Announcement of a new implementation date for modifications to the National Settlement Service and Fedwire® Funds Service
October 2, 2020
To All National Settlement Service Settlement Agents and Fedwire Funds Service Participants:
The Board of Governors of the Federal Reserve System (the Board) announced (Off-site) a new implementation date of March 8, 2021 for the previously approved (Off-site) modifications to the National Settlement Service and Fedwire Funds Service and related changes to the Federal Reserve Policy on Payment System Risk (PSR policy). The modifications support Nacha’s adoption of a third and later Same Day ACH processing and settlement window. The March 8 implementation date will allow the Federal Reserve Banks to test and implement the modifications before the March 19, 2021 effective date for the later Same Day ACH window.
The following changes will take effect beginning on the March 8, 2021 business day:
- The Federal Reserve Banks will expand the National Settlement Service closing time to 6:30 p.m. ET from 5:30 p.m. ET, the Fedwire Funds Service third-party cutoff time to 6:45 p.m. ET from 6 p.m. ET, and the Fedwire Funds Service closing time to 7 p.m. ET from 6:30 p.m. ET.
- The Federal Reserve Banks will increase the dollar value threshold for granting an extension of the operating hours of the Fedwire Funds Service from $1 billion to $3 billion.
- The Board will make changes (Off-site) to sections II.C and II.F of the PSR policy to reflect the expansion of the Fedwire Funds Service operating hours. Expanding the closing time of the Fedwire Funds Service will slightly increase the fees that institutions pay for daylight overdrafts because daylight overdraft fees are calculated based on the length of the standard Fedwire operating day.
As explained in the Board’s announcement, two changes to the PSR policy relating to ACH transaction posting times will still be implemented on March 19, 2021.
Application Changes and Testing Opportunities
- Fedwire Funds Service participants that use the FedPayments® Manager – Funds application will be able to update the time parameter control for outgoing messages to ensure alignment with the new Fedwire Funds Service closing time.
- Participants with Fedline Direct® access to the Fedwire Funds Service were asked earlier this year to notify the Federal Reserve Banks if changes are needed within their internal systems to accommodate the expanded operating hours and associated changes to the timing of the Federal Reserve Banks’ closing broadcast messages. For participants needing to make system changes, testing is required. Testing opportunities will be available in the Depository Institution Test (DIT) environment beginning January 7, 2021. All questions related to testing should be directed to the Wholesale Testing Units.
- For all other Fedwire Funds Service participants and National Settlement Service settlement agents, testing is not required. However, all institutions should familiarize themselves with the expanded operating hours, and consider leveraging the DIT environment to help ensure preparedness for the changes. All questions related to testing should be directed to the Wholesale Testing Units.
As we approach the March 8, 2021 implementation date for these changes, you will continue to receive more information. In the meantime, please contact your Account Executive with any questions.