Federal Reserve Bank Services, 66405-66425 [2019-26228]

Download as PDF 66405 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices Request for Comment ACTION: Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the FDIC’s functions, including whether the information has practical utility; (b) the accuracy of the estimates of the burden of the information collection, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. All comments will become a matter of public record. Dated at Washington, DC, on November 27, 2019. Federal Deposit Insurance Corporation. Annmarie H. Boyd, Assistant Executive Secretary. [FR Doc. 2019–26170 Filed 12–3–19; 8:45 am] BILLING CODE 6714–01–P FEDERAL RESERVE SYSTEM [Docket No. OP–1687] Federal Reserve Bank Services Board of Governors of the Federal Reserve System. AGENCY: Notice. The Board of Governors of the Federal Reserve System (Board) has approved the private sector adjustment factor (PSAF) for 2020 of $18.9 million and the 2020 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, 2020. FOR FURTHER INFORMATION CONTACT: For questions regarding the fee schedules: David C. Mills, Deputy Associate Director, (202) 530–6265; Max Sinthorntham, Senior Financial Policy Analyst, (202) 452–2864; Amanda Holcombe, Financial Institution Policy Analyst, (202) 912–4625; Division of Reserve Bank Operations and Payment Systems. For questions regarding the PSAF: Casey Clark, Assistant Director/ Manager, (202) 452–5232; Grace Milbank, Senior Financial Institution Policy Analyst, (202) 263–4828, 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 2020 fee schedules for the SUMMARY: 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 2020 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.1 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 2009 through 2018, the Reserve Banks recovered 102.6 percent of their total expenses (including imputed costs) and targeted after-tax profits or return on equity (ROE) for providing priced services.2 Table 1 summarizes 2018 actual, 2019 estimated, and 2020 budgeted costrecovery rates for all priced services. Cost recovery is estimated to be 100.8 percent in 2019 and budgeted to be 100.2 percent in 2020. TABLE 1—AGGREGATE PRICED SERVICES PRO FORMA COST AND REVENUE PERFORMANCE a [Dollars in millions] Year 2018 (actual) ........................................................................ 2019 (estimate) .................................................................... 2020 (budget) ....................................................................... Revenue Total expense Net income (ROE) [1–2] Targeted ROE Recovery rate after targeted ROE [1/(2 + 4)](%) 1b 2c 3 4d 5e f $442.5 442.4 443.1 $428.1 433.4 436.3 $14.4 9.0 6.7 $5.2 5.4 5.9 102.1 100.8 100.2 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 2020, the projected revenue assumes implementation of the 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. f For 2019 and 2020, 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). khammond on DSKJM1Z7X2PROD with NOTICES b Revenue 1 On August 5, 2019, the Federal Reserve Board announced that the Reserve Banks will develop the FedNowSM Service, an interbank real-time gross settlement (RTGS) service with integrated clearing functionality, to support the provision of end-toend faster payment services. The Board anticipates the FedNow Service will be available in 2023 or 2024. Following the introduction of the FedNow VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 Service, the Board will regularly disclose the service’s cost recovery and will monitor progress toward matching revenues and costs. 2 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. In accordance with Accounting Standards Codification (ASC) 715 Compensation—Retirement Benefits, the PO 00000 Frm 00032 Fmt 4703 Sfmt 4703 Reserve Banks recognized a cumulative reduction in equity related to the priced services’ benefit plans. Including this cumulative reduction in equity from 2009 to 2018 results in cost recovery of 104.1 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\04DEN1.SGM 04DEN1 66406 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices Table 2 provides an overview of costrecovery budgets, estimates, and performance for the 10-year period from 2009 to 2018, 2018 actual, 2019 budget, 2019 estimate, and 2020 budget by priced service. TABLE 2—PRICED SERVICES COST RECOVERY [Percent] Priced service 2009–2018 All services ........................................................................... Check ................................................................................... FedACH ............................................................................... Fedwire Funds and NSS ..................................................... Fedwire Securities ............................................................... 2018 actual 102.6 105.3 98.3 102.1 101.8 2019 budget a 2019 estimate 2020 budget b 100.8 101.9 101.3 100.5 95.1 100.8 102.9 98.6 102.4 96.8 100.2 102.8 100.3 98.2 98.6 102.1 102.7 99.2 105.8 98.7 a The 2019 budget figures reflect the final budgets as approved by the Board in December 2018. 2020 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks will submit final budget data to the Board in November 2019, for Board consideration in December 2019. khammond on DSKJM1Z7X2PROD with NOTICES b The 1. 2019 Estimated Performance—The Reserve Banks estimate that they will recover 100.8 percent of the costs of providing priced services in 2019, including total expense and targeted ROE, compared with a 2019 budgeted recovery rate of 100.8 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 $9.0 million, compared with the targeted ROE of $5.4 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 in 2019. 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.3 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 investment costs associated with initiatives to promote operational efficiency. 2. 2020 Private-Sector Adjustment Factor—The 2020 PSAF for Reserve Bank priced services is $18.9 million. This amount represents an increase of $1.1 million from the 2019 PSAF of $17.8 million. This increase is primarily the result of an increase in imputed return on equity and sales tax and partially offset by a decrease in Board of Governors expenses. 3 The Reserve Banks have been engaged in a multiyear technology initiative to modernize the FedACH processing platform capabilities. The implementation of this initiative has moved from 2019 to 2020. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 3. 2020 Projected Performance—The Reserve Banks project a priced services cost recovery rate of 100.2 percent in 2020, with a net income of $6.7 million and targeted ROE of $5.9 million. The Reserve Banks project that the price changes will result in a 2.4 percent average price increase for customers. The Reserve Banks project that each of the individual service lines, other than the Fedwire Securities Service and the Fedwire Funds Service, will fully recover their costs for 2020. The Fedwire Services’ underrecovery projections are largely driven by an anticipated decline in revenue due to a large Fedwire Funds participant’s upcoming transition of its transfer origination activity off the Fedwire Funds Service, anticipated modest volume declines in certain product lines for the Fedwire Securities Service, and ongoing System investments in projects to increase technological resiliency. Both the Fedwire Funds Service and Fedwire Securities Service are projected to fully recover costs in the long run.4 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. 2020 Pricing—The following summarizes the Reserve Banks’ changes in fee schedules for priced services in 2020: 4 From 2011–2020, Fedwire Securities Service’s projected ten-year average recovery rate is 101.6 percent and Fedwire Funds Service’s projected tenyear average recovery rate is 102.4 percent. PO 00000 Frm 00033 Fmt 4703 Sfmt 4703 Check • The Reserve Banks will reassign the tier placement of 1,607 and 124 return endpoints in the FedForward® and FedReturn® products, respectively.5 In addition, the Reserve Banks will adjust the frequency of endpoint tier reassignments from annual to every other year. • The Reserve Banks will eliminate tier 0 for all FedForward® and FedReturn® Premium Daily deposit options.6 • The Reserve Banks will decrease per-item fees for the FedForward Premium Daily A deposit option by $0.004 for tier 1. The Reserve Banks will decrease per-item fees for the FedForward® Premium Daily B deposit option by $0.002 for tier 1. The Reserve Banks will decrease per-item fees for Premium Daily A, B, and C deposit options by $0.003 for tier 3 and tier 4. • The Reserve Banks will increase the Retail Payments Premium Receiver (RPPR) FedForward® discount by $0.001.7 • The Reserve Banks will introduce 4:00 p.m. eastern time (ET) deposit deadlines for Standard FedReturn® and Premium FedReturn® and accompanying fee schedules, which include per-item fees and fixed per-cash letter fees, as detailed in table 9 and 10, respectively. • The Reserve Banks will increase per-item fees for all other Standard FedReturn® deadlines (9:00 p.m. ET, 1:00 a.m. ET, and 12:30 p.m. ET) and Premium FedReturn® deadlines (1:00 a.m. ET and 12:30 p.m. ET) by $0.02. 5 The Reserve Banks evaluate and set tier assignments annually based on changes in the volume of items received by endpoints. 6 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. 7 For eligible customers that deposit over two million items per month. E:\FR\FM\04DEN1.SGM 04DEN1 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices • The Reserve Banks will increase per-item fees for paper/legacy services between 10 to 17 percent, as detailed in table 11. • The Reserve Banks will increase all fees for the FedImage® service 10 percent, as detailed in table 12. • The Reserve Banks will implement a fixed monthly Check 21 participation fee of $25 per parent customer. • The Reserve Banks will increase the per-item fee for the FedReceipt® Premium Delivery 8:00 a.m. ET Target by $0.003, per item fees for the Premium Delivery 10:00 a.m. Target by $0.002, and Premium Delivery 12:00 noon Target by $0.001.8 FedACH • The Reserve Banks will keep prices at existing levels for all existing priced FedACH products. Fedwire Funds • The Reserve Banks will increase the per-transfer fee for originations and receipts from $0.820 to $0.840 for tier 1 transfers, from $0.245 to $0.25 for tier 2 transfers, and from $0.160 to $0.165 for tier 3 transfers.9 • The Reserve Banks will increase the discounted (volume-based) per-transfer fee for originations and receipts from $0.164 to $0.168 for tier 1 transfers, from $0.049 to $0.050 for tier 2 transfers, and from $0.032 to $0.033 for tier 3 transfers.10 National Settlement Service (NSS) • The Reserve Banks will keep prices at existing levels for the priced NSS products. Fedwire Securities • The Reserve Banks will keep prices at existing levels for the priced Fedwire Securities products. khammond on DSKJM1Z7X2PROD with NOTICES FedLine® Solutions • The Reserve Banks will increase the FedMail Fax fee from $100 to $150.11 • The Reserve Banks will increase the FedMail Email (for customers with FedLine Web or above) fee from $20 to $40.12 8 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. 9 Tiers are based on monthly total volume of originations and receipts. Tier 1 includes up to 14,000 transfers, tier 2 includes from 14,001 to 90,000 transfers, and tier 3 includes transfers over 90,000. 10 The tiered pricing structure is complemented by a volume-based incentive mechanism that provides discounts to customers that meet certain volume thresholds. 11 Limited to installed base only. 12 All customers with a FedMail Email (for FedLine customers) have a FedLine connection today. This service allows institution with a VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 • The Reserve Banks will increase the monthly fee for the legacy FedLine Direct Plus and Premier packages to $5,500 and $7,500, respectively. The Reserve Banks subsequently will increase prices for both packages to $10,000 in May and $20,000 in August.13 • The Reserve Banks will increase the monthly fee for Additional Legacy 256K and T1 Wide Area Network services connections to $3,500. The Reserve Banks subsequently will increase prices for these Additional Legacy connections to $5,000 in May and $10,000 in August. • The Reserve Banks will increase the monthly fees for legacy Check 21 Large File Delivery (C21 LFD) 20 percent. The Reserve Banks subsequently will increase prices 50 percent in May and 100 percent in August.14 • The Reserve Banks will update the FedComplete packages to incorporate other pricing and product changes.15 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.16 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 FedLine Web or higher solution to use FedMail Email, in addition to their FedLine solution. 13 The Reserve Banks will increase fees in mid2020 for those customers who have not yet converted to new FedLine Direct network routers and circuits. 14 The monthly fees for legacy C21 LFD fee ranges from $1,680 to $24,870 depending on the size, speed, and location of the connection. In order to avoid compounding increases, December 2019 will be the baseline for all 2020 price increases for any connection still needing to convert. 15 FedComplete package pricing will be updated to include the Check participation fee and the 4:00 p.m. FedReturn® deadline. Additionally, the Reserve Banks will update the FedComplete Excess Volume and Receipt Surcharge to reflect the fee increase to Fedwire Origination and Receipt. FedComplete packages include a Fedwire Funds volume overage surcharge equivalent to the regular unit cost for originated items and one-tenth of the regular unit cost for received items. 16 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 information for the entirety of the U.S. market. PO 00000 Frm 00034 Fmt 4703 Sfmt 4703 66407 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.17 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 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 17 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. E:\FR\FM\04DEN1.SGM 04DEN1 khammond on DSKJM1Z7X2PROD with NOTICES 66408 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices maintain equity of at least 5 percent of total assets and 10 percent of riskweighted assets.18 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 Funds Service. 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 policy requires that the Fedwire Funds Service 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 Funds Service does 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.19 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 2020 budget, six months of current operating expenses would be $56.0 million. In 2020, $41.6 million of equity was imputed to meet the FDIC capital requirements; however, an additional $7.1 million of equity was imputed to meet the PSR policy requirement and is allocated solely to the Fedwire Funds Service. 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 2020 PSAF is $18.9 million, compared with $17.8 million in 2019. The increase of $1.1 million is attributable to a net $0.7 million increase in the cost of capital and a $0.7 million increase in sales tax, offset by a $0.3 million decrease in the Board’s costs. The net $0.7 million increase in cost of capital resulted from an incremental $1 million increase in return on imputed equity necessary for PSR Policy compliance partially offset by a $0.3 million decrease in the return on equity imputed to satisfy the FDIC requirements for a well-capitalized institution. The PSAF expense of $18.9 million, detailed in table 5, reflects $7.9 million for capital funding, $6.7 million for BOG expense, and $4.4 million in sales tax expense. As shown in table 3, 2020 total assets of $841.2 million decreased by $5.4 million from 2019. The net decrease in total assets reflects a $29.7 million decrease in long-term assets partially offset by a $24.3 million increase in short-term assets and imputed investments. The net long-term asset decrease of $29.7 million primarily consists of a $23.6 million decrease in the net pension asset and a combined $9.2 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 $240 million in 2018 to $180 million in 2019 and 2020, respectively. The decreases 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 increase in the short-term assets is primarily driven by the imputed investments in Treasury securities from imputed equity required to meet FDIC capital requirements for a wellcapitalized institution and to comply with the PSR policy. The remaining net increases in short-term assets reflect a $34.1 million increase in items in process of collection resulting from relatively high balances in the value of foreign transactions offset by a $27.5 million decrease in imputed investments in Fed Funds. The capital structure of the 2020 pro forma balance sheet, provided in table 4, is composed of equity of $56.0 million, or 11.4 percent of the 2020 risk weighted assets detailed in table 6, and no long-term debt. The 2020 capital structure is similar to that of 2019, which was composed of $51.8 million of equity. The 2020 imputed equity required to fund assets and meet the publicly traded firm model capital requirements is $31.2 million. Longterm debt of $10.4 million was imputed at the observed market ratio of 58.4 percent. To meet the FDIC capital requirements for a well-capitalized institution, the $10.4 million of imputed long-term debt was substituted for equity, and additional $31.2 million equity was imputed. The resulting $49 million total level of equity was not sufficient to satisfy the $56.0 million equity requirement for the PSR policy requirements. An additional $7.1 million was imputed to comply with the PSR requirement. The net Accumulated Other Comprehensive Income loss is $625.2 million, compared with $624.3 million in 2019. The slight increase is primarily attributable to a higher 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. 18 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. 19 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. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00035 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 66409 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices TABLE 3—COMPARISON OF PRO FORMA BALANCE SHEETS FOR BUDGETED FEDERAL RESERVE PRICED SERVICES a [Millions of dollars—projected average for year] 2020 Short-term assets: Receivables .......................................................................................................................... Materials and supplies .......................................................................................................... Prepaid expenses ................................................................................................................. Items in process of collection 20 ........................................................................................... 2019 Change $37.1 0.5 10.8 129.1 $36.7 0.6 11.1 95.0 $0.4 (0.1) (0.3) 34.1 Total short-term assets ................................................................................................. Imputed investments: 21 Imputed investment in Treasury Securities .......................................................................... Imputed investment in Fed Funds ........................................................................................ 177.5 143.4 34.1 38.2 225.5 20.5 253.0 17.7 (27.5) Total imputed investments ............................................................................................ Long-term assets: Premises 22 ........................................................................................................................... Furniture and equipment ...................................................................................................... Leasehold improvements and long-term prepayments ........................................................ Net pension asset ................................................................................................................. Deferred tax asset ................................................................................................................ 263.7 273.5 (9.8) 111.5 30.2 81.1 ........................ 177.2 104.2 32.8 87.7 23.6 181.4 7.3 (2.6) (6.6) (23.6) (4.2) Total long-term assets ................................................................................................... 400.0 429.7 (29.7) Total assets ............................................................................................................ 841.2 846.6 (5.4) Short-term liabilities: Deferred credit items ............................................................................................................ Short-term debt ..................................................................................................................... Short-term payables ............................................................................................................. 354.6 13.0 35.5 348.0 13.5 34.9 6.6 (0.5) 0.6 Total short-term liabilities .............................................................................................. Long-term liabilities: Pension liability ..................................................................................................................... Long-term debt ..................................................................................................................... Postemployment/postretirement benefits and net pension liabilities 23 ................................ 403.1 396.4 6.7 0.1 ........................ 382.0 ........................ ........................ 398.4 0.1 ........................ (16.4) Total liabilities ................................................................................................................ Equity 24 ......................................................................................................................... 785.2 56.0 794.8 51.8 (9.6) 4.2 Total liabilities and equity ....................................................................................... 841.2 846.6 (5.4) a Calculations in this table and subsequent PSAF tables may be affected by rounding. TABLE 4—IMPUTED FUNDING FOR PRICED-SERVICES ASSETS [Millions of dollars] khammond on DSKJM1Z7X2PROD with NOTICES 2020 2019 A. Short-term asset financing: Short-term assets to be financed: Receivables ............................................................................................................................................... Materials and supplies .............................................................................................................................. Prepaid expenses ...................................................................................................................................... $37.1 0.5 10.8 $36.7 0.6 11.1 Total short-term assets to be financed ............................................................................................................ Short-term payables .................................................................................................................................. 48.4 35.5 48.4 34.9 Net short-term assets to be financed ............................................................................................................... 13.0 13.5 20 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 before providing credit to the depositing bank. Float is directly estimated at the service level. 21 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 VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 Funds Service’s projected current operating expenses is $56.0 million. In 2020, $41.6 million of equity was imputed to meet the regulatory capital requirements and $7.1 million of equity was imputed to satisfy PSR policy funding requirements. 22 Includes the allocation of Board of Governors assets to priced services of $3.1 million for 2020 and $2.9 million for 2019. 23 Includes the allocation of Board of Governors liabilities to priced services of $0.8 million for 2020 and $0.8 million for 2019. PO 00000 Frm 00036 Fmt 4703 Sfmt 4703 24 Includes an accumulated other comprehensive loss of $625.2 million for 2020 and $624.3 million for 2019, 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\04DEN1.SGM 04DEN1 66410 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices TABLE 4—IMPUTED FUNDING FOR PRICED-SERVICES ASSETS—Continued [Millions of dollars] 2020 2019 Imputed short-term debt financing 25 ................................................................................................................ 13.0 13.5 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 ..................................................................................................................................... 111.5 30.2 81.1 ........................ 177.2 104.2 32.8 87.7 23.6 181.4 Total long-term assets to be financed .............................................................................................................. Postemployment/postretirement benefits and net pension liabilities ........................................................ 400.0 382.0 429.7 398.4 Net long-term assets to be financed ......................................................................................................... 17.8 31.3 Imputed long-term debt 20 ......................................................................................................................... Imputed equity 20 ....................................................................................................................................... ........................ 56.0 ........................ 51.8 Total long-term financing ................................................................................................................... 56.0 51.8 TABLE 5—DERIVATION OF THE 2020 AND 2019 PSAF [Dollars in millions] 2020 2019 Debt A. Imputed long-term debt and equity: Net long-term assets to finance ................................................... Capital structure observed in market ........................................... Pre-adjusted long-term debt and equity ....................................... Equity adjustments: 26 Equity to meet capital requirements ..................................... Adjustment to debt and equity funding given capital requirements 27 .............................................................................. Adjusted equity balance ........................................................ Equity to meet capital requirements 28 .................................. Debt Equity $17.8 58.4% $17.8 41.6% $31.3 58.3% $31.3 41.7% $10.4 $7.4 $18.2 $13.1 .............................. 49.0 .............................. 51.8 (10.4) .............................. .............................. 10.4 17.8 31.2 (18.2) .............................. .............................. 18.2 31.3 20.5 Total imputed long-term debt and equity ....................... B. Cost of capital: Elements of capital costs: Short-term debt 29 .................................................................. Long-term debt 29 .................................................................. Equity 30 ................................................................................. khammond on DSKJM1Z7X2PROD with NOTICES Equity $ $49.0 $13.0 × 2.3% = ¥ × 4.0% = 49.0 × 13.3% = $ $51.8 $0.3 ........................ 6.6 $13.5 × 2.3% = ¥ × 3.9% = 51.8 × 13.3% = $0.3 ........................ 6.8 $6.9 .............................. $7.1 C. Incremental cost of PSR policy: Equity to meet policy .................................................................... $7.1 × 13.5% = $1.0 $ ¥ × 13.3% = D. Other required PSAF costs: Sales taxes ................................................................................... Board of Governors expenses ..................................................... $4.4 6.7 ........................ ........................ $3.7 7.0 25 Imputed short-term debt financing is computed as the difference between short-term assets and short-term liabilities. As presented in table 5, the financing costs of imputed short-term debt, imputed long-term debt and imputed equity are the elements of cost of capital, which contribute to the calculation of the PSAF. 26 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 VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 and equity based on the capital structure observed in the market (see tables 4 and 6). In 2020, the amount of imputed equity met the minimum equity requirements for risk-weighted assets. 27 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. 28 Additional equity in excess of that needed to fund priced services assets is offset by an asset balance of imputed investments in treasury securities. PO 00000 Frm 00037 Fmt 4703 Sfmt 4703 $ ........................ ........................ 29 Imputed short-term debt and long-term debt are computed at table 4. 30 The 2020 ROE is equal to a risk-free rate plus a risk premium (beta * market risk premium). The 2020 after-tax CAPM ROE is calculated as 2.16% + (1.0 * 8.34%) = 10.50%. Using a tax rate of 22.1%, the after-tax ROE is converted into a pretax ROE, which results in a pretax ROE of (10.50%/(1– 22.1%)) = 13.48%. Calculations may be affected by rounding. E:\FR\FM\04DEN1.SGM 04DEN1 66411 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices TABLE 5—DERIVATION OF THE 2020 AND 2019 PSAF—Continued [Dollars in millions] 2020 Debt E. Total PSAF: As a percent of assets ................................................................. As a percent of expenses ............................................................ F. Tax rates ......................................................................................... 2019 Equity .............................. .............................. .............................. Debt Equity 11.1 .............................. 10.7 $18.9 .............................. $17.8 2.2% 3.4% 22.1% .............................. .............................. .............................. 2.1% 3.3% 22.2% TABLE 6—COMPUTATION OF 2020 CAPITAL ADEQUACY FOR FEDERAL RESERVE PRICED SERVICES [Dollars in millions] Assets Risk weight Weighted assets Imputed investments: 1-Year Treasury securities 31 ................................................................................................ Federal funds 32 .................................................................................................................... $38.2 225.5 ........................ 0.2 $ Total imputed investments ............................................................................................ Receivables ................................................................................................................................. Materials and supplies ................................................................................................................. Prepaid expenses ........................................................................................................................ Items in process of collection ...................................................................................................... Premises ...................................................................................................................................... Furniture and equipment ............................................................................................................. Leasehold improvements and long-term prepayments ............................................................... Deferred tax asset ....................................................................................................................... 263.7 37.1 0.5 10.8 129.1 111.5 30.2 81.1 177.2 ........................ 0.2 1.0 1.0 0.2 1.0 1.0 1.0 1.0 45.1 7.4 0.5 10.8 25.8 111.5 30.2 81.1 177.2 Total ...................................................................................................................................... 841.2 ........................ 489.7 Imputed equity: Capital to risk-weighted assets ............................................................................................ Capital to total assets ........................................................................................................... 11.4% 6.7% ........................ ........................ ........................ ........................ C. Check Service—Table 7 shows the 2018 actual, 2019 estimated, and 2020 45.1 budgeted cost-recovery performance for the commercial check service. TABLE 7—CHECK SERVICE PRO FORMA COST AND REVENUE PERFORMANCE [Dollars in millions] Year khammond on DSKJM1Z7X2PROD with NOTICES 2018 (actual) ........................................................................ 2019 (estimate) .................................................................... 2020 (budget) ....................................................................... Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1 2 3 [1–2] 4 5 [1/(2 + 4)] $132.9 126.7 119.4 $127.8 121.6 114.8 $5.1 5.2 4.6 $1.5 1.5 1.3 102.7 102.9 102.8 1. 2019 Estimate—The Reserve Banks estimate that the check service will recover 102.9 percent of total expenses and targeted ROE, compared with a 2019 budgeted recovery rate of 101.9 percent. Through August, total commercial forward and total commercial return check volumes were 8.1 percent and 7.1 percent lower, respectively, than they were during the same period last year. Consistent with anticipated fourthquarter declines, for full-year 2019, the Reserve Banks estimate that their total 31 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 https:// www.federalreserve.gov/releases/h15/data.htm. 32 The investments are imputed based on the amounts arising from the collection of items before providing credit according to established availability schedules. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00038 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 66412 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices forward check volume will decline 7.8 percent (compared with a budgeted decline of 7.6 percent) and their total return check volume will decline 6.6 percent (compared with a budgeted decline of 7.7 percent) from 2018 levels.33 The Reserve Banks expect that check volumes will continue to decline, although uncertainty remains as to the rate of decline over the long term. In particular, the Reserve Banks’ check volumes are expected to decrease because of competitive pressures in the check-clearing market, and substitution away from checks to other payment instruments. 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 realization of operational efficiencies. These factors have allowed for close alignment between budgeted and estimated 2019 cost recovery. 2. 2020 Pricing—The Reserve Banks expect the check service to recover 102.8 percent of total expenses and targeted ROE in 2020. The Reserve Banks project revenue to be $119.4 million, a decline of 5.8 percent from the 2019 estimate. This decline is driven in part by an anticipated accelerating decline in the overall number of checks written, as well as by competition from correspondent banks, aggregators, and direct exchanges.34 Total expenses for the check service are projected to be $114.8 million, a decrease of $6.8 million, or 5.6 percent, from 2019 expenses, primarily because of reduced operating costs, including cost savings associated with the Reserve Banks’ customer support services. The Reserve Banks will introduce a fixed participation fee, which will be charged to any customer that receives FedReceipt volume on a monthly basis. In light of ongoing volume declines, the participation fee is intended to support revenue stability by increasing the proportion of fixed to variable fees. Additionally, this fee introduction aligns the check service with other priced services that offer similar monthly participation fees, such as FedACH and the Fedwire Funds Service. The Reserve Banks evaluate and set tier assignments annually based on changes in the volume of items received by endpoints. In 2020, the Reserve Banks will reassign the tier placement of 238 endpoints currently in tiers 1–4 to another tier.35 In addition, the Reserve Banks will eliminate tier 0 for all Forward and Return Premium Daily deposit options, and reassign all remaining tier 0 customers.36 This change is intended to reflect the fact that the Reserve Banks now have sufficient volume to appropriately assign the remaining 1,130 endpoints from tier 0 into tiers 1–4. In response to feedback from customers, the Reserve Banks will also evaluate and set tier assignments every other year instead of annually, to provide more certainty and price stability to the industry. As a result, the Reserve Banks will next reevaluate and set tier assignments in 2022.37 Based on the 2020 tier assignments and the elimination of tier 0, the Reserve Banks will include changes to FedForward Premium Daily Fees and the Retail Payments Premium Receiver (RPPR) discount structure. The Reserve Banks will lower the FedForward Premium Daily Fee A per item fees by $0.004 for tier 1, lower the FedForward Premium Daily Fee B per item fees by $0.002 for tier 1, and lower the FedForward Premium Daily Fee A, B, and C per item fees by $0.003 for tiers 3 and 4. The Reserve Banks also will include an increase to the RPPR discount of $0.001 for eligible customers that deposit over two million items per month. Table 8 shows the 2020 FedForward Premium Daily fees. TABLE 8—FEDFORWARD PREMIUM DAILY DEPOSIT [Applicable to Premium Daily Fee A, Premium Daily Fee B, and Premium Daily Fee C] Tier 38 Premium A Premium B Premium C Deposit Deadline of 5:00 a.m. EST M–F 0 1 2 3 4 5 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... N/A $0.002 0.014 0.022 0.036 0.200 N/A $0.002 0.012 0.020 0.034 0.200 N/A $0.002 0.010 0.018 0.032 0.200 N/A 0.012 0.024 0.032 0.046 0.200 N/A 0.012 0.022 0.030 0.044 0.200 N/A 0.012 0.020 0.028 0.042 0.200 Deposit Deadline of 12:00 p.m. EST M–F khammond on DSKJM1Z7X2PROD with NOTICES 0 1 2 3 4 5 ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... In response to customer demand for intraday return options to match other clearing option capabilities, the Reserve Banks will introduce a new 4:00 p.m. ET FedReturn® deposit deadline. The deadline will accelerate the speed of 33 Total Reserve Bank forward check volumes are expected to be 4.4 billion in 2019. Total Reserve Bank return check volumes are expected to be 27.1 million in 2019. 34 The Reserve Banks estimate that total commercial forward check volumes in 2019 will decline 8.5 percent, to 4.0 billion, and total commercial return check volumes will decline 8.5 percent, to 24.8 million in 2019. 35 The tiers for 2019 are available at https:// www.frbservices.org/resources/fees/check2019.html. 36 Tier 0 was introduced as part of the Reserve Banks’ 2016 restructured FedForward and FedReturn fee schedules and is 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 was only available for FedForward and Return Premium Daily deposit options. 37 The tiers for 2020 are available at https:// www.frbservices.org/resources/fees/check2020.html. 38 Tier 5 for FedForward Daily Deposit is also referred to as Substitute Check Endpoints. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00039 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices payments by providing additional options for paying banks to return items earlier. The Reserve Banks will increase the tier pricing for the 9:00 p.m. ET, 1:00 a.m. ET, and 12:30 p.m. ET FedReturn deposit deadlines. Table 9 lists the fees for the Standard FedReturn® product, inclusive of 66413 current and new deposit deadlines. Table 10 lists the fees for the Premium FedReturn® product, inclusive of current and new deposit deadlines. TABLE 9—STANDARD FEDRETURN IMAGE CASH LETTER Tier 39 4:00 p.m. ET 1 ....................................................................................................................... 2 ....................................................................................................................... 3 ....................................................................................................................... 4 ....................................................................................................................... 5 ....................................................................................................................... 6 ....................................................................................................................... Cash Letter ...................................................................................................... 9:00 p.m. ET $0.120 0.180 0.590 0.790 1.000 1.500 4.50 1:00 a.m. ET $0.170 0.230 0.640 0.840 1.050 1.500 4.50 $0.470 0.530 0.940 1.140 1.350 1.500 6.50 12:30 p.m. ET $0.170 0.230 0.640 0.840 1.050 1.500 6.50 TABLE 10—PREMIUM FEDRETURN IMAGE CASH LETTER Tier 39 4:00 p.m. ET 0 ................................................................................................................................................... 1 ................................................................................................................................................... 2 ................................................................................................................................................... 3 ................................................................................................................................................... 4 ................................................................................................................................................... 5 ................................................................................................................................................... 6 ................................................................................................................................................... Daily Fixed Fee ............................................................................................................................ The Reserve Banks will increase to the per-item fee for all paper-related products, as well as large-dollar return item notification (LDRIN), and returns reclear services by 10 to 17 percent.40 The Reserve Banks will increase all FedImage® fees 10 percent. The Reserve Banks will continue increasing fees to encourage depositors to shift volume away from legacy paper-related 1:00 a.m. ET N/A $0.020 0.070 0.490 0.690 0.900 1.500 400.00 N/A $0.070 0.120 0.540 0.740 0.950 1.500 400.00 12:30 p.m. ET N/A $0.090 0.140 0.560 0.760 0.970 1.500 400.00 products in light of today’s electronic check-processing environment. Table 11 and 12 show these pricing changes. TABLE 11—PAPER CHECK FORWARD AND RETURN COLLECTION Paper services Fixed fee Canadian Items—U.S. Funds .................................................................................................................................. Canadian Items—Canadian Funds ......................................................................................................................... Canadian Cash Letter Correction Fee .................................................................................................................... Canadian Amount Encoding .................................................................................................................................... Foreign Items—GBP and Euro ................................................................................................................................ Foreign Items—All Other Items ............................................................................................................................... Foreign Items—Collection Items ............................................................................................................................. Mixed Forward Paper Deposits ............................................................................................................................... LDRIN—FedLine Web access solution ................................................................................................................... LDRIN—Telephone .................................................................................................................................................. LDRIN—Physical Item ............................................................................................................................................. Returns Item Reclear—Level 1 ............................................................................................................................... Returns Item Reclear—Level 2 ............................................................................................................................... Returns Item Reclear—Level 3 ............................................................................................................................... Returns Item Reclear—Level 4 ............................................................................................................................... Canadian Item—Return ........................................................................................................................................... Foreign Item—Return .............................................................................................................................................. Mixed Return Paper Deposits ................................................................................................................................. Return Item Qualification ......................................................................................................................................... $15.00 15.00 ........................ ........................ 15.00 15.00 15.00 15.00 ........................ ........................ ........................ 10.00 10.00 10.00 10.00 ........................ ........................ 15.00 ........................ Per item fee $5.50 5.50 22.00 1.65 22.00 22.00 88.00 4.00 4.00 22.00 28.00 0.70 0.80 0.90 1.00 16.50 44.00 7.00 8.25 khammond on DSKJM1Z7X2PROD with NOTICES TABLE 12—FEDIMAGE AND ELECTRONIC CHECK SERVICES AND FEES Fixed fee Image Archive: Image Capture + 7 business day archive ........................................................................................ 39 Tier 5 for FedReturn Daily Deposit is also referred to as PDF Endpoints. Tier 6 for FedReturn Daily Deposit is also referred to as Substitute Check Endpoints. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 40 LDRIN is a service in which the Reserve Banks, at the payor bank’s request, notifies the bank of first deposit (BOFD) that an item of $5,000 or more is being returned to them, to satisfy the payor bank’s Regulation CC requirement. Returns reclear is a PO 00000 Frm 00040 Fmt 4703 Sfmt 4703 $6.60 .............................. Per item fee $0.010 service in which the Reserve Banks, at the BOFD’s request, will make a second attempt to clear a check that has been returned during the first clearing attempt. E:\FR\FM\04DEN1.SGM 04DEN1 66414 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices TABLE 12—FEDIMAGE AND ELECTRONIC CHECK SERVICES AND FEES—Continued Fixed fee 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 ...................................................................................................... The Reserve Banks will increase the per-item fee for the FedReceipt® Premium Delivery 8:00 a.m. ET Target by $0.003 to $0.026, for the 10:00 a.m. Target by $0.002 to $0.017, and for the 12:00 noon Target by $0.001 to $0.012.41 The fee increases are intended to maintain cost recovery of the Premium Delivery service in light of declining check volume. The primary risks to the Reserve Banks’ ability to achieve budgeted 2020 cost recovery for the check service include greater-than-expected declines in check volume due to the general reduction in check writing and Per item fee ........................................ ........................................ ........................................ ........................................ ........................................ ........................................ $4.70 .............................. $4.70 .............................. 0.0233 0.0012 0.0014 0.0022 0.0013 0.0133 0.0133 0.0133 ........................................ ........................................ ........................................ 0.0011 0.0026 0.0067 ........................................ 0.4700 ........................................ ........................................ ........................................ ........................................ ........................................ 0.4700 0.4700 0.4700 0.0029 8.0000 $20.00/CD–ROM ........... $20.00/CD–ROM ........... 0.0210 0.1300 $7.25 .............................. ........................................ 0.0120 1.4000 increased competition from correspondent banks, aggregators, and direct exchanges, which would result in lower-than-anticipated revenue. D. FedACH Service—Table 13 shows the 2018 actual, 2019 estimate, and 2020 budgeted cost-recovery performance for the commercial FedACH service. TABLE 13—FEDACH SERVICE PRO FORMA COST AND REVENUE PERFORMANCE [Dollars in millions] Year khammond on DSKJM1Z7X2PROD with NOTICES 2018 (actual) ........................................................................ 2019 (estimate) .................................................................... 2020 (budget) ....................................................................... Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1 2 3 [1–2] 4 5 [1/(2 + 4)] $149.7 152.7 157.6 $149.1 153.1 155.3 $0.6 ¥0.4 2.3 $1.9 1.9 1.9 99.2 98.6 100.3 1. 2019 Estimate—The Reserve Banks estimate that the FedACH service will recover 98.6 percent of total expenses and targeted ROE, compared with a 2019 budgeted recovery rate of 101.3 percent. Through August, FedACH commercial origination and receipt volume was 5.4 percent higher than it was during the same period last year. For full-year 2019, the Reserve Banks estimate that FedACH commercial origination and receipt volume will increase 5.8 percent from 2018 levels, compared with a 2019 budgeted increase of 3.3 percent. However, investment costs associated with a multiyear technology initiative to modernize the FedACH processing platform continue to drive the overall underrecovery rate. Although FedACH is estimated to not fully recover its costs in 2019, the Reserve Banks are expected to fully recover FedACH costs following the finalization of the FedACH technology modernization project. 2. 2020 Pricing—The Reserve Banks expect the FedACH service to recover 100.3 percent of total expenses and targeted ROE in 2020. FedACH commercial origination and receipt volume is projected to grow 4.2 percent, which is expected to contribute to an increase of $4.9 million in total revenue 41 FedReceipt services consist of the electronic presentment of an image cash letter to the paying bank that consists of all forward items deposited electronically. 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. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00041 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 66415 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices from the 2019 estimate. Total expenses are projected to increase $2.2 million from 2019 expenses, primarily because of testing and implementation costs associated with the introduction of the new FedACH technology platform, which is now expected in 2020. The Reserve Banks will not change fees for existing FedACH priced services. This is consistent with a multiyear strategy of providing price stability for customers in light of ongoing investments to upgrade the FedACH processing platform. The primary risks to the Reserve Banks’ ability to achieve budgeted 2020 cost recovery for the FedACH service are unanticipated cost overruns associated with the FedACH technology modernization project and unanticipated volume reductions. E. Fedwire Funds and National Settlement Services—Table 14 shows the 2018 actual, 2019 estimate, and 2020 budgeted cost-recovery performance for the Fedwire Funds and National Settlement Services. TABLE 14—FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES PRO FORMA COST AND REVENUE PERFORMANCE [Dollars in millions] Year khammond on DSKJM1Z7X2PROD with NOTICES 2018 (actual) ........................................................................ 2019 (estimate) .................................................................... 2020 (budget) ....................................................................... 1. 2019 Estimate—The Reserve Banks estimate that the Fedwire Funds and National Settlement Services will recover 102.4 percent of total expenses and targeted ROE, compared with a 2019 budgeted recovery rate of 100.5 percent. Through August, Fedwire Funds Service online volume was 4.0 percent higher than it was during the same period last year. For full-year 2019, the Reserve Banks estimate that Fedwire Funds Services online volume will increase 4.5 percent from 2018 levels, compared with the 2.1 percent volume increase that had been budgeted. Through August, the National Settlement Service (NSS) settlement file volume was 4.8 percent lower than it was during the same period last year, and settlement entry volume was 4.2 percent lower. For the full year, the Reserve Banks estimate that settlement file volume will decrease 5.0 percent (slightly more than the budgeted decrease of 3.5 percent) and settlement entry volume will decrease 4.0 percent from 2018 levels (compared with a budgeted 3.0 percent decrease). 2. 2020 Pricing—The Reserve Banks expect the Fedwire Funds and National Settlement Services to recover 98.2 percent of total expenses and targeted ROE. Revenue is projected to be $139.9 million, an increase of 2.6 percent from the 2019 estimate. The Reserve Banks project total expenses to be roughly $8.4 million higher than 2019 expenses, primarily reflecting investments in initiatives to improve resiliency and operational functionality. The Reserve Banks will increase the per-transfer fee for originations and receipts from $0.820 to $0.840 for tier 1 transfers, from $0.245 to $0.250 for tier VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1 2 3 [1–2] 4 5 [1/(2 + 4)] $132.4 136.4 139.9 $123.6 131.6 140.0 $8.8 4.8 ¥0.1 $1.5 1.6 2.4 105.8 102.4 98.2 2 transfers, and from $0.160 to $0.165 for tier 3 transfers.42 Correspondingly, the discounted per-transfer fee for originations and receipts will increase from $0.164 to $0.168 for tier 1 transfers, from $0.049 to $0.050 for tier 2 transfers, and from $0.032 to $0.033 for tier 3 transfers.43 The Reserve Banks will increase the per-transfer fee in order to offset an anticipated decline in revenue due to a large Fedwire Funds participant’s upcoming transition of its transfer origination activity off the Fedwire Funds Service, which is set to occur in 2020. This shift in volume is coupled with ongoing project costs associated with resiliency and operational objectives and increased investments in System technology infrastructure. The price increase has been structured to affect tier 3 (that is, high-volume) customers proportionally more than lower-volume customers. The structure was chosen because the ongoing project costs incurred by the Fedwire Funds Service are expected to be of greater benefit to tier 3 customers. Overall Fedwire Funds participants will experience an average price increase of 3.7 percent.44 The Reserve Banks will not change NSS fees for 2020. There are three primary risks to the Reserve Banks’ ability to achieve budgeted 2020 cost recovery for these services. First, the Fedwire Funds Service could experience a potential overrun in costs from ongoing technology initiatives to improve resiliency and operational functionality. Second, the services could experience lower–than-expected volume related to unforeseen market trends. Finally, the Fedwire Funds Service is reevaluating its current resource commitments and portfolio goals in order to better support any necessary strategic and development work related to emerging Systemwide initiatives, in addition to revisiting project implementation timelines in response to industry feedback.45 As a result, the Fedwire Funds Service future resource and project costs may shift and this may affect 2020 cost recovery. F. Fedwire Securities Service—Table 15 shows the 2018 actual, 2019 estimate, and 2020 budgeted cost- 42 Tiers are based on monthly total volume of originations and receipts. Tier 1 includes up to 14,000 transfers, Tier 2 includes from 14,001 to 90,000 transfers, and Tier 3 includes transfers over 90,000. 43 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. 44 The average price impact (increase) reflects both the price changes as well as an overall expected increase in the average benchmark volume required to receive discount pricing based on historic observed increases in customer benchmark volume year over year. 45 In response to industry feedback, the Federal Reserve Banks have decided to put on hold Phase 1 of the Fedwire Funds Service’s ISO 20022 migration strategy (originally scheduled for November 2020). The Federal Reserve will provide an update regarding its implementation plans after engaging with key stakeholders to reassess the Fedwire Funds Service’s migration strategy. See official press release for additional details (https:// frbservices.org/news/press-releases/092319-fedwirefunds-migration-iso20022-messages.html). PO 00000 Frm 00042 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 66416 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices recovery performance for the Fedwire Securities Service.46 TABLE 15—FEDWIRE SECURITIES SERVICE PRO FORMA COST AND REVENUE PERFORMANCE [Dollars in millions] Year khammond on DSKJM1Z7X2PROD with NOTICES 2018 (actual) ........................................................................ 2019 (estimate) .................................................................... 2020 (budget) ....................................................................... Revenue Total expense Net income (ROE) Targeted ROE Recovery rate after targeted ROE (%) 1 2 3 [1¥2] 4 5 [1/(2 + 4)] $27.5 26.6 26.1 $27.5 27.1 26.2 $0.0 ¥0.5 ¥0.1 $0.3 0.3 0.3 98.7 96.8 98.6 1. 2019 Estimate—The Reserve Banks estimate that the Fedwire Securities Service will recover 96.8 percent of total expenses and targeted ROE, compared with a 2019 budgeted recovery rate of 95.1 percent. The Reserve Banks estimate revenue to be $26.6 million, an increase of 0.8 percent from the 2019 budget. Total expenses are projected to be $27.1 million for full-year 2019, a decrease of 1.5 percent from the 2019 budget. Through August, Fedwire Securities Service online agency transfer volume was 6.6 percent lower than it was during the same period last year. For full-year 2019, the Reserve Banks estimate that Fedwire Securities Service online agency transfer volume will decline 11.1 percent from 2018 levels, compared with a budgeted decline of 4.7 percent. This decrease in online agency transfer volume primarily reflects JP Morgan Chase’s (JPMC) exiting the broker-dealer services business, which resulted in Bank of New York Mellon (BNYM) generally serving as the sole clearing bank for government securities. Activity between JPMC and BNYM that had previously settled over the Fedwire Securities Service is now concentrated within BNYM. The significant decline in agency transfer volume realized from JPMC’s exit was partially offset by a reorganization of BNYM’s broker-dealer activity and non-broker-dealer activity into separate securities accounts. This reorganization resulted in transfer activity that was previously conducted on BNYM’s books shifting to the Fedwire Securities Service. The Reserve Banks do not expect that there will be further significant changes in 2020 in online agency transfer volume related to the JPMC exit. For full-year 2019, volumes for the Fedwire Securities’ two largest revenuegenerating services—account maintenance and issue maintenance— are expected to decline from 2018 levels. Through August, account maintenance volume was 2.8 percent lower than it was during the same period last year. For full-year 2019, the Reserve Banks estimate that account maintenance volume will decline 2.8 percent from 2018 levels, compared with a budgeted decline of 5.8 percent. The account maintenance volume decline is largely the result of joint custody account closures. Through August, the number of agency issues maintained was 11.8 percent lower than it was during the same period last year. For full-year 2019, the Reserve Banks estimate that the number of agency issues maintained will decline 11.9 percent from 2018 levels, compared with a budgeted decline of 19.7 percent. 2. 2020 Pricing—The Reserve Banks expect the Fedwire Securities Service to recover 98.6 percent of total expenses and targeted ROE in 2020. Revenue is projected to be $26.1 million, a decrease of 1.9 percent from the 2019 estimate. The Reserve Banks also project that 2020 expenses will remain relatively flat, decreasing by $0.9 million from the 2019 estimate. Significant drivers of 2020 operating costs include investments to advance initiatives to improve resiliency and operational functionality. The Reserve Banks will not change Fedwire Securities Service fees for 2020. This is largely the result of a stable nearterm volume outlook across Fedwire Securities’ core products. Relevant cost drivers include ongoing project costs associated with resiliency and operational objectives and increased Systemwide investment in technology infrastructure. Of particular note, however, operating costs for the Fedwire Securities Service are expected to decrease in 2021, primarily due to Fedwire Securities Modernization Program-related costs being fully amortized. The Reserve Banks project that online agency transfer volume will remain relatively flat, with a slight decrease of 1.4 percent in 2020. As interest rates decline, an expected increase in refinancing activity will likely lead to higher mortgage-backed securities (MBS) issuance and a corresponding higher level of online MBS transfers. Conversely, agency debt transfers will likely decrease since the Federal Housing Finance Agency (FHFA) has mandated a decline in governmentsponsored enterprise retained portfolios. Thus, it is expected that there will be no significant volume changes in this category for 2020. The volume of accounts maintained will likely decrease 3.7 percent, and the volume of agency issues maintained will likely decrease 0.5 percent.47 Account maintenance volume is expected to continue to decline in 2020 because of ongoing joint custody account closures. The primary risk to the Reserve Banks’ ability to achieve budgeted 2020 cost recovery for these services is a potential overrun in costs from ongoing technology initiatives to improve resiliency and operational functionality 46 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. 47 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 2019. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00043 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 66417 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices or lower-than-expected volume related to unforeseen market trends. G. FedLine Solutions—The Reserve Banks charge fees for the electronic connections that depository institutions use to access priced services and allocate the costs and revenues associated with this electronic access to the priced services.48 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.49 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, Internet Protocol (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 multiple connection speeds to Check, FedACH, Fedwire Funds, and Fedwire Securities transactional and information services and to most accounting information services.50 In 2020, the Reserve Banks will increase the monthly fees for legacy FedLine Direct (FLD) Plus and Premier, Additional Legacy 256K and T1 Wide Area Network (WAN) services, and Check 21 Large File Delivery (C21 LFD). The fee for legacy FLD Plus (Legacy 256K) package will increase by $1,500, from $4,000 to $5,500, and FLD Premier (Legacy T1) will increase by $700, from $6,800 to $7,500. The Reserve Banks also will increase the a` la carte monthly fee for the Additional Legacy 256K WAN by $1,000, from $2,500 to $3,500 and for the Additional Legacy T1 WAN by $300, from $3,200 to $3,500. In addition, the Reserve Banks will increase the C21 LFD fee by 20 percent.51 Starting in mid-2020 the Reserve Banks will include additional fee increases for these packages, as shown in table 16, to encourage customers to move to more modern and secure technology that meets industry standards.52 As previously announced, the Reserve Banks intend to sunset legacy FLD and C21 LFD services after all customers have converted to the new solution. Table 16 provides a summary of the services and 2020 pricing for FLD and C21 LFD services: TABLE 16—FEDLINE DIRECT AND CHECK 21 LARGE FILE DELIVERY LEGACY PRICE INCREASES Fee structure 2019 monthly fee Services FedLine Direct Plus (Legacy 256K) ........................................ FedLine Direct Premier (Legacy T1) ....................................... Additional Legacy 256K WAN Connection .............................. Additional Legacy T1 WAN Connection .................................. Check 21 Large File Delivery 53 .............................................. $4,000 6,800 2,500 3,200 Various January 1, 2010 monthly fee $5,500 (+37.5%) $7,500 (10.3%) $3,500 (+40.0%) $3,500 (+9.4%) +20.0% May 1, 2020 monthly fee $10,000 (+150.0%) $10,000 (+47.1%) $5,000 (+100.0%) $5,000 (+56.3%) * +50.0% August 1, 2020 monthly fee $20,000 $20,000 $10,000 $10,000 (+400.0%) (+194.1%) (+300.0%) (+212.5%) * +100.0% khammond on DSKJM1Z7X2PROD with NOTICES * (from Dec. 2019 fee). In addition, the Reserve Banks will increase the price for FedMail Fax and FedMail Email (for customers with FedLine Web or above).54 FedMail Fax will increase by $50, from $100 to $150. Additionally, FedMail Email (for customers with FedLine Web or above) will increase by $20, from $20 to $40. The price increases to FedMail Fax and FedMail Email are intended to move customers to more secure and contemporary solutions. The Reserve Banks will also update the existing FedComplete 100 and 200 (Plus and Premier) packages to incorporate other pricing and product changes.55 Although the Reserve Banks are not making changes to package fees, the content of the packages is being updated to reflect individual 2020 pricing and product changes. Specifically, the Reserve Banks will add the 2020 Check participation fee and the 4:00 p.m. FedReturn® deadline to FedComplete packages. The Reserve Banks will update the FedComplete Excess Volume and Receipt Surcharge to reflect the fee increase to Fedwire Origination and Receipt. The Reserve Banks estimate that the price changes will result in a 2.9 percent average price increase for FedLine customers. 48 FedLine Solutions provide customers with access to Reserve Bank priced services. As such, FedLine costs and revenue are allocated to the Reserve Banks’ priced services on an expense ratio basis. 49 FedMail, FedLine Exchange, FedLine Web, FedLine Advantage, FedLine Command, and FedLine Direct are registered trademarks of the Federal Reserve Banks. 50 In 2019, the Reserve Banks began offering Check 21 Large File Delivery services as part of modernized FedLine Direct Plus and FedLine Direct Premier connections. 51 The monthly fees for legacy C21 LFD fee ranges from $1,680 to $24,870 depending on the size, speed, and location of the connection. In order to avoid compounding increases, December 2019 will be the baseline for all 2020 price increases for any connection still needing to convert. 52 The Reserve Banks will increase fees further in mid-2020 for those customers who have not yet converted to newer FedLine Direct network routers and circuits. 53 To avoid compounding increases, the fee as of December 2019 will serve as the baseline for all 2020 price increases for any connection still needing to convert. 54 FedMail Email is only available to FedLine Web, Advantage, Command, and Direct customers. 55 FedComplete packages bundle certain payment services and are designed for institutions with lower transaction volumes that are interested in processing their own payments. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00044 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 66418 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices 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.’’ 56 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. The 2020 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 proposed 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. 2020 Fee Schedules FEDACH SERVICE 2020 FEE SCHEDULE [Effective January 2, 2020. Bold indicates changes from 2019 prices] Fee khammond on DSKJM1Z7X2PROD with NOTICES FedACH minimum monthly fee: Originating depository financial institution (ODFI) 57 .................................................................................................................................. Receiving depository financial institution (RDFI) 58 ................................................................................................................................... Origination (per item or record): Forward or return items .............................................................................................................................................................................. SameDay Service—forward item 59 ........................................................................................................................................................... Addenda record .......................................................................................................................................................................................... FedLine Web-originated returns and notification of change (NOC) 60 ...................................................................................................... Facsimile Exception Return/NOC 61 ........................................................................................................................................................... SameDay Exception Return ....................................................................................................................................................................... Automated NOC ......................................................................................................................................................................................... Volume discounts (based on monthly billed origination volume) 62 per item when origination volume is. 750,001 to 1,500,000 items per month ............................................................................................................................................... more than 1,500,000 items per month ............................................................................................................................................... Volume discounts (based on monthly billed receipt volume) 63 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 discounts: Non-Premium Receivers 64 per item when volume is:. 750,001 to 12,500,000 items per month 65 .................................................................................................................................. more than 12,500,000 items per month 66 .................................................................................................................................. Premium Receivers, Level One 67 per item when volume is: 750,001 to 1,500,000 items per month 65 .................................................................................................................................... 1,500,001 to 2,500,000 items per month 66 ................................................................................................................................. 2,500,001 to 12,500,000 items per month 66 ............................................................................................................................... more than 12,500,000 items per month 66 .................................................................................................................................. Premium Receivers, Level Two 68 per item when volume is: 750,001 to 1,500,000 items per month 65 .................................................................................................................................... 1,500,001 to 2,500,000 items per month 66 ................................................................................................................................. 2,500,001 to 12,500,000 items per month 66 ............................................................................................................................... more than 12,500,000 items per month 66 .................................................................................................................................. FedACH Bundled Package Pricing Discount: Monthly Bundled Service Package Discount 69 ......................................................................................................................................... FedACH Risk® Management Services: 70 Monthly Package Fee (a single fee based on total number of criteria sets): For up to 5 criteria sets ....................................................................................................................................................................... For 6 through 11 criteria sets ............................................................................................................................................................. For 12 through 23 criteria sets ........................................................................................................................................................... 56 Federal Reserve Regulatory Service (FRRS) 9– 1558. 57 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. 58 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. 59 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. 60 The fee includes the item and addenda fees in addition to the conversion fee. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 61 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. 62 Origination volumes at these levels qualify for a waterfall discount which includes all FedACH origination items. 63 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. 64 RDFIs receiving through FedACH less than 90 percent of their FedACH-originated items. 65 This per-item discount is a reduction to the standard receipt fees listed in this fee schedule. 66 Receipt volumes at these levels qualify for a waterfall discount which includes all FedACH receipt items. 67 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. PO 00000 Frm 00045 Fmt 4703 Sfmt 4703 $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. 68 RDFIs receiving through FedACH at least 90 percent of all of their ACH items originated through any operator. 69 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. 70 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. 71 Premier reports generated on demand are subject to the package/tiered fees plus a surcharge. 72 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. E:\FR\FM\04DEN1.SGM 04DEN1 66419 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices FEDACH SERVICE 2020 FEE SCHEDULE—Continued [Effective January 2, 2020. Bold indicates changes from 2019 prices] khammond on DSKJM1Z7X2PROD with NOTICES Fee 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 .......................................................................................................................................................... Batch/Item Monitoring (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 monthly package includes the following reports ACH Received Entries Detail—Customer and Depository Financial Institution ACH Return Reason Report—Customer and Depository Financial Institution ACH Originated Entries Detail—Customer and Depository Financial Institution ACH Volume Summary by SEC Code—Customer ACH Customer Transaction Activity ACH Death Notification ACH International (IAT) ACH Notification of Change ACH Payment Data Information File ACH Remittance Advice Detail ACH Remittance Advice Summary ACH Return Item Report and File ACH Return Ratio ACH Social Security Beneficiary ACH Originator Setup ACH Report Delivery via FedLine Solution On Demand Report Surcharge 71 ....................................................................................................................................................... Monthly Package Fee (counts reflect reports generated as well as delivered via a FedLine Solution): 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): 71 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 72 .............................................................................................................................................................. SameDay Service Origination Participation Fee 73 ............................................................................................................................. FedACH Settlement Fee 74 ................................................................................................................................................................. FedACH Information File Extract Fee ................................................................................................................................................. IAT Output File Sort Fee ..................................................................................................................................................................... Fixed Participation Fee—Automated NOCs 75 ................................................................................................................................... Non-Electronic Input/Output fee: 76 CD/DVD (CD or DVD) ......................................................................................................................................................................... Paper (file or report) ............................................................................................................................................................................ Fees and Credits Established by NACHA: 77 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: 78 Fixed Monthly Fee (per RTN): 79 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): 80 Canada service ................................................................................................................................................................................... Mexico service .................................................................................................................................................................................... VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00046 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 $150.00. $250.00. $425.00. $675.00. $850.00. $1,100.00. $0.007. $0.0035. $1.00. $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. 66420 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices FEDACH SERVICE 2020 FEE SCHEDULE—Continued [Effective January 2, 2020. Bold indicates changes from 2019 prices] Fee Panama service .................................................................................................................................................................................. Europe service .................................................................................................................................................................................... Per-item Origination Fee for Monthly Volume between 161 and 500 items (surcharge): 80 Canada service ................................................................................................................................................................................... Mexico service .................................................................................................................................................................................... Panama service .................................................................................................................................................................................. Europe service .................................................................................................................................................................................... Per-item Origination Fee for Monthly Volume less than 161 items (surcharge): 80 Canada service ................................................................................................................................................................................... Mexico service .................................................................................................................................................................................... Panama service .................................................................................................................................................................................. Europe service .................................................................................................................................................................................... Other FedGlobal ACH Payments Fees: Canada service: Return received from Canada 81 .................................................................................................................................................. Trace of item at receiving gateway ............................................................................................................................................. Trace of item not at receiving gateway ....................................................................................................................................... Mexico service: Return received from Mexico 81 ................................................................................................................................................... Item trace ..................................................................................................................................................................................... Foreign currency to foreign currency (F3X) item originated to Mexico 80 ................................................................................... Panama service: Return received from Panama 81 ................................................................................................................................................. Item trace ..................................................................................................................................................................................... NOC ............................................................................................................................................................................................. Europe service: F3X item originated to Europe 80 ................................................................................................................................................. Return received from Europe 81 ................................................................................................................................................... Item trace ..................................................................................................................................................................................... Exception Resolution Service: Fixed Fee per RTN 82 (monthly): Self-Managed Cases ........................................................................................................................................................................... Agent-Managed Cases ....................................................................................................................................................................... Offline Service Participant ................................................................................................................................................................... Variable Case Open Monthly Fees per Case (applies to self-managed and agent-managed cases only at the parent RTN): 83 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 ................................................................................................................................................................... Offline Service Participant—Case Fees: 84 Case Open Fee ................................................................................................................................................................................... Case Response Fee ........................................................................................................................................................................... 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. 74 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. 75 Fee will be assessed only when automated NOCs are generated. khammond on DSKJM1Z7X2PROD with NOTICES 73 This VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 76 Limited services are offered in contingency situations. 77 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. 78 The international fees and surcharges vary from country to country as these are negotiated with each international gateway operator. 79 A single monthly fee based on total FedGlobal ACH Payments origination volume. 80 This per-item surcharge is in addition to the standard domestic origination fees listed in this fee schedule. 81 This per-item surcharge is in addition to the standard domestic receipt fees listed in this fee schedule. PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 $0.60. $1.13. $0.75. $0.80. $0.85. $1.38. $1.00. $1.05. $1.10. $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. $1.25. $1.00. $0.75. $0.50. $0.25. $0.20. $0.10. $5.00. $5.00. 82 Any financial institution that opens at least 1,000 Exception Resolution Service cases in a given month will receive a 50% discount on its Exception Resolution Service fixed fees for that month. 83 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. 84 A depository institution may enroll in the Service as an offline Service Participant by designating the Reserve Bank to access and use the functionality of the application on behalf of the Offline Participant. E:\FR\FM\04DEN1.SGM 04DEN1 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices 66421 FEDWIRE FUNDS AND NATIONAL SETTLEMENT SERVICES 2020 FEE SCHEDULE [Effective January 2, 2020. Bold indicates changes from 2019 prices] Fee Fedwire Funds Service Monthly Participation Fee ..................................................................................................................................................................................................... Basic volume-based pre-incentive transfer fee (originations and receipts)—per transfer for: Tier 1: The first 14,000 transfers per month ............................................................................................................................................................. Tier 2: Additional transfers up to 90,000 per month ............................................................................................................................................... Tier 3: Every transfer over 90,000 per month ........................................................................................................................................................... Volume-based transfer fee with the incentive discount (originations and receipts)—per eligible transfer for: 85 Tier 1: The first 14,000 transfers per month ............................................................................................................................................................. Tier 2: Additional transfers up to 90,000 per month ............................................................................................................................................... Tier 3: Every transfer over 90,000 per month ........................................................................................................................................................... Surcharge for Offline Transfers (Originations and Receipt) ................................................................................................................................................. Surcharge for End-of-Day Transfer Originations 86 .............................................................................................................................................................. Monthly FedPayments Manager Import/Export fee 87 .......................................................................................................................................................... Surcharge for high-value payments: >$10 million .................................................................................................................................................................................................................... >$100 million .................................................................................................................................................................................................................. Surcharge for Payment Notification: Origination Surcharge 88 ................................................................................................................................................................................................ Receipt Volume 88 89 ...................................................................................................................................................................................................... Delivery of Reports—Hard Copy Reports to On-Line Customers ........................................................................................................................................ Special Settlement Arrangements (charge per settlement day) 90 ....................................................................................................................................... $95.00 0.840 0.250 0.165 0.168 0.050 0.033 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 91 ............................................................................................................................................................................... Minimum Monthly Fee 92 ....................................................................................................................................................................................................... 1.50 30.00 45.00 60.00 FEDWIRE SECURITIES SERVICE 2020 FEE SCHEDULE (NON-TREASURY SECURITIES) [Effective January 2, 2020. Bold indicates changes from 2019 prices] Fee Fee: 93 khammond on DSKJM1Z7X2PROD with NOTICES Basic Transfer Transfer or reversal originated or received ................................................................................................................................................................... Surcharge: 94 Offline origination & receipt surcharge .......................................................................................................................................................................... Monthly Maintenance Fees: 93 Account maintenance (per account) .............................................................................................................................................................................. Issue maintenance (per issue/per account) .................................................................................................................................................................. Claims Adjustment Fee 93 95 ................................................................................................................................................................................................. GNMA Serial Note Stripping or Reconstitution Fee 96 .......................................................................................................................................................... Joint Custody Origination Surcharge 93 97 ............................................................................................................................................................................ Delivery of Reports—Hard Copy Reports to On-Line Customers 93 .................................................................................................................................... 85 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: $0.672 for transfers up to 14,000; $0.200 for transfers 14,001 to 90,000; and $0.132 for transfers over 90,000. 86 This surcharge applies to originators of transfers that are processed by the Reserve Banks after 5:00 p.m. eastern time. 87 This fee is charged to any Fedwire Funds participant that originates a transfer message via the VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 FedPayments Manager (FPM) Funds tool and has the import/export processing option setting active at any point during the month. 88 Payment Notification and End-of-Day Origination surcharges apply to each Fedwire funds transfer message. 89 Provided on billing statement for informational purposes only. 90 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. 91 Offline files will be accepted only on an exception basis when a settlement agent’s primary PO 00000 Frm 00048 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. 92 Any settlement arrangement that accrues less than $60 during a calendar month will be assessed a variable amount to reach the minimum monthly fee. 93 These fees are set by the Federal Reserve Banks. 94 This surcharge is set by the Federal Reserve Banks. It is in addition to any basic transfer or reversal fee. 95 The Federal Reserve Banks offer an automated claim adjustment process only for Agency mortgage-backed securities. 96 This fee is set by and remitted to the Government National Mortgage Association (GNMA). 97 The Federal Reserve Banks charge participants a Joint Custody Origination Surcharge for both Agency and Treasury securities. E:\FR\FM\04DEN1.SGM 04DEN1 66422 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices FEDLINE 2020 FEE SCHEDULE [Effective January 2, 2020. Bold indicates changes from 2019 prices] Fee khammond on DSKJM1Z7X2PROD with NOTICES FedComplete Packages (monthly) 98 99 100 FedComplete 100A Plus ........................................................................................................................................................................... includes: FedLine Advantage Plus package FedLine subscriber 5-pack Check Participation Fee 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 monthly participation fee 1,000 FedACH origination items FedACH monthly minimum fee—Forward Origination 7,500 FedACH receipt items FedACH monthly minimum fee—Receipt 10 FedACH web-originated return/NOC 500 FedACH addenda record originated 1,000 FedACH addenda record received 100 FedACH SameDay Service origination items FedACH Participation Fee FedACH settlement fee FedACH SameDay Service 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 Check Participation Fee 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 monthly participation fee 2,000 FedACH origination items FedACH monthly minimum fee—Forward Origination 25,000 FedACH receipt items FedACH monthly minimum fee—Receipt 20 FedACH web-originated return/NOC 750 FedACH addenda record originated 1,500 FedACH addenda record received 200 FedACH SameDay Service origination items FedACH Participation Fee FedACH settlement fee FedACH SameDay Service 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: 101 FedForward 102 .................................................................................................................................................................................. 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. $0.8400/item. $0.084/item. $0.0035/item. $0.00035/item. various. various. FedLine Customer Access Solutions (monthly) FedMail 103 ................................................................................................................................................................................................ includes: VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00049 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 $85.00. 66423 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices FEDLINE 2020 FEE SCHEDULE—Continued [Effective January 2, 2020. Bold indicates changes from 2019 prices] khammond on DSKJM1Z7X2PROD with NOTICES Fee FedMail access channel Check FedFoward, Fed Return and FedReceipt Services Check Adjustments FedACH Download Advice and Settlement Information Fedwire Funds Offline Advices Daily Statement of Account (Text) Daylight Overdraft Reports Monthly Statement of Service Charges (Text) Electronic Cash Difference Advices FedLine Exchange 103 ............................................................................................................................................................................... includes: E-Payments Directory (via manual download) FedLine Exchange Premier 103 ................................................................................................................................................................. includes: FedLine Exchange package E-Payments Directory (via automated download) FedLine Web 104 ....................................................................................................................................................................................... includes: FedLine Web access channel Services included in the FedLine Exchange package Check FedForward, FedReturn and FedReceipt services Check Adjustments FedACH Derived Returns and NOCs FedACH File, Batch and Item Detail Information FedACH Download Advice FedACH Settlement Information FedACH Customer Profile Information FedACH Returns Activity Statistics FedACH Risk RDFI Alert Service FedACH Risk Returns Reporting Service FedACH Exception Resolution Service FedCash® Services FedLine Web Plus 104 ............................................................................................................................................................................... includes: Services included in the 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) Daylight Overdraft Reports Monthly Account Services (SCRD) File Monthly Statement of Service Charges (PDF, Text) E-Payments Routing Directory (via automated download) FedLine Advantage 104 ............................................................................................................................................................................. includes: FedLine Advantage access channel One VPN device Services included in the FedLine Web package FedACH File Transmission To/From Federal Reserve FedACH Request Output File Delivery FedACH View File Transmission and Processing Status Fedwire Originate and Receive Funds Transfer Fedwire Originate and Receive Securities Transfer National Settlement Service Services Check Large Dollar Return Check FedImage Services Account Management Information with Intra-Day Download Search File Daily Statement of Account (PDF, Text) Daylight Overdraft Reports Monthly Account Services (SCRD) File Monthly Statement of Service Charges (PDF, Text) FedLine Advantage Plus 104 ..................................................................................................................................................................... includes: Services included in the 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 automated download) FedLine Advantage Premier 104 ................................................................................................................................................................ 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 ........................................................................................................................................................................... VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 $40.00. $125.00. $110.00. $160.00. $415.00. $460.00. $570.00. $1,035.00. 66424 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices FEDLINE 2020 FEE SCHEDULE—Continued [Effective January 2, 2020. Bold indicates changes from 2019 prices] Fee includes: FedLine Command access channel Services included in the FedLine Advantage Plus package One VPN device Additional FedLine Command server certificates Fedwire Statement Services Fedwire Funds FedPayments Manager Import/Export FedTransaction Analyzer Intra-Day File with Transaction Details (up to six times daily) Statement of Account Spreadsheet File (SASF) Financial Institution Reconcilement Data (FIRD) File (machine readable) FedLine Direct Plus (Legacy 256K) 105 ................................................................................................................................................. 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 Daylight Overdraft Reports Treasury Check Information System (TCIS) FedLine Direct Plus 106 ........................................................................................................................................................................... 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 Check 21 Services FedLine Direct Premier (Legacy T1) 105 ................................................................................................................................................ includes: FedLine Direct Plus package (legacy) T1 dedicated WAN connection Two VPN devices FedLine Direct Premier 106 ..................................................................................................................................................................... includes: FedLine Direct Plus package (new) Two 2 Mbps dedicated WAN Connections One Network Diversity Two VPN devices $5,500.00. $5,500.00. $7,500.00. $10,500.00. khammond on DSKJM1Z7X2PROD with NOTICES A la carte options (monthly) 107 Electronic Access: FedMail—FedLine Exchange Subscriber 5-pack .............................................................................................................................. FedLine Subscriber 5-pack (access to Web and Advantage) .......................................................................................................... Additional FedLine Direct Certificate 108 ............................................................................................................................................ Additional VPNs 109 ........................................................................................................................................................................... Additional WAN connections 106 256K (Legacy) 105 ...................................................................................................................................................................... T1 (Legacy) 105 .......................................................................................................................................................................... 2 Mbps ........................................................................................................................................................................................ WAN Connection Upgrade 10 Mbps 110 ................................................................................................................................................................................ 30 Mbps 110 ................................................................................................................................................................................ 50 Mbps 110 ................................................................................................................................................................................ 100 Mbps 110 .............................................................................................................................................................................. 200 Mbps 110 .............................................................................................................................................................................. FedLine International Setup (one-time fee) ...................................................................................................................................... FedLine Custom Implementation Fee 111 .......................................................................................................................................... Network Diversity ............................................................................................................................................................................... FedLine Direct Contingency Solution 112 ........................................................................................................................................... Check 21 Large File Delivery 113 ....................................................................................................................................................... FedMail Email (for customers with FedLine Web and above) 114 .............................................................................................. FedMail Fax 115 ................................................................................................................................................................................. 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) 116 ................................................................................................................ E-Payments Automated Download (6–20 Add’l Codes) 116 .............................................................................................................. E-Payments Automated Download (21–50 Add’l Codes) 116 ............................................................................................................ E-Payments Automated Download (51–100 Add’l Codes) 116 .......................................................................................................... E-Payments Automated Download (101–250 Add’l Codes) 116 ........................................................................................................ E-Payments Automated Download (>250 Add’l Codes) 116 .............................................................................................................. Accounting Information Services (monthly): Cash Management System (CMS) Plus—Own report—up to six files with 117 no respondent/sub-account activity ................................................................................................................................................... VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 E:\FR\FM\04DEN1.SGM 04DEN1 $15.00. $80.00. $100.00. $100.00. $3,500.00. $3,500.00. $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. $40.00. $150.00. $200.00. $175.00. $100.00. $300.00. $75.00. $150.00. $300.00. $500.00. $1,000.00. $2,000.00. $60.00. 66425 Federal Register / Vol. 84, No. 233 / Wednesday, December 4, 2019 / Notices FEDLINE 2020 FEE SCHEDULE—Continued [Effective January 2, 2020. Bold indicates changes from 2019 prices] Fee less than 9 respondent and/or sub-accounts .................................................................................................................................... 10–50 respondent and/or sub-accounts ............................................................................................................................................ 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 118 .............................................................................................. Statement of Account Spreadsheet File 119 ...................................................................................................................................... Intra-day Download Search File (with AMI) 120 ................................................................................................................................. 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 26, 2019. Ann Misback, Secretary of the Board. [FR Doc. 2019–26228 Filed 12–3–19; 8:45 am] BILLING CODE P khammond on DSKJM1Z7X2PROD with NOTICES 98 FedComplete packages are all-electronic service options that bundle payment services with an access solution for one monthly fee. 99 Packages with an ‘‘A’’ include the FedLine Advantage channel, and packages with ‘‘C’’ include the FedLine Command channel. 100 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. 101 Per-item surcharges are in addition to the standard fees listed in the applicable priced services fee schedules. 102 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. 103 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. 104 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. VerDate Sep<11>2014 21:17 Dec 03, 2019 Jkt 250001 105 Limited to installed base only. All customers with 256K or T1 connections will need to upgrade to a minimum 2Mbps Ethernet line speed connection associated with the FedLine Direct packages Effective May 1, 2020, package price will increase to $10,000 for FedLine Direct® Plus (Legacy 256K) and FedLine Direct Premier (Legacy T1). Effective August 1, 2020, package price will increase to $20,000 for FedLine Direct® Plus (Legacy 256K) and FedLine Direct Premier (Legacy T1). 106 Early termination fees and/or expedited order fees may apply to all FedLine Direct packages and FedLine Direct a la carte options. 107 These add-on services can be purchased only with a FedLine Solutions packages. 108 Fee applies only to customers in a legacy FedLine Direct package. Server certificates are included in the monthly fee for customers in the new FedLine Direct packages. 109 Additional VPNs are available for FedLine Advantage, FedLine Command, and FedLine Direct packages only. 110 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. 111 The FedLine Custom Implementation Fee is $2,500 or $5,000 based on the complexity of the setup. 112 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. 113 Limited to installed base only. The fee currently ranges from $1,400 to $20,725 depending PO 00000 Frm 00052 Fmt 4703 Sfmt 9990 $125.00. $250.00. $500.00. $750.00. $1,000.00. $150.00. $150.00. $150.00. $0.00 to $8,000.00. various. various. various. 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. Effective January 2, 2020, fees will increase by 20.0 percent for Check 21 Large File Delivery. Effective May 1, 2020, fees will increase by 50.0 percent for Check 21 Large File Delivery. Effective August 1, 2020, fees will increase by 100.0 percent for Check 21 Large File Delivery. To avoid compounding increases, the fee as of December 2019 will serve as the baseline for all 2020 price increases for any Check 21 Large File Delivery connection. 114 Available only to customers with a priced FedLine package. 115 Limited to installed base only. 116 Five download codes are included at no cost in all Plus and Premier packages. 117 Cash Management Service options are limited to plus and premier packages. 118 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. 119 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. 120 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. E:\FR\FM\04DEN1.SGM 04DEN1

Agencies

FEDERAL RESERVE SYSTEM

[Federal Register Volume 84, Number 233 (Wednesday, December 4, 2019)]
[Notices]
[Pages 66405-66425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26228]

=======================================================================
-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM

[Docket No. OP-1687]

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 2020 of
$18.9 million and the 2020 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, 2020.

FOR FURTHER INFORMATION CONTACT: For questions regarding the fee
schedules: David C. Mills, Deputy Associate Director, (202) 530-6265;
Max Sinthorntham, Senior Financial Policy Analyst, (202) 452-2864;
Amanda Holcombe, Financial Institution Policy Analyst, (202) 912-4625;
Division of Reserve Bank Operations and Payment Systems. For questions
regarding the PSAF: Casey Clark, Assistant Director/Manager, (202) 452-
5232; Grace Milbank, Senior Financial Institution Policy Analyst, (202)
263-4828, 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 2020 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 2020 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.\1\ 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 2009 through 2018, the Reserve Banks recovered
102.6 percent of their total expenses (including imputed costs) and
targeted after-tax profits or return on equity (ROE) for providing
priced services.\2\
---------------------------------------------------------------------------

\1\ On August 5, 2019, the Federal Reserve Board announced that
the Reserve Banks will develop the FedNow\SM\ Service, an interbank
real-time gross settlement (RTGS) service with integrated clearing
functionality, to support the provision of end-to-end faster payment
services. The Board anticipates the FedNow Service will be available
in 2023 or 2024. Following the introduction of the FedNow Service,
the Board will regularly disclose the service's cost recovery and
will monitor progress toward matching revenues and costs.
\2\ 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. In accordance with Accounting Standards
Codification (ASC) 715 Compensation--Retirement Benefits, the
Reserve Banks recognized a cumulative reduction in equity related to
the priced services' benefit plans. Including this cumulative
reduction in equity from 2009 to 2018 results in cost recovery of
104.1 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 2018 actual, 2019 estimated, and 2020 budgeted
cost-recovery rates for all priced services. Cost recovery is estimated
to be 100.8 percent in 2019 and budgeted to be 100.2 percent in 2020.

Table 1--Aggregate Priced Services Pro Forma Cost and Revenue Performance a
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Recovery rate
Net income after targeted
Year Revenue Total expense (ROE) [1-2] Targeted ROE ROE [1/(2 +
4)](%)
1 \b\ 2 \c\ 3 4 \d\ 5e f
----------------------------------------------------------------------------------------------------------------
2018 (actual)................... $442.5 $428.1 $14.4 $5.2 102.1
2019 (estimate)................. 442.4 433.4 9.0 5.4 100.8
2020 (budget)................... 443.1 436.3 6.7 5.9 100.2
----------------------------------------------------------------------------------------------------------------
\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 2020, the projected
revenue assumes implementation of the 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.
\f\ For 2019 and 2020, 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).

[[Page 66406]]

Table 2 provides an overview of cost-recovery budgets, estimates,
and performance for the 10-year period from 2009 to 2018, 2018 actual,
2019 budget, 2019 estimate, and 2020 budget by priced service.

Table 2--Priced Services Cost Recovery
[Percent]
----------------------------------------------------------------------------------------------------------------
2019 budget 2020 budget
Priced service 2009-2018 2018 actual \a\ 2019 estimate \b\
----------------------------------------------------------------------------------------------------------------
All services.................... 102.6 102.1 100.8 100.8 100.2
Check........................... 105.3 102.7 101.9 102.9 102.8
FedACH.......................... 98.3 99.2 101.3 98.6 100.3
Fedwire Funds and NSS........... 102.1 105.8 100.5 102.4 98.2
Fedwire Securities.............. 101.8 98.7 95.1 96.8 98.6
----------------------------------------------------------------------------------------------------------------
\a\ The 2019 budget figures reflect the final budgets as approved by the Board in December 2018.
\b\ The 2020 budget figures reflect preliminary budget information from the Reserve Banks. The Reserve Banks
will submit final budget data to the Board in November 2019, for Board consideration in December 2019.

1. 2019 Estimated Performance--The Reserve Banks estimate that they
will recover 100.8 percent of the costs of providing priced services in
2019, including total expense and targeted ROE, compared with a 2019
budgeted recovery rate of 100.8 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 $9.0 million, compared with the
targeted ROE of $5.4 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 in 2019. 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.\3\ 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 investment costs
associated with initiatives to promote operational efficiency.
---------------------------------------------------------------------------

\3\ The Reserve Banks have been engaged in a multiyear
technology initiative to modernize the FedACH processing platform
capabilities. The implementation of this initiative has moved from
2019 to 2020.
---------------------------------------------------------------------------

2. 2020 Private-Sector Adjustment Factor--The 2020 PSAF for Reserve
Bank priced services is $18.9 million. This amount represents an
increase of $1.1 million from the 2019 PSAF of $17.8 million. This
increase is primarily the result of an increase in imputed return on
equity and sales tax and partially offset by a decrease in Board of
Governors expenses.
3. 2020 Projected Performance--The Reserve Banks project a priced
services cost recovery rate of 100.2 percent in 2020, with a net income
of $6.7 million and targeted ROE of $5.9 million. The Reserve Banks
project that the price changes will result in a 2.4 percent average
price increase for customers. The Reserve Banks project that each of
the individual service lines, other than the Fedwire Securities Service
and the Fedwire Funds Service, will fully recover their costs for 2020.
The Fedwire Services' underrecovery projections are largely driven by
an anticipated decline in revenue due to a large Fedwire Funds
participant's upcoming transition of its transfer origination activity
off the Fedwire Funds Service, anticipated modest volume declines in
certain product lines for the Fedwire Securities Service, and ongoing
System investments in projects to increase technological resiliency.
Both the Fedwire Funds Service and Fedwire Securities Service are
projected to fully recover costs in the long run.\4\
---------------------------------------------------------------------------

\4\ From 2011-2020, Fedwire Securities Service's projected ten-
year average recovery rate is 101.6 percent and Fedwire Funds
Service's projected ten-year average recovery rate is 102.4 percent.
---------------------------------------------------------------------------

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. 2020 Pricing--The following summarizes the Reserve Banks'
changes in fee schedules for priced services in 2020:
Check
The Reserve Banks will reassign the tier placement of
1,607 and 124 return endpoints in the FedForward[supreg] and
FedReturn[supreg] products, respectively.\5\ In addition, the Reserve
Banks will adjust the frequency of endpoint tier reassignments from
annual to every other year.
---------------------------------------------------------------------------

\5\ The Reserve Banks evaluate and set tier assignments annually
based on changes in the volume of items received by endpoints.
---------------------------------------------------------------------------

The Reserve Banks will eliminate tier 0 for all
FedForward[supreg] and FedReturn[supreg] Premium Daily deposit
options.\6\
---------------------------------------------------------------------------

\6\ 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.
---------------------------------------------------------------------------

The Reserve Banks will decrease per-item fees for the
FedForward Premium Daily A deposit option by $0.004 for tier 1. The
Reserve Banks will decrease per-item fees for the FedForward[supreg]
Premium Daily B deposit option by $0.002 for tier 1. The Reserve Banks
will decrease per-item fees for Premium Daily A, B, and C deposit
options by $0.003 for tier 3 and tier 4.
The Reserve Banks will increase the Retail Payments
Premium Receiver (RPPR) FedForward[supreg] discount by $0.001.\7\
---------------------------------------------------------------------------

\7\ For eligible customers that deposit over two million items
per month.
---------------------------------------------------------------------------

The Reserve Banks will introduce 4:00 p.m. eastern time
(ET) deposit deadlines for Standard FedReturn[supreg] and Premium
FedReturn[supreg] and accompanying fee schedules, which include per-
item fees and fixed per-cash letter fees, as detailed in table 9 and
10, respectively.
The Reserve Banks will increase per-item fees for all
other Standard FedReturn[supreg] deadlines (9:00 p.m. ET, 1:00 a.m. ET,
and 12:30 p.m. ET) and Premium FedReturn[supreg] deadlines (1:00 a.m.
ET and 12:30 p.m. ET) by $0.02.

[[Page 66407]]

The Reserve Banks will increase per-item fees for paper/
legacy services between 10 to 17 percent, as detailed in table 11.
The Reserve Banks will increase all fees for the
FedImage[supreg] service 10 percent, as detailed in table 12.
The Reserve Banks will implement a fixed monthly Check 21
participation fee of $25 per parent customer.
The Reserve Banks will increase the per-item fee for the
FedReceipt[supreg] Premium Delivery 8:00 a.m. ET Target by $0.003, per
item fees for the Premium Delivery 10:00 a.m. Target by $0.002, and
Premium Delivery 12:00 noon Target by $0.001.\8\
---------------------------------------------------------------------------

\8\ 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.
---------------------------------------------------------------------------

FedACH
The Reserve Banks will keep prices at existing levels for
all existing priced FedACH products.
Fedwire Funds
The Reserve Banks will increase the per-transfer fee for
originations and receipts from $0.820 to $0.840 for tier 1 transfers,
from $0.245 to $0.25 for tier 2 transfers, and from $0.160 to $0.165
for tier 3 transfers.\9\
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\9\ Tiers are based on monthly total volume of originations and
receipts. Tier 1 includes up to 14,000 transfers, tier 2 includes
from 14,001 to 90,000 transfers, and tier 3 includes transfers over
90,000.
---------------------------------------------------------------------------

The Reserve Banks will increase the discounted (volume-
based) per-transfer fee for originations and receipts from $0.164 to
$0.168 for tier 1 transfers, from $0.049 to $0.050 for tier 2
transfers, and from $0.032 to $0.033 for tier 3 transfers.\10\
---------------------------------------------------------------------------

\10\ The tiered pricing structure is complemented by a volume-
based incentive mechanism that provides discounts to customers that
meet certain volume thresholds.
---------------------------------------------------------------------------

National Settlement Service (NSS)
The Reserve Banks will keep prices at existing levels for
the priced NSS products.
Fedwire Securities
The Reserve Banks will keep prices at existing levels for
the priced Fedwire Securities products.
FedLine[supreg] Solutions
The Reserve Banks will increase the FedMail Fax fee from
$100 to $150.\11\
---------------------------------------------------------------------------

\11\ Limited to installed base only.
---------------------------------------------------------------------------

The Reserve Banks will increase the FedMail Email (for
customers with FedLine Web or above) fee from $20 to $40.\12\
---------------------------------------------------------------------------

\12\ All customers with a FedMail Email (for FedLine customers)
have a FedLine connection today. This service allows institution
with a FedLine Web or higher solution to use FedMail Email, in
addition to their FedLine solution.
---------------------------------------------------------------------------

The Reserve Banks will increase the monthly fee for the
legacy FedLine Direct Plus and Premier packages to $5,500 and $7,500,
respectively. The Reserve Banks subsequently will increase prices for
both packages to $10,000 in May and $20,000 in August.\13\
---------------------------------------------------------------------------

\13\ The Reserve Banks will increase fees in mid-2020 for those
customers who have not yet converted to new FedLine Direct network
routers and circuits.
---------------------------------------------------------------------------

The Reserve Banks will increase the monthly fee for
Additional Legacy 256K and T1 Wide Area Network services connections to
$3,500. The Reserve Banks subsequently will increase prices for these
Additional Legacy connections to $5,000 in May and $10,000 in August.
The Reserve Banks will increase the monthly fees for
legacy Check 21 Large File Delivery (C21 LFD) 20 percent. The Reserve
Banks subsequently will increase prices 50 percent in May and 100
percent in August.\14\
---------------------------------------------------------------------------

\14\ The monthly fees for legacy C21 LFD fee ranges from $1,680
to $24,870 depending on the size, speed, and location of the
connection. In order to avoid compounding increases, December 2019
will be the baseline for all 2020 price increases for any connection
still needing to convert.
---------------------------------------------------------------------------

The Reserve Banks will update the FedComplete packages to
incorporate other pricing and product changes.\15\
---------------------------------------------------------------------------

\15\ FedComplete package pricing will be updated to include the
Check participation fee and the 4:00 p.m. FedReturn[supreg]
deadline. Additionally, the Reserve Banks will update the
FedComplete Excess Volume and Receipt Surcharge to reflect the fee
increase to Fedwire Origination and Receipt. FedComplete packages
include a Fedwire Funds volume overage surcharge equivalent to the
regular unit cost for originated items and one-tenth of the regular
unit cost for received items.
---------------------------------------------------------------------------

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.\16\ 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.
---------------------------------------------------------------------------

\16\ 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 information for 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.\17\
---------------------------------------------------------------------------

\17\ 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 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

[[Page 66408]]

maintain equity of at least 5 percent of total assets and 10 percent of
risk-weighted assets.\18\ 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.
---------------------------------------------------------------------------

\18\ 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
Funds Service. 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 policy requires
that the Fedwire Funds Service 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 Funds Service does 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.\19\ 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 2020 budget, six months of current
operating expenses would be $56.0 million. In 2020, $41.6 million of
equity was imputed to meet the FDIC capital requirements; however, an
additional $7.1 million of equity was imputed to meet the PSR policy
requirement and is allocated solely to the Fedwire Funds Service.
---------------------------------------------------------------------------

\19\ 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 2020 PSAF is $18.9 million, compared with $17.8 million in
2019. The increase of $1.1 million is attributable to a net $0.7
million increase in the cost of capital and a $0.7 million increase in
sales tax, offset by a $0.3 million decrease in the Board's costs. The
net $0.7 million increase in cost of capital resulted from an
incremental $1 million increase in return on imputed equity necessary
for PSR Policy compliance partially offset by a $0.3 million decrease
in the return on equity imputed to satisfy the FDIC requirements for a
well-capitalized institution.
The PSAF expense of $18.9 million, detailed in table 5, reflects
$7.9 million for capital funding, $6.7 million for BOG expense, and
$4.4 million in sales tax expense.
As shown in table 3, 2020 total assets of $841.2 million decreased
by $5.4 million from 2019. The net decrease in total assets reflects a
$29.7 million decrease in long-term assets partially offset by a $24.3
million increase in short-term assets and imputed investments.
The net long-term asset decrease of $29.7 million primarily
consists of a $23.6 million decrease in the net pension asset and a
combined $9.2 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
$240 million in 2018 to $180 million in 2019 and 2020, respectively.
The decreases 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 increase in the short-term assets is primarily driven by the
imputed investments in Treasury securities from imputed equity required
to meet FDIC capital requirements for a well-capitalized institution
and to comply with the PSR policy. The remaining net increases in
short-term assets reflect a $34.1 million increase in items in process
of collection resulting from relatively high balances in the value of
foreign transactions offset by a $27.5 million decrease in imputed
investments in Fed Funds.
The capital structure of the 2020 pro forma balance sheet, provided
in table 4, is composed of equity of $56.0 million, or 11.4 percent of
the 2020 risk weighted assets detailed in table 6, and no long-term
debt. The 2020 capital structure is similar to that of 2019, which was
composed of $51.8 million of equity. The 2020 imputed equity required
to fund assets and meet the publicly traded firm model capital
requirements is $31.2 million. Long-term debt of $10.4 million was
imputed at the observed market ratio of 58.4 percent. To meet the FDIC
capital requirements for a well-capitalized institution, the $10.4
million of imputed long-term debt was substituted for equity, and
additional $31.2 million equity was imputed. The resulting $49 million
total level of equity was not sufficient to satisfy the $56.0 million
equity requirement for the PSR policy requirements. An additional $7.1
million was imputed to comply with the PSR requirement.
The net Accumulated Other Comprehensive Income loss is $625.2
million, compared with $624.3 million in 2019. The slight increase is
primarily attributable to a higher 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.

[[Page 66409]]

Table 3--Comparison of Pro Forma Balance Sheets for Budgeted Federal Reserve Priced Services a
[Millions of dollars--projected average for year]
----------------------------------------------------------------------------------------------------------------
2020 2019 Change
----------------------------------------------------------------------------------------------------------------
Short-term assets:
Receivables................................................. $37.1 $36.7 $0.4
Materials and supplies...................................... 0.5 0.6 (0.1)
Prepaid expenses............................................ 10.8 11.1 (0.3)
Items in process of collection \20\......................... 129.1 95.0 34.1
-----------------------------------------------
Total short-term assets................................. 177.5 143.4 34.1
Imputed investments: \21\
Imputed investment in Treasury Securities................... 38.2 20.5 17.7
Imputed investment in Fed Funds............................. 225.5 253.0 (27.5)
-----------------------------------------------
Total imputed investments............................... 263.7 273.5 (9.8)
Long-term assets:
Premises \22\............................................... 111.5 104.2 7.3
Furniture and equipment..................................... 30.2 32.8 (2.6)
Leasehold improvements and long-term prepayments............ 81.1 87.7 (6.6)
Net pension asset........................................... .............. 23.6 (23.6)
Deferred tax asset.......................................... 177.2 181.4 (4.2)
-----------------------------------------------
Total long-term assets.................................. 400.0 429.7 (29.7)
-----------------------------------------------
Total assets........................................ 841.2 846.6 (5.4)
===============================================
Short-term liabilities:
Deferred credit items....................................... 354.6 348.0 6.6
Short-term debt............................................. 13.0 13.5 (0.5)
Short-term payables......................................... 35.5 34.9 0.6
-----------------------------------------------
Total short-term liabilities............................ 403.1 396.4 6.7
Long-term liabilities:
Pension liability........................................... 0.1 .............. 0.1
Long-term debt.............................................. .............. .............. ..............
Postemployment/postretirement benefits and net pension 382.0 398.4 (16.4)
liabilities \23\...........................................
-----------------------------------------------
Total liabilities....................................... 785.2 794.8 (9.6)
Equity \24\............................................. 56.0 51.8 4.2
-----------------------------------------------
Total liabilities and equity........................ 841.2 846.6 (5.4)
----------------------------------------------------------------------------------------------------------------
\a\ Calculations in this table and subsequent PSAF tables may be affected by rounding.

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

\20\ 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 before
providing credit to the depositing bank. Float is directly estimated
at the service level.
\21\ 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 $56.0 million. In 2020, $41.6 million of equity was
imputed to meet the regulatory capital requirements and $7.1 million
of equity was imputed to satisfy PSR policy funding requirements.
\22\ Includes the allocation of Board of Governors assets to
priced services of $3.1 million for 2020 and $2.9 million for 2019.
\23\ Includes the allocation of Board of Governors liabilities
to priced services of $0.8 million for 2020 and $0.8 million for
2019.
\24\ Includes an accumulated other comprehensive loss of $625.2
million for 2020 and $624.3 million for 2019, 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 4--Imputed Funding for Priced-Services Assets
[Millions of dollars]
------------------------------------------------------------------------
2020 2019
------------------------------------------------------------------------
A. Short-term asset financing:
Short-term assets to be financed:
Receivables..................... $37.1 $36.7
Materials and supplies.......... 0.5 0.6
Prepaid expenses................ 10.8 11.1
-------------------------------
Total short-term assets to be 48.4 48.4
financed...........................
Short-term payables............. 35.5 34.9
-------------------------------
Net short-term assets to be financed 13.0 13.5

[[Page 66410]]

Imputed short-term debt financing 13.0 13.5
\25\...............................
===============================
B. Long-term asset financing:
Long-term assets to be financed:
Premises........................ 111.5 104.2
Furniture and equipment......... 30.2 32.8
Leasehold improvements and long- 81.1 87.7
term prepayments...............
Net pension asset............... .............. 23.6
Deferred tax asset.............. 177.2 181.4
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Total long-term assets to be 400.0 429.7
financed...........................
Postemployment/postretirement 382.0 398.4
benefits and net pension
liabilities....................
-------------------------------
Net long-term assets to be 17.8 31.3
financed.......................
===============================
Imputed long-term debt \20\..... .............. ..............
Imputed equity \20\............. 56.0 51.8
-------------------------------
Total long-term financing... 56.0 51.8
------------------------------------------------------------------------

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

\25\ Imputed short-term debt financing is computed as the
difference between short-term assets and short-term liabilities. As
presented in table 5, the financing costs of imputed short-term
debt, imputed long-term debt and imputed equity are the elements of
cost of capital, which contribute to the calculation of the PSAF.
\26\ 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 2020, the amount of imputed equity met the minimum equity
requirements for risk-weighted assets.
\27\ 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.
\28\ Additional equity in excess of that needed to fund priced
services assets is offset by an asset balance of imputed investments
in treasury securities.
\29\ Imputed short-term debt and long-term debt are computed at
table 4.
\30\ The 2020 ROE is equal to a risk-free rate plus a risk
premium (beta * market risk premium). The 2020 after-tax CAPM ROE is
calculated as 2.16% + (1.0 * 8.34%) = 10.50%. Using a tax rate of
22.1%, the after-tax ROE is converted into a pretax ROE, which
results in a pretax ROE of (10.50%/(1-22.1%)) = 13.48%. Calculations
may be affected by rounding.

Table 5--Derivation of the 2020 and 2019 PSAF
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
2020 2019
---------------------------------------------------------------------
Debt Equity Debt Equity
----------------------------------------------------------------------------------------------------------------
A. Imputed long-term debt and equity:
Net long-term assets to finance....... $17.8 $17.8 $31.3 $31.3
Capital structure observed in market.. 58.4% 41.6% 58.3% 41.7%
---------------------------------------------------------------------
Pre-adjusted long-term debt and equity $10.4 $7.4 $18.2 $13.1
Equity adjustments: \26\
Equity to meet capital ................. 49.0 ................. 51.8
requirements.....................
Adjustment to debt and equity (10.4) 10.4 (18.2) 18.2
funding given capital
requirements \27\................
Adjusted equity balance........... ................. 17.8 ................. 31.3
Equity to meet capital ................. 31.2 ................. 20.5
requirements \28\................
---------------------------------------------------------------------
Total imputed long-term debt $ $49.0 $ $51.8
and equity...................
=====================================================================
B. Cost of capital:
Elements of capital costs:
Short-term debt \29\.............. $13.0 x 2.3% = $0.3 $13.5 x 2.3% = $0.3
Long-term debt \29\............... - x 4.0% = .............. - x 3.9% = ..............
Equity \30\....................... 49.0 x 13.3% = 6.6 51.8 x 13.3% = 6.8
---------------- ---------------
$6.9 ................. $7.1
C. Incremental cost of PSR policy:
Equity to meet policy................. $7.1 x 13.5% = $1.0 $ - x 13.3% = $
---------------- ---------------
D. Other required PSAF costs:
Sales taxes........................... $4.4 .............. $3.7 ..............
Board of Governors expenses........... 6.7 .............. 7.0 ..............
------------------- -------------------

[[Page 66411]]

11.1 ................. 10.7
---------------- ---------------
$18.9 ................. $17.8
================ ===============
E. Total PSAF:
As a percent of assets................ ................. 2.2% ................. 2.1%
As a percent of expenses.............. ................. 3.4% ................. 3.3%
F. Tax rates.............................. ................. 22.1% ................. 22.2%
----------------------------------------------------------------------------------------------------------------

Table 6--Computation of 2020 Capital Adequacy for Federal Reserve Priced Services
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Weighted
Assets Risk weight assets
----------------------------------------------------------------------------------------------------------------
Imputed investments:
1-Year Treasury securities \31\............................. $38.2 .............. $
Federal funds \32\.......................................... 225.5 0.2 45.1
-----------------------------------------------
Total imputed investments............................... 263.7 .............. 45.1
Receivables..................................................... 37.1 0.2 7.4
Materials and supplies.......................................... 0.5 1.0 0.5
Prepaid expenses................................................ 10.8 1.0 10.8
Items in process of collection.................................. 129.1 0.2 25.8
Premises........................................................ 111.5 1.0 111.5
Furniture and equipment......................................... 30.2 1.0 30.2
Leasehold improvements and long-term prepayments................ 81.1 1.0 81.1
Deferred tax asset.............................................. 177.2 1.0 177.2
-----------------------------------------------
Total....................................................... 841.2 .............. 489.7
===============================================
Imputed equity:
Capital to risk-weighted assets............................. 11.4% .............. ..............
Capital to total assets..................................... 6.7% .............. ..............
----------------------------------------------------------------------------------------------------------------

C. Check Service--Table 7 shows the 2018 actual, 2019 estimated,
and 2020 budgeted cost-recovery performance for the commercial check
service.
---------------------------------------------------------------------------

\31\ 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 https://www.federalreserve.gov/releases/h15/data.htm.
\32\ The investments are imputed based on the amounts arising
from the collection of items before providing credit according to
established availability schedules.

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)]
----------------------------------------------------------------------------------------------------------------
2018 (actual)................... $132.9 $127.8 $5.1 $1.5 102.7
2019 (estimate)................. 126.7 121.6 5.2 1.5 102.9
2020 (budget)................... 119.4 114.8 4.6 1.3 102.8
----------------------------------------------------------------------------------------------------------------

1. 2019 Estimate--The Reserve Banks estimate that the check service
will recover 102.9 percent of total expenses and targeted ROE, compared
with a 2019 budgeted recovery rate of 101.9 percent.
Through August, total commercial forward and total commercial
return check volumes were 8.1 percent and 7.1 percent lower,
respectively, than they were during the same period last year.
Consistent with anticipated fourth-quarter declines, for full-year
2019, the Reserve Banks estimate that their total

[[Page 66412]]

forward check volume will decline 7.8 percent (compared with a budgeted
decline of 7.6 percent) and their total return check volume will
decline 6.6 percent (compared with a budgeted decline of 7.7 percent)
from 2018 levels.\33\ The Reserve Banks expect that check volumes will
continue to decline, although uncertainty remains as to the rate of
decline over the long term. In particular, the Reserve Banks' check
volumes are expected to decrease because of competitive pressures in
the check-clearing market, and substitution away from checks to other
payment instruments. 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 realization of operational
efficiencies. These factors have allowed for close alignment between
budgeted and estimated 2019 cost recovery.
---------------------------------------------------------------------------

\33\ Total Reserve Bank forward check volumes are expected to be
4.4 billion in 2019. Total Reserve Bank return check volumes are
expected to be 27.1 million in 2019.
---------------------------------------------------------------------------

2. 2020 Pricing--The Reserve Banks expect the check service to
recover 102.8 percent of total expenses and targeted ROE in 2020. The
Reserve Banks project revenue to be $119.4 million, a decline of 5.8
percent from the 2019 estimate. This decline is driven in part by an
anticipated accelerating decline in the overall number of checks
written, as well as by competition from correspondent banks,
aggregators, and direct exchanges.\34\ Total expenses for the check
service are projected to be $114.8 million, a decrease of $6.8 million,
or 5.6 percent, from 2019 expenses, primarily because of reduced
operating costs, including cost savings associated with the Reserve
Banks' customer support services.
---------------------------------------------------------------------------

\34\ The Reserve Banks estimate that total commercial forward
check volumes in 2019 will decline 8.5 percent, to 4.0 billion, and
total commercial return check volumes will decline 8.5 percent, to
24.8 million in 2019.
---------------------------------------------------------------------------

The Reserve Banks will introduce a fixed participation fee, which
will be charged to any customer that receives FedReceipt volume on a
monthly basis. In light of ongoing volume declines, the participation
fee is intended to support revenue stability by increasing the
proportion of fixed to variable fees. Additionally, this fee
introduction aligns the check service with other priced services that
offer similar monthly participation fees, such as FedACH and the
Fedwire Funds Service.
The Reserve Banks evaluate and set tier assignments annually based
on changes in the volume of items received by endpoints. In 2020, the
Reserve Banks will reassign the tier placement of 238 endpoints
currently in tiers 1-4 to another tier.\35\ In addition, the Reserve
Banks will eliminate tier 0 for all Forward and Return Premium Daily
deposit options, and reassign all remaining tier 0 customers.\36\ This
change is intended to reflect the fact that the Reserve Banks now have
sufficient volume to appropriately assign the remaining 1,130 endpoints
from tier 0 into tiers 1-4. In response to feedback from customers, the
Reserve Banks will also evaluate and set tier assignments every other
year instead of annually, to provide more certainty and price stability
to the industry. As a result, the Reserve Banks will next reevaluate
and set tier assignments in 2022.\37\
---------------------------------------------------------------------------

\35\ The tiers for 2019 are available at https://www.frbservices.org/resources/fees/check-2019.html.
\36\ Tier 0 was introduced as part of the Reserve Banks' 2016
restructured FedForward and FedReturn fee schedules and is 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 was only
available for FedForward and Return Premium Daily deposit options.
\37\ The tiers for 2020 are available at https://www.frbservices.org/resources/fees/check-2020.html.
---------------------------------------------------------------------------

Based on the 2020 tier assignments and the elimination of tier 0,
the Reserve Banks will include changes to FedForward Premium Daily Fees
and the Retail Payments Premium Receiver (RPPR) discount structure. The
Reserve Banks will lower the FedForward Premium Daily Fee A per item
fees by $0.004 for tier 1, lower the FedForward Premium Daily Fee B per
item fees by $0.002 for tier 1, and lower the FedForward Premium Daily
Fee A, B, and C per item fees by $0.003 for tiers 3 and 4. The Reserve
Banks also will include an increase to the RPPR discount of $0.001 for
eligible customers that deposit over two million items per month. Table
8 shows the 2020 FedForward Premium Daily fees.

Table 8--FedForward Premium Daily Deposit
[Applicable to Premium Daily Fee A, Premium Daily Fee B, and Premium Daily Fee C]
----------------------------------------------------------------------------------------------------------------
Tier \38\ Premium A Premium B Premium C
----------------------------------------------------------------------------------------------------------------
Deposit Deadline of 5:00 a.m. EST M-F
----------------------------------------------------------------------------------------------------------------
0............................................................... N/A N/A N/A
1............................................................... $0.002 $0.002 $0.002
2............................................................... 0.014 0.012 0.010
3............................................................... 0.022 0.020 0.018
4............................................................... 0.036 0.034 0.032
5............................................................... 0.200 0.200 0.200
----------------------------------------------------------------------------------------------------------------
Deposit Deadline of 12:00 p.m. EST M-F
----------------------------------------------------------------------------------------------------------------
0............................................................... N/A N/A N/A
1............................................................... 0.012 0.012 0.012
2............................................................... 0.024 0.022 0.020
3............................................................... 0.032 0.030 0.028
4............................................................... 0.046 0.044 0.042
5............................................................... 0.200 0.200 0.200
----------------------------------------------------------------------------------------------------------------

In response to customer demand for intraday return options to match
other clearing option capabilities, the Reserve Banks will introduce a
new 4:00 p.m. ET FedReturn[supreg] deposit deadline. The deadline will
accelerate the speed of

[[Page 66413]]

payments by providing additional options for paying banks to return
items earlier. The Reserve Banks will increase the tier pricing for the
9:00 p.m. ET, 1:00 a.m. ET, and 12:30 p.m. ET FedReturn deposit
deadlines. Table 9 lists the fees for the Standard FedReturn[supreg]
product, inclusive of current and new deposit deadlines. Table 10 lists
the fees for the Premium FedReturn[supreg] product, inclusive of
current and new deposit deadlines.
---------------------------------------------------------------------------

\38\ Tier 5 for FedForward Daily Deposit is also referred to as
Substitute Check Endpoints.

Table 9--Standard FedReturn Image Cash Letter
----------------------------------------------------------------------------------------------------------------
Tier \39\ 4:00 p.m. ET 9:00 p.m. ET 1:00 a.m. ET 12:30 p.m. ET
----------------------------------------------------------------------------------------------------------------
1............................................... $0.120 $0.170 $0.470 $0.170
2............................................... 0.180 0.230 0.530 0.230
3............................................... 0.590 0.640 0.940 0.640
4............................................... 0.790 0.840 1.140 0.840
5............................................... 1.000 1.050 1.350 1.050
6............................................... 1.500 1.500 1.500 1.500
Cash Letter..................................... 4.50 4.50 6.50 6.50
----------------------------------------------------------------------------------------------------------------

Table 10--Premium FedReturn Image Cash Letter
----------------------------------------------------------------------------------------------------------------
Tier \39\ 4:00 p.m. ET 1:00 a.m. ET 12:30 p.m. ET
----------------------------------------------------------------------------------------------------------------
0............................................................... N/A N/A N/A
1............................................................... $0.020 $0.070 $0.090
2............................................................... 0.070 0.120 0.140
3............................................................... 0.490 0.540 0.560
4............................................................... 0.690 0.740 0.760
5............................................................... 0.900 0.950 0.970
6............................................................... 1.500 1.500 1.500
Daily Fixed Fee................................................. 400.00 400.00 400.00
----------------------------------------------------------------------------------------------------------------

The Reserve Banks will increase to the per-item fee for all paper-
related products, as well as large-dollar return item notification
(LDRIN), and returns reclear services by 10 to 17 percent.\40\ The
Reserve Banks will increase all FedImage[supreg] fees 10 percent. 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. Table 11 and 12 show
these pricing changes.
---------------------------------------------------------------------------

\39\ Tier 5 for FedReturn Daily Deposit is also referred to as
PDF Endpoints. Tier 6 for FedReturn Daily Deposit is also referred
to as Substitute Check Endpoints.
\40\ LDRIN is a service in which the Reserve Banks, at the payor
bank's request, notifies the bank of first deposit (BOFD) that an
item of $5,000 or more is being returned to them, to satisfy the
payor bank's Regulation CC requirement. Returns reclear is a service
in which the Reserve Banks, at the BOFD's request, will make a
second attempt to clear a check that has been returned during the
first clearing attempt.

Table 11--Paper Check Forward and Return Collection
------------------------------------------------------------------------
Paper services Fixed fee Per item fee
------------------------------------------------------------------------
Canadian Items--U.S. Funds.............. $15.00 $5.50
Canadian Items--Canadian Funds.......... 15.00 5.50
Canadian Cash Letter Correction Fee..... .............. 22.00
Canadian Amount Encoding................ .............. 1.65
Foreign Items--GBP and Euro............. 15.00 22.00
Foreign Items--All Other Items.......... 15.00 22.00
Foreign Items--Collection Items......... 15.00 88.00
Mixed Forward Paper Deposits............ 15.00 4.00
LDRIN--FedLine Web access solution...... .............. 4.00
LDRIN--Telephone........................ .............. 22.00
LDRIN--Physical Item.................... .............. 28.00
Returns Item Reclear--Level 1........... 10.00 0.70
Returns Item Reclear--Level 2........... 10.00 0.80
Returns Item Reclear--Level 3........... 10.00 0.90
Returns Item Reclear--Level 4........... 10.00 1.00
Canadian Item--Return................... .............. 16.50
Foreign Item--Return.................... .............. 44.00
Mixed Return Paper Deposits............. 15.00 7.00
Return Item Qualification............... .............. 8.25
------------------------------------------------------------------------

Table 12--FedImage and Electronic Check Services and Fees
----------------------------------------------------------------------------------------------------------------
Fixed fee Per item fee
----------------------------------------------------------------------------------------------------------------
Image Archive:
Image Capture + 7 business day archive.... $6.60........................................... $0.010

[[Page 66414]]

Image Capture On-Us Surcharge............. ................................................ 0.0233
30 business day archive................... ................................................ 0.0012
60 business day archive................... ................................................ 0.0014
7-year archive/11-year archive............ ................................................ 0.0022
Dual archive (Transition period up to 120 ................................................ 0.0013
days).
Extended dual archive (More than 120 days) ................................................ 0.0133
Back File Conversion...................... $4.70........................................... 0.0133
Electronic On-Us Service.................. $4.70........................................... 0.0133
Extended RAID Storage
61 days to 6 months................... ................................................ 0.0011
61 days to 12 months.................. ................................................ 0.0026
61 days to 24 months.................. ................................................ 0.0067
Image Retrievals:
Retrievals to view via FedLine Web[supreg] ................................................ 0.4700
inquiry.
Retrievals to email via FedLine Web
Request via FedLine Web inquiry....... ................................................ 0.4700
Recurring request..................... ................................................ 0.4700
Image Access and Retrievals through a ................................................ 0.4700
Gateway.
Subscription Retrievals............... ................................................ 0.0029
Manual FedImage Requests (requests ................................................ 8.0000
performed by FRB staff).
Image Delivery:
Physical Media
CD-ROM Select Accounts Service--RAID.. $20.00/CD-ROM................................... 0.0210
CD-ROM--Tape.......................... $20.00/CD-ROM................................... 0.1300
Truncation:
Image Enhanced Truncation................. $7.25........................................... 0.0120
Return Item Retrieval--FedLine............ ................................................ 1.4000
----------------------------------------------------------------------------------------------------------------

The Reserve Banks will increase the per-item fee for the
FedReceipt[supreg] Premium Delivery 8:00 a.m. ET Target by $0.003 to
$0.026, for the 10:00 a.m. Target by $0.002 to $0.017, and for the
12:00 noon Target by $0.001 to $0.012.\41\ The fee increases are
intended to maintain cost recovery of the Premium Delivery service in
light of declining check volume.
---------------------------------------------------------------------------

\41\ FedReceipt services consist of the electronic presentment
of an image cash letter to the paying bank that consists of all
forward items deposited electronically. 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 primary risks to the Reserve Banks' ability to achieve budgeted
2020 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 13 shows the 2018 actual, 2019 estimate,
and 2020 budgeted cost-recovery performance for the commercial FedACH
service.

Table 13--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)]
----------------------------------------------------------------------------------------------------------------
2018 (actual)................... $149.7 $149.1 $0.6 $1.9 99.2
2019 (estimate)................. 152.7 153.1 -0.4 1.9 98.6
2020 (budget)................... 157.6 155.3 2.3 1.9 100.3
----------------------------------------------------------------------------------------------------------------

1. 2019 Estimate--The Reserve Banks estimate that the FedACH
service will recover 98.6 percent of total expenses and targeted ROE,
compared with a 2019 budgeted recovery rate of 101.3 percent. Through
August, FedACH commercial origination and receipt volume was 5.4
percent higher than it was during the same period last year. For full-
year 2019, the Reserve Banks estimate that FedACH commercial
origination and receipt volume will increase 5.8 percent from 2018
levels, compared with a 2019 budgeted increase of 3.3 percent. However,
investment costs associated with a multiyear technology initiative to
modernize the FedACH processing platform continue to drive the overall
underrecovery rate. Although FedACH is estimated to not fully recover
its costs in 2019, the Reserve Banks are expected to fully recover
FedACH costs following the finalization of the FedACH technology
modernization project.
2. 2020 Pricing--The Reserve Banks expect the FedACH service to
recover 100.3 percent of total expenses and targeted ROE in 2020.
FedACH commercial origination and receipt volume is projected to grow
4.2 percent, which is expected to contribute to an increase of $4.9
million in total revenue

[[Page 66415]]

from the 2019 estimate. Total expenses are projected to increase $2.2
million from 2019 expenses, primarily because of testing and
implementation costs associated with the introduction of the new FedACH
technology platform, which is now expected in 2020.
The Reserve Banks will not change fees for existing FedACH priced
services. This is consistent with a multiyear strategy of providing
price stability for customers in light of ongoing investments to
upgrade the FedACH processing platform.
The primary risks to the Reserve Banks' ability to achieve budgeted
2020 cost recovery for the FedACH service are unanticipated cost
overruns associated with the FedACH technology modernization project
and unanticipated volume reductions.
E. Fedwire Funds and National Settlement Services--Table 14 shows
the 2018 actual, 2019 estimate, and 2020 budgeted cost-recovery
performance for the Fedwire Funds and National Settlement Services.

Table 14--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)]
----------------------------------------------------------------------------------------------------------------
2018 (actual)................... $132.4 $123.6 $8.8 $1.5 105.8
2019 (estimate)................. 136.4 131.6 4.8 1.6 102.4
2020 (budget)................... 139.9 140.0 -0.1 2.4 98.2
----------------------------------------------------------------------------------------------------------------

1. 2019 Estimate--The Reserve Banks estimate that the Fedwire Funds
and National Settlement Services will recover 102.4 percent of total
expenses and targeted ROE, compared with a 2019 budgeted recovery rate
of 100.5 percent. Through August, Fedwire Funds Service online volume
was 4.0 percent higher than it was during the same period last year.
For full-year 2019, the Reserve Banks estimate that Fedwire Funds
Services online volume will increase 4.5 percent from 2018 levels,
compared with the 2.1 percent volume increase that had been budgeted.
Through August, the National Settlement Service (NSS) settlement file
volume was 4.8 percent lower than it was during the same period last
year, and settlement entry volume was 4.2 percent lower. For the full
year, the Reserve Banks estimate that settlement file volume will
decrease 5.0 percent (slightly more than the budgeted decrease of 3.5
percent) and settlement entry volume will decrease 4.0 percent from
2018 levels (compared with a budgeted 3.0 percent decrease).
2. 2020 Pricing--The Reserve Banks expect the Fedwire Funds and
National Settlement Services to recover 98.2 percent of total expenses
and targeted ROE. Revenue is projected to be $139.9 million, an
increase of 2.6 percent from the 2019 estimate. The Reserve Banks
project total expenses to be roughly $8.4 million higher than 2019
expenses, primarily reflecting investments in initiatives to improve
resiliency and operational functionality.
The Reserve Banks will increase the per-transfer fee for
originations and receipts from $0.820 to $0.840 for tier 1 transfers,
from $0.245 to $0.250 for tier 2 transfers, and from $0.160 to $0.165
for tier 3 transfers.\42\ Correspondingly, the discounted per-transfer
fee for originations and receipts will increase from $0.164 to $0.168
for tier 1 transfers, from $0.049 to $0.050 for tier 2 transfers, and
from $0.032 to $0.033 for tier 3 transfers.\43\ The Reserve Banks will
increase the per-transfer fee in order to offset an anticipated decline
in revenue due to a large Fedwire Funds participant's upcoming
transition of its transfer origination activity off the Fedwire Funds
Service, which is set to occur in 2020. This shift in volume is coupled
with ongoing project costs associated with resiliency and operational
objectives and increased investments in System technology
infrastructure. The price increase has been structured to affect tier 3
(that is, high-volume) customers proportionally more than lower-volume
customers. The structure was chosen because the ongoing project costs
incurred by the Fedwire Funds Service are expected to be of greater
benefit to tier 3 customers. Overall Fedwire Funds participants will
experience an average price increase of 3.7 percent.\44\
---------------------------------------------------------------------------

\42\ Tiers are based on monthly total volume of originations and
receipts. Tier 1 includes up to 14,000 transfers, Tier 2 includes
from 14,001 to 90,000 transfers, and Tier 3 includes transfers over
90,000.
\43\ 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.
\44\ The average price impact (increase) reflects both the price
changes as well as an overall expected increase in the average
benchmark volume required to receive discount pricing based on
historic observed increases in customer benchmark volume year over
year.
---------------------------------------------------------------------------

The Reserve Banks will not change NSS fees for 2020.
There are three primary risks to the Reserve Banks' ability to
achieve budgeted 2020 cost recovery for these services. First, the
Fedwire Funds Service could experience a potential overrun in costs
from ongoing technology initiatives to improve resiliency and
operational functionality. Second, the services could experience lower-
than-expected volume related to unforeseen market trends. Finally, the
Fedwire Funds Service is reevaluating its current resource commitments
and portfolio goals in order to better support any necessary strategic
and development work related to emerging Systemwide initiatives, in
addition to revisiting project implementation timelines in response to
industry feedback.\45\ As a result, the Fedwire Funds Service future
resource and project costs may shift and this may affect 2020 cost
recovery.
---------------------------------------------------------------------------

\45\ In response to industry feedback, the Federal Reserve Banks
have decided to put on hold Phase 1 of the Fedwire Funds Service's
ISO 20022 migration strategy (originally scheduled for November
2020). The Federal Reserve will provide an update regarding its
implementation plans after engaging with key stakeholders to
reassess the Fedwire Funds Service's migration strategy. See
official press release for additional details (https://frbservices.org/news/press-releases/092319-fedwire-funds-migration-iso20022-messages.html).
---------------------------------------------------------------------------

F. Fedwire Securities Service--Table 15 shows the 2018 actual, 2019
estimate, and 2020 budgeted cost-

[[Page 66416]]

recovery performance for the Fedwire Securities Service.\46\
---------------------------------------------------------------------------

\46\ 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 15--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)]
----------------------------------------------------------------------------------------------------------------
2018 (actual)................... $27.5 $27.5 $0.0 $0.3 98.7
2019 (estimate)................. 26.6 27.1 -0.5 0.3 96.8
2020 (budget)................... 26.1 26.2 -0.1 0.3 98.6
----------------------------------------------------------------------------------------------------------------

1. 2019 Estimate--The Reserve Banks estimate that the Fedwire
Securities Service will recover 96.8 percent of total expenses and
targeted ROE, compared with a 2019 budgeted recovery rate of 95.1
percent. The Reserve Banks estimate revenue to be $26.6 million, an
increase of 0.8 percent from the 2019 budget. Total expenses are
projected to be $27.1 million for full-year 2019, a decrease of 1.5
percent from the 2019 budget.
Through August, Fedwire Securities Service online agency transfer
volume was 6.6 percent lower than it was during the same period last
year. For full-year 2019, the Reserve Banks estimate that Fedwire
Securities Service online agency transfer volume will decline 11.1
percent from 2018 levels, compared with a budgeted decline of 4.7
percent. This decrease in online agency transfer volume primarily
reflects JP Morgan Chase's (JPMC) exiting the broker-dealer services
business, which resulted in Bank of New York Mellon (BNYM) generally
serving as the sole clearing bank for government securities. Activity
between JPMC and BNYM that had previously settled over the Fedwire
Securities Service is now concentrated within BNYM. The significant
decline in agency transfer volume realized from JPMC's exit was
partially offset by a reorganization of BNYM's broker-dealer activity
and non-broker-dealer activity into separate securities accounts. This
reorganization resulted in transfer activity that was previously
conducted on BNYM's books shifting to the Fedwire Securities Service.
The Reserve Banks do not expect that there will be further significant
changes in 2020 in online agency transfer volume related to the JPMC
exit.
For full-year 2019, volumes for the Fedwire Securities' two largest
revenue-generating services--account maintenance and issue
maintenance--are expected to decline from 2018 levels. Through August,
account maintenance volume was 2.8 percent lower than it was during the
same period last year. For full-year 2019, the Reserve Banks estimate
that account maintenance volume will decline 2.8 percent from 2018
levels, compared with a budgeted decline of 5.8 percent. The account
maintenance volume decline is largely the result of joint custody
account closures. Through August, the number of agency issues
maintained was 11.8 percent lower than it was during the same period
last year. For full-year 2019, the Reserve Banks estimate that the
number of agency issues maintained will decline 11.9 percent from 2018
levels, compared with a budgeted decline of 19.7 percent.
2. 2020 Pricing--The Reserve Banks expect the Fedwire Securities
Service to recover 98.6 percent of total expenses and targeted ROE in
2020. Revenue is projected to be $26.1 million, a decrease of 1.9
percent from the 2019 estimate. The Reserve Banks also project that
2020 expenses will remain relatively flat, decreasing by $0.9 million
from the 2019 estimate. Significant drivers of 2020 operating costs
include investments to advance initiatives to improve resiliency and
operational functionality.
The Reserve Banks will not change Fedwire Securities Service fees
for 2020. This is largely the result of a stable near-term volume
outlook across Fedwire Securities' core products. Relevant cost drivers
include ongoing project costs associated with resiliency and
operational objectives and increased Systemwide investment in
technology infrastructure. Of particular note, however, operating costs
for the Fedwire Securities Service are expected to decrease in 2021,
primarily due to Fedwire Securities Modernization Program-related costs
being fully amortized.
The Reserve Banks project that online agency transfer volume will
remain relatively flat, with a slight decrease of 1.4 percent in 2020.
As interest rates decline, an expected increase in refinancing activity
will likely lead to higher mortgage-backed securities (MBS) issuance
and a corresponding higher level of online MBS transfers. Conversely,
agency debt transfers will likely decrease since the Federal Housing
Finance Agency (FHFA) has mandated a decline in government-sponsored
enterprise retained portfolios. Thus, it is expected that there will be
no significant volume changes in this category for 2020.
The volume of accounts maintained will likely decrease 3.7 percent,
and the volume of agency issues maintained will likely decrease 0.5
percent.\47\ Account maintenance volume is expected to continue to
decline in 2020 because of ongoing joint custody account closures.
---------------------------------------------------------------------------

\47\ 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 2019.
---------------------------------------------------------------------------

The primary risk to the Reserve Banks' ability to achieve budgeted
2020 cost recovery for these services is a potential overrun in costs
from ongoing technology initiatives to improve resiliency and
operational functionality

[[Page 66417]]

or lower-than-expected volume related to unforeseen market trends.
G. FedLine Solutions--The Reserve Banks charge fees for the
electronic connections that depository institutions use to access
priced services and allocate the costs and revenues associated with
this electronic access to the priced services.\48\ 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.\49\ 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.
---------------------------------------------------------------------------

\48\ FedLine Solutions provide customers with access to Reserve
Bank priced services. As such, FedLine costs and revenue are
allocated to the Reserve Banks' priced services on an expense ratio
basis.
\49\ 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, Internet
Protocol (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 multiple connection
speeds to Check, FedACH, Fedwire Funds, and Fedwire Securities
transactional and information services and to most accounting
information services.\50\
---------------------------------------------------------------------------

\50\ In 2019, the Reserve Banks began offering Check 21 Large
File Delivery services as part of modernized FedLine Direct Plus and
FedLine Direct Premier connections.
---------------------------------------------------------------------------

In 2020, the Reserve Banks will increase the monthly fees for
legacy FedLine Direct (FLD) Plus and Premier, Additional Legacy 256K
and T1 Wide Area Network (WAN) services, and Check 21 Large File
Delivery (C21 LFD). The fee for legacy FLD Plus (Legacy 256K) package
will increase by $1,500, from $4,000 to $5,500, and FLD Premier (Legacy
T1) will increase by $700, from $6,800 to $7,500. The Reserve Banks
also will increase the [agrave] la carte monthly fee for the Additional
Legacy 256K WAN by $1,000, from $2,500 to $3,500 and for the Additional
Legacy T1 WAN by $300, from $3,200 to $3,500. In addition, the Reserve
Banks will increase the C21 LFD fee by 20 percent.\51\ Starting in mid-
2020 the Reserve Banks will include additional fee increases for these
packages, as shown in table 16, to encourage customers to move to more
modern and secure technology that meets industry standards.\52\ As
previously announced, the Reserve Banks intend to sunset legacy FLD and
C21 LFD services after all customers have converted to the new
solution.
---------------------------------------------------------------------------

\51\ The monthly fees for legacy C21 LFD fee ranges from $1,680
to $24,870 depending on the size, speed, and location of the
connection. In order to avoid compounding increases, December 2019
will be the baseline for all 2020 price increases for any connection
still needing to convert.
\52\ The Reserve Banks will increase fees further in mid-2020
for those customers who have not yet converted to newer FedLine
Direct network routers and circuits.
---------------------------------------------------------------------------

Table 16 provides a summary of the services and 2020 pricing for
FLD and C21 LFD services:

Table 16--FedLine Direct and Check 21 Large File Delivery Legacy Price Increases
----------------------------------------------------------------------------------------------------------------
Fee structure
2019 monthly January 1, 2010 ---------------------------------------
Services fee monthly fee May 1, 2020 August 1, 2020
monthly fee monthly fee
----------------------------------------------------------------------------------------------------------------
FedLine Direct Plus (Legacy 256K)... $4,000 $5,500 (+37.5%) $10,000 (+150.0%) $20,000 (+400.0%)
FedLine Direct Premier (Legacy T1).. 6,800 $7,500 (10.3%) $10,000 (+47.1%) $20,000 (+194.1%)
Additional Legacy 256K WAN 2,500 $3,500 (+40.0%) $5,000 (+100.0%) $10,000 (+300.0%)
Connection.........................
Additional Legacy T1 WAN Connection. 3,200 $3,500 (+9.4%) $5,000 (+56.3%) $10,000 (+212.5%)
Check 21 Large File Delivery \53\... Various +20.0% * +50.0% * +100.0%
----------------------------------------------------------------------------------------------------------------
* (from Dec. 2019 fee).

In addition, the Reserve Banks will increase the price for FedMail
Fax and FedMail Email (for customers with FedLine Web or above).\54\
FedMail Fax will increase by $50, from $100 to $150. Additionally,
FedMail Email (for customers with FedLine Web or above) will increase
by $20, from $20 to $40. The price increases to FedMail Fax and FedMail
Email are intended to move customers to more secure and contemporary
solutions.
---------------------------------------------------------------------------

\53\ To avoid compounding increases, the fee as of December 2019
will serve as the baseline for all 2020 price increases for any
connection still needing to convert.
\54\ FedMail Email is only available to FedLine Web, Advantage,
Command, and Direct customers.
---------------------------------------------------------------------------

The Reserve Banks will also update the existing FedComplete 100 and
200 (Plus and Premier) packages to incorporate other pricing and
product changes.\55\ Although the Reserve Banks are not making changes
to package fees, the content of the packages is being updated to
reflect individual 2020 pricing and product changes. Specifically, the
Reserve Banks will add the 2020 Check participation fee and the 4:00
p.m. FedReturn[supreg] deadline to FedComplete packages. The Reserve
Banks will update the FedComplete Excess Volume and Receipt Surcharge
to reflect the fee increase to Fedwire Origination and Receipt.
---------------------------------------------------------------------------

\55\ FedComplete packages bundle certain payment services and
are designed for institutions with lower transaction volumes that
are interested in processing their own payments.
---------------------------------------------------------------------------

The Reserve Banks estimate that the price changes will result in a
2.9 percent average price increase for FedLine customers.

[[Page 66418]]

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.'' \56\ 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.
---------------------------------------------------------------------------

\56\ Federal Reserve Regulatory Service (FRRS) 9-1558.
\57\ 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.
\58\ 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.
\59\ 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.
\60\ The fee includes the item and addenda fees in addition to
the conversion fee.
\61\ 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.
\62\ Origination volumes at these levels qualify for a waterfall
discount which includes all FedACH origination items.
\63\ 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.
\64\ RDFIs receiving through FedACH less than 90 percent of
their FedACH-originated items.
\65\ This per-item discount is a reduction to the standard
receipt fees listed in this fee schedule.
\66\ Receipt volumes at these levels qualify for a waterfall
discount which includes all FedACH receipt items.
\67\ 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.
\68\ RDFIs receiving through FedACH at least 90 percent of all
of their ACH items originated through any operator.
\69\ 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.
\70\ 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.
\71\ Premier reports generated on demand are subject to the
package/tiered fees plus a surcharge.
\72\ 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.
---------------------------------------------------------------------------

The 2020 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 proposed 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. 2020 Fee Schedules

FedACH Service 2020 Fee Schedule
[Effective January 2, 2020. Bold indicates changes from 2019 prices]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
FedACH minimum monthly fee:
Originating depository financial institution $50.00.
(ODFI) \57\.
Receiving depository financial institution (RDFI) $40.00.
\58\.
Origination (per item or record):
Forward or return items.......................... $0.0035.
SameDay Service--forward item \59\............... $0.0010
surcharge.
Addenda record................................... $0.0015.
FedLine Web-originated returns and notification $0.35.
of change (NOC) \60\.
Facsimile Exception Return/NOC \61\.............. $45.00.
SameDay Exception Return......................... $45.00.
Automated NOC.................................... $0.20.
Volume discounts (based on monthly billed
origination volume) \62\ 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 discounts (based on monthly billed receipt
volume) \63\ 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 discounts:
Non-Premium Receivers \64\ per item when
volume is:.
750,001 to 12,500,000 items per month $0.0017 discount.
\65\.
more than 12,500,000 items per month \66\ $0.0019 discount.
Premium Receivers, Level One \67\ per item
when volume is:
750,001 to 1,500,000 items per month \65\ $0.0017 discount.
1,500,001 to 2,500,000 items per month $0.0017 discount.
\66\.
2,500,001 to 12,500,000 items per month $0.0018 discount.
\66\.
more than 12,500,000 items per month \66\ $0.0020 discount.
Premium Receivers, Level Two \68\ per item
when volume is:
750,001 to 1,500,000 items per month \65\ $0.0017 discount.
1,500,001 to 2,500,000 items per month $0.0017 discount.
\66\.
2,500,001 to 12,500,000 items per month $0.0019 discount.
\66\.
more than 12,500,000 items per month \66\ $0.0021 discount.
FedACH Bundled Package Pricing Discount:
Monthly Bundled Service Package Discount \69\.... $20.00 discount.
FedACH Risk[supreg] Management Services: \70\
Monthly Package Fee (a single fee based on total
number of criteria sets):
For up to 5 criteria sets.................... $35.00.
For 6 through 11 criteria sets............... $70.00.
For 12 through 23 criteria sets.............. $125.00.

[[Page 66419]]

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.
Batch/Item Monitoring (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 monthly package
includes the following reports
ACH Received Entries Detail--Customer and
Depository Financial Institution
ACH Return Reason Report--Customer and
Depository Financial Institution
ACH Originated Entries Detail--Customer and
Depository Financial Institution
ACH Volume Summary by SEC Code--Customer
ACH Customer Transaction Activity
ACH Death Notification
ACH International (IAT)
ACH Notification of Change
ACH Payment Data Information File
ACH Remittance Advice Detail
ACH Remittance Advice Summary
ACH Return Item Report and File
ACH Return Ratio
ACH Social Security Beneficiary
ACH Originator Setup
ACH Report Delivery via FedLine Solution
On Demand Report Surcharge \71\.............. $1.00.
Monthly Package Fee (counts reflect reports
generated as well as delivered via a FedLine
Solution):
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): \71\
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 \72\................ $65.00.
SameDay Service Origination Participation Fee $10.00.
\73\.
FedACH Settlement Fee \74\................... $55.00.
FedACH Information File Extract Fee.......... $150.00.
IAT Output File Sort Fee..................... $75.00.
Fixed Participation Fee--Automated NOCs \75\. $5.00.
Non-Electronic Input/Output fee: \76\
CD/DVD (CD or DVD)........................... $50.00.
Paper (file or report)....................... $50.00.
Fees and Credits Established by NACHA: \77\
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: \78\
Fixed Monthly Fee (per RTN): \79\
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): \80\
Canada service............................... $0.50.
Mexico service............................... $0.55.

[[Page 66420]]

Panama service............................... $0.60.
Europe service............................... $1.13.
Per-item Origination Fee for Monthly Volume
between 161 and 500 items (surcharge): \80\
Canada service............................... $0.75.
Mexico service............................... $0.80.
Panama service............................... $0.85.
Europe service............................... $1.38.
Per-item Origination Fee for Monthly Volume less
than 161 items (surcharge): \80\
Canada service............................... $1.00.
Mexico service............................... $1.05.
Panama service............................... $1.10.
Europe service............................... $1.63.
Other FedGlobal ACH Payments Fees:
Canada service:
Return received from Canada \81\......... $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 \81\......... $0.91
(surcharge).
Item trace............................... $13.50.
Foreign currency to foreign currency $0.67
(F3X) item originated to Mexico \80\. (surcharge).
Panama service:
Return received from Panama \81\......... $1.00
(surcharge).
Item trace............................... $7.00.
NOC...................................... $0.72.
Europe service:
F3X item originated to Europe \80\....... $1.25
(surcharge).
Return received from Europe \81\......... $1.35
(surcharge).
Item trace............................... $7.00.
Exception Resolution Service:
Fixed Fee per RTN \82\ (monthly):
Self-Managed Cases........................... $10.00.
Agent-Managed Cases.......................... $10.00.
Offline Service Participant.................. $60.00.
Variable Case Open Monthly Fees per Case (applies
to self-managed and agent-managed cases only at
the parent RTN): \83\
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.
Offline Service Participant--Case Fees: \84\
Case Open Fee................................ $5.00.
Case Response Fee............................ $5.00.
------------------------------------------------------------------------

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

\73\ 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.
\74\ 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.
\75\ Fee will be assessed only when automated NOCs are
generated.
\76\ Limited services are offered in contingency situations.
\77\ 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.
\78\ The international fees and surcharges vary from country to
country as these are negotiated with each international gateway
operator.
\79\ A single monthly fee based on total FedGlobal ACH Payments
origination volume.
\80\ This per-item surcharge is in addition to the standard
domestic origination fees listed in this fee schedule.
\81\ This per-item surcharge is in addition to the standard
domestic receipt fees listed in this fee schedule.
\82\ Any financial institution that opens at least 1,000
Exception Resolution Service cases in a given month will receive a
50% discount on its Exception Resolution Service fixed fees for that
month.
\83\ 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.
\84\ A depository institution may enroll in the Service as an
offline Service Participant by designating the Reserve Bank to
access and use the functionality of the application on behalf of the
Offline Participant.

[[Page 66421]]

Fedwire Funds and National Settlement Services 2020 Fee Schedule
[Effective January 2, 2020. Bold indicates changes from 2019 prices]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
Fedwire Funds Service
------------------------------------------------------------------------
Monthly Participation Fee............................... $95.00
Basic volume-based pre-incentive transfer fee
(originations and receipts)--per transfer for:
Tier 1: The first 14,000 transfers per month........ 0.840
Tier 2: Additional transfers up to 90,000 per month. 0.250
Tier 3: Every transfer over 90,000 per month........ 0.165
Volume-based transfer fee with the incentive discount
(originations and receipts)--per eligible transfer for:
\85\
Tier 1: The first 14,000 transfers per month........ 0.168
Tier 2: Additional transfers up to 90,000 per month. 0.050
Tier 3: Every transfer over 90,000 per month........ 0.033
Surcharge for Offline Transfers (Originations and 65.00
Receipt)...............................................
Surcharge for End-of-Day Transfer Originations \86\..... 0.26
Monthly FedPayments Manager Import/Export fee \87\...... 50.00
Surcharge for high-value payments:
>$10 million........................................ 0.14
>$100 million....................................... 0.36
Surcharge for Payment Notification:
Origination Surcharge \88\.......................... 0.01
Receipt Volume \88 89\.............................. N/A
Delivery of Reports--Hard Copy Reports to On-Line 50.00
Customers..............................................
Special Settlement Arrangements (charge per settlement 150.00
day) \90\..............................................
------------------------------------------------------------------------
National Settlement Service
------------------------------------------------------------------------
Basic:
Settlement Entry Fee................................ 1.50
Settlement File Fee................................. 30.00
Surcharge for Offline File Origination \91\............. 45.00
Minimum Monthly Fee \92\................................ 60.00
------------------------------------------------------------------------

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

\85\ 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: $0.672 for transfers up to 14,000; $0.200
for transfers 14,001 to 90,000; and $0.132 for transfers over
90,000.
\86\ This surcharge applies to originators of transfers that are
processed by the Reserve Banks after 5:00 p.m. eastern time.
\87\ This fee is charged to any Fedwire Funds participant that
originates a transfer message via the FedPayments Manager (FPM)
Funds tool and has the import/export processing option setting
active at any point during the month.
\88\ Payment Notification and End-of-Day Origination surcharges
apply to each Fedwire funds transfer message.
\89\ Provided on billing statement for informational purposes
only.
\90\ 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.
\91\ 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.
\92\ Any settlement arrangement that accrues less than $60
during a calendar month will be assessed a variable amount to reach
the minimum monthly fee.

Fedwire Securities Service 2020 Fee Schedule (Non-Treasury Securities)
[Effective January 2, 2020. Bold indicates changes from 2019 prices]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
Basic Transfer Fee: \93\
Transfer or reversal originated or received......... $0.98
Surcharge: \94\
Offline origination & receipt surcharge............. 80.00
Monthly Maintenance Fees: \93\
Account maintenance (per account)................... 57.50
Issue maintenance (per issue/per account)........... 0.77
Claims Adjustment Fee \93 95\........................... 1.00
GNMA Serial Note Stripping or Reconstitution Fee \96\... 9.00
Joint Custody Origination Surcharge \93 97\............. 46.00
Delivery of Reports--Hard Copy Reports to On-Line 50.00
Customers \93\.........................................
------------------------------------------------------------------------

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

\93\ These fees are set by the Federal Reserve Banks.
\94\ This surcharge is set by the Federal Reserve Banks. It is
in addition to any basic transfer or reversal fee.
\95\ The Federal Reserve Banks offer an automated claim
adjustment process only for Agency mortgage-backed securities.
\96\ This fee is set by and remitted to the Government National
Mortgage Association (GNMA).
\97\ The Federal Reserve Banks charge participants a Joint
Custody Origination Surcharge for both Agency and Treasury
securities.

[[Page 66422]]

FedLine 2020 Fee Schedule
[Effective January 2, 2020. Bold indicates changes from 2019 prices]
------------------------------------------------------------------------
Fee
------------------------------------------------------------------------
FedComplete Packages (monthly) 98 99 100
------------------------------------------------------------------------
FedComplete 100A Plus........................... $825.00.
includes:
FedLine Advantage Plus package
FedLine subscriber 5-pack
Check Participation Fee
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 monthly participation fee
1,000 FedACH origination items
FedACH monthly minimum fee--Forward
Origination
7,500 FedACH receipt items
FedACH monthly minimum fee--Receipt
10 FedACH web-originated return/NOC
500 FedACH addenda record originated
1,000 FedACH addenda record received
100 FedACH SameDay Service origination items
FedACH Participation Fee
FedACH settlement fee
FedACH SameDay Service 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
Check Participation Fee
25,000 FedForward transactions
46 FedForward Cash Letter items
225 FedReturn transactions
25,000 FedReceipt[supreg] transactions
100 Fedwire Funds origination transfers
100 Fedwire Funds receipt transfers
Fedwire monthly participation fee
2,000 FedACH origination items
FedACH monthly minimum fee--Forward
Origination
25,000 FedACH receipt items
FedACH monthly minimum fee--Receipt
20 FedACH web-originated return/NOC
750 FedACH addenda record originated
1,500 FedACH addenda record received
200 FedACH SameDay Service origination items
FedACH Participation Fee
FedACH settlement fee
FedACH SameDay Service 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:
\101\
FedForward \102\............................ $0.037/item.
FedReturn................................... $0.8200/item.
FedReceipt.................................. $0.00005/item.
Fedwire Funds Origination................... $0.8400/item.
Fedwire Funds Receipt....................... $0.084/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 \103\................................... $85.00.
includes:

[[Page 66423]]

FedMail access channel
Check FedFoward, Fed Return and FedReceipt
Services
Check Adjustments
FedACH Download Advice and Settlement
Information
Fedwire Funds Offline Advices
Daily Statement of Account (Text)
Daylight Overdraft Reports
Monthly Statement of Service Charges (Text)
Electronic Cash Difference Advices
FedLine Exchange \103\.......................... $40.00.
includes:
E-Payments Directory (via manual download)
FedLine Exchange Premier \103\.................. $125.00.
includes:
FedLine Exchange package
E-Payments Directory (via automated
download)
FedLine Web \104\............................... $110.00.
includes:
FedLine Web access channel
Services included in the FedLine Exchange
package
Check FedForward, FedReturn and FedReceipt
services
Check Adjustments
FedACH Derived Returns and NOCs
FedACH File, Batch and Item Detail
Information
FedACH Download Advice
FedACH Settlement Information
FedACH Customer Profile Information
FedACH Returns Activity Statistics
FedACH Risk RDFI Alert Service
FedACH Risk Returns Reporting Service
FedACH Exception Resolution Service
FedCash[supreg] Services
FedLine Web Plus \104\.......................... $160.00.
includes:
Services included in the 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)
Daylight Overdraft Reports
Monthly Account Services (SCRD) File
Monthly Statement of Service Charges (PDF,
Text)
E-Payments Routing Directory (via automated
download)
FedLine Advantage \104\......................... $415.00.
includes:
FedLine Advantage access channel
One VPN device
Services included in the FedLine Web package
FedACH File Transmission To/From Federal
Reserve
FedACH Request Output File Delivery
FedACH View File Transmission and Processing
Status
Fedwire Originate and Receive Funds Transfer
Fedwire Originate and Receive Securities
Transfer
National Settlement Service Services
Check Large Dollar Return
Check FedImage Services
Account Management Information with Intra-
Day Download Search File
Daily Statement of Account (PDF, Text)
Daylight Overdraft Reports
Monthly Account Services (SCRD) File
Monthly Statement of Service Charges (PDF,
Text)
FedLine Advantage Plus \104\.................... $460.00.
includes:
Services included in the 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 automated
download)
FedLine Advantage Premier \104\................. $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.

[[Page 66424]]

includes:
FedLine Command access channel
Services included in the FedLine Advantage
Plus package
One VPN device
Additional FedLine Command server
certificates
Fedwire Statement Services
Fedwire Funds FedPayments Manager Import/
Export
FedTransaction Analyzer
Intra-Day File with Transaction Details (up
to six times daily)
Statement of Account Spreadsheet File (SASF)
Financial Institution Reconcilement Data
(FIRD) File (machine readable)
FedLine Direct Plus (Legacy 256K) \105\......... $5,500.00.
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
Daylight Overdraft Reports
Treasury Check Information System (TCIS)
FedLine Direct Plus \106\....................... $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
Check 21 Services
FedLine Direct Premier (Legacy T1) \105\........ $7,500.00.
includes:
FedLine Direct Plus package (legacy)
T1 dedicated WAN connection
Two VPN devices
FedLine Direct Premier \106\.................... $10,500.00.
includes:
FedLine Direct Plus package (new)
Two 2 Mbps dedicated WAN Connections
One Network Diversity
Two VPN devices
------------------------------------------------------------------------
A la carte options (monthly) \107\
------------------------------------------------------------------------
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 \108\. $100.00.
Additional VPNs \109\....................... $100.00.
Additional WAN connections \106\
256K (Legacy) \105\..................... $3,500.00.
T1 (Legacy) \105\....................... $3,500.00.
2 Mbps.................................. $3,000.00.
WAN Connection Upgrade
10 Mbps \110\........................... $1,700.00.
30 Mbps \110\........................... $3,000.00.
50 Mbps \110\........................... $4,000.00.
100 Mbps \110\.......................... $7,000.00.
200 Mbps \110\.......................... $11,000.00.
FedLine International Setup (one-time fee).. $5,000.00.
FedLine Custom Implementation Fee \111\..... various.
Network Diversity........................... $2,500.00.
FedLine Direct Contingency Solution \112\... $1,000.00.
Check 21 Large File Delivery \113\.......... various.
FedMail Email (for customers with FedLine $40.00.
Web and above) \114\.
FedMail Fax \115\........................... $150.00.
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 $75.00.
Codes) \116\.
E-Payments Automated Download (6-20 Add'l $150.00.
Codes) \116\.
E-Payments Automated Download (21-50 Add'l $300.00.
Codes) \116\.
E-Payments Automated Download (51-100 Add'l $500.00.
Codes) \116\.
E-Payments Automated Download (101-250 Add'l $1,000.00.
Codes) \116\.
E-Payments Automated Download (>250 Add'l $2,000.00.
Codes) \116\.
Accounting Information Services (monthly):
Cash Management System (CMS) Plus--Own
report--up to six files with \117\
no respondent/sub-account activity.......... $60.00.

[[Page 66425]]

less than 9 respondent and/or sub-accounts.. $125.00.
10-50 respondent and/or sub-accounts........ $250.00.
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 $150.00.
Reconcilement Data (FIRD) File \118\.
Statement of Account Spreadsheet File \119\. $150.00.
Intra-day Download Search File (with AMI) $150.00.
\120\.
Other:
Software Certification...................... $0.00 to $8,000.00.
Vendor Pass-Through Fee..................... various.
Electronic Access Credit Adjustment......... various.
Electronic Access Debit Adjustment.......... various.
------------------------------------------------------------------------

By order of the Board of Governors of the Federal Reserve
System, November 26, 2019.
---------------------------------------------------------------------------

\98\ FedComplete packages are all-electronic service options
that bundle payment services with an access solution for one monthly
fee.
\99\ Packages with an ``A'' include the FedLine Advantage
channel, and packages with ``C'' include the FedLine Command
channel.
\100\ 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.
\101\ Per-item surcharges are in addition to the standard fees
listed in the applicable priced services fee schedules.
\102\ 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.
\103\ 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.
\104\ 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.
\105\ Limited to installed base only. All customers with 256K or
T1 connections will need to upgrade to a minimum 2Mbps Ethernet line
speed connection associated with the FedLine Direct packages
Effective May 1, 2020, package price will increase to $10,000 for
FedLine Direct[supreg] Plus (Legacy 256K) and FedLine Direct Premier
(Legacy T1). Effective August 1, 2020, package price will increase
to $20,000 for FedLine Direct[supreg] Plus (Legacy 256K) and FedLine
Direct Premier (Legacy T1).
\106\ Early termination fees and/or expedited order fees may
apply to all FedLine Direct packages and FedLine Direct a la carte
options.
\107\ These add-on services can be purchased only with a FedLine
Solutions packages.
\108\ Fee applies only to customers in a legacy FedLine Direct
package. Server certificates are included in the monthly fee for
customers in the new FedLine Direct packages.
\109\ Additional VPNs are available for FedLine Advantage,
FedLine Command, and FedLine Direct packages only.
\110\ 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.
\111\ The FedLine Custom Implementation Fee is $2,500 or $5,000
based on the complexity of the setup.
\112\ 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.
\113\ 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. Effective January 2, 2020, fees will
increase by 20.0 percent for Check 21 Large File Delivery. Effective
May 1, 2020, fees will increase by 50.0 percent for Check 21 Large
File Delivery. Effective August 1, 2020, fees will increase by 100.0
percent for Check 21 Large File Delivery. To avoid compounding
increases, the fee as of December 2019 will serve as the baseline
for all 2020 price increases for any Check 21 Large File Delivery
connection.
\114\ Available only to customers with a priced FedLine package.
\115\ Limited to installed base only.
\116\ Five download codes are included at no cost in all Plus
and Premier packages.
\117\ Cash Management Service options are limited to plus and
premier packages.
\118\ 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.
\119\ 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.
\120\ 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.
---------------------------------------------------------------------------

Ann Misback,
Secretary of the Board.
[FR Doc. 2019-26228 Filed 12-3-19; 8:45 am]
BILLING CODE P

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