The New York Clearing House Association has formed a regional check- clearing exchange it hopes will simplify check clearing and settlement for New York-area banks by absorbing smaller regional clearing houses.
The Long Island Clearing Association is the first clearing house merging its operations into the new organization, which is called the Northeast Regional Check Exchange. The Long Island association settles about 525,000 checks a day for 16 bank members.
NYCHA settles for about 80 institutions in the New York area and daily clears more than 1.2 million checks, worth about $10 billion.
The idea behind the new exchange is to standardize rules. The country has about 200 local clearing house groups, all of which have similar, yet distinct sets of check clearing and settlement rules.
Neil Savino, vice president at Bank of New York Co. and chairman of the Northeast Regional Check Exchange, said interstate banking has prompted a growing number of local clearing relationships.
"I think many of the banks in different clearing associations will look to consolidate so they can operate under a standard set of rules," he said.
Henry C. Farrar, senior vice president at the New York Clearing House Association, said the Northeast Regional Check Exchange could advance electronic check initiatives.
"I think you will see more regionalization of the clearing process," he predicted.
Mr. Farrar said the check exchange hopes to attract other clearing houses soon.
Another clearing house group formed to consolidate the industry is the Fourth District Clearing House, which was formed late last year by several organizations, including the Federal Reserve Bank of Cleveland.
