October 25, 1989
TO: OPERATIONS COMMITTEE NO. 22-89
RE: CHECK AGING STUDY - MONTH OF NOVEMBER, 1989
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At the October 18, 1989 meeting, the Operations Committee
agreed to conduct a "check aging" study of investor checks
presented to money market and other income funds for share
purchases during the month of November, 1989. For this study,
please submit check data for ginnie mae, U. S. Government and
municipal funds as well as money market funds.
For those Committee members who were not at the meeting,
the check aging study is being performed at this time in an
effort to determine whether monies from checks deposited into
bank checking accounts are being made available to customers as
provided for under the recently adopted Federal Reserve rule
implementing the Expedited Funds Availability Act enacted by the
Congress on August 10, 1987. The effective date for the FED rule
was September 1, 1988.
The Act includes specific and detailed provisions requiring
banks to:
(1) Make funds available to their customers
within specified time frames,
(2) Pay interest on interest-bearing transaction
accounts not later than the day the bank receives
provisional credit, and
(3) Disclose their funds availability policies
to their customers.
Under the temporary schedule that became effective on
September 1, 1988, a depositary bank must make the proceeds of
local checks available for withdrawal by the third business day
following deposit; that is, the proceeds of local checks
deposited on a Monday must be available for withdrawal by the
following Thursday. The depositary bank must make the proceeds
of nonlocal checks available for withdrawal by the seventh
business day following deposit; that is, the proceeds of a Monday
deposit must be available for withdrawal by Wednesday of the
following week.
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As was done with the seven previous "check aging" studies
(July 1980, March 1981, November 1982, November 1984, November
1985, January 1987 and November 1988), the attached forms are to
be completed by each Committee member for each type of fund.
Please complete a separate form for each fund and fill out both
sides of each form.
In accordance with a special request from the SEC, please
note that this year's survey requests information regarding
foreign checks. Namely, we are requesting that you separately
report the number of foreign checks returned in November and the
number and corresponding total dollar amount of foreign checks
sent to drawee banks for collection in November.
Please supply the information requested for the items
enumerated on the form as follows:
(1) The number of checks returned that were drawn against
domestic banks and cleared through the Federal Reserve
System.
(2) The number of checks returned that were drawn against
foreign banks and sent out for special collection
by the fund's custodian. Please note that this is a
new item.
(3) The number of redemption requests refused in
November because of uncollected payments (as
set forth as fund policy in No. 4 below).
(4) Each fund's policy (if any) with respect to how long
investments made by personal check are held before
redemption proceeds are mailed or wired, or a check
is permitted to be drawn against the shareholder
account. Please state the fund's policy as
set forth in the prospectus.
(5) The total number of all shareholder checks
drawn on domestic banks and cleared through
the Federal Reserve System that were
deposited and cleared in the month of
November for each fund.
(6) The total number of foreign checks sent out
by the fund's custodian for special collection
in November and their corresponding total dollar
amount. Please note that this is a new item.
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It is very important that we have maximum participation in
this year's study. The previous check aging studies have been
most valuable for the Institute in responding to questions before
the SEC, Federal Reserve and the Congress. Participation and
completion of this study by all Committee members is most
important as this will be the second check aging study performed
after the effective date for banks implementing the new rule.
Therefore, please contact your transfer agent as soon as possible
so that they can be prepared to start the study on November 1,
1989. If you are new to the Operations Committee and have not
participated in prior studies and you have questions regarding
the study, please call Donald O'Connor at the Institute.
Please return the completed form(s) and any other responses
or comments you may have as soon as possible in December. Send
them to Rita Pemberton, Investment Company Institute, 1600 M St.,
N.W. - 6th Floor, Washington, D.C. 20036. If you have any
questions, please contact Donald E. O'Connor at 202/955-3550.
Robert W. Blucke
Chairman
Attachments