Last Updated: November 17, 2010

Changes to the Pledging of Payment System Risk Collateral

In preparation for the March 24, 2011 implementation of the revised Payment System Risk (PSR) Policy, the Federal Reserve plans to consolidate the collateral in the pledge accounts used for discount window and PSR purposes into one account by December 10, 2010. This change supports improved automation for collateral processing, as detailed in the Planned Enhancements Supporting Implementation of PSR Policy Revision paper. The majority of institutions that have collateral pledged to the Federal Reserve currently only have collateral pledged to the discount window account; these institutions will not be affected by this change.

Of the few institutions that currently have collateral pledged to the PSR accounts, only those that have securities pledged through Depository Trust Company (DTC) will need to take action. Specifically, institutions that have securities currently pledged under the Federal Reserve purpose code 05-Daylight (Funds) through DTC will need to initiate a release transaction to move the securities. Once the release is approved, institutions will need to re-pledge the securities to the Federal Reserve Bank using purpose code 01-Discount. Local Reserve Banks will be in contact with these institutions to guide them through this transition.

Institutions will not be required to take action for securities pledged through Fedwire Securities Service to the PSR accounts. The Federal Reserve Banks will transfer this collateral automatically. Institutions that do not have a Fedwire Securities Service Discount account will be contacted by their Federal Reserve Bank. All loan collateral pledged to the PSR accounts will also be transferred automatically.

Institutions should refrain from pledging assets to PSR accounts effective immediately. New pledges of securities via the Fedwire Securities Service should be made to account U102. New pledges of securities via the Depository Trust Company should be made using Federal Reserve purpose code 01-Discount.

Please contact your local Federal Reserve Bank for additional information.