Letter to the Board on Fedwire and the National Settlement Service Proposal

Dear Ms. Misback,

Thank you for the opportunity to provide input on the Board of Governors of the Federal Reserve System (Board) Request for Comment (RFC) regarding the Expansion of Fedwire® Funds Service) and National Settlement Service (NSS) Operating Hours. The American Bankers Association (Association) shares the desire of the Board for the United States to operate an efficient payment system for the benefit of the country and its citizens.

The proposal would extend the normal operating hours of Fedwire® Funds Service and NSS from the conventional five-day work week, excluding weekends and holidays, to be live 365 days a year. This is a substantial change that, as proposed, would enable financial institutions to opt in to provide wire services every day of the year. Certain financial institutions may explore the opportunity of extending wire services for their customers. Those financial institutions that do not participate would post any incoming wires at the beginning of the next conventional business day. However, it is important to note this could put some financial institutions at a competitive disadvantage if they opt not to offer expanded service hours.

The Association also notes the Board is not currently considering an expansion of operating hours for the Fedwire® Securities Service ("FSS") and supports this stance. Any potential future change in stance from the Board with respect to FSS operating hours would require significant adjustments across the industry and a separate and thorough public consultation process.

Expanding the NSS would also enable private clearing arrangements, such as ACH operators and check clearing houses, to do the same. The staffing expense, procedural, and risk management changes at participating banks would be significant if ACH operations were extended. Due to the ubiquitous nature of ACH, financial institutions would be at a competitive disadvantage if they do not offer expanded hours and at a financial disadvantage if they do. The additional costs of operating on weekends and holidays could foreseeably lead to accelerated consolidation in the industry among smaller financial institutions due to the increased costs of participation.

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