What is a cap breach? When does a cap breach occur?
A cap breach occurs when an institution’s account balance for a particular day shows one or more negative end-of-minute account balances larger than its single-day net debit cap or its “max cap” (single-day cap plus its collateralized capacity) . In addition, a cap breach would occur if an institution’s average peak daily overdraft over a reserve maintenance period were greater than its two-week average cap or its “max cap” (two-week-average cap plus its collateralized capacity).
