Fedwire Funds & Securities Services Flashcards
Who operates two critical wholesale services for direct participation of Fedwire Funds and Securities Services.
The Federal Reserve Banks
This service is processed transfer-by-transfer
Fedwire Funds Service
How are all Fedwire transactions confirmed with the sending depository institution?
Through an Acknowledgment message
How are all Fedwire transactions confirmed with a receiving depository institution?
Through a notification message
Who are eligible to use Fedwire services?
Depository institutions that maintain a reserve or clearing account with a Federal Reserve Bank.
Fedwire service that supports high transaction volumes by creating a direct connection between the Federal Reserve Bank’s computer system and Fedwire using Internet-protocol technology.
FedLine Direct
Is a web-based access solution. Transfer instructions are created by the sending depository institution and electronically transmitted to the Federal Reserve Banks for processing. It is primarily used by mid-and low-volume institutions.
FedLine Advantage
This Fedwire service is more costly and is primarily used by institutions with infrequent transfer needs or for contingency access.
Off-line Fedwire
This service provides immediate finality and irrevocability of settlement once transfer is processed by Federal Reserve Banks.
Fedwire Funds Service
Is a real-time gross settlement system used to settle interbank funds transactions such as federal funds purchases, corporate payments and other large value payments.
Fedwire Funds Service
Transfers are processed individually, in real-time, and settled by debiting the Federal Reserve Bank account of the sending depository institution and simultaneously crediting the federal Reserve bank account of the receiving depository institution.
Fedwire Funds Service
The two Fedwire services are centralized and consist of two operational components… What are they?
- Computer applications that process and record individual funds and securities transfers as they occur.
- National communications network that electronically links the Federal Reserve Banks with depository institutions.
This service is a credit/push system in which only originating/sender bank can remove funds from its Federal Reserve Bank Account.
Fedwire Funds Service
What are the Fedwire Funds Service hours?
Business day begins at 9:00 PM Eastern Time on the preceding calendar day and ends at 7:00 PM ET.
What is the deadline for initiating on-line third-party transfers?
6:45 PM ET, after which participants may only initiate transfers on its own behalf.
Off-line transfers generally cannot be initiated during which times?
- Before 9:00AM ET
- After 6:30PM ET
- After 6:15PM ET for third-party transfers
Real time, delivery vs payment, gross settlement system
Fedwire Securities
This service allows for electronic issuance, transfer and maintenance of being issued by US Treasury, Federal Government agencies, Government sponsored enterprise, and certain international organizations.
Fedwire Securities
When do Fedwire Securities services operate to initiatae on-line securities transfers?
from 8:30 AM to 3:15 PM ET, Monday through Friday
When do Fedwire Securities services operate to initiatae on-line securities reversals?
from 8:30 AM to 3:30 PM ET, Monday through Friday
On-line participants may move securities against payment among their own securities accounts with the Federal Reserve Banks until what time?
4:30PM ET, and until 7:00 PM ET free of payment.
Off-line Securities services may be initiated between what hours for same day processing?
9:00 AM and 1:30 PM ET, Monday through Friday
Off-line Securities services may be initiated between what hours for same future- day processing?
9:00 AM and 4:00PM ET, Monday through Friday
This means the system settles each transfer individually, rather than processing by batch.
Gross Settlement
What is the system called when it processes each transaction as it is initiated?
real time environment
Specifies the terms under which the Federal Reserve Banks will accept checks and other items for collection and present them for collection to the institutions upon which they are drawn. It also establishes guidelines for the return of unpaid checks, and the receipt and delivery of funds via Fedwire.
Regulation J
covers funds transferred through the Federal Reserve’s wire transfer system, Fedwire. It establishes rules governing these transfers and authorizes the Federal Reserve to debit a sender’s account in order to obtain payment for a transfer sent over the Fedwire system.
Regulation J: Subpart B
Governs the Fedwire Funds Service
Operating Circular 6
sets forth the requirements that credit unions make funds deposited into transaction accounts available according to specified time schedules and that they disclose their funds availability policies to their members. It also establishes rules designed to speed the collection and return of unpaid checks.
Regulation CC
Who governs the US government securities market?
Department of Treasury and the Government Securities Act (GSA)
contains the terms under which the Federal Reserve Banks maintain securities accounts and effect transfers of book-entry securities for participants.
Operating Circular 7
Sets out rules regarding the rights and obligations of entitlement holders, securities intermediaries and other parties in both direct and indirect systems for holding securities.
UCC Article 8
Governs the rights and obligations of parties to a secured transaction
UCC Article 9
If a bank holds more fed funds than is required to cover its Regulation D reserve requirement, those excess reserves may be lent to another financial institution with an account at a Federal Reserve Bank. To the borrowing institution, these funds are?
federal fund purchase
This participant is a sender of first payment order in funds or securities transfer
Originator
This participant initiates the transfer and is a bank to which the payment order of originator is issues.
Originating/Sender Bank
Entity that processes and settles Fedwire funds transfers and book-entry securities transfers at instruction of participants
Federal Reserve Bank
This Participant is identified in payment order to be credited pursuant to order
Beneficiary’s Bank
This participant is the person to be paid
Beneficiary
This Regulation deals with remittance transfers.
Regulation E - Subpart B
This Regulation deals with Funds transfers through Fedwire
Regulation J - Subpart B
This legal framework deals with wholesale credit funds transfers not governed by Regulation E.
Uniform Commercial Code Article 4A
This Legal Framework deals with funds transfers through Fedwire Funds Service.
Federal Reserve Bank Operation Circular 6
This legal framework deals with opening, maintaining and terminating a master account with a Federal Reserve Bank
Federal Reserve Bank Operating Circular 1
This Regulation Governs Funds availability
Regulation CC
This Legal Framework deals with recordkeeping requirements/travel rule
Bank Secrecy Act - 31 CFR 103
This administration and enforcement of economic and trade sanctions based on U.S. Foreign policy.
OFAC
This service is a debit pull system with regards to payments.
Fedwire Securities
- Sender initiates transfer
- Automatically debits payment from Beneficiary Bank’s Federal Reserve Bank Account.
