(a) Definitions. For purposes of this section—
(1) “Account” means a reserve account,
clearing account, or deposit account as defined in the Board’s Regulation
D (12 CFR 204.2(a)(1)(i)), that is maintained at a Federal Reserve
Bank or nonbank bank.
(2) “Cash item” means (i) a check other than a check classified as
a noncash item; or (ii) any other item payable on demand and collectible
at par that the Federal Reserve Bank of the District in which the
item is payable is willing to accept as a cash item.
(3) “Discount-window loan” means any credit
extended by a Federal Reserve Bank to a nonbank bank or industrial
bank pursuant to the provisions of the Board’s Regulation A (12 CFR
201).
(4) “Industrial
bank” means an institution as defined in section 2(c)(2)(H) of the
BHC Act (12 USC 1841(c)(2)(H)).
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(5) “Noncash item” means an item handled
by a Reserve Bank as a noncash item under the Reserve Bank’s “Collection
of Noncash Items Operating Circular” (e.g., a maturing banker’s acceptance
or a maturing security, or a demand item, such as a check, with special
instructions or an item that has not been preprinted or postencoded).
(6) “Other nonelectronic
transactions” include all other transactions not included as funds
transfers, book-entry securities transfers, cash items, noncash items,
automated clearinghouse transactions, net-settlement entries, and
discount-window loans (e.g., original issue of securities or redemption
of securities).
(7)
An “overdraft” in an account occurs whenever the Federal Reserve Bank,
nonbank bank, or industrial bank holding an account posts a transaction
to the account of the nonbank bank, industrial bank, or affiliate
that exceeds the aggregate balance of the accounts of the nonbank
bank, industrial bank, or affiliate, as determined by the posting
rules set forth in paragraphs (d) and (e) of this section and continues
until the aggregate balance of the account is zero or greater.
(8) “Transfer item” means
an item as defined in subpart B of Regualtion J (12 CFR 210.25 et
seq.).
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(b) Restriction
on overdrafts.
(1) Affiliates. Neither a nonbank bank nor an industrial bank shall permit any affiliate
to incur any overdraft in its account with the nonbank bank or industrial
bank.
(2) Nonbank banks or industrial banks.
(i) No nonbank bank or industrial bank shall incur any overdraft
in its account at a Federal Reserve Bank on behalf of an affiliate.
(ii) An overdraft by
a nonbank bank or industrial bank in its account at a Federal Reserve
Bank shall be deemed to be on behalf of an affiliate whenever—
(A) a nonbank bank or industrial bank holds an account for an affiliate
from which third-party payments can be made; and
(B) when the posting of an affiliate’s transaction
to the nonbank bank’s or industrial bank’s account at a Reserve Bank
creates an overdraft in its account at a Federal Reserve Bank or increases
the amount of an existing overdraft in its account at a Federal Reserve
Bank.
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(c) Permissible overdrafts. The following
are permissible overdrafts not subject to paragraph (b):
(1) Inadvertent
error. An overdraft in its account by a nonbank bank or its affiliate,
or an industrial bank or its affiliate, that results from an inadvertent
computer error or inadvertent accounting error, that was not reasonably foreseeable
or could not have been prevented through the maintenance of procedures
reasonably adopted by the nonbank bank or affiliate to avoid such
overdraft; and
(2) Fully secured primary-dealer affiliate overdrafts.
(i) An overdraft incurred by an affiliate
of a nonbank bank, which affiliate is recognized as a primary dealer
by the Federal Reserve Bank of New York, in the affiliate’s account
at the nonbank bank, or an overdraft incurred by a nonbank bank on
behalf of its primary-dealer affiliate in the nonbank bank’s account
at a Federal Reserve Bank; provided the overdraft is fully
secured by bonds, notes, or other obligations which are direct obligations
of the United States or on which the principal and interest are fully
guaranteed by the United States or by securities and obligations eligible
for settlement on the Federal Reserve book-entry system.
(ii) An overdraft by a nonbank
bank in its account at a Federal Reserve Bank that is on behalf of
a primary-dealer affiliate is fully secured when that portion of its
overdraft at the Federal Reserve Bank that corresponds to the transaction
posted for an affiliate that caused or increased the nonbank bank’s
overdraft is fully secured in accordance with paragraph (c)(2)(iii).
(iii) An overdraft
is fully secured under paragraph (c)(2)(i) when the nonbank bank can
demonstrate that the overdraft is secured, at all times, by a perfected
security interest in specific, identified obligations described in
paragraph (c)(2)(i) with a market value that, in the judgment of the
Reserve Bank holding the nonbank bank’s account, is sufficiently in
excess of the amount of the overdraft to provide a margin of protection
in a volatile market or in the event the securities need to be liquidated
quickly.
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(d) Posting by Federal Reserve Banks. For purposes
of determining the balance of an account under this section, payments
and transfers by nonbank banks and industrial banks processed by the
Federal Reserve Banks shall be considered posted to their accounts
at Federal Reserve Banks as follows:
(1) Funds transfers. Transfer items shall be posted—
(i) to the transferor’s
account at the time the transfer is actually made by the transferor’s
Federal Reserve Bank; and
(ii) to the transferee’s account at
the time the transferee’s Reserve Bank sends the transfer item or
sends or telephones the advice of credit for the item to the transferee,
whichever occurs first.
(2) Book-entry
securities transfers against payment. A book-entry securities
transfer against payment shall be posted—
(i) to the transferor’s
account at the time the entry is made by the transferor’s Reserve
Bank; and
(ii) to
the transferee’s account at the time the entry is made by the transferee’s
Reserve Bank.
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(3) Discount-window
loans. Credit for a discount-window loan shall be posted to the
account of a nonbank bank or industrial bank at the close of business
on the day that it is made or such earlier time as may be specifically
agreed to by the Federal Reserve Bank and the nonbank bank under the
terms of the loan. Debit for repayment of a discount-window loan shall
be posted to the account of the nonbank bank or industrial bank as
of the close of business on the day of maturity of the loan or such
earlier time as may be agreed to by the Federal Reserve Bank and the
nonbank bank or required by the Federal Reserve Bank under the terms
of the loan.
(4) Other transactions. Total aggregate credits
for automated clearinghouse transfers, cash items, noncash items,
net-settlement entries, and other nonelectronic transactions shall
be posted to the account of a nonbank bank or industrial bank as of
the opening of business on settlement day. Total aggregate debits
for these transactions and entries shall be posted to the account
of a nonbank or
industrial bank as of the close of business on settlement day.
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(e) Posting by nonbank
banks and industrial banks. For purposes of determining the balance
of an affiliate’s account under this section, payments and transfers
through an affiliate’s account at a nonbank bank or industrial bank
shall by posted as follows:
(1) Funds transfers.
(i) Fedwire transfer items shall be
posted—
(A) to the transferor affiliate’s account
no later than the time the transfer is actually made by the transferor’s
Federal Reserve Bank; and
(B) to the transferee affiliate’s account no earlier than the time
the transferee’s Reserve Bank sends the transfer item, or sends or
telephones the advice of credit for the item to the transferee, whichever
occurs first.
(ii) For funds transfers not sent or
received through Federal Reserve Banks, debits shall be posted to
the transferor affiliate’s account not later than the time the nonbank
bank or industrial bank becomes obligated on the transfer. Credits
shall not be posted to the transferee affiliate’s account before the
nonbank bank or industrial bank has received actually and finally
collected funds for the transfer.
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(2) Book-entry
securities transfers against payment.
(i) A book-entry securities
transfer against payment shall be posted—
(A) to the transferor affiliate’s
account not earlier than the time the entry is made by the transferor’s
Reserve Bank; and
(B)
to the transferee affiliate’s account not later than the time the
entry is made by the transferee’s Reserve Bank.
(ii) For book-entry
securities transfers against payment that are not sent or received
through Federal Reserve Banks, enteries shall be posted—
(A) to the buyer-affiliate’s
account not later than the time the nonbank bank or industrial bank
becomes obligated on the transfer; and
(B) to the seller-affiliate’s account not
before the nonbank bank or industrial bank has received actually and
finally collected funds for the transfer.
4-052.93
(3) Other transactions.
(i) Credits. Except as otherwise provided in
this paragraph, credits for cash items, noncash items, ACH transfers,
net-settlement entries, and all other nonelectronic transactions shall
be posted to an affiliate’s account on the day of the transaction
(i.e., settlement day for ACH transactions or the day of credit for
check transactions), but no earlier than the Federal Reserve Bank’s
opening of business on that day. Credit for cash items that are required
by federal or state statute or regulation to be made available to
the depositor for withdrawal prior to the posting time set forth in
the preceding paragraph shall be posted as of the required availability
time.
(ii) Debits. Debits for cash items, noncash
items, ACH transfers, net-settlement entries, and all other nonelectronic
transactions shall be posted to an affiliate’s account on the day
of the transaction (e.g., settlement day for ACH transactions or the
day of presentment for check transactions), but no later than the
Federal Reserve Bank’s close of business on that day. If a check drawn
on an affiliate’s account or an ACH debit transfer received by an
affiliate is returned timely by the nonbank bank or industrial bank
in accordance with applicable law and agreements, no entry need be
posted to the affiliate’s account for such item.
