The Federal Reserve Board of Governors should conduct additional outreach on expanded operating hours for the FedWire Funds Service and National Settlement Service (NSS) before proceeding with a final rule. America’s Credit Unions Director of Innovation and Technology Andrew Morris shared these comments with the Fed Friday, in response to the Fed’s proposal to expand hours for both services to 22 hours a day, seven days a week, 365 days per year.
The most significant potential change for credit unions is the transition to weekend and holiday operating hours, creating increased staffing costs, and some credit unions have expressed strong disagreement with any expansion of operation hours.
“A rule that benefits only a few large institutions connected to international business markets should not come at the expense of high staffing costs and elevated fraud risks for credit unions, particularly when FedNow may adequately address domestic, consumer demand for weekend settlement that does not exceed high value limits,” Morris wrote.
A more gradual implementation approach could help reduce weekend costs, allow a more gradual ramp up in staffing, and permit better tests around demand and use cases, Morris added. The Fed should also “consider how new message format or directory capabilities might enable more precise application of expanded operating hours to certain types of transactions,” he continued.
Extended hours would be implemented no sooner than two years after the implementation of the ISO 20022 message format for the Fedwire Funds Service, scheduled for March 2025.
“America’s Credit Unions agrees that planning for implementation only after a successful migration to the ISO 20022 message standard is sensible; however, some credit unions suggested a phased implementation approach where weekend hours are limited to test demand and adjust to new operational burdens,” Morris wrote.
