Request for Public Comment on Proposal to Modify Method for Imputing Priced-Service Income from Clearing

Federal Reserve Bank of Dallas2200 N. PEARL ST.DALLAS, TX 75201-2272June 19, 2003Notice 03-32TO: The Chief Executive Officer of eachfinancial institution and others concernedin the Eleventh Federal Reserve DistrictSUBJECTRequest for Public Comment on Proposal toModify Method for Imputing Priced-Service Income from Clearing-Balance InvestmentsDETAILSThe Board of Governors of the Federal Reserve System has requested public comment ona proposal to modify the method for imputing priced-service income from clearing balance invest-ments. Federal Reserve Banks impute this income when setting fees and measuring actual costrecovery each year.Specifically, the Board proposes to impute the income from its clearing balanceinvestments on the basis of a broader portfolio of investment instruments than used today, selectedfrom instruments available to banks and subject to a portfolio management framework. Selection ofthe portfolio mix would be subject to a risk-management framework that includes criteria consistentwith those used by bank holding companies and regulators in evaluating investment risk. The Boardalso requests comment on two different implementation methods for imputing this investmentincome.This proposal focuses on the imputed investment of clearing balances; it would notchange the terms or conditions under which depository institutions hold clearing balances. If adopted,the changes would be effective for the 2004 fees for Federal Reserve priced ...