Academic journal article ABA Banking Journal

Business MMDAs

Academic journal article ABA Banking Journal

Business MMDAs

Article excerpt

Q. Do the pre-authorized transaction limits found in Regulation D apply to business-held Money Market Deposit Accounts (MMDAs)?

A. Yes. 12 CFR 204.1(b) states:

"Purpose. This part relates to reserves that depository institutions are required to maintain for the purpose of facilitating the implementation of monetary policy by the Federal Reserve System."

Moving forward, 12 CFR 204.2 (d) (2) states:

"The term savings deposit also means: A deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account ('MMDA'), that otherwise meets the requirements of [section] 204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle (or similar period) of at Least four weeks, to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order or instruction, and no more than three of the six such transfers may be made by check, draft, debit card, or similar order made by the depositor and payable to third parties. …

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