CUNA Regulatory Comment Call

January 30, 2003

Expanded Operating Hours for the On-Line Fedwire Funds Service


The Federal Reserve Board requests comment on a proposal to expand the operating hours for the Fedwire Funds Service (Fedwire).

Please feel free to fax your responses to CUNA at 202-638-7052 by February 24th; e-mail them to Associate General Counsel Mary Dunn at and to Assistant General Counsel Michelle Profit at; or mail them to Mary and Michelle in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, D.C. 20004-2601. You may also click here for a copy of this comment request.


In 1997, the Federal Reserve Banks (Reserve Banks) expanded the operating day for on-line Fedwire funds transfers from ten hours to eighteen hours –opening weekdays at 12:30 a.m. and closing at 6:30 p.m. The Federal Reserve was approached about expanding the hours further in order to improve the overlap of these operating hours with those of the Asia-Pacific financial markets. The Federal Reserve believes that further expansion of Fedwire funds transfer operating hours would support the continued development of the payments system and improve efficiency and reduce risk in existing settlements and payments.

According to the Federal Reserve, the estimated costs for Reserve Banks to open Fedwire three and one-half hours earlier are expected to be negligible and should not affect funds transfer fees paid by depository institutions. Depository institutions would not have to open earlier, but they could do so at their discretion.

The longer hours would affect the calculation of balances at depository institutions. Under the expanded Fedwire operating hours, depository institutions’ Federal Reserve Account balances may not reflect all of the previous day’s payment activity because certain activity that is processed and posted later in the day may not be posted to accounts by 9 p.m., the start of the next Fedwire operating day. Generally, account balances would reflect all of a business day’s activity by about 11 p.m. The Reserve Banks would also notify depository institutions when the day’s payment activity has been processed and is reflected fully on their account balances.

Longer hours would not affect the fees for intraday credit. Under the expanded Fedwire operating hours, the Reserve Banks would continue to provide intraday credit to eligible depository institutions on the same basis as they do today according to the provisions of the Board’s payment system risk policy. While the calculation of the daylight overdraft fee will reflect the expanded Fedwire operating hours, the fee assessed for the use of intraday credit will not change for an overdraft of a given size and duration.

If the Federal Reserve adopts a 9 p.m. Fedwire opening time, depository institutions would be given the opportunity to test their systems for the expanded Fedwire hours with the Reserve Banks beginning in the third quarter 2003. Full implementation of the expanded Fedwire operating day from 9 p.m. to 6:30 p.m. would begin in the second quarter of 2004.

According to the Federal Reserve, it sometimes extends the closing time in emergency situations, such as after September 11th. According to the Federal Reserve, however, if the Federal Reserve approved an earlier Fedwire opening time, then extension of the scheduled Fedwire closing time could result in greater operating difficulties for some depository institutions and could impair the ability of Fedwire to open promptly the next day.


  1. Does your credit union support the proposal to expand the operating hours of Fedwire?

  2. Should the opening for Fedwire be moved to 9 p.m. or is another opening time preferable? Please explain.

  3. What do you believe are the business, market, risk management, and operational issues that should be considered in evaluating the benefits and drawbacks of a 9 p.m. to 6:30 p.m. Fedwire business day? For example, what are the business needs that would warrant an earlier Fedwire opening time?

  4. Should the Reserve Banks continue to grant significant extensions to the Fedwire closing time to help mitigate substantial market disruptions (such as those granted during the week of September 11, 2001) even if they result in a significant delay in the Fedwire opening for the next business day?

  5. Would this proposal result in costs or benefits to your organization? Please explain.

    Please submit your address and phone number.

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •