Discussed below are two announcements and a reminder regarding the Federal Reserve Policy Statement on Payments System Risk.

Request for Comment - Consultation Paper on Intraday Liquidity Management and Payments System Risk Policy

The Federal Reserve Board is requesting public comment on a consultation paper that is intended to help the Board obtain broader information on intraday liquidity management issues and to lay the groundwork for discussions about the long-term evolution of its Payment System Risk (PSR) Policy.

The consultation paper seeks information from the financial industry and other interested parties on their experience in managing intraday liquidity, credit, and operational risks associated with Fedwire funds transfers and associated transactions. In particular, the paper requests views on potential changes in market practices, depository institution and Federal Reserve Bank operations, and the Board's PSR Policy that could reduce one or more of these risks, while maintaining or improving the efficiency of the payments system over the long run. Also, the paper includes a brief list of possible changes that might further assist depository institutions, financial markets, and the Federal Reserve Banks in managing intraday risks. Items on the list should be regarded as preliminary and intended for further study.

The consultation paper stems from the Federal Reserve's ongoing review of the long-term effects of market, operational, and policy changes by the financial industry and the Federal Reserve on intraday liquidity and risks in the financial markets and the payments system, including account overdrafts at the Reserve Banks.

Comment is requested by December 15, 2006.

The Board’s consultation paper is located at: http://www.federalreserve.gov/boarddocs/press/other/2006/200606152/default.htm

Request for Comment - Proposed Revisions to Part I of the PSR Policy

The Federal Reserve Board is requesting comment on proposed revisions to Part I of its PSR Policy which addresses risk management in payments and settlement systems. The proposed revisions update and revise the Policy in several ways:

1) The Board is proposing to incorporate into its Policy the international risk management standards for central counterparties recently developed by the Committee on Payment and Settlement Systems of the central banks of the Group of Ten countries and the Technical Committee of the International Organization of Securities Commissions.

2) In support of these standards, the Board is proposing revisions to the scope of Part I of the Policy with regard to central counterparties, and revisions to the purposes of Part I of the Policy to clarify its views on risk management for payments and settlement systems generally and its expectations for systems subject to its authority.

3) The Board is proposing revisions that would establish an expectation that systemically important systems publicly disclose self-assessments against the principles or minimum standards incorporated in the PSR Policy.

Comment is requested by September 22, 2006.

The request for comment is located at: http://www.federalreserve.gov/BoardDocs/Press/other/2006/200606222/default.htm

Reminder - PSR Policy Changes Effective July 20, 2006

As previously announced, modifications to the Federal Reserve’s PSR Policy will be implemented on July 20, 2006 that will affect the processing of interest and redemption payments for securities issued by government-sponsored enterprises and certain international organizations. Information on the policy changes and resulting operational considerations can be found at http://www.frbservices.org/Wholesale/FedwireSecuritiesPSR.html.

As a reminder, changes to the timing of certain of these payments may affect account management for daylight overdraft purposes.