Fed Proposes Changes to Reg J to Accommodate FedNow

The Federal Reserve today proposed to create a new subpart of Regulation J that would provide a “comprehensive set of rules” to govern funds transfers made through FedNow, the real-time payments network the Fed is developing.

The new subpart, Subpart C, would specify terms and conditions under which reserve banks will process funds transfers, and grants the reserve banks authority to issue an operating circular for the FedNow service. Also included in Subpart C would be a requirement for a FedNow participant that is the beneficiary’s bank to make funds available to the beneficiary immediately after it has accepted the payment order over the service.

The proposal also includes changes and clarifications to Subpart B of Reg J—which governs the Fedwire Funds Service—to reflect that the reserve banks will be operating a second funds transfer service in addition to Fedwire, along with technical changes to Subpart A, which governs check service. Comments on the proposal are due 60 days after publication in the Federal Register.