E McQuerry F3X Pilot Mexico Description GPF

Fixed-to-Fixed Foreign Exchange (F3X) Pilot Overview: 

Fixed-to-Fixed Foreign Exchange (F3X) Pilot Overview NACHA Global Payments Forum September 12-13, 2007

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Efficiency of ACH using CBR/ PBR NACHA Cross-Border formats Standard Cross-Border and F3X items in same file as domestic ACH items. Required to batch standard cross-border (Directo a México) and F3X items separately ODFI can manage own FX conversion Ability for Originator to send exact peso amount (beneficial for invoice payments, trade payments etc) ODFI required to provide limited information to Mexican Correspondent – including total peso amount Maintain originator’s privacy for entry detail record information Value Proposition to ODFIs

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Banks Participating in SPEI 53 Financial Institutions

Standard Flow – Directo a México: 

Standard Flow – Directo a México ODFI FedACH Banxico RDFIs Settlement Bank Originator FRB MPLS – Gateway Operator FX Agent FedACH International Mexico Service (Directo a México) ODFI settles with FRB in US$ Banxico and FRB settle in US$ through U.S. settlement bank Service works under NACHA formats and NACHA Rules – Gateway Operator Uses Domestic ACH framework plus Gateway Operator Set-up Foreign Exchange is done at Banxico (through FX agent)

F3X Players: 

F3X Players Originator = ODFI customer USODFI = ODFI FRB = Federal Reserve Bank Banxico = Banco de México MCFI = Mexican Correspondent Financial Institution (settlement account) RDFI = Receiving Bank in Mexico

What is different about the F3X Service?: 

What is different about the F3X Service? ODFI FedACH Banxico RDFIs Settlement Bank Originator FRB MPLS – Gateway Operator FX Agent ODFI FedACH Banxico RDFIs Mexican Correspondent Settlement Bank Originator FRB MPLS – Gateway Operator FedACH International Mexico Service (Directo a México) F3X Mexico Service FX Conversion FX Conversion

F3X Flow: 

F3X Flow ODFI has $0 settlement with FedACH FedACH and FRB MPLS act as a messaging service only Foreign Exchange is done at the ODFI level ODFI settles with Banxico via a Mexican Correspondent Bank Disbursement from Banxico: no later than 11:30 CT ODFI FedACH Banxico RDFIs Mexican Correspondent Settlement Bank Originator FRB MPLS – Gateway Operator F3X Mexico Service

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Pooled or Batched Settlement Pooled Settlement – ODFI sends one settlement instruction to the Mexican Correspondent (MCFI) with total pesos amount for all F3X Batches transmitted to FedACH for the day Batched Settlement – ODFI sends one settlement instruction to MCFI with total pesos amount for each F3X Batch transmitted to FedACH for the day Settlement Process

F3X Returns/Rejects: 

F3X Returns/Rejects FedACH Rejects (same as domestic ACH) Banxico Returns ACH returns Settlement returns Insufficient Funds (Pooled/ Batched) Mismatched Batches or Funding Excess Funds Mexican RDFI Returns

F3X Framework: 

F3X Framework Service uses NACHA formats and is subject to the general provisions in the NACHA Cross-Border Rules FedACH acts as a messaging service only The legal relationships between all parties are governed by a separate set of contractual rules that reflect the changing roles for the USODFI, FRB and Banxico Agreement between FRB and Banxico Agreement between US ODFI and FRB Revision in Mexico SPEI Rules/ Manual

Contact : 

Contact Elizabeth McQuerry Federal Reserve Retail Payments Office (404) 498-7888 elizabeth.mcquerry@atl.frb.org Elena Whisler Federal Reserve Retail Payments Office (404) 498-7879 elena.whisler@atl.frb.org