Federal Reserve Bank Services, 1126-1147 [2019-00624]

Download as PDF 1126 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)). The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than February 19, 2019. A. Federal Reserve Bank of Minneapolis (Mark A. Rauzi, Vice President), 90 Hennepin Avenue, Minneapolis, Minnesota 55480–0291: 1. Scott Kopp, Galesville, Wisconsin, individually and acting in concert with Steve Kopp, LaCrosse, Wisconsin, and Mark Copp, Galesville, Wisconsin; all to retain shares of Gale Bank Holding Company, Inc., and thereby indirectly retain shares of Bluff View Bank, both in Galesville, Wisconsin. Board of Governors of the Federal Reserve System, January 29, 2019. Yao-Chin Chao, Assistant Secretary of the Board. [FR Doc. 2019–00778 Filed 1–31–19; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM [Docket No. OP–1636] Federal Reserve Bank Services Board of Governors of the Federal Reserve System. AGENCY: ACTION: Notice. The Board of Governors of the Federal Reserve System (Board) has approved the private sector adjustment factor (PSAF) for 2019 of $17.8 million and the 2019 fee schedules for Federal Reserve priced services and electronic access. These actions were taken in accordance with the Monetary Control Act of 1980, which requires that, over the long run, fees for Federal Reserve priced services be established on the basis of all direct and indirect costs, including the PSAF. SUMMARY: The new fee schedules become effective January 2, 2019. DATES: For questions regarding the fee schedules: David C. Mills, Deputy Associate Director, (202) 530–6265; Amanda Holcombe, Financial Institution Policy Analyst, (202) 912–4625; Emily Massaro, Financial Institution Policy Analyst, (202) 452–2493, Division of Reserve Bank Operations and Payment Systems. For questions regarding the PSAF: Lawrence Mize, Deputy Associate Director, (202) 452–5232; Max Sinthorntham, Senior Financial Institution Policy Analyst, (202) 452– 2864, Division of Reserve Bank Operations and Payment Systems. For users of Telecommunications Device for the Deaf (TDD) only, please call (202) 263–4869. Copies of the 2019 fee schedules for the check service are available from the Board, the Federal Reserve Banks, or the Reserve Banks’ FOR FURTHER INFORMATION CONTACT: financial services website at www.frbservices.org. I. Supplementary Information Private Sector Adjustment Factor, Priced Services Cost Recovery, and Overview of 2019 Price Changes A. Overview—Each year, as required by the Monetary Control Act of 1980, the Reserve Banks set fees for priced services provided to depository institutions. These fees are set to recover, over the long run, all direct and indirect costs and imputed costs, including financing costs, taxes, and certain other expenses, as well as the return on equity (profit) that will have been earned if a private business firm provided the services. The imputed costs and imputed profit are collectively referred to as the private-sector adjustment factor (PSAF). From 2008 through 2017, the Reserve Banks recovered 101.9 percent of their total expenses (including imputed costs) and targeted after-tax profits or return on equity (ROE) for providing priced services.1 Table 1 summarizes 2017 actual, 2018 estimated, and 2019 budgeted costrecovery rates for all priced services. Cost recovery is estimated to be 101.0 percent in 2018 and budgeted to be 100.9 percent in 2019. TABLE 1—AGGREGATE PRICED SERVICES PRO FORMA COST AND REVENUE PERFORMANCE a [Dollars in millions] Year 2017 (actual) ........................................................................ 2018 (estimate) .................................................................... 2019 (budget) ....................................................................... Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1b 2c 3 [1¥2] 4d 5ef [1/(2 + 4)] 441.6 441.7 440.2 419.4 432.0 430.8 22.2 9.7 9.4 4.6 5.2 5.4 104.1 101.0 100.9 a Calculations in this table and subsequent pro forma cost and revenue tables may be affected by rounding. includes imputed income on investments when equity is imputed at a level that meets minimum capital requirements and, when combined with liabilities, exceeds total assets (attachment 1). For 2018, the projected revenue assumes implementation of the proposed fee changes. c The calculation of total expense includes operating, imputed, and other expenses. Imputed and other expenses include taxes, Board of Governors’ priced services expenses, the cost of float, and interest on imputed debt, if any. Credits or debits related to the accounting for pension plans under ASC 715 are also included. d Targeted ROE is the after-tax ROE included in the PSAF. e The recovery rates in this and subsequent tables do not reflect the unamortized gains or losses that must be recognized in accordance with ASC 715. Future gains or losses, and their effect on cost recovery, cannot be projected. b Revenue 1 The 10-year recovery rate is based on the pro forma income statements for Federal Reserve priced services published in the Board’s Annual Report. Effective December 31, 2006, the Reserve Banks implemented Statement of Financial Accounting Standards (SFAS) No. 158: Employers’ Accounting VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 for Defined Benefit Pension and Other Postretirement Plans [Accounting Standards Codification (ASC) 715 Compensation—Retirement Benefits], which resulted in recognizing a cumulative reduction in equity related to the priced services’ benefit plans. Including this cumulative PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 reduction in equity from 2008 to 2017 results in cost recovery of 94.7 percent for the ten-year period. This measure of long-run cost recovery is also published in the Board’s Annual Report. E:\FR\FM\01FEN1.SGM 01FEN1 1127 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices f For 2019, credits or debits related to the accounting for pension plans under ASC 715 include service cost only with the adoption of ASU 2017–07 Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715). Table 2 provides an overview of costrecovery budgets, estimates, and performance for the 10-year period from 2008 to 2017, 2017 actual, 2018 budget, 2018 estimate, and 2019 budget by priced service. TABLE 2—PRICED SERVICES COST RECOVERY [Percent] Priced service 2008–2017 All services ........................................................................... Check ................................................................................... FedACH ............................................................................... Fedwire Funds and NSS ..................................................... Fedwire Securities ............................................................... 101.9 103.5 98.5 101.5 102.2 2017 actual 2018 budget a 104.1 107.0 99.8 106.2 103.6 100.1 101.6 96.1 103.9 97.6 2018 estimate 101.0 101.7 98.0 105.0 96.5 2019 budget b 100.9 101.5 101.8 100.7 94.7 a The 2018 budget figures reflect the final budgets as approved by the Board in December 2017. 2019 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks will submit final budget data to the Board in November 2018, for Board consideration in December 2018. b The 1. 2018 Estimated Performance—The Reserve Banks estimate that they will recover 101.0 percent of the costs of providing priced services in 2018, including total expense and targeted ROE, compared with a 2018 budgeted recovery rate of 100.1 percent, as shown in table 2. Overall, the Reserve Banks estimate that they will fully recover actual and imputed costs and earn net income of $9.7 million, compared with the targeted ROE of $5.2 million. The Reserve Banks estimate that the check service and the Fedwire® Funds and National Settlement Services will achieve full cost recovery; however, the Reserve Banks continue to estimate that the FedACH® Service and the Fedwire Securities Service will not achieve full cost recovery. Consistent with recent years, the FedACH Service will not achieve full cost recovery because of investment costs associated with the multiyear technology initiative to modernize its processing platform.2 This investment is expected to enhance efficiency, the overall quality of operations, and the Reserve Banks’ ability to offer additional services to depository institutions. The Reserve Banks estimate that the Fedwire Securities Service will not achieve full cost recovery because of ongoing market structure changes and investment costs associated with initiatives to promote operational resiliency. 2. 2019 Private-Sector Adjustment Factor—The 2019 PSAF for Reserve Bank priced services is $17.8 million. This amount represents a decrease of $1.1 million from the 2018 PSAF of $18.9 million. This decrease is primarily 2 The Reserve Banks have been engaged in a multiyear technology initiative to modernize the FedACH processing platform by migrating the service from a mainframe system to a distributed computing environment. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 the result of a decrease in the total cost of debt and partially offset by an increase in Board of Governors expenses. 3. 2019 Projected Performance—The Reserve Banks project a priced services cost recovery rate of 100.9 percent in 2019, with a net income of $9.4 million and targeted ROE of $5.4 million. The Reserve Banks project that the price changes will result in a 2.5 percent average price increase for customers. The Reserve Banks project that each of the individual service lines, other than the Fedwire Securities Service, will fully recover their costs. The Reserve Banks anticipate that the FedACH technology modernization initiative will conclude in 2019, allowing for a projected return to cost recovery for the FedACH Service. Although the Fedwire Securities Service is not budgeted to fully cover its costs in 2019 because of volume declines driven by market changes, the service is projected to recover costs over the long run.3 The primary risks to the Reserve Banks’ ability to achieve their targeted cost-recovery rates are unanticipated volume and revenue reductions and the potential for cost overruns from new and ongoing improvement initiatives. In light of these risks, the Reserve Banks will continue to refine their business and operational strategies to manage operating costs, to increase product revenue, and to capitalize on efficiencies gained from technology initiatives. 3 Fedwire Securities Service’s ten-year average recovery rate in 2019 is 101.6 percent. As the aggregate impact of market structural changes materializes, the Reserve Banks will take into account subsequent volume changes as well as future anticipated cost allocation adjustments, in order to adjust the Fedwire Securities Service’s prices and to continue recovering costs over the long-run. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 4. 2019 Pricing—The following summarizes the Reserve Banks’ changes in fee schedules for priced services in 2019: Check • The Reserve Banks will reassign the tier placement of 1,116 forward and 240 return endpoints in the FedForward® and FedReturn® products, respectively.4 • The Reserve Banks will lower the average daily forward receipt and return tier volume thresholds approximately 6.0 percent for tiers 1, 2, 3, and 4 for FedForward® and FedReturn® image cash letter and daily fee deposit options based on the 2019 tier assignments to account for the anticipated continued decline in check deposit volumes. • The Reserve Banks will increase per-item fees for the FedForward® Premium Daily Fee A, B, and C deposit options by $0.001 for Tier 3 and $0.003 for Tier 4. The Reserve Banks will also increase the Premium Daily Fee C daily fixed fee by $200, from $3,500 to $3,700. • The Reserve Banks will increase cash letter fees by $0.50 for all deadlines on FedForward® Standard, Deferred, Dollar-Culled, and Endpoint-Culled image cash letters and FedReturn® Standard image cash letters. • The Reserve Banks will increase the per-item fee for the FedReceipt® Premium Delivery 8:00 a.m. EST target by $0.006 and per item fees for the Premium Delivery 10:00 a.m. target and Premium Delivery 12:00 noon target by $0.002.5 • The Reserve Banks will increase FedReceipt® Electronic Reject Repair fees by $0.05, increasing the Basic repair 4 The Reserve Banks evaluate and set tier assignments annually based on changes in the volume of items received by endpoints. 5 The 8:00 a.m. delivery target is expressed in eastern time, while the 10:00 a.m. and 12:00 noon targets are local time. E:\FR\FM\01FEN1.SGM 01FEN1 1128 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices from $0.15 per-item to $0.20 per-item and increasing the Premium repair from $0.25 per-item to $0.30 per-item. • The Reserve Banks will increase all fees for the FedImage® product and certain truncation fees 10.0 percent (rounded to the nearest increment based upon the number of decimal places of the current fee). • The Reserve Banks will introduce two new fees intended to improve the quality of check deposit processing and reduce errors in adjustment case submissions. The Reserve Banks will introduce a $0.50 fee for encoding error and duplicate-payment adjustment cases caused by the depositary bank’s incorrect encoding or duplicate deposit of an item. The Reserve Banks will also introduce a $2.50 fee for automated adjustment case types that require manual intervention by Reserve Bank staff due to error on the part of the adjusting bank. FedACH • The Reserve Banks will offer a new ACH Exception Resolution Service® that will provide an automated means for customers to resolve ACH exceptions. The fee structure will contain fixed and variable elements, as outlined in the ACH fee schedule. • The Reserve Banks will keep prices at existing levels for all existing priced FedACH products. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 Fedwire Funds • The Reserve Banks will increase the offline send surcharge and offline receive surcharge from $60.00 to $65.00. National Settlement Service (NSS) • The Reserve Banks will keep prices at existing levels for the priced NSS products. Fedwire Securities • The Reserve Banks will increase the agency online transfer fee from $0.77 to $0.98. • The Reserve Banks will increase the automated claims adjustment process (ACAP) fee from $0.80 to $1.00. FedLine® Access Solutions • The Reserve Banks will discontinue offering new FedMail Fax subscriptions. • The Reserve Banks will discontinue offering the Accounting Totals by Service (ACTS) report. • The Reserve Banks will discontinue charging a` la carte fees for additional FedLine Command server certificates. The Reserve Banks will provide FedLine Command server certificates as part of FedLine Command packages at no additional cost. • The Reserve Banks will offer upgraded FedLine Direct® Plus and Premier packages, with monthly fees of $5,500 and $10,500 respectively, to reflect the incorporation of the Check 21 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 Large File Delivery service with the FedLine Direct solution. Existing customers may continue to use the legacy FedLine Direct Plus and Premier packages until they migrate to the upgraded packages. The Reserve Banks will also increase the monthly fee for the legacy FedLine Direct Plus package by $350, from $3,650 to $4,000. • The Reserve Banks will increase the monthly a` la carte fee for Network Diversity by $500, from $2,000 to $2,500. 5. 2019 Price Index—Figure 1 compares indexes of fees for the Reserve Banks’ priced services with the GDP price index.6 The price index for Reserve Bank priced services is projected to remain relatively flat, with a decrease of less than 1 percent in 2019 from the 2018 level. The price index for Check 21 services is projected to increase approximately 3 percent. The price indexes for the FedACH Service, the Fedwire Funds and National Settlement Services, and the Fedwire Securities Service are projected to decrease approximately 1 percent, 2 percent, and 3 percent, respectively. For the period 2009 to 2019, the price index for total priced services is expected to decrease nearly 7 percent. 6 For the period 2009 to 2017, the GDP price index increased 13.6 percent. E:\FR\FM\01FEN1.SGM 01FEN1 B. Private Sector Adjustment Factor— The imputed debt financing costs, targeted ROE, and effective tax rate are based on a U.S. publicly traded firm market model.7 The method for calculating the financing costs in the PSAF requires determining the appropriate imputed levels of debt and equity and then applying the applicable financing rates. In this process, a pro forma balance sheet using estimated assets and liabilities associated with the Reserve Banks’ priced services is developed, and the remaining elements that would exist are imputed as if these priced services were provided by a private business firm. The same generally accepted accounting principles that apply to commercialentity financial statements apply to the 7 Data for U.S. publicly traded firms is from the Standard and Poor’s Compustat® database. This database contains information on more than 6,000 U.S. publicly traded firms, which approximates the entirety of the U.S. market. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 relevant elements in the priced services pro forma financial statements. The portion of Federal Reserve assets that will be used to provide priced services during the coming year is determined using information about actual assets and projected disposals and acquisitions. The priced portion of these assets is determined based on the allocation of depreciation and amortization expenses of each asset class. The priced portion of actual Federal Reserve liabilities consists of postemployment and postretirement benefits, accounts payable, and other liabilities. The priced portion of the actual net pension asset or liability is also included on the balance sheet.8 The equity financing rate is the targeted ROE produced by the capital asset pricing model (CAPM). In the CAPM, the required rate of return on a 8 The pension assets are netted with the pension liabilities and reported as a net asset or net liability as required by ASC 715 Compensation—Retirement Benefits. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 1129 firm’s equity is equal to the return on a risk-free asset plus a market risk premium. The risk-free rate is based on the three-month Treasury bill; the beta is assumed to be equal to 1.0, which approximates the risk of the market as a whole; and the market risk premium is based on the monthly returns in excess of the risk-free rate over the most recent 40 years. The resulting ROE reflects the return a shareholder would expect when investing in a private business firm. For simplicity, given that federal corporate income tax rates are graduated, state income tax rates vary, and various credits and deductions can apply, an actual income tax expense is not explicitly calculated for Reserve Bank priced services. Instead, the Board targets a pretax ROE that would provide sufficient income to fulfill the priced services’ imputed income tax obligations. To the extent that performance results are greater or less E:\FR\FM\01FEN1.SGM 01FEN1 EN01FE19.001</GPH> Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices 1130 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices than the targeted ROE, income taxes are adjusted using the effective tax rate. Capital structure. The capital structure is imputed based on the imputed funding need (assets less liabilities), subject to minimum equity constraints. Short-term debt is imputed to fund the imputed short-term funding need. Long-term debt and equity are imputed to meet the priced services long-term funding need at a ratio based on the capital structure of the U.S. publicly traded firm market. The level of equity must meet the minimum equity constraints, which follow the FDIC requirements for a well-capitalized institution. The priced services must maintain equity of at least 5 percent of total assets and 10 percent of riskweighted assets.9 Any equity imputed that exceeds the amount needed to fund the priced services’ assets and meet the minimum equity constraints is offset by a reduction in imputed long-term debt. When imputed equity is larger than what can be offset by imputed debt, the excess is imputed as investments in Treasury securities; income imputed on these investments reduces the PSAF. Application of the Payment System Risk (PSR) Policy to the Fedwire Services. The Board’s PSR policy incorporates the international standards for financial market infrastructures (FMIs) developed by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions in the Principles for Financial Market Infrastructures. The revised policy retains the expectation that the Fedwire Services meet or exceed the applicable risk-management standards. Principle 15 states that an FMI should identify, monitor, and manage general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that it can continue operations and services as a going concern if those losses materialize. Further, liquid net assets should at all times be sufficient to ensure a recovery or orderly wind-down of critical operations and services. The Fedwire Services do not face the risk that a 9 The FDIC rule, which was adopted as final on April 14, 2014, requires that well-capitalized institutions meet or exceed the following standards: (1) Total capital to risk-weighted assets ratio of at least 10 percent, (2) tier 1 capital to risk-weighted assets ratio of at least 8 percent, (3) common equity tier 1 capital to risk-weighted assets ratio of at least 6.5 percent, and (4) a leverage ratio (tier 1 capital to total assets) of at least 5 percent. Because all of the Federal Reserve priced services’ equity on the pro forma balance sheet qualifies as tier 1 capital, only requirements 1 and 4 are binding. The FDIC rule can be located at https://www.fdic.gov/news/ board/2014/2014-04-08_notice_dis_c_fr.pdf. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 business shock would cause the service to wind down in a disorderly manner and disrupt the stability of the financial system. In order to foster competition with private-sector FMIs, however, the Reserve Banks’ priced services will hold an amount equivalent to six months of the Fedwire Funds Service’s current operating expenses as liquid financial assets and equity on the pro forma balance sheet.10 Current operating expenses are defined as normal business operating expenses on the income statement, less depreciation, amortization, taxes, and interest on debt. Using the Fedwire Funds Service’s preliminary 2019 budget, six months of current operating expenses would be $50.5 million. In 2019, $38.8 million of equity was imputed to meet the FDIC capital requirements, resulting in an ending equity balance of $51.8 million. No additional imputed equity was necessary to meet the PSR policy requirement. Effective tax rate. Like the imputed capital structure, the effective tax rate is calculated based on data from U.S. publicly traded firms. The tax rate is the mean of the weighted average rates of the U.S. publicly traded firm market over the past 5 years. Debt and equity financing. The imputed short- and long-term debt financing rates are derived from the nonfinancial commercial paper rates from the Federal Reserve Board’s H.15 Selected Interest Rates release (AA and A2/P2) and the annual Merrill Lynch Corporate & High Yield Index rate, respectively. The equity financing rate is described above. The rates for debt and equity financing are applied to the priced services estimated imputed short-term debt, long-term debt, and equity needed to finance short- and long-term assets and meet equity requirements. The 2019 PSAF is $17.8 million, compared with $18.9 million in 2018. The decrease of $1.1 million is attributable to a $2.8 million decrease in the cost of debt and a $0.3 million decrease in sales tax, offset by a $1.9 million increase in the Board’s costs and a $0.1 million increase in the return on equity. The net $2.7 million decrease in cost of capital ($2.8 million less $0.1 million) resulted from lower funding needs driven by lower long-term assets. The increase in Board costs are attributed to a shift from policy to priced services oversight activities. 10 This requirement does not apply to the Fedwire Securities Service. There are no competitors to the Fedwire Securities Service that would face such a requirement, and imposing such a requirement when pricing the securities services could artificially increase the cost of these services. PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 The PSAF expense of $17.8 million, detailed in table 5, reflects $7.1 million for capital funding, $7.0 million for BOG expense and $3.7 million in sales tax expense. As shown in table 3, 2019 total assets of $846.6 million increased by $29.4 million from 2018. The net increase in total assets reflects a $105 million increase in short-term assets and imputed investments offset by a $75.6 million decrease in long-term assets. The increase in the short-term assets is primarily driven by the imputed investments in Treasury securities and Federal Funds. These increases in shortterm assets are largely offset by increases in short-term liabilities in the form of deferred credits. There were larger averages for check items in process of collection, and higher average ACH Pre-Fund account balances in the first several months of 2018. The 2019 balances are estimated based on the current account balance average for the first part of 2018. The net long-term asset decrease of $75.6 million primarily consists of a $53.0 million decrease in the net pension asset and a combined $18.6 million decrease in Furniture and equipment and Leasehold improvements and long-term prepayments. The net pension asset decrease reflects lower plan contributions over the past two years, down from $720 million to $240 million in 2018 and from $480 million to $180 million in 2019. The decrease in furniture and equipment and Leasehold improvements and long-term prepayments are mainly due to a lower allocation of Reserve Bank assets to the Federal Reserve’s priced services. The capital structure of the 2019 pro forma balance sheet, provided in table 4, is composed of equity of $51.8 million, or 10 percent of the 2019 risk weighted assets detailed in table 6, and no longterm debt. The 2019 capital structure differs from that of 2018, which was composed of $57.8 million of equity and $76.9 million of long-term debt. The 2019 imputed equity required to fund assets and meet the publicly traded firm model capital requirements is $31.3 million. Long-term debt of $18.2 million was imputed at the observed market ratio of 58.3 percent. To meet the FDIC capital requirements for a wellcapitalized institution, the $18.2 million of imputed long-term debt was substituted for equity, and additional $20.5 million equity was imputed. The resulting $51.8 million total level of equity satisfies the PSR policy requirements for 2019. The net Accumulated Other Comprehensive Income loss is $624.3 E:\FR\FM\01FEN1.SGM 01FEN1 1131 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices million, compared with $637.2 million in 2018. The slight decrease is primarily attributable to the actuarial gains as a result of higher than expected returns on pension assets and a lower discount rate. AOCI is in a net loss position and does not reduce the total imputed equity required to fund priced services assets or fulfill the FDIC equity requirements for a well-capitalized institution. TABLE 3—COMPARISON OF PRO FORMA BALANCE SHEETS FOR BUDGETED FEDERAL RESERVE PRICED SERVICES [Millions of dollars—projected average for year] 2019 Short-term assets: Receivables .......................................................................................................................... Materials and supplies .......................................................................................................... Prepaid expenses ................................................................................................................. Items in process of collection 11 ........................................................................................... 2018 Change $36.7 0.6 11.1 95.0 $36.6 0.5 13.0 87.0 $0.0 0.1 (1.9) 8.0 Total short-term assets ................................................................................................. Imputed investments: 12 Imputed investment in Treasury Securities .......................................................................... Imputed investment in Fed Funds ........................................................................................ 143.4 137.1 6.3 20.5 253.0 ........................ 174.8 20.5 78.2 Total imputed investments ............................................................................................ Long-term assets: Premises 13 ........................................................................................................................... Furniture and equipment ...................................................................................................... Leasehold improvements and long-term prepayments ........................................................ Net pension asset ................................................................................................................. Deferred tax asset ................................................................................................................ 273.5 174.8 98.7 104.2 32.8 87.7 23.6 181.4 103.7 38.9 100.3 76.6 185.6 0.2 (6.0) (12.6) (53.0) (4.1) Total long-term assets ................................................................................................... 429.7 505.3 (75.6) Total assets ............................................................................................................ 846.6 817.2 29.4 Short-term liabilities: Deferred credit items ............................................................................................................ Short-term debt ..................................................................................................................... Short-term payables ............................................................................................................. 348.0 13.5 34.9 261.8 14.5 35.6 86.2 (1.0) (0.7) Total short-term liabilities .............................................................................................. Long-term liabilities: Long-term debt ..................................................................................................................... Postemployment/postretirement benefits and net pension liabilities 14 ................................ 396.4 311.9 84.5 ........................ 398.4 76.9 370.5 (76.9) 27.9 Total liabilities ................................................................................................................ Equity 15 ......................................................................................................................... 794.8 51.8 759.3 57.8 35.4 (6.0) Total liabilities and equity ....................................................................................... 846.6 817.2 29.4 TABLE 4—IMPUTED FUNDING FOR PRICED-SERVICES ASSETS [Millions of dollars] 2019 2018 A. Short-term asset financing: Short-term assets to be financed: Receivables ............................................................................................................................................... Materials and supplies .............................................................................................................................. Prepaid expenses ...................................................................................................................................... $36.7 0.6 11.1 $36.6 0.5 13.0 Total short-term assets to be financed ............................................................................................................ Short-term payables .................................................................................................................................. 48.4 34.9 50.1 35.6 Net short-term assets to be financed ............................................................................................................... 13.5 14.5 11 Credit float, which represents the difference between items in process of collection and deferred credit items, occurs when the Reserve Banks debit the paying bank for transactions prior to providing credit to the depositing bank. Float is directly estimated at the service level. 12 Consistent with the Board’s PSR policy, the Reserve Banks’ priced services will hold and amount equivalent to six months of the Fedwire Funds Service’s current operating expenses as liquid net financial assets and equity on the pro VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 forma balance sheet. Six months of the Fedwire Funds Service’s projected current operating expenses is $50.5 million. In 2019, $38.8 million of equity was imputed to meet the regulatory capital requirements. 13 Includes the allocation of Board of Governors assets to priced services of $2.9 million for 2019 and $1.1 million for 2018. 14 Includes the allocation of Board of Governors liabilities to priced services of $0.8 million for 2019 and $0.6 million for 2018. PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 15 Includes an accumulated other comprehensive loss of $624.3 million for 2019 and $637.2 million for 2018, which reflects the ongoing amortization of the accumulated loss in accordance with ASC 715. Future gains or losses, and their effects on the pro forma balance sheet, cannot be projected. See table 5 for calculation of required imputed equity amount. E:\FR\FM\01FEN1.SGM 01FEN1 1132 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices TABLE 4—IMPUTED FUNDING FOR PRICED-SERVICES ASSETS—Continued [Millions of dollars] 2019 2018 Imputed short-term debt financing: 16 ............................................................................................................... 13.5 14.5 B. Long-term asset financing: Long-term assets to be financed: Premises .................................................................................................................................................... Furniture and equipment ........................................................................................................................... Leasehold improvements and long-term prepayments ............................................................................. Net pension asset ..................................................................................................................................... Deferred tax asset ..................................................................................................................................... 104.2 32.8 87.7 23.6 181.4 103.9 38.9 100.3 76.6 185.6 Total long-term assets to be financed .............................................................................................................. Postemployment/postretirement benefits and net pension liabilities ........................................................ 429.7 398.4 505.3 370.5 Net long-term assets to be financed ......................................................................................................... 31.3 134.8 Imputed long-term debt 23 ......................................................................................................................... Imputed equity 23 ....................................................................................................................................... ........................ 51.8 76.9 57.8 Total long-term financing ................................................................................................................... 51.8 134.8 TABLE 5—DERIVATION OF THE 2019 AND 2018 PSAF [Dollars in millions] 2019 2018 Debt A. Imputed long-term debt and equity: Net long-term assets to finance ................................................... Capital structure observed in market ........................................... Equity Debt Equity $31.3 58.3% $31.3 41.7% $134.8 58.2% $134.8 41.8% $18.2 $13.1 $78.4 $56.4 Pre-adjusted long-term debt and equity ....................................... Equity adjustments: 17 Equity to meet capital requirements ..................................... Adjustment to debt and equity funding given capital requirements 18 .............................................................................. Adjusted equity balance ........................................................ Equity to meet capital requirements 19 .................................. .............................. 51.8 .............................. 57.8 (18.2) .............................. .............................. 18.2 31.3 20.5 (1.5) .............................. .............................. 1.5 57.8 ........................ Total imputed long-term debt and equity ....................... .............................. $51.8 $76.9 $57.8 B. Cost of capital: Elements of capital costs: Short-term debt 20 .................................................................. Long-term debt 23 .................................................................. Equity 21 ................................................................................. $13.5 × 2.3% = 3.9% = 51.8 × 13.3% = $0.3 ........................ 6.8 $14.5 × 1.3% = 76.9 × 3.8% = 57.8 × 11.7% = $0.2 3.0 6.7 .............................. $7.1 .............................. $9.9 C. Incremental cost of PSR policy: Equity to meet policy .................................................................... 13.3% = ........................ 11.7% = ........................ D. Other required PSAF costs: Sales taxes ................................................................................... $3.7 ........................ $3.9 ........................ 16 See table 5 for calculation. minimum equity constraints are not met after imputing equity based on the capital structure observed in the market, additional equity is imputed to meet these constraints. The long-term funding need was met by imputing long-term debt and equity based on the capital structure observed in the market (see tables 4 and 6). In 2019, the amount of imputed equity met the minimum equity requirements for risk-weighted assets. 18 Equity adjustment offsets are due to a shift of long-term debt funding to equity in order to meet FDIC capital requirements for well-capitalized institutions. 17 If VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 19 Additional equity in excess of that needed to fund priced services assets is offset by an asset balance of imputed investments in treasury securities. 20 Imputed short-term debt and long-term debt are computed at table 4. 21 The 2019 ROE is equal to a risk-free rate plus a risk premium (beta * market risk premium). The 2019 after-tax CAPM ROE is calculated as 2.01% + (1.0 * 8.32%) = 10.33%. Using a tax rate of 22.2%, the after-tax ROE is converted into a pretax ROE, which results in a pretax ROE of (10.33%/ (1¥22.2%)) = 13.27%. Calculations may be affected by rounding. PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 22 If minimum equity constraints are not met after imputing equity based on all other financial statement components, additional equity is imputed to meet these constraints. Additional equity imputed to meet minimum equity requirements is invested solely in Treasury securities. The imputed investments are similar to those for which rates are available on the Federal Reserve’s H.15 statistical release, which can be located at http:// www.federalreserve.gov/releases/h15/data.htm. 23 The investments are imputed based on the amounts arising from the collection of items prior to providing credit according to established availability schedules. E:\FR\FM\01FEN1.SGM 01FEN1 1133 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices TABLE 5—DERIVATION OF THE 2019 AND 2018 PSAF—Continued [Dollars in millions] 2019 2018 Debt Equity Board of Governors expenses ..................................................... E. Total PSAF: As a percent of assets ................................................................. As a percent of expenses ............................................................ F. Tax rates ......................................................................................... Debt Equity 7.0 ........................ 5.1 ........................ .............................. 10.7 .............................. 9.0 .............................. $17.8 .............................. $18.9 .............................. .............................. .............................. 2.1% 3.3% 22.2% .............................. .............................. .............................. 2.3% 4.1% 22.7% TABLE 6—COMPUTATION OF 2019 CAPITAL ADEQUACY FOR FEDERAL RESERVE PRICED SERVICES [Dollars in millions] Assets Risk weight Weighted assets Imputed investments: 1-Year Treasury securities 22 ................................................................................................ Federal funds 23 .................................................................................................................... $20.5 253.0 ........................ 0.2 ........................ $50.6 Total imputed investments ............................................................................................ Receivables ................................................................................................................................. Materials and supplies ................................................................................................................. Prepaid expenses ........................................................................................................................ Items in process of collection ...................................................................................................... Premises ...................................................................................................................................... Furniture and equipment ............................................................................................................. Leasehold improvements and long-term prepayments ............................................................... Net pension asset ........................................................................................................................ Deferred tax asset ....................................................................................................................... 273.5 36.7 0.6 11.1 95.0 104.2 32.8 87.7 23.6 181.4 ........................ 0.2 1.0 1.0 0.2 1.0 1.0 1.0 1.0 1.0 50.6 7.3 0.6 11.1 19.0 104.2 32.8 87.7 23.6 181.4 Total ...................................................................................................................................... 846.6 ........................ 518.3 Imputed equity: Capital to risk-weighted assets ............................................................................................ Capital to total assets ........................................................................................................... 10.0% 6.1% ........................ ........................ ........................ ........................ C. Check Service—Table 7 shows the 2017 actual, 2018 estimated, and 2019 budgeted cost-recovery performance for the commercial check service. TABLE 7—CHECK SERVICE PRO FORMA COST AND REVENUE PERFORMANCE [Dollars in millions] Year 2017 (actual) ........................................................................ 2018 (estimate) .................................................................... 2019 (budget) ....................................................................... 1. 2018 Estimate—The Reserve Banks estimate that the check service will recover 101.7 percent of total expenses and targeted ROE, compared with a 2018 budgeted recovery rate of 101.6 percent. The expected decline in check volumes processed by the Reserve VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1 2 3 [1 – 2] 4 5 [1/(2 + 4)] 142.0 133.2 128.3 131.3 129.5 124.8 Banks continues to influence the check service’s cost recovery. Through August, total commercial forward and total commercial return check volumes were 7.6 percent and 7.2 percent lower, respectively, than they were during the same period last year. PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 10.7 3.8 3.4 1.4 1.5 1.5 107.0 101.7 101.5 Consistent with anticipated fourthquarter declines, for full-year 2018, the Reserve Banks estimate that their total forward check volume will decline 7.6 percent (compared with a budgeted decline of 4.7 percent) and their total return check volume will decline 7.7 E:\FR\FM\01FEN1.SGM 01FEN1 1134 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices percent (compared with a budgeted decline of 3.5 percent) from 2017 levels.24 While these volume declines will affect budgeted total revenue, the Reserve Banks estimate that total expenses will also be lower given the decline in those expenses directly correlated with volumes as well as the continued recognition of operational efficiencies. This has allowed for close alignment between budgeted and estimated 2018 cost recovery. 2. 2019 Pricing—The Reserve Banks expect the check service to recover 101.5 percent of total expenses and targeted ROE in 2019. The Reserve Banks project revenue to be $128.3 million, a decline of 3.7 percent from the 2018 estimate. This decline is driven in part by anticipated accelerating decline in the overall number of checks written, as well as by competition from correspondent banks, aggregators, and direct exchanges.25 Total expenses for the check service are projected to be $124.8 million, a decrease of $4.7 million, or 3.6 percent, from 2018 expenses, primarily because of reduced operating costs, including cost savings associated with the Reserve Banks’ customer support services. The Reserve Banks evaluate and set tier assignments annually based on changes in the volume of items received by endpoints. In 2019, the Reserve Banks will reassign the tier placement of 1,116 forward and 240 return endpoints in the FedForward and FedReturn products, respectively.26 Based on these 2019 tier assignments, the Reserve Banks will increase the FedForward Premium Daily Fee A, B, and C per item fees by $0.001 for Tier 3 and $0.003 for Tier 4, while also increasing to the Premium Daily Fee C daily fixed fee by $200, from $3,500 to $3,700. These price increases are intended to better align pricing between premium daily and standard deposit options. The Reserve Banks will also lower the average daily forward receipt and return volume thresholds by approximately 6.0 percent for tiers 1, 2, 3, and 4 for FedForward® and FedReturn® image cash letter and daily fee deposit options based on the 2019 tier assignments.27 These changes are intended to account for the anticipated continued decline in check deposit volumes. Tables 8, 9, 10, and 11 show the 2018 volume thresholds and the 2019 thresholds for the four tiered pricing structures. TABLE 8—FEDFORWARD STANDARD DEPOSIT TIER VOLUME THRESHOLDS [Applicable to Standard ICL, Premium ICL, Deferred ICL, Dollar-Culled ICL, Endpoint-Culled ICL, Standard Daily Fee A, and Standard Daily Fee B deposit options] Tier 1 2 3 4 2018 Average daily forward receipt volume items/day ......................... ......................... ......................... ......................... Over 65,000 ............................................................................. 10,001–65,000 ......................................................................... 750–10,000 .............................................................................. Less than 750 .......................................................................... 2019 Average daily forward receipt volume items/day Over 61,000. 9,401–61,000. 700–9,400. Less than 700. TABLE 9—FEDFORWARD PREMIUM DAILY DEPOSIT OPTION TIER VOLUME THRESHOLDS [Applicable to Premium Daily Fee A, Premium Daily Fee B, and Premium Daily Fee C deposit options] Tier 0 1 2 3 4 2018 Average daily forward receipt volume items/day ......................... ......................... ......................... ......................... ......................... See explanation below * ........................................................... Over 25,000 ............................................................................. 3,301–25,000 ........................................................................... 750–3,300 ................................................................................ Less than 750 .......................................................................... 2019 Average daily forward receipt volume items/day See explanation below.* Over 23,500. 3,101–23,500. 700–3,100. Less than 700. * Tier 0 consists of financial institutions that meet both of the following criteria: 1. Less than 10 percent of their Reserve Bank forward receipt volume was deposited with the Reserve Banks by Premium Daily Fee depositors during the sample period, and 2. Their average daily Reserve Bank forward receipt volume exceeded 150 items per day during the sample period. Tier 0 is intended to be a transitional tier: Once a financial institution is assigned to tier 1–4 or the substitute check tier, it cannot be assigned to tier 0. TABLE 10—FEDRETURN STANDARD DEPOSIT TIER VOLUME THRESHOLDS [Applicable to Standard ICL deposit option] Tier 1 2 3 4 2018 Average daily return receipt volume items/day ......................... ......................... ......................... ......................... Over 3,000 ............................................................................... 1,001–3,000 ............................................................................. 100–1,000 ................................................................................ Less than 100 .......................................................................... 24 Total Reserve Bank forward check volumes are expected to be 4.8 billion in 2018. Total Reserve Bank return check volumes are expected to be 28.9 million in 2018. 25 The Reserve Banks estimate that total commercial forward check volumes in 2019 will decline 8.5 percent, to 4.4 billion, and total commercial return check volumes will decline 7.5 percent, to 26.7 million in 2019. 26 The tiers for 2019 are available at https:// www.frbservices.org/resources/fees/check2019.html. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 2019 Average daily return receipt volume items/day Over 2,820. 941–2,820. 94–940. Less than 94. 27 As part of the Reserve Banks’ 2016 restructured FedForward and FedReturn fee schedules, the Reserve Banks use a volume-based tiered pricing structure to determine per-item fees based on the average daily receipt or return volume an endpoint receives from chartered institutions through the Reserve Banks. Tiers for the three premium variations of the Reserve Banks’ daily subscription fee deposit options (FedForward Premium Daily Fee A, B, and C) are based only on volume received by the Reserve Banks’ top 15 customers, which represent the likely users of the deposit options. PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 These premium daily fee options include a fifth tier, Tier 0, composed of routing numbers for which the Reserve Banks currently receive little to no volume from the specified subset of Reserve Bank customers (and which therefore cannot currently be assigned to the other tiers with sufficient predictability). Tier 0 is evaluated annually, along with all other tiers and endpoints, and endpoints cannot be placed in Tier 0 if they have previously been assigned to one of the other tiers. E:\FR\FM\01FEN1.SGM 01FEN1 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices 1135 TABLE 11—FEDRETURN PREMIUM DAILY DEPOSIT OPTION TIER VOLUME THRESHOLDS [Applicable to Premium Daily Fee A deposit option] Tier 0 1 2 3 4 2018 Average daily return receipt volume items/day ......................... ......................... ......................... ......................... ......................... See explanation below * ........................................................... Over 1,500 ............................................................................... 501–1,500 ................................................................................ 100–500 ................................................................................... Less than 100 .......................................................................... 2019 Average daily return receipt volume items/day See explanation below.* Over 1,410. 471–1,410. 94–470. Less than 94. * Tier 0 consists of financial institutions with less than 10 percent of their Reserve Bank return receipt volume deposited with the Reserve Banks by Premium Daily Fee depositors during the sample period. Tier 0 is intended to be a transitional tier: once a financial institution is assigned to tier 1–4 or the substitute check tier, it cannot be assigned to tier 0. The Reserve Banks will increase cash letter fees by $0.50 for all deadlines on the FedForward Standard, Deferred, Dollar-Culled, and Endpoint-Culled image cash letters and FedReturn Standard image cash letters. The Reserve Banks will also increase the FedReceipt Premium Delivery 8:00 a.m. EST target per-item fee by $0.006 and the Premium Delivery 10:00 a.m. target and 12:00 noon target per-item fees by $0.002.28 Further, the Reserve Banks will increase FedReceipt Electronic Reject Repair fees by $0.05, increasing the Basic repair fee from $0.15 per item to $0.20 per item and increasing the Premium repair fee from $0.25 per item to $0.30 per item. Together, these changes are intended to facilitate longerterm cost recovery for the check service by increasing the proportion of fixed revenue while still providing price stability for customers in light of the anticipated continued decline in check volumes. The Reserve Banks will continue increasing fees to encourage depositors to shift volume away from legacy paperrelated products in light of today’s electronic check-processing environment. Specifically, the Reserve Banks will increase all fees for the FedImage product and certain truncation fees by approximately 10.0 percent.29 Table 12 shows the 2019 FedImage and Electronic Check Services fees. TABLE 12—FEDIMAGE AND ELECTRONIC CHECK SERVICES AND FEES Fixed fee Image Archive: Image Capture + 7 business day archive ........................................................................................ Image Capture On-Us Surcharge .................................................................................................... 30 business day archive .................................................................................................................. 60 business day archive .................................................................................................................. 7-year archive/11-year archive ........................................................................................................ Dual archive (Transition period up to 120 days) ............................................................................. Extended dual archive (More than 120 days) ................................................................................. Back File Conversion ....................................................................................................................... Electronic On-Us Service ................................................................................................................. Extended RAID Storage 61 days to 6 months ................................................................................................................. 61 days to 12 months ............................................................................................................... 61 days to 24 months ............................................................................................................... Image Retrievals: Retrievals to view via FedLine Web® inquiry .................................................................................. Retrievals to email via FedLine Web: Request via FedLine Web inquiry ............................................................................................ Recurring request ..................................................................................................................... Image Access and Retrievals through a Gateway ................................................................... Subscription Retrievals ............................................................................................................. Manual FedImage Requests (requests performed by FRB staff) ............................................ Image Delivery: Physical Media: CD–ROM Select Accounts Service—RAID .............................................................................. CD–ROM—Tape ....................................................................................................................... Truncation: Image Enhanced Truncation ............................................................................................................ Return Item Retrieval—Fedline ........................................................................................................ Finally, the Reserve Banks will introduce two new fees as incentives to financial institutions to reduce errors in adjustment case submissions. The Reserve Banks will introduce a $0.50 fee for encoding error and duplicate 28 The 8:00 a.m. delivery target is expressed in eastern time, while the 10:00 a.m. and 12:00 noon targets are local time. 29 Because of rounding, the individual price increases range from 8.3 percent to 12.5 percent. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 Per item fee $6.00 .............................. ........................................ ........................................ ........................................ ........................................ ........................................ ........................................ $4.25 .............................. $4.25 .............................. $0.0090 0.0212 0.0011 0.0013 0.0020 0.0012 0.0121 0.0121 0.0121 ........................................ ........................................ ........................................ 0.0010 0.0024 0.0061 ........................................ 0.4300 ........................................ ........................................ ........................................ ........................................ ........................................ 0.4300 0.4300 0.4300 0.0026 7.2500 $18.15/CD–ROM ........... $18.15/CD–ROM ........... 0.0190 0.1200 $6.60 .............................. ........................................ 0.0110 1.2700 payment adjustment cases caused by the depositary bank’s incorrect encoding or duplicate deposit of an item. The E:\FR\FM\01FEN1.SGM 01FEN1 1136 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices Reserve Banks will also introduce a $2.50 fee for automated adjustment case types that require manual intervention by Reserve Bank staff because of error on the part of the adjusting bank.30 These new fees are intended to help drive efficiencies throughout the industry’s check collection process by providing an incentive to financial institutions to improve the quality of their check deposit processing. In addition, the $2.50 fee will cover the staffing costs associated with manually handling cases that should have been automatically resolved. Table 13 shows the 2019 fees under Quality Improvement Initiatives for Electronic Check Collection. TABLE 13—QUALITY IMPROVEMENT INITIATIVES Per case/ item fee Product Check Adjustments—Deposit Quality Issues ...................................................................................................................................... Check Adjustments—Incorrect/Incomplete Case Opening ................................................................................................................. Return Deposit Exceptions—Items Qualified to the Federal Reserve as BOFD 31 ............................................................................ The Reserve Banks estimate that the announced price changes will result in a 4.0 percent average price increase for check customers. The primary risks to the Reserve Banks’ ability to achieve budgeted 2019 cost recovery for the check service include greater-than-expected declines in check volume due to the general reduction in check writing and increased competition from correspondent banks, aggregators, and $0.50 2.50 15.00 direct exchanges, which would result in lower-than-anticipated revenue. D. FedACH Service—Table 14 shows the 2017 actual, 2018 estimate, and 2019 budgeted cost-recovery performance for the commercial FedACH service. TABLE 14—FEDACH SERVICE PRO FORMA COST AND REVENUE PERFORMANCE [Dollars in millions] Year 2017 (actual) ........................................................................ 2018 (estimate) .................................................................... 2019 (budget) ....................................................................... Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1 2 3 [1 – 2] 4 5 [1/(2 + 4)] 141.3 149.2 152.0 140.0 150.4 147.4 1.3 ¥1.2 4.6 1.6 1.9 1.9 99.8 98.0 101.8 1. 2018 Estimate—The Reserve Banks estimate that the FedACH service will recover 98.0 percent of total expenses and targeted ROE, compared with a 2018 budgeted recovery rate of 96.1 percent. Through August, FedACH commercial origination and receipt volume was 7.5 percent higher than it was during the same period last year. For full-year 2018, the Reserve Banks estimate that FedACH commercial origination and receipt volume will increase 6.1 percent from 2017 levels, in line with the budgeted increase of 5.2 percent. However, investment costs associated with the multiyear technology initiative to modernize the FedACH processing platform are driving the overall under recovery rate. 2. 2019 Pricing—The Reserve Banks expect the FedACH service to recover 101.8 percent of total expenses and targeted ROE in 2019. FedACH commercial origination and receipt volume is projected to grow 3.3 percent, which, combined with anticipated incremental revenue from new services, is expected to contribute to an increase of $2.8 million in total revenue from the 2018 estimate. Total expenses are projected to decrease $3.0 million from 2018 expenses, primarily because of the reduction in costs associated with the development and expected completion in 2019 of the new FedACH technology platform. The Reserve Banks will introduce a new Exception Resolution Service that provides an automated means for participants to manage ACH exceptions for entries settled through FedACH.32 The Reserve Banks expect that automation of exception cases will improve efficiency of FedACH payments by streamlining existing timeconsuming manual processes that banks use to manage exception cases. The Service is optional; customers will be able to originate an exception case directly through FedLine, through a third-party agent on their behalf, or through a Federal Reserve Bank on their behalf. The Reserve Banks will not change fees for existing FedACH priced services. The primary risks to the Reserve Banks’ ability to achieve budgeted 2019 cost recovery for the FedACH service are unanticipated cost overruns associated with the FedACH technology modernization project and unanticipated volume reductions. 30 This fee is charged to a financial institution that provides incorrect or incomplete information when opening an adjustment case with the Reserve Banks. The fee is only applicable to adjustment cases that would have resolved automatically had the case been submitted correctly (investigation types ENC, PAID, NCH, DISP, SOR and LNE). 31 This existing fee was previously located in the FedReturn section of the Electronic Check Collection Fee. 32 Specifically, the service is designed to handle disputes, notifications, questions, or requests for additional information from a financial institution either for their own use or on behalf of their account holder. Eight of the most common exception requests between financial institutions will be able to be managed through the service initially: (1) Written statement of unauthorized debit copy, (2) converted check copy, (3) ODFI request for return, (4) RDFI request for late return acceptance, (5) request for proof of debit authorization, (6) originator contact information, (7) payment trace request, and (8) general inquiries (used to contact another institution for information exchange). The ERS product will not be available to customers on January 2nd, 2019.The Reserve Banks will provide notice to customers, regarding the availability of the product, once an implementation date has been determined. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\01FEN1.SGM 01FEN1 1137 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices E. Fedwire Funds and National Settlement Services—Table 15 shows the 2017 actual, 2018 estimate, and 2019 budgeted cost-recovery performance for the Fedwire Funds and National Settlement Services. TABLE 15—FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES PRO FORMA COST AND REVENUE PERFORMANCE [Dollars in millions] Year Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1 2 3 [1 – 2] 4 5 [1/(2 + 4)] 2017 (actual) ........................................................................ 2018 (estimate) .................................................................... 2019 (budget) ....................................................................... 1. 2018 Estimate—The Reserve Banks estimate that the Fedwire Funds and National Settlement Services will recover 105.0 percent of total expenses and targeted ROE, compared with a 2018 budgeted recovery rate of 103.9 percent. Through August, Fedwire Funds Service online volume was 5.1 percent higher than it was during the same period last year. For full-year 2018, the Reserve Banks estimate that Fedwire Funds Services online volume will increase 3.2 percent from 2017 levels, compared with the 0.8 percent volume decrease that had been budgeted. Through August, the National Settlement Service (NSS) settlement file volume was 3.6 percent higher than it was during the same period last year, and settlement entry volume was 1.1 percent higher. For the full year, the Reserve Banks estimate that settlement file volume will increase 1.5 percent (in 129.7 132.2 133.6 120.8 124.4 131.1 line with a budgeted increase of 1.3 percent) and settlement entry volume will decrease 2.3 percent from 2017 levels (compared with a budgeted 0.7 percent increase). 2. 2019 Pricing—The Reserve Banks expect the Fedwire Funds and National Settlement Services to recover 100.7 percent of total expenses and targeted ROE. Revenue is projected to be $133.6 million, an increase of 1.1 percent from the 2018 estimate. The Reserve Banks project total expenses to be roughly $6.7 million higher than 2018 expenses, primarily reflecting investments in new initiatives to improve resiliency and operational functionality. The Reserve Banks will increase the offline send surcharge and offline receive surcharge for the Fedwire Funds Service from $60.00 to $65.00 in order to offset project costs related to the automation of Office of Foreign Asset 8.9 7.8 2.5 1.3 1.5 1.6 106.2 105.0 100.7 Control (OFAC) screening within the offline process. The Reserve Banks estimate that the price changes, along with an expected increase in incentive discount-eligible volume, will ultimately result in an overall 2.0 percent average price increase for Fedwire Funds customers. The Reserve Banks will not change NSS fees for 2019. The primary risk to the Reserve Banks’ ability to achieve budgeted 2019 cost recovery for these services is an overrun in costs from new initiatives to improve resiliency and operational functionality. Unanticipated decreases in volume may also negatively impact cost recovery. F. Fedwire Securities Service—Table 16 shows the 2017 actual, 2018 estimate, and 2019 budgeted costrecovery performance for the Fedwire Securities Service.33 TABLE 16—FEDWIRE SECURITIES SERVICE PRO FORMA COST AND REVENUE PERFORMANCE [Dollars in millions] Year 2017 (actual) ........................................................................ 2018 (estimate) .................................................................... 2019 (budget) ....................................................................... Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1 2 3 [1 – 2] 4 5 [1/(2 + 4)] 28.6 27.1 26.4 27.3 27.7 27.5 1.3 ¥0.7 ¥1.1 0.3 0.3 0.3 103.6 96.5 94.7 1. 2018 Estimate—The Reserve Banks estimate that the Fedwire Securities Service will recover 96.5 percent of total expenses and targeted ROE, compared with a 2018 budgeted recovery rate of 97.6 percent. The Reserve Banks estimate revenue to be $27.1 million, a decrease of 5.3 percent from the 2018 budget. Total expenses are projected to be $27.7 million for full-year 2018, an increase of 1.7 percent from the 2018 budget. Through August, Fedwire Securities Service online agency transfer volume was 2.3 percent lower than it was during the same period last year. For full-year 2018, the Reserve Banks estimate that Fedwire Securities Service online agency transfer volume will decline 4.8 percent from 2017 levels, compared with a budgeted decline of 33 The Reserve Banks provide transfer services for securities issued by the U.S. Treasury, federal government agencies, government-sponsored enterprises, and certain international institutions. The priced component of this service, reflected in this memorandum, consists of revenues, expenses, and volumes associated with the transfer of all nonTreasury securities. For Treasury securities, the U.S. Treasury assesses fees for the securities transfer component of the service. The Reserve Banks assess a fee for the funds settlement component of a Treasury securities transfer; this component is not treated as a priced service. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 E:\FR\FM\01FEN1.SGM 01FEN1 1138 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices 15.4 percent. This decrease in online agency transfer volume primarily reflects two market trends. First, a continuation of interest rate increases in 2018 has led to a decrease in mortgage refinance volume and issuance, which in turn has led to a decrease in settlement activity for agency mortgagebacked securities over Fedwire Securities. Second, JP Morgan Chase (JPMC) has recently completed its exit from the broker-dealer services business, resulting in Bank of New York Mellon generally serving as the sole clearing bank for government securities. As a result of this market shift, online agency transfer volume is expected to decrease through year-end 2018. These structural changes within the government securities clearing and settlement market are expected to continue to affect online transfer volumes through 2019. For full-year 2018, volumes for the Fedwire Securities’ two largest revenuegenerating services—account maintenance and issue maintenance— are expected to decline from 2017 levels. Through August, account maintenance volume was 5.3 percent lower than it was during the same period last year. For full-year 2018, the Reserve Banks estimate that account maintenance volume will decline 5.0 percent from 2017 levels, compared with a budgeted decline of 3.2 percent. The higher-than-expected account maintenance volume decline is largely the result of joint custody account closures. Through August, the number of agency issues maintained was 3.9 percent lower than it was during the same period last year. For full-year 2018, the Reserve Banks estimate that the number of agency issues maintained will decline 4.7 percent from 2017 levels, compared with a budgeted decline of 1.4 percent. 2. 2019 Pricing—The Reserve Banks expect the Fedwire Securities Service to recover 94.7 percent of total expenses and targeted ROE in 2019. Revenue is projected to be $26.4 million, a decrease of 2.6 percent from the 2018 estimate. The Reserve Banks also project that 2019 expenses will remain relatively flat, decreasing by $0.2 million from the 2018 estimate. Significant drivers of 2019 operating costs include investments to advance new initiatives to improve resiliency and operational functionality. As JPMC finalizes its reallocation of holdings and ongoing market changes reach steady state, the Reserve Banks project that online agency transfer volume will remain relatively flat, with a slight increase of 0.8 percent in 2019. Additionally, the volume of accounts VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 maintained will likely decrease 5.6 percent, and the volume of agency issues maintained will likely decrease 15.5 percent.34 Account maintenance volume is expected to continue to decline in 2019 because of ongoing joint custody account closures driven by state-level collateral program changes. Issue maintenance volume is expected to decline because of cost allocation adjustments necessitated by the completion of the Fedwire Modernization Program, and new securities related to the Federal Home Loan Mortgage Corporation’s securities exchange program in advance of the Federal Housing Finance Agency’s Single Security Initiative. The Reserve Banks will increase the online agency transfer fee from $0.77 to $0.98. Processing costs for online agency transfers and online Treasury transfers are nearly identical, yet the corresponding fees are different; therefore, the fee change is intended to bring the two fees into better alignment.35 Additionally, the Reserve Banks will increase the automated claims adjustment processing fee from $0.80 to $1.00. This fee increase will offset costs associated with the automated claims adjustment processing expansion project, which is scheduled to go live at year-end 2019. The Reserve Banks estimate that the combined price changes will result in a 6.0 percent average price increase for Fedwire Securities customers. The primary risks to the Reserve Banks’ ability to achieve budgeted 2019 cost recovery for these services are lower-than-expected volume resulting from the pace of structural changes in government securities clearing and settlement, and higher-than-expected costs from new initiatives to improve resiliency and operational functionality. G. FedLine Access—The Reserve Banks charge fees for the electronic connections that depository institutions use to access priced services and allocate the costs and revenue associated with this electronic access to the various priced services. There are currently six FedLine channels through which customers can access the Reserve Banks’ priced services: FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, FedLine Command, and FedLine Direct.36 The Reserve Banks bundle these channels into eleven FedLine packages, described below, that are supplemented by a number of premium (or a` la carte) access and accounting information options. In addition, the Reserve Banks offer FedComplete packages, which are bundled offerings of FedLine connections and a fixed number of FedACH, Fedwire Funds, and Check 21enabled transactions. Eight attended access packages offer manual access to critical payment and information services via a web-based interface. The FedMail package provides access to basic information services via email, while the two FedLine Exchange packages are designed to provide certain services, such as the E-Payments Routing Directory, to customers that otherwise do not use FedLine for any payment services. The two FedLine Web packages offer online attended access to a range of services, including cash services, FedACH information services, and Check services. Three FedLine Advantage packages expand upon the FedLine Web packages and offer attended access to critical transactional services: FedACH, Fedwire Funds, and Fedwire Securities. Three unattended access packages are computer-to-computer, IP-based interfaces. The FedLine Command package offers an unattended connection to FedACH as well as to most accounting information services. The two remaining options are FedLine Direct packages, which allow for unattended connections at one of two connection speeds to FedACH, Fedwire Funds, and Fedwire Securities transactional and information services and to most accounting information services.37 In 2019, the Reserve Banks will offer upgraded FedLine Direct Plus and FedLine Direct Premier packages, at monthly fees of $5,500 and $10,500 respectively, in order to reflect improved network resiliency, efficiency in supporting all payments traffic, and availability of higher network speeds.38 Historically, the Reserve Banks’ FedLine 34 The online transfer fee, monthly account maintenance fee, and monthly issue maintenance fee accounted for more than 94 percent of total Fedwire Securities Service revenue through August 2018. 35 Treasury online transfer fees are set by and remitted to the U.S. Department of the Treasury, except for a funds movement fee of $0.11, which is set and retained by the Federal Reserve Banks for their direct, support, and overhead costs of settling on their books the payment associated with the transfer of a Treasury security between securities accounts. 36 FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, FedLine Command, and FedLine Direct are registered trademarks of the Federal Reserve Banks. 37 The Reserve Banks offer an unattended check product, Check 21 Large File Delivery, that allows a depository institution to upload and download check image cash letters automatically via a direct network connection to the Reserve Banks. 38 As of July 16, 2018, 256K and T1 line speed connections are no longer offered to new customers as part of the FedLine Direct Plus and FedLine Direct Premier packages. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 E:\FR\FM\01FEN1.SGM 01FEN1 1139 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices Direct connections were not able to support all payment traffic including Check Services because of limitations in network speed and ability to manage bandwidth. The Reserve Banks will also increase the monthly fee for the current (legacy) FedLine Direct Plus solution by $350, from $3,650 to $4,000. Existing customers can use the current (legacy) FedLine Plus and Premier solutions and Check 21 Large File Delivery but will eventually need to convert to the enhanced FedLine Direct Solutions. Existing users should expect the legacy solutions to be retired and plan migration efforts to the new service packages beginning in late 2018. The Reserve Banks will also increase the a` la carte Network Diversity monthly fee by $500, from $2,000 to $2,500.39 Table 17 provides a summary of the attributes and 2019 pricing for legacy and upgraded FedLine Direct packages: TABLE 17—FEDLINE DIRECT PACKAGES Legacy 40 FedLine Direct Plus: Connection Speed ................................................. Dual Vendors ......................................................... Check 21 Services ................................................ Server Certificates ................................................. Network Diversity ................................................... Contingency Solution ............................................. Additional WANs .................................................... VPNs ...................................................................... Bundled FedLine Channels ................................... Price ....................................................................... FedLine Direct Premier: Connection Speed ................................................. Dual Vendors ......................................................... Check 21 Services ................................................ Server Certificates ................................................. Network Diversity ................................................... Contingency Solution ............................................. Additional WANs .................................................... VPNs ...................................................................... Bundled FedLine Channels ................................... Price ....................................................................... 256 Kbps ...................................................................... N/A ................................................................................ Available a` la carte ....................................................... Two included ................................................................ None included ............................................................... Available a` la carte ....................................................... None included ............................................................... One included ................................................................ Web, Advantage, Command ........................................ $4,000.00 ...................................................................... 2 Mbps. Included. Included. Included. None included. Included. None included. One included. Web, Advantage, Command. $5,500.00. 1.5 Mbps ....................................................................... N/A ................................................................................ Available a` la carte ....................................................... Two included ................................................................ None included ............................................................... Available a` la carte ....................................................... None included ............................................................... Two included ................................................................ Web, Advantage, Command ........................................ $6,800.00 ...................................................................... 2 Mbps. Included. Included. Included. One included. Included. One included. Two included. Web, Advantage, Command. $10,500.00. meets industry standards and enhances their experience. The Reserve Banks estimate that the price changes will result in a 7.5 percent average price increase for FedLine customers. This increase is primarily driven by the changes to FedLine Direct Plus and Premier packages that provide enhanced network options. In addition, the Reserve Banks will eliminate specific a` la carte fees and services for current FedLine packages. The Reserve Banks will discontinue offering FedLine Command server certificates as a separate monthly fee. FedLine Command server certificates will be included in FedLine Command packages for no additional cost. Including these certificates in FedLine Command packages is similar to current practices for upgraded FedLine Direct packages and will result in a consistent customer experience across both product lines. The Reserve Banks will also discontinue offering the Accounting Totals by Service (ACTS) report as an Accounting Service option for customers, because of low usage. In addition, the Reserve Banks will discontinue offering new FedMail Fax subscriptions to customers, in order to encourage them to move to more modern and secure technology that II. Analysis of Competitive Effect All operational and legal changes considered by the Board that have a substantial effect on payment system participants are subject to the competitive impact analysis described in the March 1990 policy ‘‘The Federal Reserve in the Payments System.’’ 42 Under this policy, the Board assesses whether proposed changes would have a direct and material adverse effect on the ability of other service providers to compete effectively with the Federal Reserve in providing similar services because of differing legal powers or 39 Network Diversity refers to a method for improving the resiliency of a computing network by using two or more telecommunication paths with different characteristics so that the first remains unaffected by events interrupting traffic on the second and vice versa. 40 Available only to existing customers prior to 2019. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 2019 41 Frm 00093 Fmt 4703 Sfmt 4703 constraints or because of a dominant market position deriving from such legal differences. If any proposed changes create such an effect, the Board must further evaluate the changes to assess whether the benefits associated with the changes—such as contributions to payment system efficiency, payment system integrity, or other Board objectives—can be achieved while minimizing the adverse effect on competition. The 2019 fees, fee structures, and changes in service will not have a direct and material adverse effect on the ability of other service providers to compete effectively with the Reserve Banks in providing similar services. The changes should permit the Reserve Banks to earn a ROE that is comparable to overall market returns and provide for full cost recovery over the long run. III. 2019 Fee Schedules 41 Available to new and existing customers starting 2019. 42 Federal Reserve Regulatory Service (FRRS) 9– 1558. E:\FR\FM\01FEN1.SGM 01FEN1 1140 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices FEDACH SERVICE 2019 FEE SCHEDULE [Effective January 2, 2019. Bold indicates changes from 2018 prices] Fee FedACH minimum monthly fee: Originating Depository Financial Institution (ODFI) 43 ............................................................................................................ Receiving Depository Financial Institution (RDFI) 44 .............................................................................................................. Origination (per item or record): Forward or return items .......................................................................................................................................................... SameDay Service—forward item 45 ....................................................................................................................................... Addenda record ...................................................................................................................................................................... FedLine Web-originated returns and notification of change (NOC) 46 ................................................................................... Facsimile Exception Return/NOC 47 ....................................................................................................................................... SameDay Exception Return ................................................................................................................................................... Automated NOC ..................................................................................................................................................................... Volume-based discounts (based on monthly billed origination volume) 48 per item when origination volume is: 750,001 to 1,500,000 items per month ........................................................................................................................... more than 1,500,000 items per month ............................................................................................................................ Volume-based discounts (based on monthly billed receipt volume) 49 per item when receipt volume is: 10,000,001 to 15,000,000 items per month .................................................................................................................... more than 15,000,000 items per month .......................................................................................................................... Receipt (per item or record): Forward Item .......................................................................................................................................................................... Return Item ............................................................................................................................................................................. Addenda record ...................................................................................................................................................................... Volume-based discounts: Non-Premium Receivers 50 per item when volume is: 750,001 to 12,500,000 items per month 51 .............................................................................................................. more than 12,500,000 items per month 52 ............................................................................................................... Premium Receivers, Level One 53 per item when volume is: 750,001 to 1,500,000 items per month 51 ....................................................................................................................... 1,500,001 to 2,500,000 items per month 52 .................................................................................................................... 2,500,001 to 12,500,000 items per month 52 .................................................................................................................. more than 12,500,000 items per month 52 ...................................................................................................................... Premium Receivers, Level Two 54 per item when volume is: 750,001 to 1,500,000 items per month 51 ....................................................................................................................... 1,500,001 to 2,500,000 items per month 52 .................................................................................................................... 2,500,001 to 12,500,000 items per month 52 .................................................................................................................. more than 12,500,000 items per month 52 ...................................................................................................................... FedACH Bundled Package Pricing Discount: Monthly Bundled Service Package Discount 55 ..................................................................................................................... Monthly FedACH Risk® Management fees: 56 For up to 5 criteria sets ................................................................................................................................................... For 6 through 11 criteria sets .......................................................................................................................................... For 12 through 23 criteria sets ........................................................................................................................................ For 24 through 47 criteria sets ........................................................................................................................................ For 48 through 95 criteria sets ........................................................................................................................................ For 96 through 191 criteria sets ...................................................................................................................................... For 192 through 383 criteria sets .................................................................................................................................... For 384 through 584 criteria sets .................................................................................................................................... For more than 584 criteria sets ....................................................................................................................................... Risk origination monitoring batch (based on total monthly volume): For 1 through 100,000 batches (per batch) .................................................................................................................... For more than 100,000 batches (per batch) ................................................................................................................... Monthly FedPayments® Reporter Service: FedPayments Reporter Service package pricing includes: ACH Received Entries Detail—Customer and Depository Financial Institution. ACH Return Reason Report—Customer and Depository Financial Institution. ACH Volume Summary by SEC Code—Customer. Customer Transaction Activity. Death Notification. International (IAT). Notification of Change. Payment Data Information File. Remittance Advice Detail. Remittance Advice Summary. Return Item Return Ratio. Social Security Beneficiary. Originator Setup. Report Delivery via FedLine Access Solution. On Demand Surcharge ................................................................................................................................................... VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 E:\FR\FM\01FEN1.SGM 01FEN1 $50.00. $40.00. $0.0035. $0.0010 surcharge. $0.0015. $0.35. $45.00. $45.00. $0.20. $0.0008 discount. $0.0010 discount. $0.0002 discount. $0.0003 discount. $0.0035. $0.0075. $0.0015. $0.0017 discount. $0.0019 discount. $0.0017 $0.0017 $0.0018 $0.0020 discount. discount. discount. discount. $0.0017 $0.0017 $0.0019 $0.0021 discount. discount. discount. discount. $20.00 discount. $35.00. $70.00. $125.00. $150.00. $250.00. $425.00. $675.00. $850.00. $1,100.00. $0.007. $0.0035. $1.00. 1141 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices FEDACH SERVICE 2019 FEE SCHEDULE—Continued [Effective January 2, 2019. Bold indicates changes from 2018 prices] Fee Report delivery via FedLine file access solution (monthly fee): For up to 50 reports ................................................................................................................................................. For 51 through 150 reports ...................................................................................................................................... For 151 through 500 reports .................................................................................................................................... For 501 through 1,000 reports ................................................................................................................................. For 1,001 through 1,500 reports .............................................................................................................................. For 1,501 through 2,500 reports .............................................................................................................................. For 2,501 through 3,500 reports .............................................................................................................................. For 3,501 through 4,500 reports .............................................................................................................................. For 4,501 through 5,500 reports .............................................................................................................................. For 5,501 through 7,000 reports .............................................................................................................................. For 7,001 through 8,500 reports .............................................................................................................................. For 8,501 through 10,000 reports ............................................................................................................................ For more than 10,000 reports .................................................................................................................................. Premier reports (per report generated): 57 ACH Volume Summary by SEC Code Report—Depository Financial Institution: For 1 through 5 reports ................................................................................................................................................... For 6 through 10 reports ................................................................................................................................................. For 11 or more reports .................................................................................................................................................... On Demand Surcharge ................................................................................................................................................... ACH Routing Number Activity Report: For 1 through 5 reports ................................................................................................................................................... For 6 through 10 reports ................................................................................................................................................. For 11 or more reports .................................................................................................................................................... On Demand Surcharge ................................................................................................................................................... ACH Originated Batch Report (monthly): For 1 through 5 reports ................................................................................................................................................... For 6 through 10 reports ................................................................................................................................................. For 11 or more reports .................................................................................................................................................... On Demand Surcharge ................................................................................................................................................... ACH Originated Batch Report (daily): Scheduled Report ............................................................................................................................................................ On Demand Surcharge ................................................................................................................................................... On-us inclusion: Participation (monthly fee per RTN) ............................................................................................................................... Per-item ........................................................................................................................................................................... Per-addenda .................................................................................................................................................................... Report delivery via encrypted email (per email) .................................................................................................................... Other Fees and Discounts: Monthly fee (per RTN): FedACH Participation Fee 58 ........................................................................................................................................... SameDay Service Origination Participation Fee 59 ......................................................................................................... FedACH Settlement Fee 60 ............................................................................................................................................. FedACH Information File Extract Fee ............................................................................................................................. IAT Output File Sort Fee ................................................................................................................................................. Fixed Participation Fee—Automated NOCs 61 ................................................................................................................ Non-Electronic Input/Output fee: 62 CD/DVD (CD or DVD) ..................................................................................................................................................... Paper (file or report) ........................................................................................................................................................ Fees and Credits Established by NACHA: 63 NACHA Same Day Entry fee (per item) ......................................................................................................................... NACHA Same Day Entry credit (per item) ..................................................................................................................... NACHA Unauthorized Entry fee (per item) ..................................................................................................................... NACHA Unauthorized Entry credit (per item) ................................................................................................................. NACHA Admin Network fee (monthly fee per RTN) ....................................................................................................... NACHA Admin Network fee (per entry) .......................................................................................................................... FedGlobal® ACH Payments: 64 Fixed Monthly Fee (per RTN): 65 Monthly origination volume more than 500 items ........................................................................................................... Monthly origination volume between 161 and 500 items ............................................................................................... Monthly origination volume less than 161 items ............................................................................................................. Per-item Origination Fee for Monthly Volume more than 500 Items (surcharge): 66 Canada service ............................................................................................................................................................... Mexico service ................................................................................................................................................................. Panama service ............................................................................................................................................................... Europe service ................................................................................................................................................................ Per-item Origination Fee for Monthly Volume between 161 and 500 items (surcharge): 66 Canada service ............................................................................................................................................................... Canada service ............................................................................................................................................................... Mexico service ................................................................................................................................................................. Panama service ............................................................................................................................................................... VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\01FEN1.SGM 01FEN1 $40.00. $60.00. $110.00. $200.00. $285.00. $460.00. $640.00. $820.00. $995.00. $1,225.00. $1,440.00. $1,650.00. $1,800.00. $10.00. $6.00. $1.00. $1.00. $10.00. $6.00. $1.00. $1.00. $10.00. $6.00. $1.00. $1.00. $0.65. $1.00. $10.00. $0.0030. $0.0015. $0.20. $65.00. $10.00. $55.00. $150.00. $75.00. $5.00. $50.00. $50.00. $0.052. $0.052 (credit). $4.50. $4.50 (credit). $22.00. $0.000185. $185.00. $60.00. $20.00. $0.50. $0.55. $0.60. $1.13. $0.75. $1.00. $1.05. $1.10. 1142 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices FEDACH SERVICE 2019 FEE SCHEDULE—Continued [Effective January 2, 2019. Bold indicates changes from 2018 prices] Fee Europe service ................................................................................................................................................................ Other FedGlobal ACH Payments Fees: Canada service: Return received from Canada 67 ..................................................................................................................................... Trace of item at receiving gateway ................................................................................................................................. Trace of item not at receiving gateway ........................................................................................................................... Mexico service: Return received from Mexico 67 ...................................................................................................................................... Item trace ........................................................................................................................................................................ Foreign currency to foreign currency (F3X) item originated to Mexico 66 ...................................................................... Panama service: Return received from Panama 67 .................................................................................................................................... Item trace ........................................................................................................................................................................ NOC ................................................................................................................................................................................. Europe service: F3X item originated to Europe 66 .................................................................................................................................... Return received from Europe 67 ...................................................................................................................................... Item trace ........................................................................................................................................................................ Exception Resolution Service: 68 Fixed Fee per RTN: 69 Self-Managed Cases ..................................................................................................................................................... Agent-Managed Cases .................................................................................................................................................. Federal Reserve Bank-Managed Cases ...................................................................................................................... Federal Reserve Bank-Managed Cases Case Open Fee .............................................................................................................................................................. Case Response Fee ...................................................................................................................................................... Variable Case Open Fees (applies to self-managed and agent-managed cases only at the parent RTN): 70 1–50 cases ..................................................................................................................................................................... 51–100 cases ................................................................................................................................................................. 101–500 cases ............................................................................................................................................................... 501–1,000 cases ............................................................................................................................................................ 1,001–5,000 cases ......................................................................................................................................................... 5,001–10,000 cases ....................................................................................................................................................... 10,001–99,999,999 cases .............................................................................................................................................. 43 Any ODFI incurring less than $50 for the following fees will be charged a variable amount to reach the minimum: Forward value and non-value item origination fees, and FedGlobal ACH origination surcharges. 44 Any RDFI not originating forward value and non-value items and incurring less than $40 in receipt fees will be charged a variable amount to reach the minimum. Any RDFI that originates forward value and nonvalue items incurring less than $50 in forward value and nonvalue item origination fees will only be charged a variable amount to reach the minimum monthly origination fee. 45 This surcharge is assessed on all forward items that qualify for same-day processing and settlement and is incremental to the standard origination item fee. 46 The fee includes the item and addenda fees in addition to the conversion fee. 47 The fee includes the item and addenda fees in addition to the conversion fee. Reserve Banks also assess a $45 fee for every government paper return/ NOC they process. 48 Origination volumes at these levels qualify for a waterfall discount which includes all FedACH origination items. 49 Origination discounts based on monthly billed receipt volume apply only to those items received by FedACH receiving points and are available only to Premium Receivers. 50 RDFIs receiving through FedACH less than 90 percent of their FedACH-originated items. 51 This per-item discount is a reduction to the standard receipt fees listed in this fee schedule. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 52 Receipt volumes at these levels qualify for a waterfall discount which includes all FedACH receipt items. 53 RDFIs receiving through FedACH at least 90 percent of their FedACH-originated items, but less than 90 percent of all of their ACH items originated through any operator. 54 RDFIs receiving through FedACH at least 90 percent of all of their ACH items originated through any operator. 55 To qualify for the discount, a financial institution must meet all of the following criteria in a given month: (1) Be charged the minimum monthly fee—forward origination (57208); (2) subscribe to FedLine Web Plus or any higher FedLine® access solution; and (3) subscribe to the FedPayments Reporter service, the FedACH RDFI Alert service, or the FedACH Risk Origination Monitoring service. 56 Criteria may be set for both the Origination Monitoring Service and the RDFI Alert Service. Subscribers with no criteria set up will be assessed the $35 monthly package fee. 57 Premier reports generated on demand are subject to the package/tiered fees plus a surcharge. 58 The fee applies to RTNs that have received or originated FedACH transactions during a month. Institutions that receive only U.S. government transactions or that elect to use a private sector operator exclusively are not assessed the fee. 59 This surcharge is assessed to any RTN that originates at least one item meeting the criteria for same-day processing and settlement in a given month. 60 The fee is applied to any RTN with activity during a month, including RTNs of institutions that PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 $1.63. $0.99 (surcharge). $5.50. $7.00. $0.91 (surcharge). $13.50. $0.67 (surcharge). $1.00 (surcharge). $7.00. $0.72. $1.25 (surcharge). $1.35 (surcharge). $7.00. $10.00. $10.00. $60.00. $5.00. $5.00. $1.25. $1.00. $0.75. $0.50. $0.25. $0.20. $0.10. elect to use a private-sector operator exclusively but also have items routed to or from customers that access the ACH network through FedACH. This fee does not apply to RTNs that use the Reserve Banks for only U.S. government transactions. 61 Fee will be assessed only when automated NOCs are generated. 62 Limited services are offered in contingency situations. 63 The fees and credits listed are collected from the ODFI and credited to NACHA (admin network) or to the RDFI (same-day entry and unauthorized entry) in accordance with the ACH Rules. 64 The international fees and surcharges vary from country to country as these are negotiated with each international gateway operator. 65 A single monthly fee based on total FedGlobal ACH Payments origination volume. 66 This per-item surcharge is in addition to the standard domestic origination fees listed in this fee schedule. 67 This per-item surcharge is in addition to the standard domestic receipt fees listed in this fee schedule. 68 The associated fees are effective upon availability of the product. 69 A customer that opens at least 1,000 cases in a given month will receive a 50% discount on the fixed fee for that month. 70 The per case fees are rolled up to the parent RTN, such that a customer that opens a total of 100 cases per month under two separate RTNs would pay a total of $112.50 ($1.25 for the first 50 cases and $1.00 for the next 50 cases) in addition to the fixed fees. E:\FR\FM\01FEN1.SGM 01FEN1 1143 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES 2019 FEE SCHEDULE [Effective January 2, 2019. Bold indicates changes from 2018 prices.] Fee Fedwire Funds Service Monthly Participation Fee .............................................................................................................................................................. Basic volume-based pre-incentive transfer fee (originations and receipts)—per transfer for the first 14,000 transfers per month ......................................................................................................................................................................................... additional transfers up to 90,000 per month .......................................................................................................................... every transfer over 90,000 per month .................................................................................................................................... Volume-based transfer fee with the incentive discount (originations and receipts)—per eligible transfer for: 71 the first 14,000 transfers per month ....................................................................................................................................... additional transfers up to 90,000 per month .......................................................................................................................... every transfer over 90,000 per month .................................................................................................................................... Surcharge for Offline Transfers (Originations and Receipts) ................................................................................................ Surcharge for End-of-Day Transfer Originations 72 ....................................................................................................................... Monthly FedPayments Manager import/export fee 73 ................................................................................................................... Surcharge for high-value payments: >$10 million ............................................................................................................................................................................ >$100 million .......................................................................................................................................................................... Surcharge for Payment Notification: Origination Surcharge 74 ......................................................................................................................................................... Receipt Volume 75 .................................................................................................................................................................. Delivery of Reports—Hard Copy Reports to On-Line Customers ................................................................................................ Special Settlement Arrangements (charge per settlement day) 76 ............................................................................................... $95.00 0.820 0.245 0.160 0.164 0.049 0.032 65.00 0.26 50.00 0.14 0.36 0.01 N/A 50.00 150.00 National Settlement Service Basic: Settlement Entry Fee .............................................................................................................................................................. Settlement File Fee ................................................................................................................................................................ Surcharge for Offline File Origination 77 ........................................................................................................................................ Minimum Monthly Fee 78 ............................................................................................................................................................... 1.50 30.00 45.00 60.00 FEDWIRE SECURITIES SERVICE 2019 FEE SCHEDULE (NON-TREASURY SECURITIES) [Effective January 2, 2019. Bold indicates changes from 2018 prices.] Fee Basic Transfer Fee: Transfer or reversal originated or received ........................................................................................................................................................ Surcharge: 79 Offline origination & receipt surcharge .................................................................................................................................................................... Monthly Maintenance Fees: Account maintenance (per account) ........................................................................................................................................................................ Issue maintenance (per issue/per account) ............................................................................................................................................................ Claims Adjustment Fee 80 ............................................................................................................................................................................................ GNMA Serial Note Stripping or Reconstitution Fee 81 .................................................................................................................................................... Joint Custody Origination Surcharge 82 .......................................................................................................................................................................... Delivery of Reports—Hard Copy Reports to On-Line Customers .................................................................................................................................. 71 The incentive discounts apply to the volume that exceeds 60 percent of a customer’s historic benchmark volume. Historic benchmark volume is based on a customer’s average daily activity over the previous five calendar years. If a customer has fewer than five full calendar years of previous activity, its historic benchmark volume is based on its daily activity for as many full calendar years of data as are available. If a customer has less than one year of past activity, then the customer qualifies automatically for incentive discounts for the year. The applicable incentive discounts are as follows: $0.656 for transfers up to 14,000, $0.196 for transfers 14,001 to 90,000, and $0.128 for transfers over 90,000. 72 This surcharge applies to originators of transfers that are processed by the Reserve Banks after 5:00 p.m. eastern time. 73 This fee is charged to any Fedwire Funds participant that originates a transfer message via the VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 FedPayments Manager Funds tool and has the import/export processing option setting active at any point during the month. 74 Payment Notification and End-of-Day Origination surcharges apply to each Fedwire funds transfer message. 75 Provided on billing statement for informational purposes only. 76 This charge is assessed to settlement arrangements that use the Fedwire Funds Service to effect the settlement of interbank obligations (as opposed to those that use the National Settlement Service). With respect to such special settlement arrangements, other charges may be assessed for each funds transfer into or out of the accounts used in connection with such arrangements. 77 Offline files will be accepted only on an exception basis when a settlement agent’s primary PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 $0.98 80.00 57.50 0.77 1.00 9.00 46.00 50.00 and backup means of transmitting settlement files are both unavailable. 78 Any settlement arrangement that accrues less than $60 during a calendar month will be assessed a variable amount to reach the minimum monthly fee. 79 This surcharge is set by the Federal Reserve Banks. It is in addition to any basic transfer or reversal fee. 80 The Federal Reserve Banks offer an automated claim adjustment process only for Agency mortgage-backed securities. 81 This fee is set by and remitted to the Government National Mortgage Association (GNMA). 82 The Federal Reserve Banks charge participants a Joint Custody Origination Surcharge for both Agency and Treasury securities. E:\FR\FM\01FEN1.SGM 01FEN1 1144 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices FEDLINE 2019 FEE SCHEDULE [Effective January 2, 2019. Bold indicates changes from 2018 prices.] Fee FedComplete Packages (monthly) 83 84 85 FedComplete 100A Plus ................................................................................................................................................................................................. includes: FedLine Advantage Plus package. FedLine subscriber 5-pack. 7,500 FedForward transactions. 46 FedForward Cash Letter items. 70 FedReturn transactions. 14,000 FedReceipt® transactions. 35 Fedwire Funds origination transfers. 35 Fedwire Funds receipt transfers. Fedwire participation fee. 1,000 FedACH origination items. FedACH minimum fee—Forward Origination. 7,500 FedACH receipt items. FedACH receipt minimum fee. 10 FedACH web return/NOC. 500 FedACH addenda originated. 1,000 FedACH addenda received. 100 FedACH Same-Day origination items. FedACH account servicing. FedACH settlement. FedACH Same-Day origination participation fee. FedComplete 100A Premier ........................................................................................................................................................................................... includes: FedLine Advantage Premier package. Volumes included in the FedComplete 100A Plus package. FedComplete 100C Plus ................................................................................................................................................................................................. includes: FedLine Command Plus package. Volumes included in the FedComplete 100A Plus package. FedComplete 200A Plus ................................................................................................................................................................................................. includes: FedLine Advantage Plus package. FedLine subscriber 5-pack. 25,000 FedForward transactions. 46 FedForward Cash Letter items. 225 FedReturn transactions. 25,000 FedReceipt transactions. 100 Fedwire Funds origination transfers. 100 Fedwire Funds receipt transfers. Fedwire participation fee. 2,000 FedACH origination items. FedACH minimum fee—forward origination. 25,000 FedACH receipt items. FedACH receipt minimum fee. 20 FedACH web return/NOC. 750 FedACH addenda originated. 1,500 FedACH addenda received. 200 FedACH Same-Day origination items. FedACH account servicing. FedACH settlement. FedACH Same-Day origination participation fee. FedComplete 200A Premier ........................................................................................................................................................................................... includes: FedLine Advantage Premier package. Volumes included in the FedComplete 200A Plus package. FedComplete 200C Plus ................................................................................................................................................................................................. includes: FedLine Command Plus package. Volumes included in the FedComplete 200A Plus package. FedComplete Excess Volume and Receipt Surcharge: 86 FedForward 87 .......................................................................................................................................................................................................... FedReturn ................................................................................................................................................................................................................ FedReceipt ............................................................................................................................................................................................................... Fedwire Funds Origination ....................................................................................................................................................................................... Fedwire Funds Receipt ............................................................................................................................................................................................ FedACH Origination ................................................................................................................................................................................................. FedACH Receipt ...................................................................................................................................................................................................... FedComplete credit adjustment ...................................................................................................................................................................................... FedComplete debit adjustment ....................................................................................................................................................................................... $825.00. $900.00. $1,375.00. $1,350.00. $1,425.00. $1,900.00. $0.037/item. $0.8200/item. $0.00005/item. $0.8200/item. $0.082/item. $0.0035/item. $0.00035/item. various. various. FedLine Customer Access Solutions (monthly) FedMail 88 ........................................................................................................................................................................................................................ includes: FedMail access channel. Check FedFoward, Fed Return and FedReceipt Services. FedACH Download Advice and Settlement Information. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\01FEN1.SGM 01FEN1 $85.00. Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices 1145 FEDLINE 2019 FEE SCHEDULE—Continued [Effective January 2, 2019. Bold indicates changes from 2018 prices.] Fee Fedwire Funds Offline Advices. Check 21 Duplicate Notification Service. Check Adjustments. Funds Offline Advices. Daily Statement of Account (Text). Daylight Overdraft Reports. Monthly Statement of Service Charges (Text). Electronic Cash Difference Advices. FedLine Exchange 88 ...................................................................................................................................................................................................... includes: E-Payments Directory (via manual download). FedLine Exchange Premier 88 ......................................................................................................................................................................................... includes: FedLine Exchange package. E-Payments Routing Directory (via auto download). FedLine Web 89 ............................................................................................................................................................................................................... includes: FedLine Web access channel. Services included in the FedLine Exchange package. Check FedForward, FedReturn and FedReceipt services. Check 21 Duplicate Notification Service. Check Adjustments. FedACH Derived Returns and NOCs. FedACH File, Batch and Item Detail Information. FedACH Customer Profile Information. FedACH Returns Activity Statistics. FedACH Risk RDFI Alert Service. FedACH Risk Returns Reporting Service. FedCash® Services. FedLine Web Plus 89 ....................................................................................................................................................................................................... includes: FedLine Web package. FedACH Risk Origination Monitoring Service. FedACH FedPayments Reporter Service. Check Large Dollar Return. Check FedImage Services. Account Management Information (AMI). Daily Statement of Account (PDF, Text). Monthly Account Services (SCRD File, Monthly Statement of Service Charges. (PDF), Monthly Statement of Service Charges (Text)). E-Payments Routing Directory (auto download). FedLine Advantage 89 ..................................................................................................................................................................................................... includes: FedLine Advantage access channel. One VPN device. Services included in the FedLine Web package. FedACH transactions. Fedwire Originate and Receive Funds Transfer. Fedwire Originate and Receive Securities Transfer. National Settlement Service transactions. Check Large Dollar Return. Check FedImage Services. Account Management Information with Intra-Day Download Search File. Daily Statement of Account (PDF, Text). Monthly Account Services (SCRD File, Monthly Statement of Service Charges. (PDF), Monthly Statement of Service Charges (Text)). FedLine Advantage Plus 89 ............................................................................................................................................................................................. includes: FedLine Advantage package. One VPN device. FedACH Risk Origination Monitoring Service. FedACH FedPayments Reporter Service. Fedwire Funds FedPayments Manager Import/Export (less than or equal to 250. Fedwire transactions and one routing number per month). FedTransaction Analyzer® (less than 250 or equal to Fedwire transactions and one routing number per month). E-Payments Routing Directory (via auto download). FedLine Advantage Premier 89 ....................................................................................................................................................................................... includes: FedLine Advantage Plus package. Two VPN devices. Fedwire Funds FedPayments Manager Import/Export (more than 250 Fedwire transactions or more than one routing number in a given month). FedTransaction Analyzer (more than 250 Fedwire transactions or more than one routing number per month). FedLine Command Plus ................................................................................................................................................................................................. includes: FedLine Command access channel. Services included in the FedLine Advantage Plus package. One VPN device. FedLine Command server certificates. Fedwire Statement Services. VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 E:\FR\FM\01FEN1.SGM 01FEN1 $40.00. $125.00. $110.00. $160.00. $415.00. $460.00. $570.00. $1,035.00. 1146 Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices FEDLINE 2019 FEE SCHEDULE—Continued [Effective January 2, 2019. Bold indicates changes from 2018 prices.] Fee Fedwire Funds FedPayments Manager Import/Export. FedTransaction Analyzer. Intra-Day File (I-Day CI File). Statement of Account Spreadsheet File (SASF). Financial Institution Reconcilement Data File (FIRD). Billing Data Format File (BDFF). FedLine Direct Plus (Legacy) 90 ................................................................................................................................................................................... includes: FedLine Direct access channel. One VPN device. 256K Dedicated WAN Connection. Services included in the FedLine Command Plus package. Two FedLine Direct server certificates. Daily Overdraft Reports. Treasury Check Information System (TCIS). FedLine Direct Plus ...................................................................................................................................................................................................... includes: FedLine Direct access channel. One VPN device. 2 Mbps Dedicated WAN Connection. Services included in the FedLine Command Plus package. FedLine Direct server certificates. Treasury Check Information System (TCIS). Dual Vendors. FedLine Direct Contingency Solution (ACH). Check 21 Services. FedLine Direct Premier (Legacy) 90 ................................................................................................................................................................................ includes: FedLine Direct Plus package (legacy). T1 dedicated WAN connection. Two VPN devices. FedLine Direct Premier ................................................................................................................................................................................................. includes: FedLine Direct Plus package (new). One additional dedicated WAN connection. One Network Diversity. Two VPN devices. $4,000.00. $5,500.00. $6,800.00. $10,500.00. A la carte options (monthly) 91 Electronic Access: FedMail—FedLine Exchange Subscriber 5-pack .................................................................................................................................................... FedLine Subscriber 5-pack (access to Web and Advantage) ................................................................................................................................. Additional FedLine Direct Certificate 92 .................................................................................................................................................................... Additional VPNs 93 ................................................................................................................................................................................................... Additional WAN connections. 256K(Legacy) 90 ................................................................................................................................................................................................ T1 (Legacy) 90 ................................................................................................................................................................................................... 2 Mbps ............................................................................................................................................................................................................. WAN Connection Upgrade: 10 Mbps 94 ........................................................................................................................................................................................................ 30 Mbps 94 ........................................................................................................................................................................................................ 50 Mbps 94 ........................................................................................................................................................................................................ 100 Mbps 94 ...................................................................................................................................................................................................... 200 Mbps 94 ...................................................................................................................................................................................................... FedLine International Setup (one-time fee) ............................................................................................................................................................. FedLine Custom Implementation Fee 95 .................................................................................................................................................................. Network Diversity ................................................................................................................................................................................................... FedLine Direct Contingency Solution 96 .................................................................................................................................................................. Check 21 Large File Delivery 97 ............................................................................................................................................................................... FedMail Email (for customers with FedLine Web and above) 98 ............................................................................................................................ FedMail Fax 99 ......................................................................................................................................................................................................... VPN Device Modification ......................................................................................................................................................................................... VPN Device Missed Activation Appointment ........................................................................................................................................................... VPN Device Expedited Hardware Surcharge .......................................................................................................................................................... VPN Device Replacement or Move ......................................................................................................................................................................... E-Payments Automated Download (1–5 Add’l Codes) ........................................................................................................................................... E-Payments Automated Download (6–20 Add’l Codes) ......................................................................................................................................... E-Payments Automated Download (21–50 Add’l Codes) ....................................................................................................................................... E-Payments Automated Download (51–100 Add’l Codes) ..................................................................................................................................... E-Payments Automated Download (101–250 Add’l Codes) ................................................................................................................................... E-Payments Automated Download (>250 Add’l Codes) ......................................................................................................................................... Accounting Information Services (monthly): Cash Management System (CMS) Plus—Own report—up to six files with: 100 no respondent/sub-account activity .................................................................................................................................................................. less than 9 respondent and/or sub-accounts ................................................................................................................................................... 10–50 respondent and/or sub-accounts ........................................................................................................................................................... VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 E:\FR\FM\01FEN1.SGM 01FEN1 $15.00. $80.00. $100.00. $100.00. $2,500.00. $3,200.00. $3,000.00. $1,700.00. $3,000.00. $4,000.00. $7,000.00. $11,000.00. $5,000.00. various. $2,500.00. $1,000.00. various. $20.00. $100.00. $200.00. $175.00. $100.00. $300.00. $75.00. $150.00. $300.00. $500.00. $1,000.00. $2,000.00. $60.00. $125.00. $250.00. Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices 1147 FEDLINE 2019 FEE SCHEDULE—Continued [Effective January 2, 2019. Bold indicates changes from 2018 prices.] Fee 51–100 respondents and/or sub-accounts ....................................................................................................................................................... 101–500 respondents and/or sub-accounts ..................................................................................................................................................... >500 respondents and/or sub-accounts ........................................................................................................................................................... End-of-Day Financial Institution Reconcilement Data (FIRD) File 101 ..................................................................................................................... Statement of Account Spreadsheet File 102 ............................................................................................................................................................. Intra-day Download Search File (with AMI) 103 ....................................................................................................................................................... Other Software Certification ............................................................................................................................................................................................... Vendor Pass-Through Fee ...................................................................................................................................................................................... Electronic Access Credit Adjustment ....................................................................................................................................................................... Electronic Access Debit Adjustment ........................................................................................................................................................................ By order of the Board of Governors of the Federal Reserve System, November 15, 2018. Ann Misback, Secretary of the Board. [FR Doc. 2019–00624 Filed 1–31–19; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding Company The notificants listed below have applied under the Change in Bank Control Act (‘‘Act’’) (12 U.S.C. 1817(j)) and § 225.41 of the Board’s Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)). The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. 83 FedComplete packages are all-electronic service options that bundle payment services with an access solution for one monthly fee. 84 Packages with an ’A’ include the FedLine Advantage channel, while packages with ‘C’ include the FedLine Command channel. 85 FedComplete customers that use the email service would be charged the FedMail Email a la carte fee and for all FedMail-FedLine Exchange Subscriber 5-packs. 86 Per-item surcharges are in addition to the standard fees listed in the applicable priced services fee schedules. 87 FedComplete customers will be charged $4 for each FedForward cash letter over the monthly package threshold. This activity will appear under billing code 51998 in Service Area 1521 on a month-lagged basis. 88 FedMail and FedLine Exchange packages do not include user credentials, which are required to access priced services and certain informational services. Credentials are sold separately in packs of five via the FedMail-FedLine Exchange Subscriber 5-pack. 89 FedLine Web and Advantage packages do not include user credentials, which are required to VerDate Sep<11>2014 21:23 Jan 31, 2019 Jkt 247001 $500.00. $750.00. $1,000.00. $150.00. $150.00. $150.00. $0.00 to $8,000.00. various. various. various. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than February 19, 2019. A. Federal Reserve Bank of Atlanta (Kathryn Haney, Assistant Vice President) 1000 Peachtree Street NE, Atlanta, Georgia 30309. Comments can also be sent electronically to Applications.Comments@atl.frb.org: 1. The John Charles Simpson, III Trust, and John Charles Simpson, Jr., as trustee, Fenton, Missouri; to acquire shares of Red River Bancshares, Inc., and thereby indirectly acquire shares of Red River Bank, both in Alexandria, Louisiana, and thereby join the group acting in concert previously approved to own shares of Red River Bancshares, Inc., which includes John Charles Simpson, the John Charles Simpson, Jr. Trust and the Angela Katherine Simpson Trust, and Simeon A. Thibeaux, Jr., as trustee of both trusts. Board of Governors of the Federal Reserve System, January 28, 2019. Yao-Chin Chao, Assistant Secretary of the Board. access priced services and certain informational services. Credentials are sold separately in packs of five via the FedLine Subscriber 5-pack. 90 Limited to installed base only. All customers with 256K or T1 connections will need to upgrade to a minimum 2Mbps Ethernet line speed connection. 91 These add-on services can be purchased only with a FedLine Customer Access Service option. 92 Additional FedLine Direct Certificates available for FedLine Direct packages (legacy) only. 93 Additional VPNs are available for FedLine Advantage, FedLine Command, and FedLine Direct packages only. 94 These upgrades are only available for the new FedLine Direct packages and the Add’l 2M WAN connection. Fee is in addition to the FedLine Direct package fees or additional WAN fees. 95 The FedLine Custom Implementation Fee is $2,500 or $5,000 based on the complexity of the setup. 96 Fee only applies to customers in a legacy FedLine Direct package. This feature is included in the monthly fee for customers in the new FedLine Direct packages. 97 Limited to installed base only. The fee currently ranges from $1,400 to $20,725 depending on the size, speed, and location of the connection. All customers will eventually need to upgrade to a minimum 2 Mbps Ethernet line speed connection with the associated FedLine Direct package. 98 Available only to customers with a priced FedLine package. 99 Limited to installed base only. 100 Cash Management Service options are limited to plus and premier packages. 101 The End of Day Reconcilement File option is available for FedLine Web Plus, FedLine Advantage Plus, and Premier packages. It is available for no extra fee in FedLine Command Plus and Direct packages. 102 The Statement of Account Spreadsheet File option is available for FedLine Web Plus, FedLine Advantage Plus, and Premier packages. It is available for no extra fee in FedLine Command Plus and Direct packages. 103 The Intra-day Download Search File option is available for the FedLine Web Plus package. It is available for no extra fee in FedLine Advantage and higher packages. PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 [FR Doc. 2019–00557 Filed 1–31–19; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM Formations of, Acquisitions by, and Mergers of Bank Holding Companies The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) (BHC Act), Regulation Y (12 CFR part 225), and all other applicable statutes and regulations to become a bank holding company and/or to acquire the assets or the ownership of, control of, or the power to vote shares of a bank or bank holding company and all of the banks and nonbanking companies owned by the bank holding company, including the companies listed below. The applications listed below, as well as other related filings required by the E:\FR\FM\01FEN1.SGM 01FEN1

Agencies

[Federal Register Volume 84, Number 22 (Friday, February 1, 2019)]
[Notices]
[Pages 1126-1147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00624]


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FEDERAL RESERVE SYSTEM

[Docket No. OP-1636]


Federal Reserve Bank Services

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
has approved the private sector adjustment factor (PSAF) for 2019 of 
$17.8 million and the 2019 fee schedules for Federal Reserve priced 
services and electronic access. These actions were taken in accordance 
with the Monetary Control Act of 1980, which requires that, over the 
long run, fees for Federal Reserve priced services be established on 
the basis of all direct and indirect costs, including the PSAF.

DATES: The new fee schedules become effective January 2, 2019.

FOR FURTHER INFORMATION CONTACT: For questions regarding the fee 
schedules: David C. Mills, Deputy Associate Director, (202) 530-6265; 
Amanda Holcombe, Financial Institution Policy Analyst, (202) 912-4625; 
Emily Massaro, Financial Institution Policy Analyst, (202) 452-2493, 
Division of Reserve Bank Operations and Payment Systems. For questions 
regarding the PSAF: Lawrence Mize, Deputy Associate Director, (202) 
452-5232; Max Sinthorntham, Senior Financial Institution Policy 
Analyst, (202) 452-2864, Division of Reserve Bank Operations and 
Payment Systems. For users of Telecommunications Device for the Deaf 
(TDD) only, please call (202) 263-4869. Copies of the 2019 fee 
schedules for the check service are available from the Board, the 
Federal Reserve Banks, or the Reserve Banks' financial services website 
at www.frbservices.org.

I. Supplementary Information

Private Sector Adjustment Factor, Priced Services Cost Recovery, and 
Overview of 2019 Price Changes

    A. Overview--Each year, as required by the Monetary Control Act of 
1980, the Reserve Banks set fees for priced services provided to 
depository institutions. These fees are set to recover, over the long 
run, all direct and indirect costs and imputed costs, including 
financing costs, taxes, and certain other expenses, as well as the 
return on equity (profit) that will have been earned if a private 
business firm provided the services. The imputed costs and imputed 
profit are collectively referred to as the private-sector adjustment 
factor (PSAF). From 2008 through 2017, the Reserve Banks recovered 
101.9 percent of their total expenses (including imputed costs) and 
targeted after-tax profits or return on equity (ROE) for providing 
priced services.\1\
---------------------------------------------------------------------------

    \1\ The 10-year recovery rate is based on the pro forma income 
statements for Federal Reserve priced services published in the 
Board's Annual Report. Effective December 31, 2006, the Reserve 
Banks implemented Statement of Financial Accounting Standards (SFAS) 
No. 158: Employers' Accounting for Defined Benefit Pension and Other 
Postretirement Plans [Accounting Standards Codification (ASC) 715 
Compensation--Retirement Benefits], which resulted in recognizing a 
cumulative reduction in equity related to the priced services' 
benefit plans. Including this cumulative reduction in equity from 
2008 to 2017 results in cost recovery of 94.7 percent for the ten-
year period. This measure of long-run cost recovery is also 
published in the Board's Annual Report.
---------------------------------------------------------------------------

    Table 1 summarizes 2017 actual, 2018 estimated, and 2019 budgeted 
cost-recovery rates for all priced services. Cost recovery is estimated 
to be 101.0 percent in 2018 and budgeted to be 100.9 percent in 2019.

                   Table 1--Aggregate Priced Services Pro Forma Cost and Revenue Performance a
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Recovery rate
              Year                    Revenue      Total expense    Net income     Targeted ROE   after targeted
                                                                       (ROE)                          ROE (%)
                                           1 \b\           2 \c\               3           4 \d\       5 \e\ \f\
                                                                           [1-2]                     [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2017 (actual)...................           441.6           419.4            22.2             4.6           104.1
2018 (estimate).................           441.7           432.0             9.7             5.2           101.0
2019 (budget)...................           440.2           430.8             9.4             5.4           100.9
----------------------------------------------------------------------------------------------------------------
\a\ Calculations in this table and subsequent pro forma cost and revenue tables may be affected by rounding.
\b\ Revenue includes imputed income on investments when equity is imputed at a level that meets minimum capital
  requirements and, when combined with liabilities, exceeds total assets (attachment 1). For 2018, the projected
  revenue assumes implementation of the proposed fee changes.
\c\ The calculation of total expense includes operating, imputed, and other expenses. Imputed and other expenses
  include taxes, Board of Governors' priced services expenses, the cost of float, and interest on imputed debt,
  if any. Credits or debits related to the accounting for pension plans under ASC 715 are also included.
\d\ Targeted ROE is the after-tax ROE included in the PSAF.
\e\ The recovery rates in this and subsequent tables do not reflect the unamortized gains or losses that must be
  recognized in accordance with ASC 715. Future gains or losses, and their effect on cost recovery, cannot be
  projected.

[[Page 1127]]

 
\f\ For 2019, credits or debits related to the accounting for pension plans under ASC 715 include service cost
  only with the adoption of ASU 2017-07 Improving the Presentation of Net Periodic Pension Cost and Net Periodic
  Postretirement Benefit Cost (Topic 715).

    Table 2 provides an overview of cost-recovery budgets, estimates, 
and performance for the 10-year period from 2008 to 2017, 2017 actual, 
2018 budget, 2018 estimate, and 2019 budget by priced service.

                                     Table 2--Priced Services Cost Recovery
                                                    [Percent]
----------------------------------------------------------------------------------------------------------------
                                                                    2018 budget                     2019 budget
         Priced service              2008-2017      2017 actual         \a\        2018 estimate        \b\
----------------------------------------------------------------------------------------------------------------
All services....................           101.9           104.1           100.1           101.0           100.9
Check...........................           103.5           107.0           101.6           101.7           101.5
FedACH..........................            98.5            99.8            96.1            98.0           101.8
Fedwire Funds and NSS...........           101.5           106.2           103.9           105.0           100.7
Fedwire Securities..............           102.2           103.6            97.6            96.5            94.7
----------------------------------------------------------------------------------------------------------------
\a\ The 2018 budget figures reflect the final budgets as approved by the Board in December 2017.
\b\ The 2019 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks
  will submit final budget data to the Board in November 2018, for Board consideration in December 2018.

    1. 2018 Estimated Performance--The Reserve Banks estimate that they 
will recover 101.0 percent of the costs of providing priced services in 
2018, including total expense and targeted ROE, compared with a 2018 
budgeted recovery rate of 100.1 percent, as shown in table 2. Overall, 
the Reserve Banks estimate that they will fully recover actual and 
imputed costs and earn net income of $9.7 million, compared with the 
targeted ROE of $5.2 million. The Reserve Banks estimate that the check 
service and the Fedwire[supreg] Funds and National Settlement Services 
will achieve full cost recovery; however, the Reserve Banks continue to 
estimate that the FedACH[supreg] Service and the Fedwire Securities 
Service will not achieve full cost recovery. Consistent with recent 
years, the FedACH Service will not achieve full cost recovery because 
of investment costs associated with the multiyear technology initiative 
to modernize its processing platform.\2\ This investment is expected to 
enhance efficiency, the overall quality of operations, and the Reserve 
Banks' ability to offer additional services to depository institutions. 
The Reserve Banks estimate that the Fedwire Securities Service will not 
achieve full cost recovery because of ongoing market structure changes 
and investment costs associated with initiatives to promote operational 
resiliency.
---------------------------------------------------------------------------

    \2\ The Reserve Banks have been engaged in a multiyear 
technology initiative to modernize the FedACH processing platform by 
migrating the service from a mainframe system to a distributed 
computing environment.
---------------------------------------------------------------------------

    2. 2019 Private-Sector Adjustment Factor--The 2019 PSAF for Reserve 
Bank priced services is $17.8 million. This amount represents a 
decrease of $1.1 million from the 2018 PSAF of $18.9 million. This 
decrease is primarily the result of a decrease in the total cost of 
debt and partially offset by an increase in Board of Governors 
expenses.
    3. 2019 Projected Performance--The Reserve Banks project a priced 
services cost recovery rate of 100.9 percent in 2019, with a net income 
of $9.4 million and targeted ROE of $5.4 million. The Reserve Banks 
project that the price changes will result in a 2.5 percent average 
price increase for customers. The Reserve Banks project that each of 
the individual service lines, other than the Fedwire Securities 
Service, will fully recover their costs. The Reserve Banks anticipate 
that the FedACH technology modernization initiative will conclude in 
2019, allowing for a projected return to cost recovery for the FedACH 
Service. Although the Fedwire Securities Service is not budgeted to 
fully cover its costs in 2019 because of volume declines driven by 
market changes, the service is projected to recover costs over the long 
run.\3\
---------------------------------------------------------------------------

    \3\ Fedwire Securities Service's ten-year average recovery rate 
in 2019 is 101.6 percent.
    As the aggregate impact of market structural changes 
materializes, the Reserve Banks will take into account subsequent 
volume changes as well as future anticipated cost allocation 
adjustments, in order to adjust the Fedwire Securities Service's 
prices and to continue recovering costs over the long-run.
---------------------------------------------------------------------------

    The primary risks to the Reserve Banks' ability to achieve their 
targeted cost-recovery rates are unanticipated volume and revenue 
reductions and the potential for cost overruns from new and ongoing 
improvement initiatives. In light of these risks, the Reserve Banks 
will continue to refine their business and operational strategies to 
manage operating costs, to increase product revenue, and to capitalize 
on efficiencies gained from technology initiatives.
    4. 2019 Pricing--The following summarizes the Reserve Banks' 
changes in fee schedules for priced services in 2019:
Check
     The Reserve Banks will reassign the tier placement of 
1,116 forward and 240 return endpoints in the FedForward[supreg] and 
FedReturn[supreg] products, respectively.\4\
---------------------------------------------------------------------------

    \4\ The Reserve Banks evaluate and set tier assignments annually 
based on changes in the volume of items received by endpoints.
---------------------------------------------------------------------------

     The Reserve Banks will lower the average daily forward 
receipt and return tier volume thresholds approximately 6.0 percent for 
tiers 1, 2, 3, and 4 for FedForward[supreg] and FedReturn[supreg] image 
cash letter and daily fee deposit options based on the 2019 tier 
assignments to account for the anticipated continued decline in check 
deposit volumes.
     The Reserve Banks will increase per-item fees for the 
FedForward[supreg] Premium Daily Fee A, B, and C deposit options by 
$0.001 for Tier 3 and $0.003 for Tier 4. The Reserve Banks will also 
increase the Premium Daily Fee C daily fixed fee by $200, from $3,500 
to $3,700.
     The Reserve Banks will increase cash letter fees by $0.50 
for all deadlines on FedForward[supreg] Standard, Deferred, Dollar-
Culled, and Endpoint-Culled image cash letters and FedReturn[supreg] 
Standard image cash letters.
     The Reserve Banks will increase the per-item fee for the 
FedReceipt[supreg] Premium Delivery 8:00 a.m. EST target by $0.006 and 
per item fees for the Premium Delivery 10:00 a.m. target and Premium 
Delivery 12:00 noon target by $0.002.\5\
---------------------------------------------------------------------------

    \5\ The 8:00 a.m. delivery target is expressed in eastern time, 
while the 10:00 a.m. and 12:00 noon targets are local time.
---------------------------------------------------------------------------

     The Reserve Banks will increase FedReceipt[supreg] 
Electronic Reject Repair fees by $0.05, increasing the Basic repair

[[Page 1128]]

from $0.15 per-item to $0.20 per-item and increasing the Premium repair 
from $0.25 per-item to $0.30 per-item.
     The Reserve Banks will increase all fees for the 
FedImage[supreg] product and certain truncation fees 10.0 percent 
(rounded to the nearest increment based upon the number of decimal 
places of the current fee).
     The Reserve Banks will introduce two new fees intended to 
improve the quality of check deposit processing and reduce errors in 
adjustment case submissions. The Reserve Banks will introduce a $0.50 
fee for encoding error and duplicate-payment adjustment cases caused by 
the depositary bank's incorrect encoding or duplicate deposit of an 
item. The Reserve Banks will also introduce a $2.50 fee for automated 
adjustment case types that require manual intervention by Reserve Bank 
staff due to error on the part of the adjusting bank.
FedACH
     The Reserve Banks will offer a new ACH Exception 
Resolution Service[supreg] that will provide an automated means for 
customers to resolve ACH exceptions. The fee structure will contain 
fixed and variable elements, as outlined in the ACH fee schedule.
     The Reserve Banks will keep prices at existing levels for 
all existing priced FedACH products.
Fedwire Funds
     The Reserve Banks will increase the offline send surcharge 
and offline receive surcharge from $60.00 to $65.00.
National Settlement Service (NSS)
     The Reserve Banks will keep prices at existing levels for 
the priced NSS products.
Fedwire Securities
     The Reserve Banks will increase the agency online transfer 
fee from $0.77 to $0.98.
     The Reserve Banks will increase the automated claims 
adjustment process (ACAP) fee from $0.80 to $1.00.
FedLine[supreg] Access Solutions
     The Reserve Banks will discontinue offering new FedMail 
Fax subscriptions.
     The Reserve Banks will discontinue offering the Accounting 
Totals by Service (ACTS) report.
     The Reserve Banks will discontinue charging [agrave] la 
carte fees for additional FedLine Command server certificates. The 
Reserve Banks will provide FedLine Command server certificates as part 
of FedLine Command packages at no additional cost.
     The Reserve Banks will offer upgraded FedLine 
Direct[supreg] Plus and Premier packages, with monthly fees of $5,500 
and $10,500 respectively, to reflect the incorporation of the Check 21 
Large File Delivery service with the FedLine Direct solution. Existing 
customers may continue to use the legacy FedLine Direct Plus and 
Premier packages until they migrate to the upgraded packages. The 
Reserve Banks will also increase the monthly fee for the legacy FedLine 
Direct Plus package by $350, from $3,650 to $4,000.
     The Reserve Banks will increase the monthly [agrave] la 
carte fee for Network Diversity by $500, from $2,000 to $2,500.
    5. 2019 Price Index--Figure 1 compares indexes of fees for the 
Reserve Banks' priced services with the GDP price index.\6\ The price 
index for Reserve Bank priced services is projected to remain 
relatively flat, with a decrease of less than 1 percent in 2019 from 
the 2018 level. The price index for Check 21 services is projected to 
increase approximately 3 percent. The price indexes for the FedACH 
Service, the Fedwire Funds and National Settlement Services, and the 
Fedwire Securities Service are projected to decrease approximately 1 
percent, 2 percent, and 3 percent, respectively. For the period 2009 to 
2019, the price index for total priced services is expected to decrease 
nearly 7 percent.
---------------------------------------------------------------------------

    \6\ For the period 2009 to 2017, the GDP price index increased 
13.6 percent.

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[[Page 1129]]

[GRAPHIC] [TIFF OMITTED] TN01FE19.001

    B. Private Sector Adjustment Factor--The imputed debt financing 
costs, targeted ROE, and effective tax rate are based on a U.S. 
publicly traded firm market model.\7\ The method for calculating the 
financing costs in the PSAF requires determining the appropriate 
imputed levels of debt and equity and then applying the applicable 
financing rates. In this process, a pro forma balance sheet using 
estimated assets and liabilities associated with the Reserve Banks' 
priced services is developed, and the remaining elements that would 
exist are imputed as if these priced services were provided by a 
private business firm. The same generally accepted accounting 
principles that apply to commercial-entity financial statements apply 
to the relevant elements in the priced services pro forma financial 
statements.
---------------------------------------------------------------------------

    \7\ Data for U.S. publicly traded firms is from the Standard and 
Poor's Compustat[supreg] database. This database contains 
information on more than 6,000 U.S. publicly traded firms, which 
approximates the entirety of the U.S. market.
---------------------------------------------------------------------------

    The portion of Federal Reserve assets that will be used to provide 
priced services during the coming year is determined using information 
about actual assets and projected disposals and acquisitions. The 
priced portion of these assets is determined based on the allocation of 
depreciation and amortization expenses of each asset class. The priced 
portion of actual Federal Reserve liabilities consists of 
postemployment and postretirement benefits, accounts payable, and other 
liabilities. The priced portion of the actual net pension asset or 
liability is also included on the balance sheet.\8\
---------------------------------------------------------------------------

    \8\ The pension assets are netted with the pension liabilities 
and reported as a net asset or net liability as required by ASC 715 
Compensation--Retirement Benefits.
---------------------------------------------------------------------------

    The equity financing rate is the targeted ROE produced by the 
capital asset pricing model (CAPM). In the CAPM, the required rate of 
return on a firm's equity is equal to the return on a risk-free asset 
plus a market risk premium. The risk-free rate is based on the three-
month Treasury bill; the beta is assumed to be equal to 1.0, which 
approximates the risk of the market as a whole; and the market risk 
premium is based on the monthly returns in excess of the risk-free rate 
over the most recent 40 years. The resulting ROE reflects the return a 
shareholder would expect when investing in a private business firm.
    For simplicity, given that federal corporate income tax rates are 
graduated, state income tax rates vary, and various credits and 
deductions can apply, an actual income tax expense is not explicitly 
calculated for Reserve Bank priced services. Instead, the Board targets 
a pretax ROE that would provide sufficient income to fulfill the priced 
services' imputed income tax obligations. To the extent that 
performance results are greater or less

[[Page 1130]]

than the targeted ROE, income taxes are adjusted using the effective 
tax rate.
    Capital structure. The capital structure is imputed based on the 
imputed funding need (assets less liabilities), subject to minimum 
equity constraints. Short-term debt is imputed to fund the imputed 
short-term funding need. Long-term debt and equity are imputed to meet 
the priced services long-term funding need at a ratio based on the 
capital structure of the U.S. publicly traded firm market. The level of 
equity must meet the minimum equity constraints, which follow the FDIC 
requirements for a well-capitalized institution. The priced services 
must maintain equity of at least 5 percent of total assets and 10 
percent of risk-weighted assets.\9\ Any equity imputed that exceeds the 
amount needed to fund the priced services' assets and meet the minimum 
equity constraints is offset by a reduction in imputed long-term debt. 
When imputed equity is larger than what can be offset by imputed debt, 
the excess is imputed as investments in Treasury securities; income 
imputed on these investments reduces the PSAF.
---------------------------------------------------------------------------

    \9\ The FDIC rule, which was adopted as final on April 14, 2014, 
requires that well-capitalized institutions meet or exceed the 
following standards: (1) Total capital to risk-weighted assets ratio 
of at least 10 percent, (2) tier 1 capital to risk-weighted assets 
ratio of at least 8 percent, (3) common equity tier 1 capital to 
risk-weighted assets ratio of at least 6.5 percent, and (4) a 
leverage ratio (tier 1 capital to total assets) of at least 5 
percent. Because all of the Federal Reserve priced services' equity 
on the pro forma balance sheet qualifies as tier 1 capital, only 
requirements 1 and 4 are binding. The FDIC rule can be located at 
https://www.fdic.gov/news/board/2014/2014-04-08_notice_dis_c_fr.pdf.
---------------------------------------------------------------------------

    Application of the Payment System Risk (PSR) Policy to the Fedwire 
Services. The Board's PSR policy incorporates the international 
standards for financial market infrastructures (FMIs) developed by the 
Committee on Payment and Settlement Systems and the Technical Committee 
of the International Organization of Securities Commissions in the 
Principles for Financial Market Infrastructures. The revised policy 
retains the expectation that the Fedwire Services meet or exceed the 
applicable risk-management standards. Principle 15 states that an FMI 
should identify, monitor, and manage general business risk and hold 
sufficient liquid net assets funded by equity to cover potential 
general business losses so that it can continue operations and services 
as a going concern if those losses materialize. Further, liquid net 
assets should at all times be sufficient to ensure a recovery or 
orderly wind-down of critical operations and services. The Fedwire 
Services do not face the risk that a business shock would cause the 
service to wind down in a disorderly manner and disrupt the stability 
of the financial system. In order to foster competition with private-
sector FMIs, however, the Reserve Banks' priced services will hold an 
amount equivalent to six months of the Fedwire Funds Service's current 
operating expenses as liquid financial assets and equity on the pro 
forma balance sheet.\10\ Current operating expenses are defined as 
normal business operating expenses on the income statement, less 
depreciation, amortization, taxes, and interest on debt. Using the 
Fedwire Funds Service's preliminary 2019 budget, six months of current 
operating expenses would be $50.5 million. In 2019, $38.8 million of 
equity was imputed to meet the FDIC capital requirements, resulting in 
an ending equity balance of $51.8 million. No additional imputed equity 
was necessary to meet the PSR policy requirement.
---------------------------------------------------------------------------

    \10\ This requirement does not apply to the Fedwire Securities 
Service. There are no competitors to the Fedwire Securities Service 
that would face such a requirement, and imposing such a requirement 
when pricing the securities services could artificially increase the 
cost of these services.
---------------------------------------------------------------------------

    Effective tax rate. Like the imputed capital structure, the 
effective tax rate is calculated based on data from U.S. publicly 
traded firms. The tax rate is the mean of the weighted average rates of 
the U.S. publicly traded firm market over the past 5 years.
    Debt and equity financing. The imputed short- and long-term debt 
financing rates are derived from the nonfinancial commercial paper 
rates from the Federal Reserve Board's H.15 Selected Interest Rates 
release (AA and A2/P2) and the annual Merrill Lynch Corporate & High 
Yield Index rate, respectively. The equity financing rate is described 
above. The rates for debt and equity financing are applied to the 
priced services estimated imputed short-term debt, long-term debt, and 
equity needed to finance short- and long-term assets and meet equity 
requirements.
    The 2019 PSAF is $17.8 million, compared with $18.9 million in 
2018. The decrease of $1.1 million is attributable to a $2.8 million 
decrease in the cost of debt and a $0.3 million decrease in sales tax, 
offset by a $1.9 million increase in the Board's costs and a $0.1 
million increase in the return on equity. The net $2.7 million decrease 
in cost of capital ($2.8 million less $0.1 million) resulted from lower 
funding needs driven by lower long-term assets. The increase in Board 
costs are attributed to a shift from policy to priced services 
oversight activities.
    The PSAF expense of $17.8 million, detailed in table 5, reflects 
$7.1 million for capital funding, $7.0 million for BOG expense and $3.7 
million in sales tax expense.
    As shown in table 3, 2019 total assets of $846.6 million increased 
by $29.4 million from 2018. The net increase in total assets reflects a 
$105 million increase in short-term assets and imputed investments 
offset by a $75.6 million decrease in long-term assets.
    The increase in the short-term assets is primarily driven by the 
imputed investments in Treasury securities and Federal Funds. These 
increases in short-term assets are largely offset by increases in 
short-term liabilities in the form of deferred credits. There were 
larger averages for check items in process of collection, and higher 
average ACH Pre-Fund account balances in the first several months of 
2018. The 2019 balances are estimated based on the current account 
balance average for the first part of 2018.
    The net long-term asset decrease of $75.6 million primarily 
consists of a $53.0 million decrease in the net pension asset and a 
combined $18.6 million decrease in Furniture and equipment and 
Leasehold improvements and long-term prepayments. The net pension asset 
decrease reflects lower plan contributions over the past two years, 
down from $720 million to $240 million in 2018 and from $480 million to 
$180 million in 2019. The decrease in furniture and equipment and 
Leasehold improvements and long-term prepayments are mainly due to a 
lower allocation of Reserve Bank assets to the Federal Reserve's priced 
services.
    The capital structure of the 2019 pro forma balance sheet, provided 
in table 4, is composed of equity of $51.8 million, or 10 percent of 
the 2019 risk weighted assets detailed in table 6, and no long-term 
debt. The 2019 capital structure differs from that of 2018, which was 
composed of $57.8 million of equity and $76.9 million of long-term 
debt. The 2019 imputed equity required to fund assets and meet the 
publicly traded firm model capital requirements is $31.3 million. Long-
term debt of $18.2 million was imputed at the observed market ratio of 
58.3 percent. To meet the FDIC capital requirements for a well-
capitalized institution, the $18.2 million of imputed long-term debt 
was substituted for equity, and additional $20.5 million equity was 
imputed. The resulting $51.8 million total level of equity satisfies 
the PSR policy requirements for 2019.
    The net Accumulated Other Comprehensive Income loss is $624.3

[[Page 1131]]

million, compared with $637.2 million in 2018. The slight decrease is 
primarily attributable to the actuarial gains as a result of higher 
than expected returns on pension assets and a lower discount rate. AOCI 
is in a net loss position and does not reduce the total imputed equity 
required to fund priced services assets or fulfill the FDIC equity 
requirements for a well-capitalized institution.
---------------------------------------------------------------------------

    \11\ Credit float, which represents the difference between items 
in process of collection and deferred credit items, occurs when the 
Reserve Banks debit the paying bank for transactions prior to 
providing credit to the depositing bank. Float is directly estimated 
at the service level.
    \12\ Consistent with the Board's PSR policy, the Reserve Banks' 
priced services will hold and amount equivalent to six months of the 
Fedwire Funds Service's current operating expenses as liquid net 
financial assets and equity on the pro forma balance sheet. Six 
months of the Fedwire Funds Service's projected current operating 
expenses is $50.5 million. In 2019, $38.8 million of equity was 
imputed to meet the regulatory capital requirements.
    \13\ Includes the allocation of Board of Governors assets to 
priced services of $2.9 million for 2019 and $1.1 million for 2018.
    \14\ Includes the allocation of Board of Governors liabilities 
to priced services of $0.8 million for 2019 and $0.6 million for 
2018.
    \15\ Includes an accumulated other comprehensive loss of $624.3 
million for 2019 and $637.2 million for 2018, which reflects the 
ongoing amortization of the accumulated loss in accordance with ASC 
715. Future gains or losses, and their effects on the pro forma 
balance sheet, cannot be projected. See table 5 for calculation of 
required imputed equity amount.

          Table 3--Comparison of Pro Forma Balance Sheets for Budgeted Federal Reserve Priced Services
                                [Millions of dollars--projected average for year]
----------------------------------------------------------------------------------------------------------------
                                                                       2019            2018           Change
----------------------------------------------------------------------------------------------------------------
Short-term assets:
    Receivables.................................................           $36.7           $36.6            $0.0
    Materials and supplies......................................             0.6             0.5             0.1
    Prepaid expenses............................................            11.1            13.0           (1.9)
    Items in process of collection \11\.........................            95.0            87.0             8.0
                                                                 -----------------------------------------------
        Total short-term assets.................................           143.4           137.1             6.3
Imputed investments: \12\
    Imputed investment in Treasury Securities...................            20.5  ..............            20.5
    Imputed investment in Fed Funds.............................           253.0           174.8            78.2
                                                                 -----------------------------------------------
        Total imputed investments...............................           273.5           174.8            98.7
Long-term assets:
    Premises \13\...............................................           104.2           103.7             0.2
    Furniture and equipment.....................................            32.8            38.9           (6.0)
    Leasehold improvements and long-term prepayments............            87.7           100.3          (12.6)
    Net pension asset...........................................            23.6            76.6          (53.0)
    Deferred tax asset..........................................           181.4           185.6           (4.1)
                                                                 -----------------------------------------------
        Total long-term assets..................................           429.7           505.3          (75.6)
                                                                 -----------------------------------------------
            Total assets........................................           846.6           817.2            29.4
                                                                 ===============================================
Short-term liabilities:
    Deferred credit items.......................................           348.0           261.8            86.2
    Short-term debt.............................................            13.5            14.5           (1.0)
    Short-term payables.........................................            34.9            35.6           (0.7)
                                                                 -----------------------------------------------
        Total short-term liabilities............................           396.4           311.9            84.5
Long-term liabilities:
    Long-term debt..............................................  ..............            76.9          (76.9)
    Postemployment/postretirement benefits and net pension                 398.4           370.5            27.9
     liabilities \14\...........................................
                                                                 -----------------------------------------------
        Total liabilities.......................................           794.8           759.3            35.4
        Equity \15\.............................................            51.8            57.8           (6.0)
                                                                 -----------------------------------------------
            Total liabilities and equity........................           846.6           817.2            29.4
----------------------------------------------------------------------------------------------------------------


           Table 4--Imputed Funding for Priced-Services Assets
                          [Millions of dollars]
------------------------------------------------------------------------
                                               2019            2018
------------------------------------------------------------------------
A. Short-term asset financing:
    Short-term assets to be financed:
        Receivables.....................           $36.7           $36.6
        Materials and supplies..........             0.6             0.5
        Prepaid expenses................            11.1            13.0
                                         -------------------------------
    Total short-term assets to be                   48.4            50.1
     financed...........................
        Short-term payables.............            34.9            35.6
                                         -------------------------------
    Net short-term assets to be financed            13.5            14.5
                                         ===============================

[[Page 1132]]

 
    Imputed short-term debt financing:              13.5            14.5
     \16\...............................
                                         ===============================
B. Long-term asset financing:
    Long-term assets to be financed:
        Premises........................           104.2           103.9
        Furniture and equipment.........            32.8            38.9
        Leasehold improvements and long-            87.7           100.3
         term prepayments...............
        Net pension asset...............            23.6            76.6
        Deferred tax asset..............           181.4           185.6
                                         -------------------------------
    Total long-term assets to be                   429.7           505.3
     financed...........................
        Postemployment/postretirement              398.4           370.5
         benefits and net pension
         liabilities....................
                                         -------------------------------
        Net long-term assets to be                  31.3           134.8
         financed.......................
                                         ===============================
        Imputed long-term debt \23\.....  ..............            76.9
        Imputed equity \23\.............            51.8            57.8
                                         -------------------------------
            Total long-term financing...            51.8           134.8
------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \16\ See table 5 for calculation.
    \17\ If minimum equity constraints are not met after imputing 
equity based on the capital structure observed in the market, 
additional equity is imputed to meet these constraints. The long-
term funding need was met by imputing long-term debt and equity 
based on the capital structure observed in the market (see tables 4 
and 6). In 2019, the amount of imputed equity met the minimum equity 
requirements for risk-weighted assets.
    \18\ Equity adjustment offsets are due to a shift of long-term 
debt funding to equity in order to meet FDIC capital requirements 
for well-capitalized institutions.
    \19\ Additional equity in excess of that needed to fund priced 
services assets is offset by an asset balance of imputed investments 
in treasury securities.
    \20\ Imputed short-term debt and long-term debt are computed at 
table 4.
    \21\ The 2019 ROE is equal to a risk-free rate plus a risk 
premium (beta * market risk premium). The 2019 after-tax CAPM ROE is 
calculated as 2.01% + (1.0 * 8.32%) = 10.33%. Using a tax rate of 
22.2%, the after-tax ROE is converted into a pretax ROE, which 
results in a pretax ROE of (10.33%/(1-22.2%)) = 13.27%. Calculations 
may be affected by rounding.
    \22\ If minimum equity constraints are not met after imputing 
equity based on all other financial statement components, additional 
equity is imputed to meet these constraints. Additional equity 
imputed to meet minimum equity requirements is invested solely in 
Treasury securities. The imputed investments are similar to those 
for which rates are available on the Federal Reserve's H.15 
statistical release, which can be located at http://www.federalreserve.gov/releases/h15/data.htm.
    \23\ The investments are imputed based on the amounts arising 
from the collection of items prior to providing credit according to 
established availability schedules.

                                  Table 5--Derivation of the 2019 and 2018 PSAF
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                           2019                               2018
                                           ---------------------------------------------------------------------
                                                   Debt            Equity             Debt            Equity
----------------------------------------------------------------------------------------------------------------
A. Imputed long-term debt and equity:
    Net long-term assets to finance.......              $31.3           $31.3             $134.8          $134.8
    Capital structure observed in market..              58.3%           41.7%              58.2%           41.8%
                                           ---------------------------------------------------------------------
    Pre-adjusted long-term debt and equity              $18.2           $13.1              $78.4           $56.4
    Equity adjustments: \17\
        Equity to meet capital              .................            51.8  .................            57.8
         requirements.....................
        Adjustment to debt and equity                  (18.2)            18.2              (1.5)             1.5
         funding given capital
         requirements \18\................
        Adjusted equity balance...........  .................            31.3  .................            57.8
        Equity to meet capital              .................            20.5  .................  ..............
         requirements \19\................
                                           ---------------------------------------------------------------------
            Total imputed long-term debt    .................           $51.8              $76.9           $57.8
             and equity...................
                                           =====================================================================
B. Cost of capital:
    Elements of capital costs:
        Short-term debt \20\..............     $13.5 x 2.3% =            $0.3     $14.5 x 1.3% =            $0.2
        Long-term debt \23\...............             3.9% =  ..............      76.9 x 3.8% =             3.0
        Equity \21\.......................     51.8 x 13.3% =             6.8     57.8 x 11.7% =             6.7
                                                              ----------------                   ---------------
                                            .................            $7.1  .................            $9.9
C. Incremental cost of PSR policy:
    Equity to meet policy.................            13.3% =  ..............            11.7% =  ..............
                                                              ----------------                   ---------------
D. Other required PSAF costs:
    Sales taxes...........................               $3.7  ..............               $3.9  ..............

[[Page 1133]]

 
    Board of Governors expenses...........                7.0  ..............                5.1  ..............
                                           -------------------                -------------------
                                            .................            10.7  .................             9.0
                                                              ----------------                   ---------------
                                            .................           $17.8  .................           $18.9
                                                              ================                   ===============
E. Total PSAF:
    As a percent of assets................  .................            2.1%  .................            2.3%
    As a percent of expenses..............  .................            3.3%  .................            4.1%
F. Tax rates..............................  .................           22.2%  .................           22.7%
----------------------------------------------------------------------------------------------------------------


                Table 6--Computation of 2019 Capital Adequacy for Federal Reserve Priced Services
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                     Weighted
                                                                      Assets        Risk weight       assets
----------------------------------------------------------------------------------------------------------------
Imputed investments:
    1-Year Treasury securities \22\.............................           $20.5  ..............  ..............
    Federal funds \23\..........................................           253.0             0.2           $50.6
                                                                 -----------------------------------------------
        Total imputed investments...............................           273.5  ..............            50.6
Receivables.....................................................            36.7             0.2             7.3
Materials and supplies..........................................             0.6             1.0             0.6
Prepaid expenses................................................            11.1             1.0            11.1
Items in process of collection..................................            95.0             0.2            19.0
Premises........................................................           104.2             1.0           104.2
Furniture and equipment.........................................            32.8             1.0            32.8
Leasehold improvements and long-term prepayments................            87.7             1.0            87.7
Net pension asset...............................................            23.6             1.0            23.6
Deferred tax asset..............................................           181.4             1.0           181.4
                                                                 -----------------------------------------------
    Total.......................................................           846.6  ..............           518.3
                                                                 ===============================================
Imputed equity:
    Capital to risk-weighted assets.............................           10.0%  ..............  ..............
    Capital to total assets.....................................            6.1%  ..............  ..............
----------------------------------------------------------------------------------------------------------------

    C. Check Service--Table 7 shows the 2017 actual, 2018 estimated, 
and 2019 budgeted cost-recovery performance for the commercial check 
service.

                          Table 7--Check Service Pro Forma Cost and Revenue Performance
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Recovery rate
              Year                    Revenue      Total expense    Net income     Targeted ROE   after targeted
                                                                       (ROE)                         ROE  (%)
                                               1               2               3               4               5
                                                                         [1 - 2]                     [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2017 (actual)...................           142.0           131.3            10.7             1.4           107.0
2018 (estimate).................           133.2           129.5             3.8             1.5           101.7
2019 (budget)...................           128.3           124.8             3.4             1.5           101.5
----------------------------------------------------------------------------------------------------------------

    1. 2018 Estimate--The Reserve Banks estimate that the check service 
will recover 101.7 percent of total expenses and targeted ROE, compared 
with a 2018 budgeted recovery rate of 101.6 percent. The expected 
decline in check volumes processed by the Reserve Banks continues to 
influence the check service's cost recovery.
    Through August, total commercial forward and total commercial 
return check volumes were 7.6 percent and 7.2 percent lower, 
respectively, than they were during the same period last year. 
Consistent with anticipated fourth-quarter declines, for full-year 
2018, the Reserve Banks estimate that their total forward check volume 
will decline 7.6 percent (compared with a budgeted decline of 4.7 
percent) and their total return check volume will decline 7.7

[[Page 1134]]

percent (compared with a budgeted decline of 3.5 percent) from 2017 
levels.\24\ While these volume declines will affect budgeted total 
revenue, the Reserve Banks estimate that total expenses will also be 
lower given the decline in those expenses directly correlated with 
volumes as well as the continued recognition of operational 
efficiencies. This has allowed for close alignment between budgeted and 
estimated 2018 cost recovery.
---------------------------------------------------------------------------

    \24\ Total Reserve Bank forward check volumes are expected to be 
4.8 billion in 2018. Total Reserve Bank return check volumes are 
expected to be 28.9 million in 2018.
---------------------------------------------------------------------------

    2. 2019 Pricing--The Reserve Banks expect the check service to 
recover 101.5 percent of total expenses and targeted ROE in 2019. The 
Reserve Banks project revenue to be $128.3 million, a decline of 3.7 
percent from the 2018 estimate. This decline is driven in part by 
anticipated accelerating decline in the overall number of checks 
written, as well as by competition from correspondent banks, 
aggregators, and direct exchanges.\25\ Total expenses for the check 
service are projected to be $124.8 million, a decrease of $4.7 million, 
or 3.6 percent, from 2018 expenses, primarily because of reduced 
operating costs, including cost savings associated with the Reserve 
Banks' customer support services.
---------------------------------------------------------------------------

    \25\ The Reserve Banks estimate that total commercial forward 
check volumes in 2019 will decline 8.5 percent, to 4.4 billion, and 
total commercial return check volumes will decline 7.5 percent, to 
26.7 million in 2019.
---------------------------------------------------------------------------

    The Reserve Banks evaluate and set tier assignments annually based 
on changes in the volume of items received by endpoints. In 2019, the 
Reserve Banks will reassign the tier placement of 1,116 forward and 240 
return endpoints in the FedForward and FedReturn products, 
respectively.\26\ Based on these 2019 tier assignments, the Reserve 
Banks will increase the FedForward Premium Daily Fee A, B, and C per 
item fees by $0.001 for Tier 3 and $0.003 for Tier 4, while also 
increasing to the Premium Daily Fee C daily fixed fee by $200, from 
$3,500 to $3,700. These price increases are intended to better align 
pricing between premium daily and standard deposit options.
---------------------------------------------------------------------------

    \26\ The tiers for 2019 are available at https://www.frbservices.org/resources/fees/check-2019.html.
---------------------------------------------------------------------------

    The Reserve Banks will also lower the average daily forward receipt 
and return volume thresholds by approximately 6.0 percent for tiers 1, 
2, 3, and 4 for FedForward[supreg] and FedReturn[supreg] image cash 
letter and daily fee deposit options based on the 2019 tier 
assignments.\27\ These changes are intended to account for the 
anticipated continued decline in check deposit volumes. Tables 8, 9, 
10, and 11 show the 2018 volume thresholds and the 2019 thresholds for 
the four tiered pricing structures.
---------------------------------------------------------------------------

    \27\ As part of the Reserve Banks' 2016 restructured FedForward 
and FedReturn fee schedules, the Reserve Banks use a volume-based 
tiered pricing structure to determine per-item fees based on the 
average daily receipt or return volume an endpoint receives from 
chartered institutions through the Reserve Banks. Tiers for the 
three premium variations of the Reserve Banks' daily subscription 
fee deposit options (FedForward Premium Daily Fee A, B, and C) are 
based only on volume received by the Reserve Banks' top 15 
customers, which represent the likely users of the deposit options. 
These premium daily fee options include a fifth tier, Tier 0, 
composed of routing numbers for which the Reserve Banks currently 
receive little to no volume from the specified subset of Reserve 
Bank customers (and which therefore cannot currently be assigned to 
the other tiers with sufficient predictability). Tier 0 is evaluated 
annually, along with all other tiers and endpoints, and endpoints 
cannot be placed in Tier 0 if they have previously been assigned to 
one of the other tiers.

       Table 8--FedForward Standard Deposit Tier Volume Thresholds
  [Applicable to Standard ICL, Premium ICL, Deferred ICL, Dollar-Culled
ICL, Endpoint-Culled ICL, Standard Daily Fee A, and Standard Daily Fee B
                            deposit options]
------------------------------------------------------------------------
                            2018 Average daily      2019 Average daily
          Tier            forward receipt volume  forward receipt volume
                                items/day                items/day
------------------------------------------------------------------------
1......................  Over 65,000............  Over 61,000.
2......................  10,001-65,000..........  9,401-61,000.
3......................  750-10,000.............  700-9,400.
4......................  Less than 750..........  Less than 700.
------------------------------------------------------------------------


 Table 9--FedForward Premium Daily Deposit Option Tier Volume Thresholds
  [Applicable to Premium Daily Fee A, Premium Daily Fee B, and Premium
                      Daily Fee C deposit options]
------------------------------------------------------------------------
                            2018 Average daily      2019 Average daily
          Tier            forward receipt volume  forward receipt volume
                                items/day                items/day
------------------------------------------------------------------------
0......................  See explanation below *  See explanation
                                                   below.*
1......................  Over 25,000............  Over 23,500.
2......................  3,301-25,000...........  3,101-23,500.
3......................  750-3,300..............  700-3,100.
4......................  Less than 750..........  Less than 700.
------------------------------------------------------------------------
* Tier 0 consists of financial institutions that meet both of the
  following criteria:
1. Less than 10 percent of their Reserve Bank forward receipt volume was
  deposited with the Reserve Banks by Premium Daily Fee depositors
  during the sample period, and
2. Their average daily Reserve Bank forward receipt volume exceeded 150
  items per day during the sample period.
Tier 0 is intended to be a transitional tier: Once a financial
  institution is assigned to tier 1-4 or the substitute check tier, it
  cannot be assigned to tier 0.


       Table 10--FedReturn Standard Deposit Tier Volume Thresholds
               [Applicable to Standard ICL deposit option]
------------------------------------------------------------------------
                            2018 Average daily      2019 Average daily
          Tier            return receipt volume    return receipt volume
                                items/day                items/day
------------------------------------------------------------------------
1......................  Over 3,000.............  Over 2,820.
2......................  1,001-3,000............  941-2,820.
3......................  100-1,000..............  94-940.
4......................  Less than 100..........  Less than 94.
------------------------------------------------------------------------


[[Page 1135]]


 Table 11--FedReturn Premium Daily Deposit Option Tier Volume Thresholds
           [Applicable to Premium Daily Fee A deposit option]
------------------------------------------------------------------------
                            2018 Average daily      2019 Average daily
          Tier            return receipt volume    return receipt volume
                                items/day                items/day
------------------------------------------------------------------------
0......................  See explanation below *  See explanation
                                                   below.*
1......................  Over 1,500.............  Over 1,410.
2......................  501-1,500..............  471-1,410.
3......................  100-500................  94-470.
4......................  Less than 100..........  Less than 94.
------------------------------------------------------------------------
* Tier 0 consists of financial institutions with less than 10 percent of
  their Reserve Bank return receipt volume deposited with the Reserve
  Banks by Premium Daily Fee depositors during the sample period.
Tier 0 is intended to be a transitional tier: once a financial
  institution is assigned to tier 1-4 or the substitute check tier, it
  cannot be assigned to tier 0.

    The Reserve Banks will increase cash letter fees by $0.50 for all 
deadlines on the FedForward Standard, Deferred, Dollar-Culled, and 
Endpoint-Culled image cash letters and FedReturn Standard image cash 
letters. The Reserve Banks will also increase the FedReceipt Premium 
Delivery 8:00 a.m. EST target per-item fee by $0.006 and the Premium 
Delivery 10:00 a.m. target and 12:00 noon target per-item fees by 
$0.002.\28\ Further, the Reserve Banks will increase FedReceipt 
Electronic Reject Repair fees by $0.05, increasing the Basic repair fee 
from $0.15 per item to $0.20 per item and increasing the Premium repair 
fee from $0.25 per item to $0.30 per item. Together, these changes are 
intended to facilitate longer-term cost recovery for the check service 
by increasing the proportion of fixed revenue while still providing 
price stability for customers in light of the anticipated continued 
decline in check volumes.
---------------------------------------------------------------------------

    \28\ The 8:00 a.m. delivery target is expressed in eastern time, 
while the 10:00 a.m. and 12:00 noon targets are local time.
---------------------------------------------------------------------------

    The Reserve Banks will continue increasing fees to encourage 
depositors to shift volume away from legacy paper-related products in 
light of today's electronic check-processing environment. Specifically, 
the Reserve Banks will increase all fees for the FedImage product and 
certain truncation fees by approximately 10.0 percent.\29\ Table 12 
shows the 2019 FedImage and Electronic Check Services fees.
---------------------------------------------------------------------------

    \29\ Because of rounding, the individual price increases range 
from 8.3 percent to 12.5 percent.

                            Table 12--FedImage and Electronic Check Services and Fees
----------------------------------------------------------------------------------------------------------------
                                                                    Fixed fee                      Per item fee
----------------------------------------------------------------------------------------------------------------
Image Archive:
    Image Capture + 7 business day archive....  $6.00...........................................         $0.0090
    Image Capture On-Us Surcharge.............  ................................................          0.0212
    30 business day archive...................  ................................................          0.0011
    60 business day archive...................  ................................................          0.0013
    7-year archive/11-year archive............  ................................................          0.0020
    Dual archive (Transition period up to 120   ................................................          0.0012
     days).
    Extended dual archive (More than 120 days)  ................................................          0.0121
    Back File Conversion......................  $4.25...........................................          0.0121
    Electronic On-Us Service..................  $4.25...........................................          0.0121
    Extended RAID Storage
        61 days to 6 months...................  ................................................          0.0010
        61 days to 12 months..................  ................................................          0.0024
        61 days to 24 months..................  ................................................          0.0061
Image Retrievals:
    Retrievals to view via FedLine Web[supreg]  ................................................          0.4300
     inquiry.
    Retrievals to email via FedLine Web:
        Request via FedLine Web inquiry.......  ................................................          0.4300
        Recurring request.....................  ................................................          0.4300
        Image Access and Retrievals through a   ................................................          0.4300
         Gateway.
        Subscription Retrievals...............  ................................................          0.0026
        Manual FedImage Requests (requests      ................................................          7.2500
         performed by FRB staff).
Image Delivery:
    Physical Media:
        CD-ROM Select Accounts Service--RAID..  $18.15/CD-ROM...................................          0.0190
        CD-ROM--Tape..........................  $18.15/CD-ROM...................................          0.1200
Truncation:
    Image Enhanced Truncation.................  $6.60...........................................          0.0110
    Return Item Retrieval--Fedline............  ................................................          1.2700
----------------------------------------------------------------------------------------------------------------

    Finally, the Reserve Banks will introduce two new fees as 
incentives to financial institutions to reduce errors in adjustment 
case submissions. The Reserve Banks will introduce a $0.50 fee for 
encoding error and duplicate payment adjustment cases caused by the 
depositary bank's incorrect encoding or duplicate deposit of an item. 
The

[[Page 1136]]

Reserve Banks will also introduce a $2.50 fee for automated adjustment 
case types that require manual intervention by Reserve Bank staff 
because of error on the part of the adjusting bank.\30\ These new fees 
are intended to help drive efficiencies throughout the industry's check 
collection process by providing an incentive to financial institutions 
to improve the quality of their check deposit processing. In addition, 
the $2.50 fee will cover the staffing costs associated with manually 
handling cases that should have been automatically resolved. Table 13 
shows the 2019 fees under Quality Improvement Initiatives for 
Electronic Check Collection.
---------------------------------------------------------------------------

    \30\ This fee is charged to a financial institution that 
provides incorrect or incomplete information when opening an 
adjustment case with the Reserve Banks. The fee is only applicable 
to adjustment cases that would have resolved automatically had the 
case been submitted correctly (investigation types ENC, PAID, NCH, 
DISP, SOR and LNE).

                Table 13--Quality Improvement Initiatives
------------------------------------------------------------------------
                                                          Per case/ item
                         Product                                fee
------------------------------------------------------------------------
Check Adjustments--Deposit Quality Issues...............           $0.50
Check Adjustments--Incorrect/Incomplete Case Opening....            2.50
Return Deposit Exceptions--Items Qualified to the                  15.00
 Federal Reserve as BOFD \31\...........................
------------------------------------------------------------------------

    The Reserve Banks estimate that the announced price changes will 
result in a 4.0 percent average price increase for check customers.
---------------------------------------------------------------------------

    \31\ This existing fee was previously located in the FedReturn 
section of the Electronic Check Collection Fee.
---------------------------------------------------------------------------

    The primary risks to the Reserve Banks' ability to achieve budgeted 
2019 cost recovery for the check service include greater-than-expected 
declines in check volume due to the general reduction in check writing 
and increased competition from correspondent banks, aggregators, and 
direct exchanges, which would result in lower-than-anticipated revenue.
    D. FedACH Service--Table 14 shows the 2017 actual, 2018 estimate, 
and 2019 budgeted cost-recovery performance for the commercial FedACH 
service.

                         Table 14--FedACH Service Pro Forma Cost and Revenue Performance
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Recovery rate
              Year                    Revenue      Total expense    Net income     Targeted ROE   after targeted
                                                                       (ROE)                         ROE  (%)
                                               1               2               3               4               5
                                                                         [1 - 2]                     [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2017 (actual)...................           141.3           140.0             1.3             1.6            99.8
2018 (estimate).................           149.2           150.4            -1.2             1.9            98.0
2019 (budget)...................           152.0           147.4             4.6             1.9           101.8
----------------------------------------------------------------------------------------------------------------

    1. 2018 Estimate--The Reserve Banks estimate that the FedACH 
service will recover 98.0 percent of total expenses and targeted ROE, 
compared with a 2018 budgeted recovery rate of 96.1 percent. Through 
August, FedACH commercial origination and receipt volume was 7.5 
percent higher than it was during the same period last year. For full-
year 2018, the Reserve Banks estimate that FedACH commercial 
origination and receipt volume will increase 6.1 percent from 2017 
levels, in line with the budgeted increase of 5.2 percent. However, 
investment costs associated with the multiyear technology initiative to 
modernize the FedACH processing platform are driving the overall under 
recovery rate.
    2. 2019 Pricing--The Reserve Banks expect the FedACH service to 
recover 101.8 percent of total expenses and targeted ROE in 2019. 
FedACH commercial origination and receipt volume is projected to grow 
3.3 percent, which, combined with anticipated incremental revenue from 
new services, is expected to contribute to an increase of $2.8 million 
in total revenue from the 2018 estimate. Total expenses are projected 
to decrease $3.0 million from 2018 expenses, primarily because of the 
reduction in costs associated with the development and expected 
completion in 2019 of the new FedACH technology platform.
    The Reserve Banks will introduce a new Exception Resolution Service 
that provides an automated means for participants to manage ACH 
exceptions for entries settled through FedACH.\32\ The Reserve Banks 
expect that automation of exception cases will improve efficiency of 
FedACH payments by streamlining existing time-consuming manual 
processes that banks use to manage exception cases. The Service is 
optional; customers will be able to originate an exception case 
directly through FedLine, through a third-party agent on their behalf, 
or through a Federal Reserve Bank on their behalf.
---------------------------------------------------------------------------

    \32\ Specifically, the service is designed to handle disputes, 
notifications, questions, or requests for additional information 
from a financial institution either for their own use or on behalf 
of their account holder. Eight of the most common exception requests 
between financial institutions will be able to be managed through 
the service initially: (1) Written statement of unauthorized debit 
copy, (2) converted check copy, (3) ODFI request for return, (4) 
RDFI request for late return acceptance, (5) request for proof of 
debit authorization, (6) originator contact information, (7) payment 
trace request, and (8) general inquiries (used to contact another 
institution for information exchange).
    The ERS product will not be available to customers on January 
2nd, 2019.The Reserve Banks will provide notice to customers, 
regarding the availability of the product, once an implementation 
date has been determined.
---------------------------------------------------------------------------

    The Reserve Banks will not change fees for existing FedACH priced 
services.
    The primary risks to the Reserve Banks' ability to achieve budgeted 
2019 cost recovery for the FedACH service are unanticipated cost 
overruns associated with the FedACH technology modernization project 
and unanticipated volume reductions.

[[Page 1137]]

    E. Fedwire Funds and National Settlement Services--Table 15 shows 
the 2017 actual, 2018 estimate, and 2019 budgeted cost-recovery 
performance for the Fedwire Funds and National Settlement Services.

         Table 15--Fedwire Funds and National Settlement Services Pro Forma Cost and Revenue Performance
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Recovery rate
              Year                    Revenue      Total expense    Net income     Targeted ROE   after targeted
                                                                       (ROE)                          ROE (%)
                                               1               2               3               4               5
                                                                         [1 - 2]                     [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2017 (actual)...................           129.7           120.8             8.9             1.3           106.2
2018 (estimate).................           132.2           124.4             7.8             1.5           105.0
2019 (budget)...................           133.6           131.1             2.5             1.6           100.7
----------------------------------------------------------------------------------------------------------------

    1. 2018 Estimate--The Reserve Banks estimate that the Fedwire Funds 
and National Settlement Services will recover 105.0 percent of total 
expenses and targeted ROE, compared with a 2018 budgeted recovery rate 
of 103.9 percent. Through August, Fedwire Funds Service online volume 
was 5.1 percent higher than it was during the same period last year. 
For full-year 2018, the Reserve Banks estimate that Fedwire Funds 
Services online volume will increase 3.2 percent from 2017 levels, 
compared with the 0.8 percent volume decrease that had been budgeted. 
Through August, the National Settlement Service (NSS) settlement file 
volume was 3.6 percent higher than it was during the same period last 
year, and settlement entry volume was 1.1 percent higher. For the full 
year, the Reserve Banks estimate that settlement file volume will 
increase 1.5 percent (in line with a budgeted increase of 1.3 percent) 
and settlement entry volume will decrease 2.3 percent from 2017 levels 
(compared with a budgeted 0.7 percent increase).
    2. 2019 Pricing--The Reserve Banks expect the Fedwire Funds and 
National Settlement Services to recover 100.7 percent of total expenses 
and targeted ROE. Revenue is projected to be $133.6 million, an 
increase of 1.1 percent from the 2018 estimate. The Reserve Banks 
project total expenses to be roughly $6.7 million higher than 2018 
expenses, primarily reflecting investments in new initiatives to 
improve resiliency and operational functionality.
    The Reserve Banks will increase the offline send surcharge and 
offline receive surcharge for the Fedwire Funds Service from $60.00 to 
$65.00 in order to offset project costs related to the automation of 
Office of Foreign Asset Control (OFAC) screening within the offline 
process. The Reserve Banks estimate that the price changes, along with 
an expected increase in incentive discount-eligible volume, will 
ultimately result in an overall 2.0 percent average price increase for 
Fedwire Funds customers.
    The Reserve Banks will not change NSS fees for 2019.
    The primary risk to the Reserve Banks' ability to achieve budgeted 
2019 cost recovery for these services is an overrun in costs from new 
initiatives to improve resiliency and operational functionality. 
Unanticipated decreases in volume may also negatively impact cost 
recovery.
    F. Fedwire Securities Service--Table 16 shows the 2017 actual, 2018 
estimate, and 2019 budgeted cost-recovery performance for the Fedwire 
Securities Service.\33\
---------------------------------------------------------------------------

    \33\ The Reserve Banks provide transfer services for securities 
issued by the U.S. Treasury, federal government agencies, 
government-sponsored enterprises, and certain international 
institutions. The priced component of this service, reflected in 
this memorandum, consists of revenues, expenses, and volumes 
associated with the transfer of all non-Treasury securities. For 
Treasury securities, the U.S. Treasury assesses fees for the 
securities transfer component of the service. The Reserve Banks 
assess a fee for the funds settlement component of a Treasury 
securities transfer; this component is not treated as a priced 
service.

                   Table 16--Fedwire Securities Service Pro Forma Cost and Revenue Performance
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Recovery rate
              Year                    Revenue      Total expense    Net income     Targeted ROE   after targeted
                                                                       (ROE)                          ROE (%)
                                               1               2               3               4               5
                                                                         [1 - 2]                     [1/(2 + 4)]
----------------------------------------------------------------------------------------------------------------
2017 (actual)...................            28.6            27.3             1.3             0.3           103.6
2018 (estimate).................            27.1            27.7            -0.7             0.3            96.5
2019 (budget)...................            26.4            27.5            -1.1             0.3            94.7
----------------------------------------------------------------------------------------------------------------

    1. 2018 Estimate--The Reserve Banks estimate that the Fedwire 
Securities Service will recover 96.5 percent of total expenses and 
targeted ROE, compared with a 2018 budgeted recovery rate of 97.6 
percent. The Reserve Banks estimate revenue to be $27.1 million, a 
decrease of 5.3 percent from the 2018 budget. Total expenses are 
projected to be $27.7 million for full-year 2018, an increase of 1.7 
percent from the 2018 budget.
    Through August, Fedwire Securities Service online agency transfer 
volume was 2.3 percent lower than it was during the same period last 
year. For full-year 2018, the Reserve Banks estimate that Fedwire 
Securities Service online agency transfer volume will decline 4.8 
percent from 2017 levels, compared with a budgeted decline of

[[Page 1138]]

15.4 percent. This decrease in online agency transfer volume primarily 
reflects two market trends. First, a continuation of interest rate 
increases in 2018 has led to a decrease in mortgage refinance volume 
and issuance, which in turn has led to a decrease in settlement 
activity for agency mortgage-backed securities over Fedwire Securities. 
Second, JP Morgan Chase (JPMC) has recently completed its exit from the 
broker-dealer services business, resulting in Bank of New York Mellon 
generally serving as the sole clearing bank for government securities. 
As a result of this market shift, online agency transfer volume is 
expected to decrease through year-end 2018. These structural changes 
within the government securities clearing and settlement market are 
expected to continue to affect online transfer volumes through 2019.
    For full-year 2018, volumes for the Fedwire Securities' two largest 
revenue-generating services--account maintenance and issue 
maintenance--are expected to decline from 2017 levels. Through August, 
account maintenance volume was 5.3 percent lower than it was during the 
same period last year. For full-year 2018, the Reserve Banks estimate 
that account maintenance volume will decline 5.0 percent from 2017 
levels, compared with a budgeted decline of 3.2 percent. The higher-
than-expected account maintenance volume decline is largely the result 
of joint custody account closures. Through August, the number of agency 
issues maintained was 3.9 percent lower than it was during the same 
period last year. For full-year 2018, the Reserve Banks estimate that 
the number of agency issues maintained will decline 4.7 percent from 
2017 levels, compared with a budgeted decline of 1.4 percent.
    2. 2019 Pricing--The Reserve Banks expect the Fedwire Securities 
Service to recover 94.7 percent of total expenses and targeted ROE in 
2019. Revenue is projected to be $26.4 million, a decrease of 2.6 
percent from the 2018 estimate. The Reserve Banks also project that 
2019 expenses will remain relatively flat, decreasing by $0.2 million 
from the 2018 estimate. Significant drivers of 2019 operating costs 
include investments to advance new initiatives to improve resiliency 
and operational functionality.
    As JPMC finalizes its reallocation of holdings and ongoing market 
changes reach steady state, the Reserve Banks project that online 
agency transfer volume will remain relatively flat, with a slight 
increase of 0.8 percent in 2019. Additionally, the volume of accounts 
maintained will likely decrease 5.6 percent, and the volume of agency 
issues maintained will likely decrease 15.5 percent.\34\ Account 
maintenance volume is expected to continue to decline in 2019 because 
of ongoing joint custody account closures driven by state-level 
collateral program changes. Issue maintenance volume is expected to 
decline because of cost allocation adjustments necessitated by the 
completion of the Fedwire Modernization Program, and new securities 
related to the Federal Home Loan Mortgage Corporation's securities 
exchange program in advance of the Federal Housing Finance Agency's 
Single Security Initiative.
---------------------------------------------------------------------------

    \34\ The online transfer fee, monthly account maintenance fee, 
and monthly issue maintenance fee accounted for more than 94 percent 
of total Fedwire Securities Service revenue through August 2018.
---------------------------------------------------------------------------

    The Reserve Banks will increase the online agency transfer fee from 
$0.77 to $0.98. Processing costs for online agency transfers and online 
Treasury transfers are nearly identical, yet the corresponding fees are 
different; therefore, the fee change is intended to bring the two fees 
into better alignment.\35\ Additionally, the Reserve Banks will 
increase the automated claims adjustment processing fee from $0.80 to 
$1.00. This fee increase will offset costs associated with the 
automated claims adjustment processing expansion project, which is 
scheduled to go live at year-end 2019. The Reserve Banks estimate that 
the combined price changes will result in a 6.0 percent average price 
increase for Fedwire Securities customers.
---------------------------------------------------------------------------

    \35\ Treasury online transfer fees are set by and remitted to 
the U.S. Department of the Treasury, except for a funds movement fee 
of $0.11, which is set and retained by the Federal Reserve Banks for 
their direct, support, and overhead costs of settling on their books 
the payment associated with the transfer of a Treasury security 
between securities accounts.
---------------------------------------------------------------------------

    The primary risks to the Reserve Banks' ability to achieve budgeted 
2019 cost recovery for these services are lower-than-expected volume 
resulting from the pace of structural changes in government securities 
clearing and settlement, and higher-than-expected costs from new 
initiatives to improve resiliency and operational functionality.
    G. FedLine Access--The Reserve Banks charge fees for the electronic 
connections that depository institutions use to access priced services 
and allocate the costs and revenue associated with this electronic 
access to the various priced services. There are currently six FedLine 
channels through which customers can access the Reserve Banks' priced 
services: FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, 
FedLine Command, and FedLine Direct.\36\ The Reserve Banks bundle these 
channels into eleven FedLine packages, described below, that are 
supplemented by a number of premium (or [agrave] la carte) access and 
accounting information options. In addition, the Reserve Banks offer 
FedComplete packages, which are bundled offerings of FedLine 
connections and a fixed number of FedACH, Fedwire Funds, and Check 21-
enabled transactions.
---------------------------------------------------------------------------

    \36\ FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, 
FedLine Command, and FedLine Direct are registered trademarks of the 
Federal Reserve Banks.
---------------------------------------------------------------------------

    Eight attended access packages offer manual access to critical 
payment and information services via a web-based interface. The FedMail 
package provides access to basic information services via email, while 
the two FedLine Exchange packages are designed to provide certain 
services, such as the E-Payments Routing Directory, to customers that 
otherwise do not use FedLine for any payment services. The two FedLine 
Web packages offer online attended access to a range of services, 
including cash services, FedACH information services, and Check 
services. Three FedLine Advantage packages expand upon the FedLine Web 
packages and offer attended access to critical transactional services: 
FedACH, Fedwire Funds, and Fedwire Securities.
    Three unattended access packages are computer-to-computer, IP-based 
interfaces. The FedLine Command package offers an unattended connection 
to FedACH as well as to most accounting information services. The two 
remaining options are FedLine Direct packages, which allow for 
unattended connections at one of two connection speeds to FedACH, 
Fedwire Funds, and Fedwire Securities transactional and information 
services and to most accounting information services.\37\
---------------------------------------------------------------------------

    \37\ The Reserve Banks offer an unattended check product, Check 
21 Large File Delivery, that allows a depository institution to 
upload and download check image cash letters automatically via a 
direct network connection to the Reserve Banks.
---------------------------------------------------------------------------

    In 2019, the Reserve Banks will offer upgraded FedLine Direct Plus 
and FedLine Direct Premier packages, at monthly fees of $5,500 and 
$10,500 respectively, in order to reflect improved network resiliency, 
efficiency in supporting all payments traffic, and availability of 
higher network speeds.\38\ Historically, the Reserve Banks' FedLine

[[Page 1139]]

Direct connections were not able to support all payment traffic 
including Check Services because of limitations in network speed and 
ability to manage bandwidth.
---------------------------------------------------------------------------

    \38\ As of July 16, 2018, 256K and T1 line speed connections are 
no longer offered to new customers as part of the FedLine Direct 
Plus and FedLine Direct Premier packages.
---------------------------------------------------------------------------

    The Reserve Banks will also increase the monthly fee for the 
current (legacy) FedLine Direct Plus solution by $350, from $3,650 to 
$4,000. Existing customers can use the current (legacy) FedLine Plus 
and Premier solutions and Check 21 Large File Delivery but will 
eventually need to convert to the enhanced FedLine Direct Solutions. 
Existing users should expect the legacy solutions to be retired and 
plan migration efforts to the new service packages beginning in late 
2018. The Reserve Banks will also increase the [agrave] la carte 
Network Diversity monthly fee by $500, from $2,000 to $2,500.\39\
---------------------------------------------------------------------------

    \39\ Network Diversity refers to a method for improving the 
resiliency of a computing network by using two or more 
telecommunication paths with different characteristics so that the 
first remains unaffected by events interrupting traffic on the 
second and vice versa.
---------------------------------------------------------------------------

    Table 17 provides a summary of the attributes and 2019 pricing for 
legacy and upgraded FedLine Direct packages:
---------------------------------------------------------------------------

    \40\ Available only to existing customers prior to 2019.
    \41\ Available to new and existing customers starting 2019.

                                        Table 17--FedLine Direct Packages
----------------------------------------------------------------------------------------------------------------
                                              Legacy \40\                            2019 \41\
----------------------------------------------------------------------------------------------------------------
FedLine Direct Plus:
    Connection Speed................  256 Kbps...................  2 Mbps.
    Dual Vendors....................  N/A........................  Included.
    Check 21 Services...............  Available [agrave] la carte  Included.
    Server Certificates.............  Two included...............  Included.
    Network Diversity...............  None included..............  None included.
    Contingency Solution............  Available [agrave] la carte  Included.
    Additional WANs.................  None included..............  None included.
    VPNs............................  One included...............  One included.
    Bundled FedLine Channels........  Web, Advantage, Command....  Web, Advantage, Command.
    Price...........................  $4,000.00..................  $5,500.00.
FedLine Direct Premier:
    Connection Speed................  1.5 Mbps...................  2 Mbps.
    Dual Vendors....................  N/A........................  Included.
    Check 21 Services...............  Available [agrave] la carte  Included.
    Server Certificates.............  Two included...............  Included.
    Network Diversity...............  None included..............  One included.
    Contingency Solution............  Available [agrave] la carte  Included.
    Additional WANs.................  None included..............  One included.
    VPNs............................  Two included...............  Two included.
    Bundled FedLine Channels........  Web, Advantage, Command....  Web, Advantage, Command.
    Price...........................  $6,800.00..................  $10,500.00.
----------------------------------------------------------------------------------------------------------------

    In addition, the Reserve Banks will eliminate specific [agrave] la 
carte fees and services for current FedLine packages. The Reserve Banks 
will discontinue offering FedLine Command server certificates as a 
separate monthly fee. FedLine Command server certificates will be 
included in FedLine Command packages for no additional cost. Including 
these certificates in FedLine Command packages is similar to current 
practices for upgraded FedLine Direct packages and will result in a 
consistent customer experience across both product lines. The Reserve 
Banks will also discontinue offering the Accounting Totals by Service 
(ACTS) report as an Accounting Service option for customers, because of 
low usage. In addition, the Reserve Banks will discontinue offering new 
FedMail Fax subscriptions to customers, in order to encourage them to 
move to more modern and secure technology that meets industry standards 
and enhances their experience.
    The Reserve Banks estimate that the price changes will result in a 
7.5 percent average price increase for FedLine customers. This increase 
is primarily driven by the changes to FedLine Direct Plus and Premier 
packages that provide enhanced network options.

II. Analysis of Competitive Effect

    All operational and legal changes considered by the Board that have 
a substantial effect on payment system participants are subject to the 
competitive impact analysis described in the March 1990 policy ``The 
Federal Reserve in the Payments System.'' \42\ Under this policy, the 
Board assesses whether proposed changes would have a direct and 
material adverse effect on the ability of other service providers to 
compete effectively with the Federal Reserve in providing similar 
services because of differing legal powers or constraints or because of 
a dominant market position deriving from such legal differences. If any 
proposed changes create such an effect, the Board must further evaluate 
the changes to assess whether the benefits associated with the 
changes--such as contributions to payment system efficiency, payment 
system integrity, or other Board objectives--can be achieved while 
minimizing the adverse effect on competition.
---------------------------------------------------------------------------

    \42\ Federal Reserve Regulatory Service (FRRS) 9-1558.
---------------------------------------------------------------------------

    The 2019 fees, fee structures, and changes in service will not have 
a direct and material adverse effect on the ability of other service 
providers to compete effectively with the Reserve Banks in providing 
similar services. The changes should permit the Reserve Banks to earn a 
ROE that is comparable to overall market returns and provide for full 
cost recovery over the long run.
III. 2019 Fee Schedules

[[Page 1140]]



                    FedACH Service 2019 Fee Schedule
  [Effective January 2, 2019. Bold indicates changes from 2018 prices]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
FedACH minimum monthly fee:
    Originating Depository Financial Institution                 $50.00.
     (ODFI) \43\.....................................
    Receiving Depository Financial Institution (RDFI)            $40.00.
     \44\............................................
Origination (per item or record):
    Forward or return items..........................           $0.0035.
    SameDay Service--forward item \45\...............            $0.0010
                                                              surcharge.
    Addenda record...................................           $0.0015.
    FedLine Web-originated returns and notification               $0.35.
     of change (NOC) \46\............................
    Facsimile Exception Return/NOC \47\..............            $45.00.
    SameDay Exception Return.........................            $45.00.
    Automated NOC....................................             $0.20.
    Volume-based discounts (based on monthly billed
     origination volume) \48\ per item when
     origination volume is:
        750,001 to 1,500,000 items per month.........  $0.0008 discount.
        more than 1,500,000 items per month..........  $0.0010 discount.
    Volume-based discounts (based on monthly billed
     receipt volume) \49\ per item when receipt
     volume is:
        10,000,001 to 15,000,000 items per month.....  $0.0002 discount.
        more than 15,000,000 items per month.........  $0.0003 discount.
Receipt (per item or record):
    Forward Item.....................................           $0.0035.
    Return Item......................................           $0.0075.
    Addenda record...................................           $0.0015.
    Volume-based discounts:
        Non-Premium Receivers \50\ per item when
         volume is:
            750,001 to 12,500,000 items per month      $0.0017 discount.
             \51\....................................
            more than 12,500,000 items per month \52\  $0.0019 discount.
    Premium Receivers, Level One \53\ per item when
     volume is:
        750,001 to 1,500,000 items per month \51\....  $0.0017 discount.
        1,500,001 to 2,500,000 items per month \52\..  $0.0017 discount.
        2,500,001 to 12,500,000 items per month \52\.  $0.0018 discount.
        more than 12,500,000 items per month \52\....  $0.0020 discount.
    Premium Receivers, Level Two \54\ per item when
     volume is:
        750,001 to 1,500,000 items per month \51\....  $0.0017 discount.
        1,500,001 to 2,500,000 items per month \52\..  $0.0017 discount.
        2,500,001 to 12,500,000 items per month \52\.  $0.0019 discount.
        more than 12,500,000 items per month \52\....  $0.0021 discount.
FedACH Bundled Package Pricing Discount:
    Monthly Bundled Service Package Discount \55\....   $20.00 discount.
Monthly FedACH Risk[supreg] Management fees: \56\
        For up to 5 criteria sets....................            $35.00.
        For 6 through 11 criteria sets...............            $70.00.
        For 12 through 23 criteria sets..............           $125.00.
        For 24 through 47 criteria sets..............           $150.00.
        For 48 through 95 criteria sets..............           $250.00.
        For 96 through 191 criteria sets.............           $425.00.
        For 192 through 383 criteria sets............           $675.00.
        For 384 through 584 criteria sets............           $850.00.
        For more than 584 criteria sets..............         $1,100.00.
    Risk origination monitoring batch (based on total
     monthly volume):
        For 1 through 100,000 batches (per batch)....            $0.007.
        For more than 100,000 batches (per batch)....           $0.0035.
Monthly FedPayments[supreg] Reporter Service:
    FedPayments Reporter Service package pricing
     includes:
        ACH Received Entries Detail--Customer and
         Depository Financial Institution............
        ACH Return Reason Report--Customer and
         Depository Financial Institution............
        ACH Volume Summary by SEC Code--Customer.....
        Customer Transaction Activity................
        Death Notification...........................
        International (IAT)..........................
        Notification of Change.......................
        Payment Data Information File................
        Remittance Advice Detail.....................
        Remittance Advice Summary....................
        Return Item Return Ratio.....................
        Social Security Beneficiary..................
        Originator Setup.............................
        Report Delivery via FedLine Access Solution..
        On Demand Surcharge..........................             $1.00.
------------------------------------------------------------------------


[[Page 1141]]


               FedACH Service 2019 Fee Schedule--Continued
  [Effective January 2, 2019. Bold indicates changes from 2018 prices]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
        Report delivery via FedLine file access
         solution (monthly fee):
            For up to 50 reports.....................            $40.00.
            For 51 through 150 reports...............            $60.00.
            For 151 through 500 reports..............           $110.00.
            For 501 through 1,000 reports............           $200.00.
            For 1,001 through 1,500 reports..........           $285.00.
            For 1,501 through 2,500 reports..........           $460.00.
            For 2,501 through 3,500 reports..........           $640.00.
            For 3,501 through 4,500 reports..........           $820.00.
            For 4,501 through 5,500 reports..........           $995.00.
            For 5,501 through 7,000 reports..........         $1,225.00.
            For 7,001 through 8,500 reports..........         $1,440.00.
            For 8,501 through 10,000 reports.........         $1,650.00.
            For more than 10,000 reports.............         $1,800.00.
Premier reports (per report generated): \57\
    ACH Volume Summary by SEC Code Report--Depository
     Financial Institution:
        For 1 through 5 reports......................            $10.00.
        For 6 through 10 reports.....................             $6.00.
        For 11 or more reports.......................             $1.00.
        On Demand Surcharge..........................             $1.00.
    ACH Routing Number Activity Report:
        For 1 through 5 reports......................            $10.00.
        For 6 through 10 reports.....................             $6.00.
        For 11 or more reports.......................             $1.00.
        On Demand Surcharge..........................             $1.00.
    ACH Originated Batch Report (monthly):
        For 1 through 5 reports......................            $10.00.
        For 6 through 10 reports.....................             $6.00.
        For 11 or more reports.......................             $1.00.
        On Demand Surcharge..........................             $1.00.
    ACH Originated Batch Report (daily):
        Scheduled Report.............................             $0.65.
        On Demand Surcharge..........................             $1.00.
    On-us inclusion:
        Participation (monthly fee per RTN)..........            $10.00.
        Per-item.....................................           $0.0030.
        Per-addenda..................................           $0.0015.
    Report delivery via encrypted email (per email)..             $0.20.
Other Fees and Discounts:
    Monthly fee (per RTN):
        FedACH Participation Fee \58\................            $65.00.
        SameDay Service Origination Participation Fee            $10.00.
         \59\........................................
        FedACH Settlement Fee \60\...................            $55.00.
        FedACH Information File Extract Fee..........           $150.00.
        IAT Output File Sort Fee.....................            $75.00.
        Fixed Participation Fee--Automated NOCs \61\.             $5.00.
    Non-Electronic Input/Output fee: \62\
        CD/DVD (CD or DVD)...........................            $50.00.
        Paper (file or report).......................            $50.00.
    Fees and Credits Established by NACHA: \63\
        NACHA Same Day Entry fee (per item)..........            $0.052.
        NACHA Same Day Entry credit (per item).......   $0.052 (credit).
        NACHA Unauthorized Entry fee (per item)......             $4.50.
        NACHA Unauthorized Entry credit (per item)...    $4.50 (credit).
        NACHA Admin Network fee (monthly fee per RTN)            $22.00.
        NACHA Admin Network fee (per entry)..........         $0.000185.
FedGlobal[supreg] ACH Payments: \64\
    Fixed Monthly Fee (per RTN): \65\
        Monthly origination volume more than 500                $185.00.
         items.......................................
        Monthly origination volume between 161 and               $60.00.
         500 items...................................
        Monthly origination volume less than 161                 $20.00.
         items.......................................
    Per-item Origination Fee for Monthly Volume more
     than 500 Items (surcharge): \66\
        Canada service...............................             $0.50.
        Mexico service...............................             $0.55.
        Panama service...............................             $0.60.
        Europe service...............................             $1.13.
    Per-item Origination Fee for Monthly Volume
     between 161 and 500 items (surcharge): \66\
        Canada service...............................             $0.75.
        Canada service...............................             $1.00.
        Mexico service...............................             $1.05.
        Panama service...............................             $1.10.
------------------------------------------------------------------------


[[Page 1142]]

       
---------------------------------------------------------------------------

    \43\ Any ODFI incurring less than $50 for the following fees 
will be charged a variable amount to reach the minimum: Forward 
value and non-value item origination fees, and FedGlobal ACH 
origination surcharges.
    \44\ Any RDFI not originating forward value and non-value items 
and incurring less than $40 in receipt fees will be charged a 
variable amount to reach the minimum. Any RDFI that originates 
forward value and nonvalue items incurring less than $50 in forward 
value and nonvalue item origination fees will only be charged a 
variable amount to reach the minimum monthly origination fee.
    \45\ This surcharge is assessed on all forward items that 
qualify for same-day processing and settlement and is incremental to 
the standard origination item fee.
    \46\ The fee includes the item and addenda fees in addition to 
the conversion fee.
    \47\ The fee includes the item and addenda fees in addition to 
the conversion fee. Reserve Banks also assess a $45 fee for every 
government paper return/NOC they process.
    \48\ Origination volumes at these levels qualify for a waterfall 
discount which includes all FedACH origination items.
    \49\ Origination discounts based on monthly billed receipt 
volume apply only to those items received by FedACH receiving points 
and are available only to Premium Receivers.
    \50\ RDFIs receiving through FedACH less than 90 percent of 
their FedACH-originated items.
    \51\ This per-item discount is a reduction to the standard 
receipt fees listed in this fee schedule.
    \52\ Receipt volumes at these levels qualify for a waterfall 
discount which includes all FedACH receipt items.
    \53\ RDFIs receiving through FedACH at least 90 percent of their 
FedACH-originated items, but less than 90 percent of all of their 
ACH items originated through any operator.
    \54\ RDFIs receiving through FedACH at least 90 percent of all 
of their ACH items originated through any operator.
    \55\ To qualify for the discount, a financial institution must 
meet all of the following criteria in a given month: (1) Be charged 
the minimum monthly fee--forward origination (57208); (2) subscribe 
to FedLine Web Plus or any higher FedLine[supreg] access solution; 
and (3) subscribe to the FedPayments Reporter service, the FedACH 
RDFI Alert service, or the FedACH Risk Origination Monitoring 
service.
    \56\ Criteria may be set for both the Origination Monitoring 
Service and the RDFI Alert Service. Subscribers with no criteria set 
up will be assessed the $35 monthly package fee.
    \57\ Premier reports generated on demand are subject to the 
package/tiered fees plus a surcharge.
    \58\ The fee applies to RTNs that have received or originated 
FedACH transactions during a month. Institutions that receive only 
U.S. government transactions or that elect to use a private sector 
operator exclusively are not assessed the fee.
    \59\ This surcharge is assessed to any RTN that originates at 
least one item meeting the criteria for same-day processing and 
settlement in a given month.
    \60\ The fee is applied to any RTN with activity during a month, 
including RTNs of institutions that elect to use a private-sector 
operator exclusively but also have items routed to or from customers 
that access the ACH network through FedACH. This fee does not apply 
to RTNs that use the Reserve Banks for only U.S. government 
transactions.
    \61\ Fee will be assessed only when automated NOCs are 
generated.
    \62\ Limited services are offered in contingency situations.
    \63\ The fees and credits listed are collected from the ODFI and 
credited to NACHA (admin network) or to the RDFI (same-day entry and 
unauthorized entry) in accordance with the ACH Rules.
    \64\ The international fees and surcharges vary from country to 
country as these are negotiated with each international gateway 
operator.
    \65\ A single monthly fee based on total FedGlobal ACH Payments 
origination volume.
    \66\ This per-item surcharge is in addition to the standard 
domestic origination fees listed in this fee schedule.
    \67\ This per-item surcharge is in addition to the standard 
domestic receipt fees listed in this fee schedule.
    \68\ The associated fees are effective upon availability of the 
product.
    \69\ A customer that opens at least 1,000 cases in a given month 
will receive a 50% discount on the fixed fee for that month.
    \70\ The per case fees are rolled up to the parent RTN, such 
that a customer that opens a total of 100 cases per month under two 
separate RTNs would pay a total of $112.50 ($1.25 for the first 50 
cases and $1.00 for the next 50 cases) in addition to the fixed 
fees.

               FedACH Service 2019 Fee Schedule--Continued
  [Effective January 2, 2019. Bold indicates changes from 2018 prices]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
        Europe service...............................             $1.63.
Other FedGlobal ACH Payments Fees:
    Canada service:
        Return received from Canada \67\.............              $0.99
                                                            (surcharge).
        Trace of item at receiving gateway...........             $5.50.
        Trace of item not at receiving gateway.......             $7.00.
    Mexico service:
        Return received from Mexico \67\.............              $0.91
                                                            (surcharge).
        Item trace...................................            $13.50.
        Foreign currency to foreign currency (F3X)                 $0.67
         item originated to Mexico \66\..............       (surcharge).
    Panama service:
        Return received from Panama \67\.............              $1.00
                                                            (surcharge).
        Item trace...................................             $7.00.
        NOC..........................................             $0.72.
    Europe service:
        F3X item originated to Europe \66\...........              $1.25
                                                            (surcharge).
        Return received from Europe \67\.............              $1.35
                                                            (surcharge).
        Item trace...................................             $7.00.
Exception Resolution Service: \68\
    Fixed Fee per RTN: \69\
        Self-Managed Cases...........................            $10.00.
        Agent-Managed Cases..........................            $10.00.
        Federal Reserve Bank-Managed Cases...........            $60.00.
    Federal Reserve Bank-Managed Cases
        Case Open Fee................................             $5.00.
        Case Response Fee............................             $5.00.
    Variable Case Open Fees (applies to self-managed
     and agent-managed cases only at the parent RTN):
     \70\
        1-50 cases...................................             $1.25.
        51-100 cases.................................             $1.00.
        101-500 cases................................             $0.75.
        501-1,000 cases..............................             $0.50.
        1,001-5,000 cases............................             $0.25.
        5,001-10,000 cases...........................             $0.20.
        10,001-99,999,999 cases......................             $0.10.
------------------------------------------------------------------------


[[Page 1143]]


    Fedwire Funds and National Settlement Services 2019 Fee Schedule
  [Effective January 2, 2019. Bold indicates changes from 2018 prices.]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
                          Fedwire Funds Service
------------------------------------------------------------------------
Monthly Participation Fee............................             $95.00
Basic volume-based pre-incentive transfer fee                      0.820
 (originations and receipts)--per transfer for the
 first 14,000 transfers per month....................
    additional transfers up to 90,000 per month......              0.245
    every transfer over 90,000 per month.............              0.160
Volume-based transfer fee with the incentive discount
 (originations and receipts)--per eligible transfer
 for: \71\
    the first 14,000 transfers per month.............              0.164
    additional transfers up to 90,000 per month......              0.049
    every transfer over 90,000 per month.............              0.032
Surcharge for Offline Transfers (Originations and                  65.00
 Receipts)...........................................
Surcharge for End-of-Day Transfer Originations \72\..               0.26
Monthly FedPayments Manager import/export fee \73\...              50.00
Surcharge for high-value payments:
    >$10 million.....................................               0.14
    >$100 million....................................               0.36
Surcharge for Payment Notification:
    Origination Surcharge \74\.......................               0.01
    Receipt Volume \75\..............................                N/A
Delivery of Reports--Hard Copy Reports to On-Line                  50.00
 Customers...........................................
Special Settlement Arrangements (charge per                       150.00
 settlement day) \76\................................
------------------------------------------------------------------------
                       National Settlement Service
------------------------------------------------------------------------
Basic:
    Settlement Entry Fee.............................               1.50
    Settlement File Fee..............................              30.00
Surcharge for Offline File Origination \77\..........              45.00
Minimum Monthly Fee \78\.............................              60.00
------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \71\ The incentive discounts apply to the volume that exceeds 60 
percent of a customer's historic benchmark volume. Historic 
benchmark volume is based on a customer's average daily activity 
over the previous five calendar years. If a customer has fewer than 
five full calendar years of previous activity, its historic 
benchmark volume is based on its daily activity for as many full 
calendar years of data as are available. If a customer has less than 
one year of past activity, then the customer qualifies automatically 
for incentive discounts for the year. The applicable incentive 
discounts are as follows: $0.656 for transfers up to 14,000, $0.196 
for transfers 14,001 to 90,000, and $0.128 for transfers over 
90,000.
    \72\ This surcharge applies to originators of transfers that are 
processed by the Reserve Banks after 5:00 p.m. eastern time.
    \73\ This fee is charged to any Fedwire Funds participant that 
originates a transfer message via the FedPayments Manager Funds tool 
and has the import/export processing option setting active at any 
point during the month.
    \74\ Payment Notification and End-of-Day Origination surcharges 
apply to each Fedwire funds transfer message.
    \75\ Provided on billing statement for informational purposes 
only.
    \76\ This charge is assessed to settlement arrangements that use 
the Fedwire Funds Service to effect the settlement of interbank 
obligations (as opposed to those that use the National Settlement 
Service). With respect to such special settlement arrangements, 
other charges may be assessed for each funds transfer into or out of 
the accounts used in connection with such arrangements.
    \77\ Offline files will be accepted only on an exception basis 
when a settlement agent's primary and backup means of transmitting 
settlement files are both unavailable.
    \78\ Any settlement arrangement that accrues less than $60 
during a calendar month will be assessed a variable amount to reach 
the minimum monthly fee.
---------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \79\ This surcharge is set by the Federal Reserve Banks. It is 
in addition to any basic transfer or reversal fee.
    \80\ The Federal Reserve Banks offer an automated claim 
adjustment process only for Agency mortgage-backed securities.
    \81\ This fee is set by and remitted to the Government National 
Mortgage Association (GNMA).
    \82\ The Federal Reserve Banks charge participants a Joint 
Custody Origination Surcharge for both Agency and Treasury 
securities.

 Fedwire Securities Service 2019 Fee Schedule (Non-Treasury Securities)
  [Effective January 2, 2019. Bold indicates changes from 2018 prices.]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
Basic Transfer Fee:
    Transfer or reversal originated or received......              $0.98
Surcharge: \79\
    Offline origination & receipt surcharge..........              80.00
Monthly Maintenance Fees:
    Account maintenance (per account)................              57.50
    Issue maintenance (per issue/per account)........               0.77
Claims Adjustment Fee \80\...........................               1.00
GNMA Serial Note Stripping or Reconstitution Fee \81\               9.00
Joint Custody Origination Surcharge \82\.............              46.00
Delivery of Reports--Hard Copy Reports to On-Line                  50.00
 Customers...........................................
------------------------------------------------------------------------


[[Page 1144]]


                        FedLine 2019 Fee Schedule
  [Effective January 2, 2019. Bold indicates changes from 2018 prices.]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
                 FedComplete Packages (monthly) 83 84 85
------------------------------------------------------------------------
FedComplete 100A Plus................................           $825.00.
includes:
    FedLine Advantage Plus package...................
    FedLine subscriber 5-pack........................
    7,500 FedForward transactions....................
    46 FedForward Cash Letter items..................
    70 FedReturn transactions........................
    14,000 FedReceipt[supreg] transactions...........
    35 Fedwire Funds origination transfers...........
    35 Fedwire Funds receipt transfers...............
    Fedwire participation fee........................
    1,000 FedACH origination items...................
    FedACH minimum fee--Forward Origination..........
    7,500 FedACH receipt items.......................
    FedACH receipt minimum fee.......................
    10 FedACH web return/NOC.........................
    500 FedACH addenda originated....................
    1,000 FedACH addenda received....................
    100 FedACH Same-Day origination items............
    FedACH account servicing.........................
    FedACH settlement................................
    FedACH Same-Day origination participation fee....
FedComplete 100A Premier.............................           $900.00.
includes:
    FedLine Advantage Premier package................
    Volumes included in the FedComplete 100A Plus
     package.........................................
FedComplete 100C Plus................................         $1,375.00.
includes:
    FedLine Command Plus package.....................
    Volumes included in the FedComplete 100A Plus
     package.........................................
FedComplete 200A Plus................................         $1,350.00.
includes:
    FedLine Advantage Plus package...................
    FedLine subscriber 5-pack........................
    25,000 FedForward transactions...................
    46 FedForward Cash Letter items..................
    225 FedReturn transactions.......................
    25,000 FedReceipt transactions...................
    100 Fedwire Funds origination transfers..........
    100 Fedwire Funds receipt transfers..............
    Fedwire participation fee........................
    2,000 FedACH origination items...................
    FedACH minimum fee--forward origination..........
    25,000 FedACH receipt items......................
    FedACH receipt minimum fee.......................
    20 FedACH web return/NOC.........................
    750 FedACH addenda originated....................
    1,500 FedACH addenda received....................
    200 FedACH Same-Day origination items............
    FedACH account servicing.........................
    FedACH settlement................................
    FedACH Same-Day origination participation fee....
FedComplete 200A Premier.............................         $1,425.00.
includes:
    FedLine Advantage Premier package................
    Volumes included in the FedComplete 200A Plus
     package.........................................
FedComplete 200C Plus................................         $1,900.00.
includes:
    FedLine Command Plus package.....................
    Volumes included in the FedComplete 200A Plus
     package.........................................
FedComplete Excess Volume and Receipt Surcharge: \86\
    FedForward \87\..................................       $0.037/item.
    FedReturn........................................      $0.8200/item.
    FedReceipt.......................................     $0.00005/item.
    Fedwire Funds Origination........................      $0.8200/item.
    Fedwire Funds Receipt............................       $0.082/item.
    FedACH Origination...............................      $0.0035/item.
    FedACH Receipt...................................     $0.00035/item.
FedComplete credit adjustment........................           various.
FedComplete debit adjustment.........................           various.
------------------------------------------------------------------------
               FedLine Customer Access Solutions (monthly)
------------------------------------------------------------------------
FedMail \88\.........................................            $85.00.
includes:
    FedMail access channel...........................
    Check FedFoward, Fed Return and FedReceipt
     Services........................................
    FedACH Download Advice and Settlement Information

[[Page 1145]]

 
    Fedwire Funds Offline Advices....................
    Check 21 Duplicate Notification Service..........
    Check Adjustments................................
    Funds Offline Advices............................
    Daily Statement of Account (Text)................
    Daylight Overdraft Reports.......................
    Monthly Statement of Service Charges (Text)......
    Electronic Cash Difference Advices...............
FedLine Exchange \88\................................            $40.00.
includes:
    E-Payments Directory (via manual download).......
FedLine Exchange Premier \88\........................           $125.00.
includes:
    FedLine Exchange package.........................
    E-Payments Routing Directory (via auto download).
FedLine Web \89\.....................................           $110.00.
includes:
    FedLine Web access channel.......................
    Services included in the FedLine Exchange package
    Check FedForward, FedReturn and FedReceipt
     services........................................
    Check 21 Duplicate Notification Service..........
    Check Adjustments................................
    FedACH Derived Returns and NOCs..................
    FedACH File, Batch and Item Detail Information...
    FedACH Customer Profile Information..............
    FedACH Returns Activity Statistics...............
    FedACH Risk RDFI Alert Service...................
    FedACH Risk Returns Reporting Service............
    FedCash[supreg] Services.........................
FedLine Web Plus \89\................................           $160.00.
includes:
    FedLine Web package..............................
    FedACH Risk Origination Monitoring Service.......
    FedACH FedPayments Reporter Service..............
    Check Large Dollar Return........................
    Check FedImage Services..........................
    Account Management Information (AMI).............
    Daily Statement of Account (PDF, Text)...........
    Monthly Account Services (SCRD File, Monthly
     Statement of Service Charges....................
    (PDF), Monthly Statement of Service Charges
     (Text)).........................................
    E-Payments Routing Directory (auto download).....
FedLine Advantage \89\...............................           $415.00.
includes:
    FedLine Advantage access channel.................
    One VPN device...................................
    Services included in the FedLine Web package.....
    FedACH transactions..............................
    Fedwire Originate and Receive Funds Transfer.....
    Fedwire Originate and Receive Securities Transfer
    National Settlement Service transactions.........
    Check Large Dollar Return........................
    Check FedImage Services..........................
    Account Management Information with Intra-Day
     Download Search File............................
    Daily Statement of Account (PDF, Text)...........
    Monthly Account Services (SCRD File, Monthly
     Statement of Service Charges....................
    (PDF), Monthly Statement of Service Charges
     (Text)).........................................
FedLine Advantage Plus \89\..........................           $460.00.
includes:
    FedLine Advantage package........................
    One VPN device...................................
    FedACH Risk Origination Monitoring Service.......
    FedACH FedPayments Reporter Service..............
    Fedwire Funds FedPayments Manager Import/Export
     (less than or equal to 250......................
    Fedwire transactions and one routing number per
     month)..........................................
    FedTransaction Analyzer[supreg] (less than 250 or
     equal to Fedwire transactions and one routing
     number per month)...............................
    E-Payments Routing Directory (via auto download).
FedLine Advantage Premier \89\.......................           $570.00.
includes:
    FedLine Advantage Plus package...................
    Two VPN devices..................................
    Fedwire Funds FedPayments Manager Import/Export
     (more than 250 Fedwire transactions or more than
     one routing number in a given month)............
    FedTransaction Analyzer (more than 250 Fedwire
     transactions or more than one routing number per
     month)..........................................
FedLine Command Plus.................................         $1,035.00.
includes:
    FedLine Command access channel...................
    Services included in the FedLine Advantage Plus
     package.........................................
    One VPN device...................................
    FedLine Command server certificates..............
    Fedwire Statement Services.......................

[[Page 1146]]

 
    Fedwire Funds FedPayments Manager Import/Export..
    FedTransaction Analyzer..........................
    Intra-Day File (I-Day CI File)...................
    Statement of Account Spreadsheet File (SASF).....
    Financial Institution Reconcilement Data File
     (FIRD)..........................................
    Billing Data Format File (BDFF)..................
FedLine Direct Plus (Legacy) \90\....................         $4,000.00.
includes:
    FedLine Direct access channel....................
    One VPN device...................................
    256K Dedicated WAN Connection....................
    Services included in the FedLine Command Plus
     package.........................................
    Two FedLine Direct server certificates...........
    Daily Overdraft Reports..........................
    Treasury Check Information System (TCIS).........
FedLine Direct Plus..................................         $5,500.00.
includes:
    FedLine Direct access channel....................
    One VPN device...................................
    2 Mbps Dedicated WAN Connection..................
    Services included in the FedLine Command Plus
     package.........................................
    FedLine Direct server certificates...............
    Treasury Check Information System (TCIS).........
    Dual Vendors.....................................
    FedLine Direct Contingency Solution (ACH)........
    Check 21 Services................................
FedLine Direct Premier (Legacy) \90\.................         $6,800.00.
includes:
    FedLine Direct Plus package (legacy).............
    T1 dedicated WAN connection......................
    Two VPN devices..................................
FedLine Direct Premier...............................        $10,500.00.
includes:
    FedLine Direct Plus package (new)................
    One additional dedicated WAN connection..........
    One Network Diversity............................
    Two VPN devices..................................
------------------------------------------------------------------------
                    A la carte options (monthly) \91\
------------------------------------------------------------------------
Electronic Access:
    FedMail--FedLine Exchange Subscriber 5-pack......            $15.00.
    FedLine Subscriber 5-pack (access to Web and                 $80.00.
     Advantage)......................................
    Additional FedLine Direct Certificate \92\.......           $100.00.
    Additional VPNs \93\.............................           $100.00.
    Additional WAN connections.......................
        256K(Legacy) \90\............................         $2,500.00.
        T1 (Legacy) \90\.............................         $3,200.00.
        2 Mbps.......................................         $3,000.00.
    WAN Connection Upgrade:
        10 Mbps \94\.................................         $1,700.00.
        30 Mbps \94\.................................         $3,000.00.
        50 Mbps \94\.................................         $4,000.00.
        100 Mbps \94\................................         $7,000.00.
        200 Mbps \94\................................        $11,000.00.
    FedLine International Setup (one-time fee).......         $5,000.00.
    FedLine Custom Implementation Fee \95\...........           various.
    Network Diversity................................         $2,500.00.
    FedLine Direct Contingency Solution \96\.........         $1,000.00.
    Check 21 Large File Delivery \97\................           various.
    FedMail Email (for customers with FedLine Web and            $20.00.
     above) \98\.....................................
    FedMail Fax \99\.................................           $100.00.
    VPN Device Modification..........................           $200.00.
    VPN Device Missed Activation Appointment.........           $175.00.
    VPN Device Expedited Hardware Surcharge..........           $100.00.
    VPN Device Replacement or Move...................           $300.00.
    E-Payments Automated Download (1-5 Add'l Codes)..            $75.00.
    E-Payments Automated Download (6-20 Add'l Codes).           $150.00.
    E-Payments Automated Download (21-50 Add'l Codes)           $300.00.
    E-Payments Automated Download (51-100 Add'l                 $500.00.
     Codes)..........................................
    E-Payments Automated Download (101-250 Add'l              $1,000.00.
     Codes)..........................................
    E-Payments Automated Download (>250 Add'l Codes).         $2,000.00.
Accounting Information Services (monthly):
    Cash Management System (CMS) Plus--Own report--up
     to six files with: \100\
        no respondent/sub-account activity...........            $60.00.
        less than 9 respondent and/or sub-accounts...           $125.00.
        10-50 respondent and/or sub-accounts.........           $250.00.
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    \83\ FedComplete packages are all-electronic service options 
that bundle payment services with an access solution for one monthly 
fee.
    \84\ Packages with an 'A' include the FedLine Advantage channel, 
while packages with `C' include the FedLine Command channel.
    \85\ FedComplete customers that use the email service would be 
charged the FedMail Email a la carte fee and for all FedMail-FedLine 
Exchange Subscriber 5-packs.
    \86\ Per-item surcharges are in addition to the standard fees 
listed in the applicable priced services fee schedules.
    \87\ FedComplete customers will be charged $4 for each 
FedForward cash letter over the monthly package threshold. This 
activity will appear under billing code 51998 in Service Area 1521 
on a month-lagged basis.
    \88\ FedMail and FedLine Exchange packages do not include user 
credentials, which are required to access priced services and 
certain informational services. Credentials are sold separately in 
packs of five via the FedMail-FedLine Exchange Subscriber 5-pack.
    \89\ FedLine Web and Advantage packages do not include user 
credentials, which are required to access priced services and 
certain informational services. Credentials are sold separately in 
packs of five via the FedLine Subscriber 5-pack.
    \90\ Limited to installed base only. All customers with 256K or 
T1 connections will need to upgrade to a minimum 2Mbps Ethernet line 
speed connection.
    \91\ These add-on services can be purchased only with a FedLine 
Customer Access Service option.
    \92\ Additional FedLine Direct Certificates available for 
FedLine Direct packages (legacy) only.
    \93\ Additional VPNs are available for FedLine Advantage, 
FedLine Command, and FedLine Direct packages only.
    \94\ These upgrades are only available for the new FedLine 
Direct packages and the Add'l 2M WAN connection. Fee is in addition 
to the FedLine Direct package fees or additional WAN fees.
    \95\ The FedLine Custom Implementation Fee is $2,500 or $5,000 
based on the complexity of the setup.
    \96\ Fee only applies to customers in a legacy FedLine Direct 
package. This feature is included in the monthly fee for customers 
in the new FedLine Direct packages.
    \97\ Limited to installed base only. The fee currently ranges 
from $1,400 to $20,725 depending on the size, speed, and location of 
the connection. All customers will eventually need to upgrade to a 
minimum 2 Mbps Ethernet line speed connection with the associated 
FedLine Direct package.
    \98\ Available only to customers with a priced FedLine package.
    \99\ Limited to installed base only.
    \100\ Cash Management Service options are limited to plus and 
premier packages.
    \101\ The End of Day Reconcilement File option is available for 
FedLine Web Plus, FedLine Advantage Plus, and Premier packages. It 
is available for no extra fee in FedLine Command Plus and Direct 
packages.
    \102\ The Statement of Account Spreadsheet File option is 
available for FedLine Web Plus, FedLine Advantage Plus, and Premier 
packages. It is available for no extra fee in FedLine Command Plus 
and Direct packages.
    \103\ The Intra-day Download Search File option is available for 
the FedLine Web Plus package. It is available for no extra fee in 
FedLine Advantage and higher packages.

                  FedLine 2019 Fee Schedule--Continued
  [Effective January 2, 2019. Bold indicates changes from 2018 prices.]
------------------------------------------------------------------------
                                                              Fee
------------------------------------------------------------------------
        51-100 respondents and/or sub-accounts.......           $500.00.
        101-500 respondents and/or sub-accounts......           $750.00.
        >500 respondents and/or sub-accounts.........         $1,000.00.
    End-of-Day Financial Institution Reconcilement              $150.00.
     Data (FIRD) File \101\..........................
    Statement of Account Spreadsheet File \102\......           $150.00.
    Intra-day Download Search File (with AMI) \103\..           $150.00.
Other
    Software Certification...........................           $0.00 to
                                                              $8,000.00.
    Vendor Pass-Through Fee..........................           various.
    Electronic Access Credit Adjustment..............           various.
    Electronic Access Debit Adjustment...............           various.
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    By order of the Board of Governors of the Federal Reserve 
System, November 15, 2018.
Ann Misback,
Secretary of the Board.
[FR Doc. 2019-00624 Filed 1-31-19; 8:45 am]
 BILLING CODE 6210-01-P