October 29, 1996
TO: OPERATIONS COMMITTEE No. 30-96
RE: CHECK AGING STUDY - MAY, 1996
______________________________________________________________________________
At its October 20, 1996 meeting, the Operations Committee reviewed the results of the
check aging study conducted in May 1996 and concluded that an additional study should be
conducted during the month of November, 1996. The results of the May 1996 study, which
were previously provided (See memo to Operations Committee No.20-96-dated August 27,
1996) indicated that checks were not clearing as quickly as in previous studies. This is an
apparent reversal of the acceleration of check clearing noted in prior studies conducted after the
implementation of the Expedited Funds Availability Act in the late 1980s. Thus, the Committee
agreed that an immediate follow-up study is needed to test these surprising results
Previous check studies conducted by the Institute have aided mutual funds in
establishing appropriate redemption policies regarding hold periods. Due to the increased
level and sophistication of check fraud, some Operations Committee members have been
reviewing their current hold policies to ensure there is sufficient time to detect and prevent
potential fraud schemes. The survey has also been useful for the Institute and its members in
responding to inquiries from the SEC and the Federal Reserve regarding check clearing and
hold policies.
Please be prepared to collect information on either a.) seven of your complexs mutual
funds (preferably three equity funds, three bond funds, and one money market fund OR, b) if
you prefer, all the funds in your complex. In the May 1996 study, several complexes found it
easier to provide information for all their funds rather than a sample selection of funds. Either
method is acceptable. Forms for the study will be mailed separately this week. This memo is
to inform you that you should be prepared to begin collecting information for the month of
November. This information should be returned to the Institute no later than January 31, 1997.
If you have any questions regarding the survey, please contact the undersigned at
202/326-5850. Thank you for your cooperation and assistance in this effort.
Justine Phoenix
Director - Operations/
Transfer Agency
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