Payments System Risk
January 8, 1998
Circular No. 11015
Changes to the "Guide to the Federal Reserve's Payments System Risk Policy" and A Change in the Posting Rules for Local Federal Funds Checks

To All Depository Institutions in the Second Federal Reserve District:

The Board of Governors of the Federal Reserve System has approved changes to the Guide to the Federal Reserve's Payments System Risk Policy (the "Guide"). Subsequently, the Board modified the daylight overdraft posting rules to accommodate an earlier presentment deadline for local Federal Funds checks. The Board's official notice of the changes to the posting rules, as published in the Federal Register is available as a file (pdf - 21kb). They will be reflected in a future update of the Guide.

Highlights of Changes to the Guide:

  • New Account Structure: Changes were made to reflect the new account structure that is being implemented to support Interstate Branch Banking. Beginning on January 2, 1998, each chartered institution is allowed, after a permissible transition period, to maintain only one Federal Reserve Bank account, known as a master account. Multiple subaccounts may be established within the master account.

    U.S. branches and agencies of foreign banks and Edge Act and agreement corporations are permitted multiple master accounts by regulation. Under recent amendments to Regulation D, however, such institutions have the option of consolidating accounts.

  • Clarification of Posting Time: All posting times previously referenced in the Guide as the opening of Fedwire are now expressed as 8:30 a.m. Eastern Time. This change in wording is necessary because Fedwire now opens at 12:30 a.m. Eastern Time.
  • Fedwire Third-Party Access Policy:Several requirements previously applicable to all Fedwire third-party access providers are now limited to non-affiliate arrangements. In addition, the policy now states that service providers can be located outside the United States, subject to certain additional conditions.

Summary of Change in the Posting Rules for Local Federal Funds Checks:

The deadline for the presentment of checks drawn against accounts at the local Federal Reserve Bank to be posted to an account and available on the same business day has been changed to 3:00 p.m. Eastern Time from 4:00 p.m. Eastern Time. This change was made to encourage the use of more efficient payment mechanisms. The revised nationwide presentment and posting times for Federal Funds checks are as follows:

Presentment Time Posting Time
Before 3:00 p.m. Eastern Time 5:00 p.m. Eastern Time
After 3:00 p.m. Eastern Time but
before 3:00 p.m. local time
After the close of Fedwire
funds transfer system
After 3:00 p.m. local time 8:30 a.m. next business day

If you would like to receive a copy of the updated Guide or have any questions regarding the Guide, please contact Lorry Prentis, Credit and Risk Management Officer.