[Federal Register Volume 61, Number 223 (Monday, November 18, 1996)]
[Notices]
[Pages 58691-58692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29289]
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FEDERAL RESERVE SYSTEM
[Docket No. R-0937]
Federal Reserve Payment System Risk Policy; Modified Procedures
for Measuring Daylight Overdrafts
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Policy Statement.
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SUMMARY: The Board has adopted changes to the procedures for measuring
daylight overdrafts. Posting times for Treasury investments resulting
from electronic federal tax payments have been added to these
procedures.
EFFECTIVE DATE: November 18, 1996.
FOR FURTHER INFORMATION CONTACT: Paul Bettge, Manager (202/452-3174),
Heidi Richards, Senior Financial Services Analyst (202/452-2598),
Division of Reserve Bank Operations and Payment Systems; for the
hearing impaired only: Telecommunications Device for the Deaf, Dorothea
Thompson (202/452-3544).
SUPPLEMENTARY INFORMATION:
Background
The U.S. Department of the Treasury is currently implementing the
Electronic Federal Tax Payment System (EFTPS) to facilitate electronic
payment of taxes. The transition of taxpayers who are currently
required to pay taxes electronically to the new EFTPS system is
expected to occur over the next several months.
Most tax payments processed through the EFTPS are expected to be
settled through the Automated Clearinghouse (ACH). ACH tax payments
processed through the EFTPS will be reinvested each day through the
Federal Reserve's Treasury Tax and Loan (TT&L) system into depository
institutions' TT&L accounts.1 Those banks choosing to receive
Treasury funds as note option banks will receive EFTPS investments,
which are TT&L credits to their Federal Reserve accounts for the amount
of tax payments settled via ACH on a given day. Banks that do not
choose to hold Treasury investments (remittance option and non-TT&L
depository institutions) will not receive EFTPS investments. EFTPS
investments provide a means for the Treasury Department to invest tax
payments remitted to the Treasury electronically which, under the
traditional paper-based tax payment system, would have been retained by
depository institutions and credited to their TT&L accounts.
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\1\ See Department of the Treasury, ``Treasury Tax and Loan
Depositaries and Payment of Federal Taxes; Proposed Rule,'' 61 FR
51185-51194, September 30, 1996.
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The Board's initial policy statement aimed at controlling daylight
overdrafts became effective in 1986 (50 FR 21120, May 22, 1985). The
Board's Policy Statement on Payments System Risk establishes maximum
limits (caps) and fees on daylight overdrafts in accounts of depository
institutions at Federal Reserve Banks. Daylight overdrafts are measured
according to a set of ``posting rules'' established by the Board, which
comprise a schedule for the posting of debits and credits to
institutions' Federal Reserve accounts for different types of
payments.2 Currently, EFTPS investments are not explicitly
included in this schedule, and thus would be posted after the close of
the Fedwire Funds Transfer System (6:30 p.m. Eastern Time) unless the
Board determined otherwise.3
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\2\ See ``Federal Reserve Policy Statement on Payments System
Risk,'' section I.A.
\3\ Treasury investments for which advance notice is given are
posted to depository institutions' accounts at the opening of the
Fedwire Funds Transfer System (currently 8:30 a.m. Eastern Time),
while same-day investments are posted as soon as they are processed,
but by no later than 1:00 p.m.
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Analysis of Daylight Overdraft Posting Times
The Board reviewed potential daylight overdraft posting times for
EFTPS investments in light of its original objectives in designing the
posting rules. These objectives included reducing intraday float,
permitting straightforward monitoring and control of institutions' cash
balances during the day, and reflecting the legal rights and
obligations of parties to payments.
Posting time options for EFTPS investments considered by the Board
included (all times are Eastern Time): (1) post all EFTPS investments
at the opening of the Fedwire Funds Transfer System (currently 8:30
a.m.); (2) post EFTPS investments resulting from ACH credit tax
payments at the opening of the Fedwire Funds Transfer System and those
from ACH debit tax payments at 11:00 a.m.; (3) post all EFTPS
investments at 11:00 a.m.; and (4) post all EFTPS investments at 1:00
p.m.
The Board has determined that the second option is most consistent
with its objectives in establishing the daylight overdraft posting
rules. This option would synchronize the EFTPS investments with the
posting of the corresponding ACH tax payments (currently 8:30 a.m. for
ACH credit originations and 11:00 a.m. for ACH debit
originations).4 The impact of the EFTPS payments on the intraday
Federal Reserve account balances and daylight overdrafts of depository
institutions would be minimized, without creating intraday float or
compromising the ability of institutions to monitor and control their
account balances.
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\4\ Posting times for payments currently posted at the opening
of the Fedwire Funds Transfer System may require modification when
this opening time is moved to 12:30 a.m. Eastern Time in 1997.
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Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
ch. 3506; 5 CFR 1320 Appendix A.1), the Board reviewed the policy
statement under the authority delegated to the Board by the Office of
Management and Budget. No collections of information pursuant to the
Paperwork Reduction Act are contained in the policy statement.
Policy Statement on Payments System Risk
The ``Federal Reserve Policy Statement on Payments System Risk,''
section I.A., under the heading ``Modified Procedures for Measuring
Daylight Overdrafts'' (57 FR 47104, October 14, 1992) is amended as
follows:
Opening Balance (Previous Day's Closing Balance)
Post at the Opening of Fedwire Funds Transfer System:
+/-Government and commercial ACH credit transactions.
+Treasury Electronic Federal Tax Payment System (EFTPS) investments
from ACH credit transactions.
+Advance-notice Treasury investments.
[[Page 58692]]
+Treasury state and local government series (SLGs) interest and
redemption payments.
+Treasury checks, postal money orders, local Federal Reserve Bank
checks, EZ-Clear savings bond redemptions in separately sorted
deposits.
* * * * *
Post at 11:00 a.m. Eastern Time:
+/-ACH debit transaction.
+EFTPS investments from ACH debit transactions
* * * * *
By order of the Board of Governors of the Federal Reserve
System, November 8, 1996.
Barbara R. Lowrey,
Associate Secretary of the Board.
[FR Doc. 96-29289 Filed 11-15-96; 8:45 am]
BILLING CODE 6210-01-P
