The Federal Reserve Board on Monday approved modifications to the Federal Reserve Banks’ National Settlement Service (NSS) and Fedwire® Funds Service to support enhancements to the same-day automated clearinghouse (ACH) service. The Board also approved changes intended to reduce the risk that the modified service closings and cutoffs would increase the frequency of delays to the reopening of the Fedwire Funds Service. Finally, the Board approved corresponding changes to the Federal Reserve Policy on Payment System Risk (PSR policy) related to a new posting time for transactions and an increased daylight overdraft fee.
On September 13, 2018, Nacha, the rules and standards body for the ACH network, announced that its voting members had approved amendments to the Nacha Operating Rules & Guidelines to establish a third and later same-day ACH processing and settlement window with a settlement deadline of 4:45 p.m. ET and settlement at 6:00 p.m. ET. A third same-day ACH window aligns with the Federal Reserve’s ongoing objective to support improved speed and efficiency of the payment system in the United States as well as public interest in greater availability of payment services. In particular, the later same-day ACH window would allow more institutions to use same-day ACH services during a greater portion of their business day and may promote greater adoption of same-day ACH and availability of the service to originators and end-users.
The amended Nacha rules changes require modifications to the Federal Reserve Banks’ payment service closings and cutoffs so that the private-sector ACH operator, The Clearing House Payments Company L.L.C., can settle same-day ACH transactions later in the day via the National Settlement Service. On May 16, 2019, the Board published a Federal Register notice seeking public comment on these modifications to the Federal Reserve Bank’s payment services. After analyzing the comments received, the Board has approved the following modifications and enhancements to be implemented in March 2021, which would accommodate Nacha’s current effective date of March 19, 2021 for implementing the later same-day ACH window:
- The National Settlement Service will close at 6:30 p.m. ET, one hour later than its current closing at 5:30 p.m. ET. The opening time for the National Settlement Service will remain at 7:30 a.m. ET.
- The Fedwire Funds Service will close at 7:00 p.m. ET, 30 minutes later than its current cutoff at 6:30 p.m. ET. The Fedwire Funds third-party cutoff will occur at 6:45 p.m. ET, 45 minutes later than its current cutoff at 6:00 p.m. ET. The opening time for the Fedwire Funds Service will remain at 9 p.m. ET on the previous calendar day.
- The Reserve Banks will modify their current practice of maintaining a two-hour window between the closing and the reopening of the Fedwire Funds Service to maintain only a 90-minute window.
- The Reserve Banks will raise the threshold for granting extensions to the Fedwire Funds Service closing time from $1 billion to $3 billion. The Reserve Banks, in consultation with the Board, will determine whether further increases to the threshold are warranted to maintain the regular and consistent open of the Fedwire Funds Service at 9:00 p.m. ET.
- The Board is amending part II of the PSR policy to add a new 6:00 p.m. ET posting time for same-day ACH transactions, remove the current 5:30 p.m. ET posting time for ACH return transactions, and make conforming changes to the daylight overdraft fee calculation.
A copy of the Board’s Federal Register notice is attached.
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