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April 17, 1997
|Circular No. 10941|
New Account Structure and Accounting Services
To the Chief Operating Officers at All Depository
In correspondence sent to you in May 1996, the Federal Reserve announced plans to modify its accounting services, effective January 1998, primarily to accommodate the newly identified accounting needs of the nationwide banking community in an interstate branch banking environment. Further information was sent in June 1996 in the form of questions and answers on the new account structure. We note, however, that the relevance of these planned changes to U.S. agencies and branches of foreign banks and Edge and agreement corporations is still being evaluated. This circular provides more detailed information on the planned changes in our accounting systems, some of which may also be useful to a depository institution (DI) that does not have or plan an interstate presence.
The most significant change involves the implementation of a new single (master) account structure, under which a DI will be provided with one "master" account at a designated Reserve Bank, in which all debits and credits arising from financial transactions with any Reserve Bank will be settled. In addition, a master account may have one or more related subaccounts established at any one or more Reserve Banks, in which information on any defined subset of financial transactions may be recorded, segregated and statemented. All subaccount transactions will settle in their related master account. Subaccounts will not carry balances, but will contain totals of debits and credits, and thus would be conceptually similar to today's respondent accounts with which you may be familiar.
Implementation of the new account structure has required major enhancements to the three Federal Reserve accounting automated systems described briefly below:
The summary descriptions of the changes being made to each of these three systems in support of the new master account/subaccount structure is included in yhis document. A Federal Reserve contact is provided on each of these descriptions for further information or clarification. We direct your attention to the need to plan for testing with us, as discussed in the ABMS summary, if you want to make use of the enhanced services being made available for this system.
We would also like you to know that an overview of the new account structure on a 14-minute video tape, as well as a more detailed presentation in a 27-page glossy magazine format, are available by calling your Account Manager or any one of the contact names on the summaries. This communications material should provide sufficient information about the new account structure for the majority of the DIs in our District. However, we are prepared to present more detailed information at seminars, which can be scheduled based on the needs expressed by the DIs. If you feel a need for more information and would like to attend a seminar, please contact your Account Manager.
Integrated Accounting System
The Integrated Accounting System (IAS) provides DIs with a variety of statements, reports and inquiry capabilities to help manage their account balances. Changes to the daily accounting statements, reports and features in support of the new account structure are described below:
Statement of Account
On-Line IAS/PSR Inquiry
The Account Balance Monitoring System (ABMS) provides on-line DIs with account information for Fedwire and non-Fedwire transactions. With the enhanced services that will be available in January 1998, the combined total of the master account and its subaccount(s) - a Master Report -- can be viewed; or the master account and each of its subaccount(s) can be viewed separately -- a Self Report. DIs can perform inquiries for the master account and for subaccounts by using the master account Routing Transit Number (RTN), and selecting the Balance Report for the "Master". A master account holder can view a balance without subaccounts by inquiring on the master account RTN and selecting the Balance Report for "Self". Subaccounts can be viewed separately by inquiring on the subaccount RTN and selecting the Balance Report for "Self".
In addition, the Master Report will display the cumulative Memo Post, Net Debit Cap, Funds Collateral, Securities Collateral, and the Daylight Overdraft or Account Balance information.
Fedline DIs will receive software from the Federal Reserve to support these changes prior to the implementation date. Computer Interface Protocol Specifications (CIPS) detailing the specific enhancements will be distributed to Computer Interface DIs in the next few weeks. The ABMS software to support Interstate Branching will be available for testing with DIs in the Federal Reserve test environment in the fall. Computer Interface DIs will have some time after the January 2, 1998, implementation date to convert to the new software. We will require all Computer Interface DIs to test with us prior to converting. As we get closer to the fall, we will announce a schedule of test environment availability, and the date by which Computer Interface DIs must convert to the new software.
The Billing application is being modified to support the new single account structure under Interstate Branch Banking. Service charges for a subaccount will automatically settle in the master account. A master account can have respondents and subaccounts. The settlement relationship between a correspondent and respondent will not change.
The following summarizes the changes under the new account structure as well as several new features available to customers in January 1998:
The service charges for a master account (together with its respondents' and/or subaccounts' service charges) may settle in a correspondent's account.
DIs will have the option of allowing a subaccount's (and any of its respondent(s)') service charges to follow any settlement option defined for the master account.
The earnings credits of a master account will automatically be used to satisfy service charges of a subaccount.
A correspondent may choose which of its respondents may use its earnings credits.
Statements will be converted to a portrait (vertical) format. This will facilitate printing of statements on a Fedline terminal.
New Customer Statement Options
Delivery of statements via FED-Mail (fax).
Availability of respondent and subaccount totals by service area on the summary statements for correspondents and master account holders.