The Board of Governors of the Federal Reserve System (Board) is revising part II of the Federal Reserve Policy on Payment System Risk (PSR policy) to add a posting rule to facilitate the implementation of enhancements to the Automated Claim Adjustment Process (ACAP).
Part II of the PSR policy governs the provision of intraday credit (also known as daylight overdrafts) in accounts at the Reserve Banks. The PSR policy includes procedures, referred to as posting rules, that are used to measure account balances. The posting rules establish settlement times for debits and credits at Federal Reserve accounts for different payment types.
The ACAP is a feature of the Fedwire Securities Service that offers Fedwire Securities participants (participants) the option to automate principal and interest (P&I) tracking and claim adjustments related to transactions between participants that settle over Fedwire Securities.
The Reserve Banks, in their capacity as fiscal agents for issuers of securities issued over Fedwire Securities, make P&I payments to record date holders of the securities. For some types of transactions between participants, such as repurchase agreements (repos), the participant identified as the record-date holder by the Service may not be entitled to the P&I payment pursuant to a separate agreement between the transaction participants.
The ACAP offers an automated way for the record-date holder to transfer a P&I payment from its master account to the master account of the designated participant.
Currently, ACAP adjustments are not explicitly mentioned in the posting rules of the PSR policy because ACAP adjustments are settled using NSS, which has its own posting rule.
The Board stated in a release that it is adding a new posting rule to part II of the PSR policy to reflect the fact that ACAP adjustments will be made on a gross basis through Fedwire Securities throughout the business day.