DEFINITION of 'Regulation J'

A regulation set forth by the Federal Reserve. Regulation J establishes the core guidelines for the processing of checks and other cash instruments for Federal Reserve Banks, senders and payers of checks, and recipients and senders of Fedwire funds. It also allows for these items to be settled on a net basis.

BREAKING DOWN 'Regulation J'

Regulation J also stipulates the collection framework for sent checks for banks or depository institutions. It also describes the procedure for presentation to a paying bank as well as the return of items that are unpaid. Member banks of the Federal Reserve also periodically publish operating circulars that serve as supplements to the Regulation.

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