.1% .............................. 3.9%
F. Tax rates .............................................................................. .............................. 22.7% .............................. 22.7%
TABLE 6—COMPUTATION OF 2018 CAPITAL ADEQUACY FOR FEDERAL RESERVE PRICED SERVICES
[Dollars in millions]
Risk Weighted
Assets weight assets
Imputed investments:
1-Year Treasury securities 24
Federal funds 25 .................................................................................................. $174.8 0.2 $35.0
Total imputed investments .......................................................................... 174.8 .............................. 35.0
Receivables ............................................................................................................... 36.6 0.2 7.3
Materials and supplies ............................................................................................... 0.5 1.0 0.5
Prepaid expenses ...................................................................................................... 13.0 1.0 13.0
Items in process of collection .................................................................................... 87.0 0.2 17.4
Premises .................................................................................................................... 103.9 1.0 103.9
Furniture and equipment ........................................................................................... 38.9 1.0 38.9
Leasehold improvements and long-term prepayments ............................................. 100.3 1.0 100.3
Net pension asset ...................................................................................................... 76.6 1.0 76.6
Deferred tax asset ..................................................................................................... 185.6 1.0 185.6
Total .................................................................................................................... $817.2 .............................. $578.4
Imputed equity:
Capital to risk-weighted assets .......................................................................... 10.0% .............................. ..............................
Capital to total assets ......................................................................................... 7.1% .............................. ..............................
C. Check Service—Table 7 shows the budgeted cost-recovery performance for
2016 actual, 2017 estimated, and 2018 the commercial check service.
19 If minimum equity constraints are not met after 21 Additional equity in excess of that needed to 24 If minimum equity constraints are not met after
imputing equity based on the capital structure fund priced services assets is offset by an asset imputing equity based on all other financial
observed in the market, additional equity is balance of imputed investments in treasury statement components, additional equity is imputed
imputed to meet these constraints. The long-term securities. to meet these constraints. Additional equity
22 Imputed short-term debt and long-term debt are imputed to meet minimum equity requirements is
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funding need was met by imputing long-term debt
and equity based on the capital structure observed computed at table 4. invested solely in Treasury securities. The imputed
23 The 2017 ROE is equal to a risk-free rate plus investments are similar to those for which rates are
in the market (see tables 4 and 6). In 2018, the
a risk premium (beta * market risk premium). The available on the Federal Reserve’s H.15 statistical
amount of imputed equity met the minimum equity release, which can be located at http://
2017 after-tax CAPM ROE is calculated as 1.09% +
requirements for risk-weighted assets. www.federalreserve.gov/releases/h15/data.htm.
(1.0 * 7.93%) = 9.03%. Using a tax rate of 22.7%,
20 Equity adjustment offsets are due to a shift of
the after-tax ROE is converted into a pretax ROE, 25 The investments are imputed based on the
long-term debt funding to equity in order to meet which results in a pretax ROE of (9.03%/(1–22.7%)) amounts arising from the collection of items prior
FDIC capital requirements for well-capitalized = 11.67%. Calculations may be affected by to providing credit according to established
institutions. rounding. availability schedules.
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![52914 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
TABLE 7—CHECK SERVICE PRO FORMA COST AND REVENUE PERFORMANCE
[Dollars in millions]
Recovery rate
Met income after targeted
Year Revenue Total expense Targeted ROE
(ROE) ROE
(%)
1 2 3 4 5
[1–2] [1/(2 + 4)]
2016 (actual) ........................................................................ 154.2 135.6 18.6 1.3 112.7
2017 (estimate) .................................................................... 142.6 134.7 7.9 1.4 104.8
2018 (budget) ....................................................................... 135.4 132.2 3.1 1.6 101.2
1. 2017 Estimate—The Reserve Banks percent (compared with a budgeted expenses, primarily because of reduced
estimate that the check service will decline of 5.0 percent) and their total operating costs, including cost savings
recover 104.8 percent of total expenses return check volume will decline 1.0 associated with increased efficiencies of
and targeted ROE, compared with a percent (compared with a budgeted the Reserve Banks’ customer support
2017 budgeted recovery rate of 104.1 decline of 10.1 percent) from 2016 services.
percent. Greater-than-expected check levels.26 The Reserve Banks evaluate and set
volumes processed by the Reserve 2. 2018 Pricing—The Reserve Banks tier assignments annually based on
Banks and lower-than-expected costs expect the check service to recover changes in the volume of items received
have influenced the check service’s cost 101.2 percent of total expenses and by endpoints. In 2018, the Reserve
recovery. targeted ROE in 2018. The Reserve Banks will reassign the tier placement of
The decline in Reserve Bank check Banks project revenue to be $135.4 478 forward and 977 return endpoints
volume was not as great as previously million, a decline of 5.0 percent from in the FedForward and FedReturn
anticipated. Through August, both total the 2017 estimate. This decline is driven products, respectively.28
commercial forward and total in part by an anticipated continued Based on these 2018 tier assignments,
commercial return check volumes were general decline in the number of checks the Reserve Banks will for the
only 0.4 percent lower than they were written and competition from FedReturn deposit options (FedReturn
during the same period last year. correspondent banks, aggregators, and Standard ICL and FedReturn Premium
Consistent with anticipated fourth direct exchanges.27 Total expenses for Daily Fee A) increase all per-item fees,
quarter declines, for full-year 2017, the the check service are projected to be except substitute checks, by 3 percent,
Reserve Banks estimate that their total $132.2 million, a decrease of $2.5 rounded to the nearest penny. Table 8
forward check volume will decline 1.3 million, or 1.9 percent, from 2017 shows the 2018 fees.
TABLE 8—FEDRETURN PER-ITEM FEES
9:00 p.m. 1:00 a.m. 12:30 p.m.
FedReturn Standard ICL:
Tier 1 .................................................................................................................................... $0.15 $0.45 $0.15
Tier 2 .................................................................................................................................... 0.21 0.51 0.21
Tier 3 .................................................................................................................................... 0.62 0.92 0.62
Tier 4 .................................................................................................................................... 0.82 1.12 0.82
PDF ....................................................................................................................................... 1.03 1.33 1.03
Substitute Check .................................................................................................................. 1.50 1.50 1.50
FedReturn Premium Daily Fee A:
Tier 0 .................................................................................................................................... ........................ 0.01 0.03
Tier 1 .................................................................................................................................... ........................ 0.05 0.07
Tier 2 .................................................................................................................................... ........................ 0.10 0.12
Tier 3 .................................................................................................................................... ........................ 0.52 0.54
Tier 4 .................................................................................................................................... ........................ 0.72 0.74
PDF ....................................................................................................................................... ........................ 0.93 0.95
Substitute Check .................................................................................................................. ........................ 1.50 1.50
The Reserve Banks will also lower the for tiers 1, 2, and 3 of the FedForward options (FedForward Premium Daily
average daily receipt volume thresholds daily subscription fee premium deposit Fee A, B, and C).29 Table 9 shows the
26 Total Reserve Bank forward check volumes are 28 The tiers for 2018 are available at https:// options (FedForward Premium Daily Fee A, B, and
www.frbservices.org/resources/fees/check-
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expected to be 5.2 billion in 2017. Total Reserve C) are based only on volume received by the
Bank return check volumes are expected to be 31.8 2018.html. Reserve Banks’ top 15 customers, which represent
29 As part of the Reserve Banks 2016 restructured
million in 2017. the likely users of the deposit options. These
27 The Reserve Banks estimate that total FedForward and FedReturn fee schedules, the premium daily fee options include a fifth tier, Tier
Reserve Banks use a volume-based tiered pricing
commercial forward check volumes in 2018 will 0, composed of routing numbers for which the
structure to determine per-item fees based on the
decline 4.7 percent, to 4.9 billion, and total average daily receipt volume an endpoint receives Reserve Banks currently receive little to no volume
commercial return check volumes will decline 3.5 from chartered institutions through the Reserve from the specified subset of Reserve Bank
percent, to 30.7 million in 2018. Banks. Tiers for the three premium variations of the customers (and which therefore cannot currently be
Reserve Banks’ daily subscription fee deposit assigned to the other tiers with sufficient
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![52916 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
TABLE 11—FEDACH SERVICE PRO FORMA COST AND REVENUE PERFORMANCE
[Dollars in millions]
5
3 Recovery rate
1 2 4
Year Net income after targeted
Revenue Total expense Targeted ROE
(ROE) ROE
(%)
1 2 3 4 5
[1–2] [1/(2 + 4)]
2016 (actual) ........................................................................ 131.0 131.4 ¥0.3 1.3 98.8
2017 (estimate) .................................................................... 141.3 142.9 ¥1.6 1.6 97.8
2018 (budget) ....................................................................... 148.5 152.4 ¥4.0 1.9 96.2
1. 2017 Estimate—The Reserve Banks associated with the development of the increased to cover the increased costs
estimate that the FedACH service will new FedACH technology platform. associated with the technology upgrade,
recover 97.8 percent of total expenses The Reserve Banks will increase the which will result in significant
and targeted ROE, compared with a base per-item fees for origination and overrecovery once the upgrade is
2017 budgeted recovery rate of 95.7 receipt from $0.0032 to $0.0035. The complete. Instead the Reserve Banks
percent, as the 2017 hiring freeze Reserve Banks will also increase per- continue to moderately increase
resulted in lower-than budgeted item volume-based discounts by FedACH fees to minimize pricing
operating costs. Through August, $0.0003 for origination discounts based volatility and promote long-term price
FedACH commercial origination and on origination volume and all receipt stability for customers.
receipt volume was 6.0 percent higher discounts. There are no changes to the The primary risks to the Reserve
than it was during the same period last existing origination volume discounts Banks’ ability to achieve budgeted 2018
year. For full-year 2017, the Reserve based on receipt volume. These changes cost recovery for the FedACH service
Banks estimate that FedACH provide an effective offset with no price are unanticipated cost overruns
commercial origination and receipt change for customers meeting the associated with the FedACH technology
volume will increase 5.8 percent from volume discount thresholds. The modernization project and higher-than-
Reserve Banks will also increase the expected support and overhead costs.
2016 levels, in line with the budgeted
monthly FedACH Participation Fee from Other risks include lower-than-expected
increase of 5.7 percent.
$58 to $65. volume and associated revenue due to
2. 2018 Pricing—The Reserve Banks The Reserve Banks estimate that the unanticipated mergers and acquisitions
expect the FedACH service to recover combined price changes will result in a and loss of market share due to
96.2 percent of total expenses and 3.6 percent average price increase for exchanges directly between banks and
targeted ROE in 2018. FedACH FedACH customers. volume shifts to the private-sector
commercial origination and receipt While the Reserve Banks are not operator.
volume is projected to grow 5.2 percent, budgeted to fully recover costs in 2018, E. Fedwire Funds and National
contributing to an increase of $7.2 they are expected to fully recover costs Settlement Services—Table 12 shows
million in total revenue, from the 2017 following the finalization of the the 2016 actual, 2017 estimate, and 2018
estimate. Total expenses are projected FedACH technology modernization budgeted cost-recovery performance for
increase $9.5 million from 2017 project. To fully recover costs in 2018, the Fedwire Funds and National
expenses, primarily because of costs fees will need to be significantly Settlement Services.
TABLE 12—FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES PRO FORMA COST AND REVENUE PERFORMANCE
[Dollars in millions]
5
3 Recovery
1 2 4
Year Net income rate after
Revenue Total expense Targeted ROE
(ROE) targeted ROE
(%)
1 2 3 4 5
[1–2] [1/(2 + 4)]
2016 (actual) ........................................................................ 123.0 117.8 5.3 1.3 103.3
2017 (estimate) .................................................................... 130.0 121.6 8.5 1.3 105.9
2018 (budget) ....................................................................... 130.6 124.1 6.5 1.4 104.0
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1. 2017 Estimate—The Reserve Banks Funds Service online volume was 3.4 volume decrease that had been
estimate that the Fedwire Funds and percent higher than it was during the budgeted. Through August, the National
National Settlement Services will same period last year. For full-year Settlement Service (NSS) settlement file
recover 105.9 percent of total expenses 2017, the Reserve Banks estimate that volume was 0.8 percent higher than it
and targeted ROE, compared with a Fedwire Funds Services online volume was during the same period last year,
2017 budgeted recovery rate of 101.1 will increase 1.1 percent from 2016 and settlement entry volume was 5.3
percent. Through August, Fedwire levels, compared with the 1.1 percent percent higher. For the full year, the
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![Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices 52917
Reserve Banks estimate that settlement ROE. Revenue is projected to be $130.6 notification origination surcharge from
file volume will increase 0.3 percent million, an increase of 0.5 percent from $0.20 to $0.01. The Reserve Banks
(compared with a budgeted 5.7 percent the 2017 estimate. The Reserve Banks estimate that the price changes will
increase) and settlement entry volume project total expenses to be $2.5 million result in a 1.2 percent average price
will increase 4.0 percent from 2016 higher than the 2017 expenses, decrease for Fedwire Funds customers.
levels (compared with a budgeted 0.6 primarily reflecting investments in new The Reserve Banks will not change
percent increase). The 2017 estimate for initiatives to improve resiliency and NSS fees for 2018.
the NSS settlement file volume is lower operational functionality as well as
than budgeted because the 2017 budget other business and technology The primary risks to the Reserve
included an assumption of additional initiatives. Banks’ ability to achieve budgeted 2018
arrangements that never materialized. The Reserve Banks will adjust the cost recovery for these services are cost
The NSS settlement entry volume grew incentive pricing fees for the Fedwire overruns from new initiatives to
more than expected due to an existing Funds Service by decreasing the Tier 3 improve resiliency and operational
arrangement that increased entries per-item pre-incentive fee from $0.17 to functionality.
submitted by 50 percent. $0.16.32 The Tier 3 per-item incentive F. Fedwire Securities Service—Table
2. 2018 Pricing—The Reserve Banks fee, which is derived from the Tier 3 13 shows the 2016 actual, 2017
expect the Fedwire Funds and National per-item pre-incentive fee, will decrease estimate, and 2018 budgeted cost
Settlement Services to recover 104.0 from $0.034 to $0.032. The Reserve recovery performance for the Fedwire
percent of total expenses and targeted Banks will also decrease the payment Securities Service.33
TABLE 13—FEDWIRE SECURITIES SERVICE PRO FORMA COST AND REVENUE PERFORMANCE
[dollars in millions]
5
3 Recovery
1 2 4
Year Net income rate after
Revenue Total expense Targeted ROE
(ROE) targeted ROE
(%)
1 2 3 4 5
[1–2] [1/(2 + 4)]
2016 (actual) ........................................................................ 25.9 25.8 0.0 0.2 99.2
2017 (estimate) .................................................................... 28.4 27.3 1.1 0.3 103.1
2018 (budget) ....................................................................... 27.3 27.7 ¥0.4 0.3 97.2
1. 2017 Estimate—The Reserve Banks U.S. government securities clearing and Reserve Banks estimate that account
estimate that the Fedwire Securities settlement business for its broker-dealer maintenance volume will decline 5.5
Service will recover 103.1 percent of services, which began gradually in 2017 percent from 2016 levels, compared
total expenses and targeted ROE, and is targeted to be complete by the with a budgeted decline of 7.6 percent.
compared with a 2017 budgeted end of 2018.34 Second, increase interest The higher-than-expected account
recovery rate of 97.8 percent. The rates have led to less prepayment on maintenance volume is the result of
Reserve Banks incurred lower-than- mortgages and decreasing issuance, estimated customer account closures not
budgeted operating costs, offsetting which in turn have led to a decrease in materializing. Through August, the
lower-than-budgeted volume estimates settlement activity for agency mortgage- number of agency issues maintained
in key services, which led to a higher- backed securities over Fedwire was 3.8 percent lower than the same
than-expected recovery. Securities. Third, the Fixed Income period last year. For full-year 2017, the
Through August, Fedwire Securities Clearing Corporation launched a new Reserve Banks estimate that the number
Service online agency transfer volume netting settlement logic in January 2016 of agency issues maintained will decline
was 7.9 percent lower than it was and launched the Mortgage-Backed 3.1 percent from 2016 levels, compared
during the same period last year. For Securities (MBS) novation project in with a budgeted decline of 2.1 percent.
full-year 2017, the Reserve Banks mid-2017, in a phased- in approach, 2. 2018 Pricing—The Reserve Banks
estimate that Fedwire Securities Service which led to the reduction in the expect the Fedwire Securities Service to
online agency transfer volume will number of Agency securities transfers recover 97.2 percent of total expenses
decline 14.7 percent from 2016 levels, over the Fedwire Securities Service.35 and targeted ROE in 2018. The Reserve
compared with a budgeted decline of Through August, account Banks project that online agency
11.8 percent. The reduction in volume maintenance volume was 5.5 percent transfer activity will decline 11.0
primarily reflects three market trends. lower than it was during the same percent in 2018, the number of accounts
First, JP Morgan Chase is exiting the period last year. For full-year 2017, the maintained will decrease 3.5 percent,
32 The per-item pre-incentive fee is the fee that 33 The Reserve Banks provide transfer services for component of a Treasury securities transfer; this
the Reserve Banks charge for transfers that do not securities issued by the U.S. Treasury, federal component is not treated as a priced service.
sradovich on DSK3GMQ082PROD with NOTICES
qualify for incentive discounts. The Tier 1 per-item government agencies, government-sponsored 34 JP Morgan Chase announced in July 2016, its
pre-incentive fee applies to the first 14,000 enterprises, and certain international institutions. intent to exit the government securities clearing and
transfers, the Tier 2 per-item pre-incentive fee The priced component of this service, reflected in settlement business. In light of JP Morgan Chase’s
applies to the next 76,000 transfers, and the Tier 3 this memorandum, consists of revenues, expenses, exit, broker-dealer services are housed almost
per-item pre-incentive fee applies to any additional and volumes associated with the transfer of all non- exclusively at BNY Mellon.
transfers. The Reserve Banks apply an 80 percent Treasury securities. For Treasury securities, the 35 Information on the Fixed Income Clearing
incentive discount to transfers once the volume of U.S. Treasury assesses fees for the securities Corporation’s new settlement logic and the MBS
transfers is greater than 60 percent of a customer’s transfer component of the service. The Reserve novation project can be found at http://
historic benchmark volume. Banks assess a fee for the funds settlement www.dtcc.com/.
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![Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices 52919
adjust FedComplete package prices to II. Analysis of Competitive Effect further evaluate the changes to assess
maintain an effective discount of less whether the benefits associated with the
All operational and legal changes
than 20 percent compared to the cost of changes—such as contributions to
considered by the Board that have a
purchasing services separately.42 payment system efficiency, payment
substantial effect on payment system
Finally, the Reserve Banks will system integrity, or other Board
participants are subject to the
objectives—can be achieved while
increase the legacy software fee for competitive impact analysis described
minimizing the adverse effect on
FedLine Direct customers that have not in the March 1990 policy ‘‘The Federal
competition.
converted to new IBM® MQ software. Reserve in the Payments System.’’ 43
The 2018 fees, fee structures, and
The fee will vary based on the number Under this policy, the Board assesses
changes in service will not have a direct
of customers remaining on the legacy whether proposed changes will have a
and material adverse effect on the
system, up to $80,000/month through direct and material adverse effect on the
ability of other service providers to
3/31/18 and up to $150,000/month ability of other service providers to
compete effectively with the Reserve
thereafter. compete effectively with the Federal
Banks in providing similar services. The
Reserve in providing similar services
The Reserve Banks estimate that the changes should permit the Reserve
because of differing legal powers or
price changes will result in a 4.3 percent Banks to earn a ROE that is comparable
constraints or because of a dominant
average price increase for FedLine to overall market returns and provide
market position deriving from such legal
customers. This is primarily driven by for full cost recovery over the long run.
differences. If any proposed changes
the VPN device billing changes. create such an effect, the Board must III. 2018 Fee Schedules
FEDACH SERVICE 2018 FEE SCHEDULE
[Effective January 2, 2018. Bold indicates changes from 2017 prices.]
Fee
FedACH minimum monthly fee:
Originating Depository Financial Institution (ODFI) 44 ............................................................................................ $50.00.
Receiving Depository Financial Institution (RDFI) 45 .............................................................................................. 40.00.
Origination (per item or record):
Forward or return items ....................................................................................................................................... 0.0035.
SameDay Service—forward item 46 ........................................................................................................................ 0.0010 surcharge.
Addenda record ...................................................................................................................................................... 0.0015.
FedLine Web-originated returns and notification of change (NOC) 47 ................................................................... 0.35.
Facsimile Exception Return/NOC 48 ....................................................................................................................... 45.00.
SameDay Exception Return ................................................................................................................................... 45.00.
Automated NOC ..................................................................................................................................................... 0.20.
Volume-based discounts (based on monthly billed origination volume) 49 per item when origination
volume is:
750,001 to 1,500,000 items per month ........................................................................................................ 0.0008 discount.
more than 1,500,000 items per month ........................................................................................................ 0.0010 discount.
Volume-based discounts (based on monthly billed receipt volume) 50 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 ......................................................................................................................................................... 0.0035.
Return Item ............................................................................................................................................................. 0.0075.
Addenda record ...................................................................................................................................................... 0.0015.
Volume-based discounts:.
Non-Premium Receivers 51 per item when volume is:
750,001 to 12,500,000 items per month 52 ........................................................................................... 0.0017 discount.
more than 12,500,000 items per month 53 ........................................................................................... 0.0019 discount.
Premium Receivers, Level One 54 per item when volume is:
750,001 to 1,500,000 items per month 52 ............................................................................................. 0.0017 discount.
1,500,001 to 2,500,000 items per month 53 .......................................................................................... 0.0017 discount.
2,500,001 to 12,500,000 items per month 53 ........................................................................................ 0.0018 discount.
more than 12,500,000 items per month 53 ........................................................................................... 0.0020 discount.
Premium Receivers, Level Two 55 per item when volume is:
750,001 to 1,500,000 items per month 52 ............................................................................................. 0.0017 discount.
1,500,001 to 2,500,000 items per month 53 .......................................................................................... 0.0017 discount.
2,500,001 to 12,500,000 items per month 53 ........................................................................................ 0.0019 discount.
more than 12,500,000 items per month 53 ........................................................................................... 0.0021 discount.
FedACH Bundled Package Pricing Discount:
Monthly Bundled Service Package Discount 56 ...................................................................................................... 20.00 discount.
Monthly FedACH Risk® Management fees: 57
For up to 5 criteria sets .......................................................................................................................................... 35.00.
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For 6 through 11 criteria sets ................................................................................................................................. 70.00.
For 12 through 23 criteria sets ............................................................................................................................... 125.00.
For 24 through 47 criteria sets ............................................................................................................................... 150.00.
For 48 through 95 criteria sets ............................................................................................................................... 250.00.
42 Customers that use priced FedMail services 43 Federal Reserve Regulatory Service (FRRS) 9–
will be required to purchase the FedMail-FedLine 1558.
Exchange Subscriber 5-pack separately.
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![52920 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
FEDACH SERVICE 2018 FEE SCHEDULE—Continued
[Effective January 2, 2018. Bold indicates changes from 2017 prices.]
Fee
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:
ACH Received Entries Detail—Customer and Depository Financial Institution.
ACH Return Reason Report—Customer and Depository Financial Institution.
ACH Volume Summary by SEC Code—Customer.
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.
Originator Setup.
Report Delivery via FedLine Access Solution.
On Demand Surcharge ................................................................................................................................... 1.00.
Report delivery via FedLine file access solution (monthly fee):
For up to 50 reports ................................................................................................................................. 40.00.
For 51 through 150 reports ...................................................................................................................... 60.00.
For 151 through 500 reports .................................................................................................................... 110.00.
For 501 through 1,000 reports ................................................................................................................. 200.00.
For 1,001 through 1,500 reports .............................................................................................................. 285.00.
For 1,501 through 2,500 reports .............................................................................................................. 460.00.
For 2,501 through 3,500 reports .............................................................................................................. 640.00.
For 3,501 through 4,500 reports .............................................................................................................. 820.00.
For 4,501 through 5,500 reports .............................................................................................................. 995.00.
For 5,501 through 7,000 reports .............................................................................................................. 1,225.00.
For 7,001 through 8,500 reports .............................................................................................................. 1,440.00.
For 8,501 through 10,000 reports ............................................................................................................ 1,650.00.
For more than 10,000 reports .................................................................................................................. 1,800.00.
Premier reports (per report generated): 58
For 1 through 5 reports ............................................................................................................................ 10.00.
For 6 through 10 reports .......................................................................................................................... 6.00.
For 11 or more reports ............................................................................................................................. 1.00.
On Demand Surcharge ............................................................................................................................ 1.00.
ACH Routing Number Activity Report:
For 1 through 5 reports ............................................................................................................................ 10.00.
For 6 through 10 reports .......................................................................................................................... 6.00.
For 11 or more 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 and Discounts:
Monthly fee (per routing number):
FedACH Participation Fee 59 ........................................................................................................................ 65.00.
SameDay Service Origination Participation Fee 60 ......................................................................................... 10.00 surcharge.
FedACH Settlement Fee 61 ............................................................................................................................. 55.00.
FedACH Information File Extract Fee ............................................................................................................. 150.00.
IAT Output File Sort Fee ................................................................................................................................. 75.00.
Fixed Participation Fee—Automated NOCs 62 ................................................................................................ 5.00.
Non-Electronic Input/Output fee 63
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CD/DVD (CD or DVD) ..................................................................................................................................... 50.00.
Paper (file or report) ........................................................................................................................................ 50.00.
Fees and Credits Established by NACHA: 64
NACHA Same Day Entry fee (per item) ......................................................................................................... 0.052.
NACHA Same Day Entry credit (per item) ...................................................................................................... 0.052 (credit).
NACHA Unauthorized Entry fee (per item) ..................................................................................................... 4.50.
NACHA Unauthorized Entry credit (per item) ................................................................................................. 4.50 (credit).
NACHA Admin Network fee (monthly fee per RTN) ....................................................................................... 22.00.
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![Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices 52921
FEDACH SERVICE 2018 FEE SCHEDULE—Continued
[Effective January 2, 2018. Bold indicates changes from 2017 prices.]
Fee
NACHA Admin Network fee (per entry) .......................................................................................................... 0.000185.
FedGlobal® ACH Payments: 65
Fixed Monthly Fee: 66
Monthly origination volume more than 500 items ........................................................................................... 185.00.
Monthly origination volume between 161 and 500 items ............................................................................... 60.00.
Monthly origination volume less than 161 items ............................................................................................. 20.00.
Per-item Origination Fee for Monthly Volume more than 500 Items (surcharge) 67
Canada service ............................................................................................................................................... 0.50.
Mexico service ................................................................................................................................................. 0.55.
Panama service ............................................................................................................................................... 0.60.
Europe service ................................................................................................................................................ 1.13.
Per-item Origination Fee for Monthly Volume between 161 and 500 items (surcharge) 67
Canada service ............................................................................................................................................... 0.75.
Mexico service ................................................................................................................................................. 0.80.
Panama service ............................................................................................................................................... 0.85.
Europe service ................................................................................................................................................ 1.38.
Per-item Origination Fee for Monthly Volume Less than 160 items (surcharge) 67
Canada service ............................................................................................................................................... 1.00.
Mexico service ................................................................................................................................................. 1.05.
Panama service ............................................................................................................................................... 1.10.
Europe service ................................................................................................................................................ 1.63.
Other FedGlobal ACH Payments Fees:
Canada service
Return received from Canada 68 ..................................................................................................................... 0.99 (surcharge).
Trace of item at receiving gateway ................................................................................................................. 5.50.
Trace of item not at receiving gateway ........................................................................................................... 7.00.
Mexico service
Return received from Mexico 68 ...................................................................................................................... 0.91 (surcharge).
Item trace ........................................................................................................................................................ 13.50.
Foreign currency to foreign currency (F3X) item originated to Mexico 67 ...................................................... 0.67 (surcharge).
Panama service
Return received from Panama 68 .................................................................................................................... 1.00 (surcharge).
Item trace ........................................................................................................................................................ 7.00.
NOC ................................................................................................................................................................. 0.72.
Europe service
F3X item originated to Europe 67 .................................................................................................................... 1.25 (surcharge).
Return received from Europe 68 ...................................................................................................................... 1.35 (surcharge).
Item trace ........................................................................................................................................................ 7.00.
59 The fee applies to routing numbers that have
by FedACH receiving points and are available only received or originated FedACH transactions during
44 Any ODFI incurring less than $50 for the to Premium Receivers. a month. Institutions that receive only U.S.
following fees will be charged a variable amount to
51 RDFIs receiving through FedACH less than 90 government transactions or that elect to use a
reach the minimum: Forward value and non-value percent of their FedACH-originated items. private sector operator exclusively are not assessed
52 This per-item discount is a reduction to the the fee.
item origination fees, and FedGlobal ACH
60 This surcharge is assessed to any routing
origination surcharges. standard receipt fees listed in this fee schedule.
45 Any RDFI not originating forward value and 53 Receipt volumes at these levels qualify for a number that originates at least one item meeting the
waterfall discount which includes all FedACH criteria for same day processing and settlement in
non-value items and incurring less than $40 in
receipt items. a given month.
receipt fees will be charged a variable amount to 61 The fee is applied to any routing number with
reach the minimum. Any RDFI that originates 54 RDFIs receiving through FedACH at least 90
forward value and nonvalue items incurring less percent of their FedACH-originated items, but less activity during a month, including routing numbers
than $50 in forward value and nonvalue item than 90 percent of all of their ACH items originated of institutions that elect to use a private-sector
origination fees will only be charged a variable through any operator. operator exclusively but also have items routed to
amount to reach the minimum monthly origination 55 RDFIs receiving through FedACH at least 90
or from customers that access the ACH network
fee. through FedACH. This fee does not apply to routing
percent of all of their ACH items originated through numbers that use the Reserve Banks for only U.S.
46 This surcharge is assessed on all forward items any operator. government transactions.
that qualify for same day processing and settlement 56 To qualify for the discount, a financial
62 Fee will be assessed only when automated
and is incremental to the standard origination item institution must meet all of the following criteria in NOCs are generated.
fee. a given month: (1) Be charged the minimum 63 Limited services are offered in contingency
47 The fee includes the item and addenda fees in
monthly fee—forward origination (57208); (2) situations.
addition to the conversion fee. subscribe to FedLine Web Plus or any higher 64 The fees and credits listed are collected from
sradovich on DSK3GMQ082PROD with NOTICES
48 The fee includes the item and addenda fees in FedLine® access solution; and (3) subscribe to the the ODFI and credited to NACHA (admin network)
addition to the conversion fee. Reserve Banks also FedPayments Reporter service, the FedACH RDFI or to the RDFI (same day entry and unauthorized
assess a $30 fee for every government paper return/ Alert service, or the FedACH Risk Origination entry) in accordance with the ACH Rules.
NOC they process. Monitoring service. 65 The international fees and surcharges vary from
49 Origination volumes at these levels qualify for 57 Criteria may be set for both the Origination
country to country as these are negotiated with each
a waterfall discount which includes all FedACH Monitoring Service and the RDFI Alert Service. international gateway operator.
origination items. Subscribers with no criteria set up will be assessed 66 A single monthly fee based on total FedGlobal
50 Origination discounts based on monthly billed the $35 monthly package fee. ACH Payments origination volume.
receipt volume apply only to those items received 58 Premier reports generated on demand are
Continued
subject to the package/tiered fees plus a surcharge.
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![52922 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES 2018 FEE SCHEDULE
[Effective January 2, 2018. Bold indicates changes from 2017 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 .................................................................................................................................................................................... 0.820.
additional transfers up to 90,000 per month ............................................................................................................................ 0.245.
every transfer over 90,000 per month .................................................................................................................................. 0.160.
Volume-based transfer fee with the incentive discount (originations and receipts)—per eligible transfer for: 69
the first 14,000 transfers per month ......................................................................................................................................... 0.164.
additional transfers up to 90,000 per month ............................................................................................................................ 0.049.
every transfer over 90,000 per month .................................................................................................................................. 0.032.
Surcharge for Off-line Transfers (Originations and Receipts) ......................................................................................................... 60.00.
Surcharge for End-of-Day Transfer Originations 70 ......................................................................................................................... 0.26.
Monthly FedPayments Manager import/export fee 71 ..................................................................................................................... 50.00.
Surcharge for high-value payments:
>$10 million .............................................................................................................................................................................. 0.14.
>$100 million ............................................................................................................................................................................ 0.36.
Surcharge for Payment Notification:
Origination Surcharge 72 ........................................................................................................................................................ 0.01.
Receipt Volume 72 73 ................................................................................................................................................................. N/A.
Delivery of Reports—Hard Copy Reports to On-Line Customers ........................................................................................... 50.00.
Special Settlement Arrangements (charge per settlement day)74 ........................................................................................... 150.00.
National Settlement Service
Basic:
Settlement Entry Fee ................................................................................................................................................................ 1.50.
Settlement File Fee .................................................................................................................................................................. 30.00.
Surcharge for Off-line File Origination 75 .................................................................................................................................. 45.00.
Minimum Monthly Fee 76 .......................................................................................................................................................... 60.00.
FEDWIRE SECURITIES SERVICE 2018 FEE SCHEDULE (NON-TREASURY SECURITIES)
[Effective January 2, 2018. Bold indicates changes from 2017 prices.]
Fee
Basic Transfer Fee:
Transfer or reversal originated or received .............................................................................................................................. $0.77
Surcharge: 77
Offline origination & receipt surcharge ..................................................................................................................................... 80.00
Monthly Maintenance Fees:
Account maintenance (per account) ........................................................................................................................................ 57.50
Issues maintained (per issue/per account) .............................................................................................................................. 0.77
Claim Adjustment Fee 78 .......................................................................................................................................................... 0.80
GNMA Serial Note Stripping or Reconstitution Fee 79 ............................................................................................................. 9.00
Joint Custody Origination Surcharge 80 .................................................................................................................................... 46.00
Delivery of Reports—Hard Copy Reports to On-Line Customers ........................................................................................... 50.00
67 This per-item surcharge is in addition to the The applicable incentive discounts are as follows: 74 This charge is assessed to settlement
standard domestic origination fees listed in this fee $0.656 for transfers up to 14,000; $0.196 for arrangements that use the Fedwire Funds Service to
schedule. transfers 14,001 to 90,000; and $0.128 for transfers effect the settlement of interbank obligations (as
68 This per-item surcharge is in addition to the over 90,000. opposed to those that use the National Settlement
70 This surcharge applies to originators of
standard domestic receipt fees listed in this fee Service). With respect to such special settlement
schedule. transfers that are processed by the Reserve Banks arrangements, other charges may be assessed for
69 The incentive discounts apply to the volume after 5:00 p.m. eastern time.
each funds transfer into or out of the accounts used
71 This fee is charged to any Fedwire Funds
that exceeds 60 percent of a customer’s historic
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in connection with such arrangements.
benchmark volume. Historic benchmark volume is participant that originates a transfer message via the 75 Offline files will be accepted only on an
based on a customer’s average daily activity over FedPayments Manager (FPM) Funds tool and has
the import/export processing option setting active exception basis when a settlement agent’s primary
the previous five calendar years. If a customer has
at any point during the month. and backup means of transmitting settlement files
fewer than five full calendar years of previous
activity, its historic benchmark volume is based on 72 Payment Notification and End-of-Day are both unavailable.
76 Any settlement arrangement that accrues less
its daily activity for as many full calendar years of Origination surcharges apply to each Fedwire funds
data as are available. If a customer has less than one transfer message. than $60 of charges during a calendar month will
year of past activity, then the customer qualifies 73 Provided on billing statement for informational be assessed a variable amount to reach the
automatically for incentive discounts for the year. purposes only. minimum monthly fee.
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![Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices 52923
FEDLINE 2018 FEE SCHEDULE
[Effective January 2, 2018. Bold indicates changes from 2017 prices.]
Fee
FedComplete Packages (monthly) 81 82 83
FedComplete 100A Plus .............................................................................................................................................. $825.00.
includes:
FedLine Advantage Plus package.
FedLine subscriber 5-pack.
7,500 FedForward transactions.
46 FedForward Cash Letter items.
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.
100 FedACH Same-Day origination items.
FedACH account servicing.
FedACH settlement.
FedACH Same-Day origination participation fee.
FedComplete 100A Premier ........................................................................................................................................ $900.00.
includes:
FedLine Advantage Premier package.
Volumes included in the FedComplete 100A Plus package.
FedComplete 100C Plus .............................................................................................................................................. $1,375.00.
includes:
FedLine Command Plus package.
Volumes included in the FedComplete 100A Plus package.
FedComplete 200A Plus ................................................................................................................................................ $1,350.00.
includes:
FedLine Advantage Plus package.
FedLine subscriber 5-pack.
25,000 FedForward transactions.
46 FedForward Cash Letter items.
225 FedReturn transactions.
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.
200 FedACH Same-Day origination items.
FedACH account servicing.
FedACH settlement.
FedACH Same-Day origination participation fee.
FedComplete 200A Premier .......................................................................................................................................... $1,425.00.
includes:
FedLine Advantage Premier package.
Volumes included in the FedComplete 200A Plus package.
FedComplete 200C Plus .............................................................................................................................................. $1,900.00.
includes:
sradovich on DSK3GMQ082PROD with NOTICES
FedLine Command Plus package.
Volumes included in the FedComplete 200A Plus package.
77 This surcharge is set by the Federal Reserve 79 This fee is set by and remitted to the
Banks. It is in addition to any basic transfer or Government National Mortgage Association
reversal fee. (GNMA).
78 The Federal Reserve Banks offer an automated 80 The Federal Reserve Banks charge participants
claim adjustment process only for Agency a Joint Custody Origination Surcharge for both
mortgage-backed securities. Agency and Treasury securities.
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![52924 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
FEDLINE 2018 FEE SCHEDULE—Continued
[Effective January 2, 2018. Bold indicates changes from 2017 prices.]
Fee
FedComplete Excess Volume and Receipt Surcharge:84
FedForward ........................................................................................................................................................... $0.037/item.
FedReturn .............................................................................................................................................................. $0.8200/item.
FedReceipt ............................................................................................................................................................ $0.00005/item.
Fedwire Funds Origination .................................................................................................................................. $0.8200/item.
Fedwire Funds Receipt ........................................................................................................................................ $0.082/item.
FedACH Origination ............................................................................................................................................. $0.0035/item.
FedACH Receipt ................................................................................................................................................... $0.00035/item.
FedComplete credit adjustment ..................................................................................................................................... various.
FedComplete debit adjustment ...................................................................................................................................... various.
FedLine Customer Access Solutions (monthly)
FedMail 85 ....................................................................................................................................................................... $85.00.
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 Exchange 85 ..................................................................................................................................................... $40.00.
includes:
E-Payments Routing Directory (manual download).
FedLine Exchange Premier.85 $125.00.
includes:
FedLine Exchange package.
E-Payments Routing Directory (auto download).
FedLine Web 86 .............................................................................................................................................................. $110.00.
includes:
FedLine Web access channel.
Services included in the FedLine Exchange package.
Check FedForward, FedReturn and FedReceipt services.
Check Adjustments.
FedACH Information Services & Derived Returns/NOCs.
FedACH Risk Services (includes RDFI Alert and Returns Reporting).
FedCash® Services.
Service Charge Information.
FedLine Web Plus 86 ...................................................................................................................................................... $160.00.
includes:
FedLine Web 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)).
E-Payments Routing Directory (auto download).
FedLine Advantage 86 .................................................................................................................................................. $415.00.
includes:
FedLine Advantage access channel.
One VPN device.
Services included in the FedLine Web package.
FedACH transactions.
Fedwire Funds transactions.
Fedwire Securities transactions.
National Settlement Service transactions.
Check Large Dollar Return.
Check FedImage Services.
sradovich on DSK3GMQ082PROD with NOTICES
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 86 ......................................................................................................................................... $460.00.
includes:
FedLine Advantage package.
One VPN device.
FedACH Risk Origination Monitoring Service.
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![Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices 52925
FEDLINE 2018 FEE SCHEDULE—Continued
[Effective January 2, 2018. Bold indicates changes from 2017 prices.]
Fee
FedACH FedPayments Reporter Service.
Fedwire Funds FedPayments Manager Import/Export (less than 250 Fedwire transactions and one routing
number per month).
FedTransaction Analyzer® (less than 250 Fedwire transactions and one routing number per month).
E-Payments Routing Directory (auto download).
FedLine Advantage Premier 85 ................................................................................................................................... $570.00.
includes:
FedLine Advantage Plus package.
Two VPN devices.
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 .............................................................................................................................................. $1,035.00.
includes:
FedLine Command access channel.
Services included in the FedLine Advantage Plus package.
One VPN device.
Two FedLine Command server certificates.
Fedwire Statement Services.
Fedwire Funds FedPayments Manager Import/Export.
FedTransaction Analyzer.
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 ..................................................................................................................................................... $3,650.00.
includes:
FedLine Direct access channel.
One VPN device.
256K Dedicated WAN Connection.
Services included in the FedLine Command Plus package.
Two FedLine Direct server certificates.
Treasury Check Information System (TCIS).
FedLine Direct Premier ............................................................................................................................................... $6,800.00.
includes:
FedLine Direct Plus package.
T1 dedicated WAN connection.
Two VPN devices.
A la carte options (monthly) 87
Electronic Access:
FedMail—FedLine Exchange Subscriber 5-pack ................................................................................................... $15.00.
FedLine Subscriber 5-pack (access to Web and Advantage) ............................................................................... $80.00.
Additional FedLine Command Certificate 88 ........................................................................................................... $100.00.
Additional FedLine Direct Certificate 89 .................................................................................................................. $100.00.
Additional VPNs 90 .................................................................................................................................................. $100.00.
Additional dedicated connections.
256K ................................................................................................................................................................ $2,500.00.
T1 .................................................................................................................................................................... $3,200.00.
FedLine International Setup (one-time fee) ........................................................................................................... $5,000.00.
FedLine Custom Implementation Fee 91 ................................................................................................................ various.
Network Diversity .................................................................................................................................................... $2,000.00.
FedLine Direct Contingency Solution ..................................................................................................................... $1,000.00.
Check 21 Large File Delivery 92 ............................................................................................................................. various.
FedMail Email (for FedLine customers) ................................................................................................................. $20.00.
FedMail Fax ............................................................................................................................................................ $100.00.
VPN Device Modification ........................................................................................................................................ $200.00.
VPN Device Missed Activation Appointment ......................................................................................................... $175.00.
VPN Device Expedited Hardware Surcharge ........................................................................................................ $100.00.
VPN Device Replacement or Move ....................................................................................................................... $300.00.
E-Payments Automated Download (1–5 Add’l Codes) .......................................................................................... $75.
E-Payments Automated Download (6–20 Add’l Codes) ........................................................................................ $150.
sradovich on DSK3GMQ082PROD with NOTICES
E-Payments Automated Download (21–50 Add’l Codes) ...................................................................................... $300.
E-Payments Automated Download (51–100 Add’l Codes) .................................................................................... $500.
E-Payments Automated Download (101–250 Add’l Codes) .................................................................................. $1,000.
E-Payments Automated Download (>250 Add’l Codes) ........................................................................................ $2,000.
Electronic Access Training:
Learning Center ...................................................................................................................................................... complimentary.
Certificate Retrieval Download Tutorial .................................................................................................................. complimentary.
Accounting Information Services:
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![52926 Federal Register / Vol. 82, No. 219 / Wednesday, November 15, 2017 / Notices
FEDLINE 2018 FEE SCHEDULE—Continued
[Effective January 2, 2018. Bold indicates changes from 2017 prices.]
Fee
Cash Management System (CMS) Plus—Own report—up to six files with: 93
no respondent/sub-account activity ................................................................................................................. $60.00.
less than 10 respondent and/or sub-accounts ................................................................................................ $125.00.
10–50 respondent and/or sub-accounts ......................................................................................................... $250.00.
51–100 respondents and/or sub-accounts ...................................................................................................... $500.00.
101–500 respondents and/or sub-accounts .................................................................................................... $750.00.
>500 respondents and/or sub-accounts .......................................................................................................... $1,000.00.
End-of-Day Financial Institution Reconcilement Data File 94 ................................................................................. $150.00.
Statement of Account Spreadsheet File 95 ............................................................................................................. $150.00.
Intra-day Download Search File (with AMI) 96 ........................................................................................................ $150.00.
ACTS Report: 97
<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.
Vendor Pass-Through Fee ..................................................................................................................................... various.
Electronic Access Credit Adjustment ..................................................................................................................... various.
Electronic Access Debit Adjustment ...................................................................................................................... various.
Legacy Software Fee 98 .......................................................................................................................................... various.
By order of the Board of Governors of the inspection at the Federal Reserve Bank
Federal Reserve System, November 6, 2017. indicated. The applications will also be
81 FedComplete packages are all-electronic Margaret McCloskey Shanks, available for inspection at the offices of
service options that bundle payment services with Deputy Secretary of the Board.
an access solution for one monthly fee.
the Board of Governors. Interested
82 Packages with an ‘A’ include the FedLine [FR Doc. 2017–24736 Filed 11–14–17; 8:45 am] persons may express their views in
Advantage channel, while packages with ‘C’ BILLING CODE 6210–01–P writing on the standards enumerated in
include the FedLine Command channel. the BHC Act (12 U.S.C. 1842(c)). If the
83 FedComplete customers that use the email
service would be charged the FedMail Email a la proposal also involves the acquisition of
carte fee and for all FedMail-FedLine Exchange FEDERAL RESERVE SYSTEM a nonbanking company, the review also
Subscriber 5-packs. includes whether the acquisition of the
84 Per-item surcharges are in addition to the Formations of, Acquisitions by, and
standard fees listed in the applicable priced Mergers of Bank Holding Companies nonbanking company complies with the
services fee schedules. standards in section 4 of the BHC Act
85 FedMail and FedLine Exchange packages do The companies listed in this notice (12 U.S.C. 1843). Unless otherwise
not include user credentials, which are required to have applied to the Board for approval, noted, nonbanking activities will be
access priced services and certain informational pursuant to the Bank Holding Company
services. Credentials are sold separately in packs of conducted throughout the United States.
five via the FedMail-FedLine Exchange Subscriber Act of 1956 (12 U.S.C. 1841 et seq.)
Unless otherwise noted, comments
5-pack. (BHC Act), Regulation Y (12 CFR part
86 FedLine Web and Advantage packages do not
225), and all other applicable statutes regarding each of these applications
include user credentials, which are required to and regulations to become a bank must be received at the Reserve Bank
access priced services and certain informational indicated or the offices of the Board of
services. Credentials are sold separately in packs of holding company and/or to acquire the
five via the FedLine Subscriber 5-pack. assets or the ownership of, control of, or Governors not later than December 12,
87 These add-on services can be purchased only
the power to vote shares of a bank or 2017.
with a FedLine Customer Access Service option. bank holding company and all of the
88 Additional FedLine Command Certificates
A. Federal Reserve Bank of San
available for FedLine Command and Direct banks and nonbanking companies Francisco (Gerald C. Tsai, Director,
packages only. owned by the bank holding company, Applications and Enforcement) 101
89 Additional FedLine Direct Certificates available including the companies listed below. Market Street, San Francisco, California
for FedLine Direct packages only. The applications listed below, as well
90 Additional VPNs are available for FedLine
94105–1579:
as other related filings required by the
Advantage, FedLine Command, and FedLine Direct
Board, are available for immediate 1. Savi Financial Corporation, Inc.; to
packages only. become a bank holding company by
91 The FedLine Custom Implementation Fee is
$2,500 or $5,000 based on the complexity of the Advantage Plus, and Premier packages. It is acquiring 100 percent of the voting
setup. available for no extra fee in FedLine Command Plus shares of SaviBank, both of Burlington,
92 The fee ranges from $1,400 to $20,725 and Direct packages. Washington.
depending on the size, speed, and location of the 96 The Intra-day Download Search File option is
connection. available for the FedLine Web Plus package. It is Board of Governors of the Federal Reserve
sradovich on DSK3GMQ082PROD with NOTICES
93 Cash Management Service options are limited available for no extra fee in FedLine Advantage and System, November 9, 2017.
to plus and premier packages. higher packages.
94 The End of Day Reconcilement File option is 97 ACT Report options are limited to FedLine
Yao-Chin Chao,
available for FedLine Web Plus, FedLine Advantage Command Plus, FedLine Direct Plus, and FedLine Assistant Secretary of the Board.
Plus, and Premier packages. It is available for no Direct Premier packages. [FR Doc. 2017–24740 Filed 11–14–17; 8:45 am]
extra fee in FedLine Command Plus and Direct 98 The fee will vary based on the number of
packages. BILLING CODE P
customers remaining on the legacy system, up to
95 The Statement of Account Spreadsheet File $80,000/month through 3/31/18 and up to
option is available for FedLine Web Plus, FedLine $150,000/month thereafter.
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Document Created: 2018-10-25 10:37:03
Document Modified: 2018-10-25 10:37:03
| 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 2, 2018. | |
| Contact | For questions regarding the fee schedules: David C. Mills, Deputy Associate Director, (202) 530-6265; Emily Massaro, Financial Services Analyst, (202) 452-2493, Division of Reserve Bank Operations and Payment Systems. For questions regarding the PSAF: Lawrence Mize, Deputy Associate Director, (202) 452-5232; Max Sinthorntham, Senior Financial Analyst, (202) 452-2864, 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 2018 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 | 82 FR 52906 |
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