text: twobanksmightnotbefinaluntilthefundstransfer between thetransferor andtransferee wasfinalundertheappropriate rule. 28.Whentherearethreeormorebanks.thedichotomy between thefunds transfer fromtransferor totransferee andthefundstransfer transaction between eachpairofbanksbecomes bothclearer and more important. A three-or-more-bank large-value fundstransfer oftenpassesthrough an electronic clearing-house whichhasclearly defined rulesastothetimewhen thetransfer isfinalasregards thesending andreceiving banks. \o1henthe sending andreceiving banksarebothintermediary banksinregardtothe customer transfer. thatintermediary segment oft.hefundstransfer maybe finaleventhoughthefundstransfer mustpassthroush oneormoreadditional banksbeforeitarrives atthetransferee bank. 29.Thefinality ofafundstransfer transaction between intermediary banks couldbeexpecled toterminate therightofthesendins bankinthat transaction towithdraw itsfundstransfer instruction. Therefore. oncethat fundstransfer transaction hadbeencompleted. thesending bank'ssubsequent receipt ofanoticethatthetransferor hadwithdrawn hisfundstransfer instruction wouldbetoolatetoaffectthetransaction. Forthesamereason. noticeofthedeathofthetransferor. conwencement ofinsolvency proceedinss• •• •A/CN.9/266/Add~1 English Page9 against himorattachment ofhisaccount wouldalsobetoolate.This suggests thatthereceiving bankinthefundstransfer transaction mightalso havenoobligation topasstoitscreditpartyanysuchnoticeitmayhave received. Ifthisisthecase,thelegaleffedofthesevarious notices in respect ofthefundstransfer as awholemightalsobeterminated bythe finality ofanintermediate fundstransfer transaction. Inordertoovercome thisresult, thetransferor bankorsending hankmightherequired tosendthe noticedirectly tothetransferee bank. 30.Theearlyfinality ofafundstransfer t.r.ansactionhasthefut'ther effect ofprotecting thefundstransfer process fromthefailure ofaninterme<;iiary banktosettleforthett'ansaction. Thismatterisdiscussed belowin pat'agraphs 97to99andintheAnnex. C.Changes intechnology affecting finality 31.Evenbeforetheadventofmodernelectronic fundstransfer techniques, changes inthetechnology usedtoprocess paper-based fundstt'ansfer instructions hadaffected therulesgoverning thefinality offundstt'ansfers. 1.Individual processing ofpaper-based instructions 32.Thett'aditional rulesgovAt'ning finality weredeveloped inthecontext of individual pt'ocessing ofpaper-based fundstransfer instructions. Therules tendedtobebasedonfourfactual assumptions whichweremoreorlesscommon tothemajority ofbanking systems. Thesefactual assumpt.ions werethat: Account records werekept.intangibleandvisibleformatthebankor branchatwhichtheaccount wasmaintained. Forpurposes oftherules governing finality (aswellastherulesgoverning theperiodoftime within whichthebankwasrequired toact),therelevant actions took placeatthatbranch. Eachfundstransfer instt'uction wasprocessed bothattheoriginating bankandatthedestination bankas anindividual itemandnotaspartof abatch. Theflowofworkcausedinstructions tobeverified andtobeposted intheordertheyarrived atthebranch andtobeprocessed inastandard wayculminating inposting theaccounts andsending ofnotices,ifany. At anygivenmomentitwaspossible toknowwhatverifications Ot' decisions hadbeenmadewithrespect toagivenfundstransfer instruction and byreferring totheaccount recorditwasalwayspossible toknowthe orderinwhichtheinstructions hadbeenreceived andhonoured. Thevolumeoftransactions wassmallenoughtopermittakingallthe stepsnecessary tohonourordishonour .thedebitandcredittransfer instructions onthedaytheywerereceived. Clearing-house rulesoften required anyreturnitems.e.g.dishonoured debittransfer instructions, tobereturned onthesameday,andrulesonfinality oftenpermitted the reversal ofentries onthatsameday,butnotlater. Acut-off timewas sometimes established forinstructions received toolateinthedayto permitprocessing onthatsameday.Tnsuchcasesinstructions received afterthecut-off timecouldbetreated ashaving beenreceived thenext day.A/CN.9/Z66/Add.1 English Page10 Z.Batch-processing 33.Theuseofbatch-processing techniques changes anumb~rofthefactual assumptions onwhichthetraditional rulesonfinality wereoftenbased: Inordertogaintheoperational efficiencies possible in batch-processing largevolumes oftransactions. centralized data processing facilities havebeencreated. Account records arenolonger keptattheindividual branches ofabank.Performance oftherelevant
analysis: The text appears to be discussing the technical aspects of financial transactions, particularly in the context of large-value fund transfers between banks. It delves into the rules governing the finality of these transactions, highlighting the impact of technological advancements on the process. Given the focus on banking and financial transactions, it seems likely that the text is related to the financial sector.