Ms. Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20^th and Constitution Avenue, N.W.
Washington, DC 20551

Re: Docket No. R-1138

Dear Ms. Johnson:

The Association for Financial Professionals (AFP) welcomes the opportunity to comment on the Federal Reserve Board's proposal to expand operating hours for the Fedwire Funds Service. The Federal Reserve proposes to open Fedwire three and one-half hours earlier than the current opening time of 12:30 a.m. EST.  The new opening time would be 9:00 p.m., with a business date of the following calendar day. Closing time would remain unchanged at 6:30 p.m. EST.

AFP represents about 14,000 finance and treasury professionals who, on behalf of over 5,000 corporations and other organizations, are significant participants in the payments system. Organizations represented by its members are drawn generally from the Fortune 1,000 companies and the largest of the middle market companies. Many of AFP's members have responsibility for originating and receiving electronic funds transfers on behalf of their organizations. They thus have a sizeable stake in Federal Reserve regulations governing the operation of Fedwire.

AFP supports the Federal Reserve's proposal to expand Fedwire operating hours.  AFP members whose companies operate on global basis would be the primary beneficiaries. Opening at 9:00 p.m. would increase the amount of overlap of Fedwire operating hours with the operating hours of the major Asia-Pacific large-value payment systems. The result would be to reduce risk and improve efficiency for companies settling foreign exchange transactions.  Expanded hours would also enable companies with Asia-Pacific operations to send funds transfers to the U.S. later in the Asian business day.

In December 1997, the Federal Reserve expanded to an 18-hour operating day, opening Fedwire at 12:30 a.m. in order to overlap the European banking day. The new proposal would extend similar capability to the Asia-Pacific region. U.S. companies with only domestic operations would not be impacted by the change.

As in the previous expansion of operating hours, depository institutions would not be required to participate in the earlier operating hours. However, they would still receive funds transfers sent from participating institutions during these hours. Fees assessed to banks by the Federal Reserve for the use of intraday credit will not change for an overdraft of a given size and duration. The Board anticipates implementation during the second quarter of 2004.

The Federal Reserve had asked for comment on whether the Reserve Banks should continue to grant significant extensions to the Fedwire closing time during periods of substantial market disruption, even if it delays opening of Fedwire for the next business day. AFP recommends that the Reserve Banks continue this practice, using their own best judgment. The smooth functioning of the financial markets is essential, and the Reserve Banks should have the discretion to keep Fedwire operating during times of financial stress. When the new hours are implemented, however, the Federal Reserve might wish to monitor the operations of participating banks to determine their ability to complete end-of-day activities in time to begin start-of-day processes by 9:00 p.m.  Such monitoring would identify any operational problems that might cause degradation of the accuracy of account balance reporting to corporate customers.

AFP applauds the Federal Reserve's efforts to expand Fedwire hours to respond to the funds transfer needs of U.S. companies operating in an increasingly global economy. If you have any questions about this comment letter, please call Arlene Chapman of AFP at 301.961.8825.

Sincerely,