Circular
Fedwire Funds Transfer Operations
June 15, 1998
Circular No. 11060

Proposal to Restrict Use of Last 15 Minutes of Fedwire Operating Hours

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The following is from a statement by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board has requested comment on whether the last fifteen minutes of the Fedwire funds transfer operating day (from 6:15 p.m. to 6:30 p.m. Eastern Time) should be restricted to funds transfers sent and received by depository institutions for their own account. This would facilitate the end-of-day management of their balances held at the Federal Reserve.

Comment is requested by August 12, 1998.

The Federal funds transfer system operates from 12:30 a.m. to 6:30 p.m. Eastern Time, with the last half hour of the operating day reserved for settlement transfers. Settlement transfers are typically used by depository institutions to adjust their Federal Reserve account positions, as well as their account positions at correspondent banks.

Since the early 1990's significant changes have affected depository institutions' management of reserve accounts, including reductions in reserve requirements and a decrease in reservable deposits due to the increased used of sweep accounts. Some depository institutions believe that these changes have made reserve management more difficult and that these difficulties are exacerbated by unexpected late-day funds transfers.

Printed on the following pages is the Board's proposal, as published in the Federal Register of June 10 is available as a file (pdf - 27kb). Comments should be submitted by August 12, 1998, and may be sent to the Board, as specified in the notice, or, at this Bank, to Gerald V. Lombardo, Assistant Vice President, Electronic Payments Department.