HERNDON, Va. - The National Organization of Clearing Houses (NOCH), a trade association representing the largest and most active check clearing houses in the U.S., is almost finished with the first phase of its effort to review and standardize clearing house operating rules. The standardization effort began in February by the NOCH Board of Directors following a review by NOCH of its members' rules and operating procedures. Fred Redeker, president of NOCH and the Clearing House Association of the Southwest said the association "perceived the need to review clearing house operating rules with a view to standardizing those aspects of the rules that make sense to our member financial institutions." He added that the financials with check clearing operations in multiple regions would especially benefit from the reduced costs and common approaches that will result from the standardization. The standardization effort will consider every aspect of clearing house rules and approach them systematically, according to the priority attached to each component, NOCH reports. To establish priorities, each component will be reviewed in terms of cost-savings or improved risk management capabilities to be gained by clearing houses and their member financial institutions. Mary Dunn, associate general counsel for regulatory advocacy at CUNA, said, "The standardization effort could potentially have a significant effect on credit unions." Dunn viewed the effort as being "a positive thing." "It's always a benefit to credit unions whenever the payment system is efficient," she remarked. "Anything that improves the efficiencies of the payment system is good for credit unions." Admittedly only a few credit unions deal directly with clearing houses. More corporate credit unions have direct relationships with them. "Whether a credit union deals directly with a clearing house or not, they still have items that go through the clearing house," said Dunn. "So it's a benefit to credit unions and their members to have standardization." NOCH says it has already drafted standard adjustment rules and adjustment request forms. It plans to incorporate the information into final recommendations that will be made available so any clearing house can review them. -
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