Factors for Evaluating Reserve Bank Requests to Withdraw from a Priced Service Line

1. It is likely that other service providers would supply an adequate level of the same service (i.e. access, price, and quality) in the relevant market(s) if the Federal Reserve withdraws from the service.

Congress, in requiring that the Federal Reserve price its services, was attempting to encourage competition, provision of services at the lowest cost to society, and nationwide availability of an adequate level of service. This factor considers whether other service providers are likely to supply an adequate level of the same service in terms of access, price, and quality. Restricted access, prices significantly higher than Reserve Bank full-costbased fees, or material degradation in the quality of service would weigh in favor of the Resource Banks’ continuing to provide the service. A relevant market would be the region that is accessible to the depository institution using the service at a cost and within a time frame that is reasonable for the service involved.

2. If other service providers are not likely to provide an adequate level of the same service in the relevant market(s), it is likely that users of the service could obtain other substitutable services that could reasonably meet their needs.

A substitutable service would be an alternative service that would achieve the same or a comparable outcome for the service user at a cost commensurate with that service. For example, providing access to a securities depository could be considered a substitutable service to providing definitive securities safekeeping on premises. The existence of adequate substitutable services would weight in favor of Reserve Banks’ withdrawing from the service even if adequate levels of the service were not available from alternate sources.

3. Withdrawal from the service would not have a material, adverse effect on the Federal Reserve’s ability to provide an adequate level of other services.

A material, adverse effect would be any consequence of withdrawal that would seriously impede or undermine the Federal Reserve’s ability to provide an adequate level of other services. For example, if withdrawal from one service caused a shift of large overhead costs to another service, it could necessitate a fee increase large enough to affect adversely the provision of that other service. These circumstances would weigh in favor of the Reserve Banks’ continuing to provide the service.

4. Withdrawal from the service would not have a material, adverse effect on the Federal Reserve’s ability to discharge other responsibilities.

A material, adverse effect would be any consequence of withdrawal that would seriously impede or undermine the Federal Reserve’s ability to discharge its other responsibilities as central bank or fiscal agent of the United States. For example, if Federal Reserve withdrawal from a payment service would seriously jeopardize its ability to carry out its fiscal-agency responsibilities, this circumstance would weigh in favor of the Reserve Banks’ continuing to provide the service.

5. The public benefits of continued Federal Reserve provision of the service do not outweigh the benefits of withdrawing from the service.

The Board would consider whether there was any other public benefit, not addressed under the previous factors, that could be achieved through continued provision of the service. If any could be identified, the Board would consider whether the public benefit outweighed the withdrawal benefits.