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Check/Check 21 Services

Federal Reserve Banks announce changes to Check Adjustment case requirements and edits

February 15, 2017

The Federal Reserve Banks are planning changes in the second quarter of 2017 to Check Adjustment requirements and edits to eliminate several investigation types (ITYPs) and two message types (MTYPs) that are outdated and have minimal usage. In addition, there will be a new deadline for receiving same day entry or same day acknowledgement for electronic adjustments submitted via the FedLine Web® and FedLine Advantage® access solutions.

The effective date for these changes will be announced in the first quarter of 2017, and the changes will be reflected in the online Check Adjustments Quick Reference Guide on their effective dates.

What does this mean to you?

  • The 11 ITYPs, listed below, will be retired. If a retired ITYP is received in an electronic adjustment file, the individual message will reject, allowing the message to be corrected from the Outbox-Unsent/Rejects feature in the Check Adjustments application. FedLine® messages for retired ITYPs will remain viewable after the effective date, but no new cases can be sent to or from the Federal Reserve Banks.
    • Advice Request (AREQ)
    • Enclosed Not Listed (ENL)
    • Expedited Recredit (EXRC)
    • Extra Bundle (EBDL)
    • Extra Cash Letter (ECL)
    • Extra Cash Letter Credit (ECLC)
    • Free Item (FREE)
    • Incorrect Cash Letter Credit (ICLC)
    • Late Cash Letter Credit (LCLC)
    • Listing Error (LST)
    • Missing Bundle (MBDL)
  • Two MTYPs, Status Inquiry (CA4000) and Status Inquiry Response (CA6000), will be retired. If a file containing a message with a retired MTYP is uploaded using a FedLine access solution, the file will upload successfully and the message(s) with the retired MTYP(s) will be rejected. The Check Adjustments Automated Status Report (PDF) will continue to be available as a menu option under the Import/Export feature in the Check Adjustments application. This report identifies the status of cases pending with the Federal Reserve Banks.
  • Documents-to-follow (DTFs) will become Not Allowed for the Encoding Error (ENC) ITYP.
  • The deadline for Check Adjustments to be submitted to the Federal Reserve Banks and receive same day entry or acknowledgement will change to 5 p.m. ET.
  • A table describing all the changes above and additional changes to various edit routines is available on the second page of the customer announcement (PDF).

An updated Check Adjustments Application File Specifications Requirements document (PDF) reflecting these changes will be posted on FRBServices.org for customers submitting adjustment requests using the file upload process in a FedLine access solution.

Contact FedACH® and Check Customer Support at (877) 372-2457 with any questions as well as to schedule testing for upload files.

Announcement

The Federal Reserve Banks are planning changes in the second quarter of 2017 to Check Adjustment requirements and edits to eliminate several investigation types (ITYPs) and two message types (MTYPs) that are outdated and have minimal usage. A table describing the changes is available on the second page of the customer announcement (PDF).

 

Check Adjustments Tip: Determining when to use the Non-Cash Item or Not Our Item investigation types

February 15, 2017

In 2016, the Federal Reserve Banks shared a series of tips (PDF) on Check Adjustments. These tips were designed to increase efficiency with using the Check Adjustments application in FedLine® access solutions. This year, we are excited to continue with a series of Check Adjustments tips that will include investigation types (ITYPs). Tip Sheet #5 (PDF) will assist you in determining when to submit a Non-Cash Item (NCH) vs. a Not Our Item (NOI). Refer to the Check Adjustments Quick Reference Guide for detailed information on the reporting time frames and Federal Reserve Bank action for each ITYP.

Please Contact ACH and Check Services Customer Support at (877) 372-2457 if you have any questions.

 

FedACH® Services

Phase 2 of the NACHA Same Day ACH Rules change becomes effective September 15, 2017

February 15, 2017

Did you know that Phase 2 of the NACHA Same Day ACH Rules change becomes effective September 15, 2017?

There are three phases to the Same Day ACH implementation schedule. One phase has passed and two are yet to come. The basic differences between the phases are as follows:

  • Phase 1 - September 23, 2016, implementation date - includes credits only with funds availability at the end of the receiving depository financial institution’s (RDFI’s) processing day
  • Phase 2 - September 15, 2017, implementation date - includes both credits and debits with funds availability at the end of the RDFI's processing day
  • Phase 3 - March 16, 2018, implementation date - includes both credits and debits with funds availability required by RDFI at 5 p.m. local time

According to the NACHA description (Off-site Link) of the Phase 2 change, “New capabilities of Same Day ACH become effective over phases to allow financial institutions and businesses to acclimate to a faster processing environment, as well as to ease the implementation effort. Beginning September 15, 2017, Same Day ACH will be available for debit entries, enabling the same-day processing of virtually any ACH payment.”

A variety of resources are available to help you stay informed about the upcoming changes:

As always, your account executive is available to answer questions. Find contact information with the My FedDirectory® tool.

Announcement

Phase 2 of the NACHA Same Day ACH Rules change becomes effective September 15, 2017. A variety of resources are available to help you stay informed about the upcoming changes. As always, your account executive is available to answer questions. Find contact information with the My FedDirectory® tool.

 

Remember to keep FedACH contact information current

February 15, 2017

Automated Clearing House (ACH) originators often reference the Federal Reserve Banks’ E-Payments Routing Directory and/or the Composite Receiver File (CRF) to determine if a receiving depository financial institution (RDFI) is a FedACH® Services participant before sending an item. These important resources contain the name, published phone number and location (city, state) for each receiving institution.

Your institution’s profile in the FedLine Web® access solution is equally important. Your profile contains staff contact information that FedACH Services operations staff will need if contacting you about an issue with a file originated by your institution. Your profile contains information you submitted in Table S.4 of the FedACH Participation Agreement.

Step one: Verify
Check to see what public information is listed for your institution in the FedACH Participant RDFI section of the E-Payments Routing Directory. Is it current?

Also, use the Display My Profile menu in the FedACH application within the FedLine Web access solution to view the non-public information that FedACH operations uses to contact your staff. Is it current?

Step two: Update
Follow these steps if you need to update either of these references:

  • For the E-Payments Routing Directory information, which is a feed from the information collected for the Composite Receiver File (CRF), you should submit a new Part 1 (PDF), Agreement to Terms and General Participant Information, of the FedACH Participation Agreement.
  • For your Customer Profile in the FedLine Web access solution, you should submit a new Table S.4 (PDF), Sending Point Contact Form, of the FedACH Participant Agreement.

Questions
If you have questions, please contact FedACH and Check Customer Support at (877) 372-2457.

Announcement

Check to see what public information is listed for your institution in the FedACH Participant RDFI section of the E-Payments Routing Directory. Also, use the Display My Profile menu in the FedACH application within the FedLine Web access solution to view the non-public information that FedACH operations uses to contact your staff. If you have questions, please contact FedACH and Check Customer Support at (877) 372-2457.

 

FedCash® Services

Effective immediately: Revisions to contaminated currency guidance

February 15, 2017

In response to customer feedback, the Federal Reserve updated its procedures for submitting deposits of contaminated currency. The updated procedures are available on the Contaminated Currency and Coin page. In addition, the FedCash® Services Contaminated Currency Notification Form (CASH-04) and Deposit Visual Reference Guide were updated to reflect the changes.

Effective immediately, FedCash customers and contracted agencies that prepare their deposits for shipment to the Federal Reserve must adhere to the revised procedures and use the updated form to notify the Fed before delivering contaminated currency.

Procedure changes include:

  • Clarification on the definition of contaminated currency
  • Elimination of office-specific procedures to improve consistency across the Federal Reserve
  • Clarification of bag, strap and fanning requirements to enhance the verification process

Form changes include:

  • Instructions to highlight health and safety concerns when handling contaminated currency
  • Updated definitions and deposit detail fields in Section 1

The Federal Reserve is also updating the packaging tutorial video, and we will notify you when it is available on the Contaminated Currency and Coin page.

If you have questions, please contact your local FedCash Services District Contacts.

Announcement

In response to customer feedback, the Federal Reserve updated its procedures for submitting deposits of contaminated currency. The updated procedures are available on the Contaminated Currency and Coin page. If you have questions, please contact your local FedCash Services District Contacts.

 

Fedwire® Services

Fedwire Securities Service to enhance Automated Claim Adjustment Process in 2018

February 15, 2017

The Fedwire Securities Service currently offers the capability to automate fail, interim accounting and repo-related “adjustments” to principal and interest (P&I) payments between participants through an Automated Claim Adjustment Process (ACAP) for mortgage-backed securities issued or guaranteed by government agencies and government-sponsored enterprises (Agency MBS). A claim adjustment is a transfer of funds from one Fedwire Securities Service participant to another participant. Using ACAP can eliminate a cumbersome manual process for tracking, calculating and clearing claim adjustments between participants. The ACAP Product Sheet (PDF) provides an overview of ACAP functionality and a list of ACAP-related Fedwire Securities Service Clearing Memos.

The Federal Reserve Banks will enhance ACAP in 2018 by providing additional tracking capabilities and aligning more closely the timing of effecting claim adjustments between participants to the time at which P&I payments are made to participants. The following outlines the planned enhancements to ACAP, the expected impact of those enhancements on customers and the schedule targeted for implementing the enhancements.

ACAP enhancements:

  1. Add new security types: Expand ACAP to additional types of Fedwire securities, including marketable securities issued by the U.S. Department of the Treasury and debt securities issued by other government agencies, government-sponsored enterprises and international organizations over the Fedwire Securities Service.
  2. Add a new claim type: Expand ACAP to include securities lending tracking.
  3. The following table reflects security types and claim types that will be tracked by ACAP once these two enhancements are made:

    Claim TypeSecurity Type
     TreasuryNon-Treasury DebtAgency MBS
    Fail New New Existing ACAP functionality
    Interim Accounting n/a n/a Existing ACAP functionality
    Repo New New Existing ACAP functionality
    Securities Lending New New New
  4. Improve the timing of effecting claim adjustment debits and credits: As a result of a claim adjustment made by ACAP, the master account of one participant will be debited for the amount of the claim, while the participant counterparty’s master account will be credited for the same amount. Currently, the Federal Reserve Banks make claim adjustments between participants at approximately 4:30 p.m. ET on payment dates, even though P&I payments are typically posted to the master accounts of the Fedwire Securities Service participants that held those securities as of record date significantly earlier in the day1.
     
    To enable Fedwire Securities Service participants to use funds credited to their master accounts as a result of claim adjustment payments sooner than 4:30 p.m. ET, the following changes will be made:
    • Claim adjustment debits and credits will be effected promptly after the distribution of an issuer’s P&I payments (by increment, if the issuer has chosen to make such payments in multiple increments) to record-date holders. In support of this timing improvement, claim adjustment debits and credits will be aggregated for each Fedwire Securities Service participant by claim type at the securities account level and effected promptly after an issuer funds  each of its P&I obligations2 (by increment, if relevant) and the associated P&I payments are distributed. Fedwire Securities Service participants will receive separate claim adjustments if an issuer uses separate funder accounts to fund its P&I obligations. By contrast, in the current ACAP, while claim adjustment debits and credits are aggregated for each Fedwire Securities Service participant by claim type at the securities account level, they are effected in a single debit or credit rather than in increments and regardless of whether an issuer uses separate accounts to fund its P&I obligations.
    • Fail tracking-related claim adjustments that are calculated for claims related to past P&I payments will be effected at 8:30 a.m. ET on the next Fedwire Securities Service business day after the securities transfer that is deemed to be a fail transaction is made over the Fedwire Securities Service.

Customer impact:
The implementation of the ACAP enhancements may result in changes to how participants and their service providers interact with the Fedwire Securities Service, as well as changes in ACAP service fees. Fedwire Securities Service participants will need to manage the following technical or operational changes. 

  1. New securities lending tracking identifier: A new, optional securities lending tracking identifier with multiple field tags (e.g., securities lending start, close) will be used to trigger securities lending tracking. 
  2. Fedwire statements reporting changes:
    • A new notification to inform participants of their upcoming securities lending claim adjustment debits and credits will be available.
    • The format of existing notifications, which notify participants of claim adjustment debit and credit amounts to be effected on a future date, will be changed to reflect claim adjustment payments’ being effected after issuers’ P&I payments are distributed to record-date holders (by increment, if relevant). The new format will also be applied to the above newly created notification.
    • A new statement containing details of daily securities lending and borrowing closing positions tracked by ACAP will be available. 
    • Tracking of repo positions will be reported on separate balance statements for each type of security (e.g., Treasury, Agency MBS). Tracking of securities lending and borrowing positions will also be reported on separate balance statements following the same security type segregation rule.
  3. Increased volume and settlement time change: Participants should anticipate an increased volume of claim adjustment payments being made throughout the day once ACAP enhancements are implemented3.
  4. ACAP service fees change: Separate and apart from the ACAP enhancements described above, the structure of the way fees are charged is likely to be updated to better match fees to where the service is providing value. All changes with respect to how the ACAP service is priced for participants are subject to the review and approval of the Board of Governors of the Federal Reserve System.

Target implementation schedule:
The high-level schedule below is based on currently available information. The Federal Reserve Banks will confirm or update the schedule as the enhancement project moves forward.

  • Individual technical specifications detailing new statements and statement changes outlined in the Customer impact section above will be made available in Q3 2017, which participants and their service providers will be able to use to begin making necessary technical changes to applications that interface with the Fedwire Securities Service.
  • Participants and service providers will have three months to test the ACAP-related changes in the Depository Institution Testing (DIT) environment. A test calendar and script will be provided before the DIT environment is open for ACAP testing. Production cutover will follow completion of testing. Currently, the ACAP enhancements are anticipated to be implemented in the production environment in the third quarter of 2018.

Additional information:
Questions regarding this communication should be directed to the Federal Reserve Bank of New York at (800) 390-2788.

 

1For securities that are obligations of, or fully guaranteed as to principal and interest by, the United States (e.g., Treasury securities, Ginnie Mae securities), P&I payments are posted to record-date holders’ master accounts at 8:30 a.m. ET. For all other securities, P&I payments are posted to record-date holders’ master accounts when issuers fund their P&I obligations (these payments may be made in multiple increments, if the issuer has decided to do so). In some instances, the record-date holder of a security may have designated the master account of another institution to receive P&I payments.

2The Fedwire Securities Service treats securities that have the same record date and payment date and whose P&I is funded through the same issuer funder account as relating to the same P&I obligation.

3Claim adjustment payments will continue to be effected by the National Settlement Service (NSS) application; the terms governing ACAP are set forth in Appendix D to Operating Circular 7 (PDF).

Announcement

The Federal Reserve Banks will enhance the Automated Claim Adjustment Process in 2018 by providing additional tracking capabilities and aligning more closely the timing of effecting claim adjustments between participants to the time at which principal and interest payments are made to participants. Questions should be directed to the Federal Reserve Bank of New York at (800) 390-2788.

 

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