Automated Claim Adjustment Process (ACAP) Frequently Asked Questions

Enhancements and Implementation Plan

1. What changes are included in the multi-phased ACAP enhancement project?
   • Shifting the timing of settling claim adjustments from late day via the National Settlement Service to promptly after the relevant principal and interest (P&I) payments are fully paid out to record holders via the Fedwire Securities Service. Completed
   • Modifying existing ACAP statements and introducing new ACAP statements, including Securities Lending Balance Statement, Claim Adjustment Notification for Securities Lending, and Unprocessed Claim Notification. Completed
   • Expanding ACAP tracking to all coupon-paying securities issued over the Fedwire^® Securities Service.
   • Adding securities lending as a transaction type.

   Please refer to Clearing Memo #278 for detailed ACAP enhancements information, and technical and operational implementation implications.
    
2. What new functionality was rolled out in Phase 1?
   • The timing and method of settling claim adjustments changed from late day via the National Settlement Service to promptly after the relevant P&I payments are fully paid out to record holders via the Fedwire Securities Service using the new type code 8908 and 8909 securities messages. Claim adjustments settle at security/CUSIP® level.
   • The new ACAP report Unprocessed Claim Notification was introduced and all existing ACAP statements (i.e., Repo Balance Statement, Claim Adjustment Notifications for Fail, Interim Accounting, Repo) with a new reporting format has also been implemented. Any existing online inquires (e.g., Clearing Summary, Endpoint Grand Totals) and end-of-day reports (e.g., Detailed Activity Statement) that contain total cash debit/credit made to a participant’s master account for the Cycle Date now include debits and credits effected through claim adjustments.
   • A new billing structure was introduced, including new billing codes.  Please see billing related FAQs below and the fee schedule on FRBServices.org for additional information and details about the billing codes and fees. 
3. What new functionality will be rolled out in Phase 2?
   • Expanded eligibility for ACAP tracking to all coupon-paying securities issued over the Service (i.e., coupon-paying U.S. Treasury and agency debt securities).
   • Expand ACAP tracking to securities lending transactions across all coupon-paying securities issued over the Service.
   • Introduce a new Securities Lending Balance Statement and Claim Adjustment Notification for Securities Lending.
4. Will ACAP tracking expand to non-coupon-paying securities in connection with repo and securities lending/borrowing balances?

   No, non-coupon-paying securities will not be included in the ACAP enhancement project in 2023. However, the Federal Reserve Banks will consider adding non-coupon-paying securities to ACAP tracking for repo and securities lending balances as a future service enhancement.

5. Did implementation plan change since the phased approach was announced in January 2022?

   At the request of industry participants, the plan did change to only a two-phase implementation plan. Phase 1, as previously announced, remained unchanged and included the change in timing and method of settling of claim adjustments. Phase 1 was implemented on January 30, 2023. Phase 2 includes the expansion of both securities and transaction types eligible for ACAP tracking that will be implemented on a date TBD.

6. Did the implementation date of Phase 2 get postponed?

   Yes, ACAP Phase 2 functionality was initially planned to go live on August 7, 2023. An industry workgroup, headed by Securities Industry and Financial Markets Association (SIFMA), has requested that the industry cutover to ACAP Phase 2 be postponed to give the industry more time to prepare.

   The Federal Reserve Financial Services will continue to work with the SIFMA-coordinated ACAP working group on industry readiness for Phase 2 functionality and hope to schedule the industry conversion for later in 2024. Details regarding the timing of Phase 2 implementation will follow.

   The second testing period in the DIT has been extended until further information on the implementation date of Phase 2 is announced.

New Fees and Billing Structure

1. Am I being charged differently for using ACAP since the enhancements have been implemented?
   Yes, on Monday, January 30, 2023, the following ACAP fees changes became effective.

   • Claim Adjustment Fees – The fail claim adjustment fee was replaced by two separate fees: the fail claim adjustment fee (debit) and the fail claim adjustment fee (credit). The Fedwire Securities Service continues to charge interim accounting and repo claim adjustment fees. The Fedwire Securities Service will activate the new securities lending claim adjustment fee once Phase 2 is implemented.
   • Tracking Indicators Fees – Both sender and receiver of a repo-tracking message (i.e., a securities transfer message with a repo tag in free text line) are charged for the tag fee. Similar securities lending tag fees will be activated once Phase 2 is implemented.
   • Positions Maintenance Fees – Participants are charged a fee for each repo-out and repo-in balance maintained on the Fedwire Securities Service per Fedwire Securities business day. A similar securities lending position maintenance fee will be activated once Phase 2 is implemented.

   
   Please refer to the Fedwire Securities Service 2023 Fee Schedules at FRBservices.org for the comprehensive ACAP fees details.
    
2. When will the new fees be reflected on my bill?

   The new ACAP fees went into effect on January 30, 2023. Starting February 2023, customer bills will reflect the new ACAP product billing codes should customers have any ACAP related activity on January 30-31, 2023.

   Note: February 2023’s invoice will reflect both the new ACAP billing structure as well as the old billing structure. 
    

Technical and Operational Inquiries

1. Will there be a new clearing memo, or will previous clearing memos be updated with the technical and operational information related to ACAP enhancements?

   The Federal Reserve Banks issued a new Clearing Memo #278 on April 4, 2022. Fedwire Securities Service participants should refer to Clearing Memo #278 for the technical and operational information related to the enhanced ACAP service. Clearing Memo #278 superseded all previously published clearing memos relating to ACAP (#219, #220, #221, #226, #236, #240, #243, #246, and #251) on January 30, 2023, when Phase 1 went into effect.

2. Where can I find the technical specifications for enhanced ACAP?

   Fedwire Securities Service participants should refer to the Fedwire Application Interface Manual (FAIM) version 2.0.2 for Fedwire Securities Service for the technical layouts for the new claim adjustment messages and ACAP statements. Participants’ End User Authorization Contacts (EUAC) can request a copy of the technical document, FAIM version 2.0.2 from the Customer Contact Center. The FedPayments-Manager for Securities Export File layout (i.e., FedPayments_Securities_File_Export_Specification_FLA_Customer_v1.0) was also modified to incorporate the technical layout for the new incoming claim adjustment messages.

   Note: The Fedwire Securities Service recently issued a revised FAIM version 2.0.3 and FPM-Securities File Export specification version 1.1. The revisions include minor modifications and clarifications to the ACAP-related documentation concerning mismatches between the ACAP technical layouts and the software. The revisions were sent to participants’ EUACs in December 2022.

3. How often will I receive the new Unprocessed Claim Notification?

   The Fedwire Securities Service will only generate and deliver the Unprocessed Claim Notification (MSG-ID: BA2074, Content Type: BAUC) to you when you have a claim that will not be processed by the Fedwire Securities Service that would otherwise be processed on the next Fedwire Securities business day. See Clearing Memo #278 (PDF) − Section VI. End-of-Day ACAP Reporting: Unprocessed Claim Notification, which outlines the various reasons that a claim will not be processed and will be reported on this new Notification. If the counterparties associated with an unprocessed claim on the Unprocessed Claim Notification desire to complete the claim adjustment, they must resolve the claim outside the Fedwire Securities Service. The Reserve Banks will take no further action with respect to such claims.

4. How will I receive the new Unprocessed Claim Notification?

   The Fedwire Securities Service will deliver the Unprocessed Claim Notification to you automatically in the same statement medium (i.e., FedLine Direct File, FedLine Command^®, FedLine Direct Message, FedLine Advantage solution, or FedMail^®) you receive your Immediate Principal and Interest Notification (MSG-ID: BA2040, Content Type: BAPI).

   For participants who will receive the new Unprocessed Claim Notification via the FedLine Direct File or FedLine Command solution, the new Unprocessed Claim Notification will be routed to the same destination (e.g., Connect:Direct¹ Node) where you receive your Repo Balance Statement (MSG-ID: BA2080, Content Type: BARB). If you use a customized report submit process or you want this Notification to be routed to a different destination, you will need to contact the FedLine Direct and FedLine Command Support (1-888-881-6700 and select Option 2).

   Since the Fedwire Securities Service will only generate this new Notification upon certain conditions, participants are encouraged to validate your ability to receive this report by contacting your designated Wholesale Testing Unit (WTS) to schedule a test.

   ¹ “Connect:Direct” is a registered trademark of IBM International Group B.V., an IBM Company.

5. I subscribe to the Financial Institution Reconcilement Data (FIRD) file. Will the FIRD file include the new Securities ACAP entries?

   Yes, the FIRD file will include the new Securities ACAP entries if you subscribe to the FIRD file for your master account and subscribe to include Fedwire details in the file. The new ACAP type code 8908 and 8909 records will be found in the Fedwire detail section in the FIRD file.

   If you only subscribe to the FIRD file for your master account and exclude Fedwire details in the file, your ACAP claim adjustment information will be included in the summarized line under transaction code 20801 in the file without detailed entries.

6. Will ACAP adjustments continue to be reported under Transaction Code: 11101?
   No, Transaction Code: 11101 of the National Settlement Service account activity will no longer be used once ACAP Phase 1 enhancements are implemented.  ACAP adjustments will be reported under Transaction Code: 20801 of the Fedwire Securities Service account activity once Phase 1 of ACAP enhancements become effective on January 30, 2023.
    
7. My firm would like to use enhanced ACAP for outstanding repo balances that currently are not tracked by ACAP. How can my firm convert these outstanding repo balances so that they are tracked by enhanced ACAP?

   To convert outstanding repo balances in connection with Treasury and non-Treasury debt securities to the enhanced ACAP, the participant with the Repo-Out balance will need to initiate a type code 2090 service message with the Repo Balance Only Adjustment field tag (i.e., {22F:ADRP}) in a free text line of the message. Once the Fedwire Securities Service processes this service message, it will record and maintain sender and receiver’s Repo-Out and Repo-In balances, respectively, without transferring the securities. The same approach applies to converting outstanding securities lending balances in connection with any securities issued over the Fedwire Securities Service to the enhanced ACAP by using the Securities Lending Balance Only Adjustment field tag (i.e., {23F:ADSL}) in a free text line of the service message.

   Participants can convert outstanding repo and securities lending balances for coupon-paying Treasury and non-Treasury debt securities after Phase 2 goes into effect.

8. My firm currently uses repo tracking to track MBS securities lending transactions. How can my firm convert these to securities lending tracking?

   Participants who currently use repo tracking to track MBS securities lending balances can convert those repo balances to securities lending balances by taking the following two steps after Phase 2 goes into effect.

   • Step 1 – The participant with the Repo-In balance must first adjust the repo balance by initiating a type code 2090 service message with the Repo Balance Only Adjustment Reversal field tag (i.e., {22F:ADRV}) in a free text line of the message.
   • Step 2 – To establish the securities lending balance in the enhanced ACAP, the participant with the Securities-Lent balance must initiate a type code 2090 service message with the Securities Lending Balance Only Adjustment field tag (i.e., {23F:ADSL}) in a free text line of the message. Once the Service processes this service message, it will record and maintain sender’s and receiver’s Securities-Lent and Securities-Borrowed balances, respectively, without transferring the security.

   Once both steps are taken, the MBS repo balance will no longer be reported on the participants’ Repo Balance Statement and will instead be reported on the participants’ Securities Lending Balance Statement.

Depository Institution Testing (DIT)

1. When will ACAP DIT testing begin and what is the scope of testing given the phased implementation approach?

   The first ACAP DIT period has closed, and Phase 1 has been implemented into production on January 30, 2023. The second DIT period has closed. Additional testing opportunities will be provided and announced when implementation of Phase 2 has been determined. 

   We expect participants and service providers to complete a comprehensive end-to-end testing for all ACAP enhancements. Participants and service providers will need to test the enhancements of each phase in the DIT prior to the implementation of the phase.

2. Given the postponement of Phase 2 implementation, will I still be able to test Phase 2 enhancements in the DIT?

   The DIT environment is no longer supporting customer testing for Phase 2 functionality. There will be another opportunity for customers to test Phase 2 functionality prior to the new implementation date for Phase 2.  The Federal Reserve Banks continues to work with the industry workgroup on an implementation plan for Phase 2.  Further details will be provided when available.

3. How do I prepare for testing of Phase 2 testing?

   Successful testing of Phase 2 functionality is dependent on a number of factors that should be reviewed and considered.

   Do you hold in your account coupon-paying Fed-eligible securities that will incur interest payments during the timeframe you are testing in the DIT environment? Claim adjustments will be made on securities in the DIT as they are in the production environment. It is essential to be coordinate which securities are tagged for ACAP claim adjustment that will result in a claim adjustment within the testing timeframe.

   Will you be testing ACAP tracking on a securities lending transaction? If so, you will need to be mindful of the record dates and payments dates of the MBS securities you will be using to test as the dates will be the same as they would be in the production environment. You will also need to be mindful of when you open the position and expect the resulting claim adjustment so that both are within two refresh dates.

   Have you requested statements? Statements will not be automatically sent and need to be requested each time.

4. What is a “refresh” in the DIT?

   The data in the DIT environment will be “refreshed” or reset periodically to replicate the production environment as of the last business day of the prior month. Therefore, any securities holdings and repo positions that are open in the production environment on the last business day of the prior month to the refresh will be replicated in the DIT environment, and any positions created in the DIT environment prior to the refresh will be overwritten.

   As of September 1, 2023 the DIT environment will revert to a monthly refresh cycle as Phase 2 testing is no longer supported.  

5. Why was a subsequent ACAP DIT testing opportunity provided for Phases 2?

   The Federal Reserve Banks acknowledge that some participants and service providers will need additional time to complete testing of both phases. As such an additional testing opportunity will be provided prior to Phase 2 for participants and service providers to complete and validate the software.

6. How does my organization register for testing in the DIT?
   Participants and service providers need to submit a Test Request Form for each testing period. On the form, please select “Other Testing” under Testing Type and provide in the comments section “ACAP Enhancements Testing 2” for the second DIT period.
7. Who should I contact if I have questions related to the ACAP DIT testing?
   For ACAP testing-related questions, you should contact your designated Wholesale Testing Units service team.

General Questions

1. If my firm does not plan to use ACAP or is not ready to use enhanced ACAP, can we “opt out”?

   There is no “opt in” or “opt out” feature for ACAP.
   
   Fail, repo, and securities lending tracking is automatically enabled for a receiver of a securities transfer by the sender of the securities transfer message initiating a fail, repo, or securities lending transaction, respectively. Interim accounting tracking is automatically enabled with respect to both sender and receiver when a sender sends a securities transfer message to transfer an MBS that has a different Record Date and Beneficiary Date. Therefore, even if a participant does not intend to use the enhanced ACAP or decides to start using it at a later date, that participant could still receive ACAP transactions (i.e., fail, interim accounting, repo or securities lending transactions) originated by other participants. Those ACAP transactions trigger ACAP tracking and result in the receiving participant receiving ACAP statements and claim adjustments regardless of whether the receiver of the message elects to use ACAP services. Given this, we encourage all participants to add controls to their Fedwire Securities Service interface applications and/or internal applications to properly handle any unanticipated ACAP transactions, the new claim adjustment messages, and ACAP statements to avoid technical or operational disruptions resulting from receiving those unanticipated messages and statements.

2. As my organization prepares for the implementation of the ACAP enhancements, what should I do if I have questions related to the ACAP enhancement project?

   For general ACAP-related questions, you can reach out to the Fedwire Securities Service contact at the East Rutherford Operations Center: (800) 390-2788. For ACAP testing-related questions, you should contact your designated Wholesale Testing Units service team.

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