End of Day Settlement



Overview

DTC's Settlement Operations group controls and coordinates the settling of Participant accounts and Settling Bank accounts on DTC's systems. A Settling Bank is a bank Participant that settles for itself and may settle for other Participants for which it is the designated Settling Bank, including other bank Participants. A Settling Bank can be located in any Federal Reserve district, but it must have access to the Settlement User Interface and online access to the National Settlement Service (“NSS”) provided by the Federal Reserve Banks (individually and collectively, the “Fed” unless indicated otherwise) and Fedwire®.

Note– A Participant must make formal arrangements with DTC and a Settling Bank for that Settling Bank to be designated as the Settling Bank to settle with DTC on the Participant’s behalf. Each Settling Bank must sign an agreement with DTC prior to the bank performing as a Settling Bank. The actual settlement process occurs through NSS and is initiated when DTC posts final figures for Participants and Settling Banks.

Although the actual settlement process begins with the posting of final settlement figures at approximately 3:45 p.m. eastern time each day, DTC operates a settlement system that provides Participants and Settling Banks with online reports throughout the processing day. These reports reflect intraday gross debits, gross credits, and the net debit or credit for each Participant, as well as a net-net figure for each Settling Bank.

The end-of-day net-net settlement balance for each Settling Bank that settles on behalf of more than one Participant is the net of the net debit and net credit balances of all Participants for which that Settling Bank settles, after cross-endorsement with the National Securities Clearing Corporation (NSCC), including the Settling Bank’s own settlement obligations as a Participant if it settles for itself.

A Settling Bank may refuse to settle on behalf of another Participant for which it is the designated Settling Bank, in accordance with the processing schedule and other provisions set forth below. It is the primary obligation of each Participant to ensure that its net settlement balance, if any, is settled timely. If a Settling Bank does not settle on behalf of a Participant, as a result of a refusal to settle or otherwise, the Participant must make alternative arrangements to make payment to DTC via Fedwire® as set forth below. A Participant that acts as its own Settling Bank, whether or not it settles for others, may not refuse to settle for itself; if it does not fund its settlement obligation, it will be in default under the DTC Rules and Procedures.

Note- Any Settling Bank that settles for both Participants of DTC and members of NSCC will have its net-net credit or debit balances at DTC and NSCC aggregated and netted to one consolidated debit amount or credit amount, as applicable.

Example of the Calculation of a DTC Settling Bank’s Net-Net Settlement Balance:

The following details illustrate and example of how the settlement process works for DTC:

  • Settling Bank ABC settles for Participants 1, 2, and 3.
  • Participant 1 has a gross debit of $2 million and a gross credit of $1 million, giving it a net debit of $1 million.
  • Participant 2 has a gross debit of $3 million and a gross credit of $2 million, giving it a net debit of $1 million.
  • Participant 3 has a gross debit of $2 million and a gross credit of $3 million, giving it a net credit of $1 million.
  • Settling Bank ABC's net-net settlement balance would be a debit for $1 million, which is the sum of the net debits and credits of Participants 1, 2, and 3.

As illustrated in the example, net-net settlement reduces the number and the dollar amount of payments due to DTC. In the example, DTC would instruct the Fed to charge the Settling Bank's American Banking Association (ABA) routing number for $1 million via NSS.

Note– Although each Settling Bank settles with DTC on one net-net amount, the Settling Bank is responsible for collecting final net debits from, and paying final net credits to, the Participants it represents.

As part of the net-net process, DTC employs a netting procedure with NSCC called cross-endorsement. Under cross-endorsement, each Participant's net debit at one organization is netted against the amount of its net credit, if any, at the other organization.

Looking back at the previous example in the Overview of End-of-Day Settlement, if Participant 1 had a net credit of $1 million at NSCC, it would be applied to its DTC net debit of $1 million, making its DTC net balance zero. This would make Settling Bank ABC's net-net balance zero and eliminate the need to settle a debit with DTC. (Participant 1's net balance would be zero after the cross-endorsement process; Participant 2's net balance would still be a debit of $1 million, but this debit would be offset by Participant 3's net credit of $1 million.) While the cross-endorsement process impacts the net-net figures of Settling Banks by affecting the net balances of the Participants for which they settle, the process is transparent to Settling Banks and is simply a component of each Participant's net balance.

A Settling Bank can limit the net debit cap assigned to each Participant it represents. However, the maximum amount set by a Settling Bank cannot exceed the Participant’s system-calculated net debit cap established by DTC.

To establish or change the net debit cap for a Participant for which it settles, the Settling Bank must submit a letter of instruction to DTC requesting the amount of the net debit cap for the Participant. This letter should be sent via e-mail to This email address is being protected from spambots. You need JavaScript enabled to view it. using the Settling Bank’s e-mail domain, or via mail or overnight delivery addressed to:

The Depository Trust Company
Executive Director, Enterprise Risk Management
55 Water Street
New York, NY 10041

DTC will process an instruction received by 2:30 p.m. eastern time, in time to be effective as of the opening of the next business day.

The following table shows the processing schedule for Settling Banks. All times are eastern time.

 

At this time...

This process takes place...

3:45 p.m. (approximately)

All settlement balances become final and the settlement period begins:

  • DTC posts the final net debit or net credit for each Participant and the final net-net debit or net-net credit for each Settling Bank.
  • Verification that final net cutoff has taken place; the message 'Final Figures' and the time they became final will appear in the Settlement Web. Settling Banks can view their respective final net-net settlement balances via the Settling Bank Account Statement made available via the Settlement Web.
  • Settling Banks that settle for other Participants must acknowledge their net-net settlement balances at this time (the system will not allow this until final figures are posted). However, a Settling Bank that settles only for itself (only its own Participant account) is not required to acknowledge its settlement balance.
  • Once final figures are posted, DTC sends periodic reminder messages to each Settling Bank until the Settling Bank either affirmatively acknowledges its balance or notifies DTC of its refusal. (Note that reminder messages may still be generated after the Settling Bank has been deemed to have acknowledged its settlement balance in accordance with the “Acknowledgment and Refusal Procedures” set forth below. Notwithstanding delivery of reminders, once a Settling Bank is deemed to have acknowledged its balance it may not notify DTC of a refusal to settle for a Participant for which it is the designated Settling Bank).
  • A Settling Bank with a final net-net debit must ensure that funds are available in its Fed account for payment via the NSS. (See Settlement Payment for Net-Net Debit Balances below for more information.)

The later of :
4:15 p.m. and the time that is 30 minutes after net-net settlement balances are first made available

Cutoff for each Settling Bank to acknowledge its net-net settlement balance or notify DTC that it refuses to settle for one or more Participants for which it is the designated Settling Bank (the “Acknowledgment Cutoff Time”).

 Approximately 4:30 p.m. (subject to settlement extensions)  DTC processes an NSS file (“NSS File”) with the Federal Reserve Bank of New York (“FRBNY”) to debit or credit each Settling Bank’s NSS account, as applicable. Note: If instructed by DTC, in the event that NSS is unavailable, Settling Banks in a net-net debit balance must remit payments to DTC via Fedwire® by the later of 5:00 pm or 1 hour  after net-net settlement balances are first made available, except that all such payments must be remitted prior to the close of the Fedwire®.
 5:00 p.m.  

Cutoff for Participants to enter valued DOs and pledges to their Settling Banks and the Settling Bank's authorization of those transactions:

  • Eligible Participants can process valued DOs and pledges to a Participant or to pledgee accounts of their Settling Bank (for example, to a Participant or pledgee account specified in advance by the Settling Bank, not just any Participant or pledgee within the Settling Bank)
  • These transactions can be processed after final figures and before 5:00 p.m. because they only affect a Participant's net figures, not those of the Settling Bank.


Note–DTC programmatically subjects these transactions to the Settling Bank's authorization via the Receiver Authorized Delivery (RAD) process. Also, to become eligible to process these transactions, Participants must sign an agreement with their Settling Bank and notify DTC about it.

   

Acknowledgment and Refusal Procedures

Each Settling Bank that is the designated Settling Bank for another Participant or for other Participants must use the Settling Bank Acknowledgment function to perform acknowledgment activities promptly after final figures have been posted and by the Acknowledgment Cutoff Time. Once the message 'Final Figures' appears on the Settlement screen, each Settling Bank that settles for other Participants should access the Settling Bank Acknowledgment function and take one of the following actions:

  1. Acknowledge its entire net-net settlement balance, or
  2.  Refuse to settle for one or more other Participants for which it is the designated Settling Bank.  

Subject to Item 7 and Item 9 below, if a Settling Bank that settles for other Participants does not, by the Acknowledgment Cutoff Time (i) affirmatively acknowledge its net-net settlement balance or, alternatively (ii) notify DTC that it refuses to settle for one or more Participants for which it is the designated Settling Bank, then, at the Acknowledgment Cutoff Time, the Settling Bank is deemed to have acknowledged its net-net settlement balance.  If the net-net settlement balance is a debit, then the Settling Bank’s Fed account will be charged; if the net-net settlement balance is a credit, then the Settling account will be credited. 

The following additional procedures also apply to the acknowledgment and refusal process:

  1. A settling Bank that settles for other Participants must acknowledge its net-net settlement balance or refuse to settle for one or more other Participants for which it is the designated Settling Bank by the Acknowledgment Cutoff Time, but cannot refuse to settle for itself.
  2. A Participant that is a Settling Bank only for itself (and not for any other Participant) need not acknowledge its balance and cannot notify DTC that it refuses to settle.
  3.  A notification to DTC by a Settling Bank of the Settling Bank’s refusal to settle for a Participant for which it is the designated Settling Bank is a refusal to settle all settlement obligations of that Participant (including the Participant's main account and all subaccounts thereunder).
  4. After a Settling Bank notifies DTC of its refusal to settle for one or more Participants for which it is the designated Settling Bank, DTC extracts from the net-net settlement balance of that Settling Bank the net balance(s) of the Participant or Participants for which the Settling Bank  has refused to settle, and provides the Settling Bank with an adjusted settlement statement reflecting the Settling Bank’s adjusted net-net settlement balance (the “Post-Refusal Adjusted Balance”).  The Settling Bank’s response to provide an acknowledgement of the Post-Refusal Adjusted Balance is immediately required.
  5. Subject to Item 7 and Item 9 below, if a Settling Bank that has been provided with a Post-Refusal Adjusted Balance does not immediately affirmatively acknowledge its Post-Refusal Adjusted Balance, then, the Settling Bank is deemed to have acknowledged its Post-Refusal Adjusted Balance.  If the Post-Refusal Adjusted Balance is a debit, the Settling Bank’s Fed account will be charged; if the Post-Refusal Adjusted Balance is a credit, the Settling Bank’s Fed account will be credited.
  6. If, after the initial release of final settlement figures, a Settling Bank’s net-net settlement balance is adjusted by DTC for any reason other than as a result of a Settling Bank’s refusal to settle on behalf of a Participant for which it is the designated Settling Bank, then the Acknowledgment Cutoff Time for that Settling Bank would change to become 30 minutes after DTC advises the Settling Bank of the adjusted net-net settlement balance.
  7. If a Settling Bank cannot (i) by the Acknowledgment Cutoff Time, send an acknowledgment or refusal instruction, or (ii), if applicable, send an immediate acknowledgment of the Post-Refusal Adjusted Balance, to DTC then it must immediately contact DTC using the Settlement Hotline at (212) 855-5800. If a Settling Bank complies with this Item 7, then it will not be deemed to have acknowledged its balance.  If the problem is due to a connectivity issue with DTC, DTC Settlement Operations may then direct the Settling Bank to submit its acknowledgement/refusal instruction via e-mail to This email address is being protected from spambots. You need JavaScript enabled to view it., or as otherwise specified by DTC at that time.
  8. In order to facilitate timely processing of the NSS File, DTC maintains its discretion to exclude a Settling Bank’s balance from the NSS File, and proceed with NSS settlement, if the Settling Bank does not acknowledge its net-net settlement balance by the Acknowledgment Cutoff Time, or if the Settling Bank has provided a refusal, does not immediately acknowledge its Post-Refusal Adjusted Balance, as applicable.  If a Settling Bank’s debit balance is excluded from the NSS File, then, the Settling Bank must pay it via Fedwire® in accordance with the instructions provided below.
  9. For a Settling Bank that is the designated Settling Bank for other Participants, DTC will attempt to contact the Settling Bank if (i) no acknowledgment or notice of a refusal to settle on behalf of one or more Participants for which it is designated as the Settling Bank is received by the Acknowledgment Cutoff Time, (ii) if applicable, the Settling Bank has failed to respond to DTC to acknowledge its Post-Refusal Adjusted Balance, or (iii) the Settling Bank has not contacted DTC in accordance with Item 7 above.  If (x) DTC is able to contact the Settling Bank, and (y) the Settling Bank notifies DTC that it cannot, at that time, acknowledge or refuse its net-net settlement balance or acknowledge their Post-Refusal Adjusted Balance, as applicable, then the Settling Bank will not be deemed to have acknowledged its net-net settlement balance or Post-Refusal Adjusted Balance, as applicable.  If the Settling Bank cannot be reached, the Settling Bank will be deemed to have acknowledged its net-net settlement balance or Post-Refusal Adjusted Balance, as applicable.  

DTC uses the most recent contact information provided by the Settling Bank to DTC.   Each Settling Bank must ensure that it maintains up-to-date and accurate contact details with DTC to facilitate DTC’s ability to contact a Settling Bank regarding settlement issues.  A Settling Bank must promptly provide its DTC Relationship Manager with up-to-date and accurate contact details for this purpose on an ongoing basis when previously provided contact details are no longer accurate.  

In the event that a Settling Bank has insufficient funds when the NSS file is run, or if Settling Banks must use Fedwire® because NSS in not available, a Settling Bank with a net-net debit settlement balance must fulfill its payment obligation to DTC by the later of 5:00 p.m. eastern time and the time that is one hour after the time that final figures are provided by DTC, except that all such payments must be remitted prior to the close of the Fedwire®. DTC's receipt of funds after the deadline will result in a late fee charged to the Settling Bank. (See Ultimately Funds Settlement / Failure to Acknowledge Fees.)

  1. A Settling Bank must settle its net-net debit settlement balance via NSS unless it has notified DTC of a connectivity issue with DTC or other good faith reason it cannot do so. NSS will allow DTC to instruct the Fed to debit the Settling Bank's account at the Fed for its net-net debit balance. If the Settling Bank's account has sufficient funds, it will be debited. Upon confirmation from the  Fed, the Settling Bank's DTC account will be credited to reflect payment of its net-net debit. If the Settling Bank's account has insufficient funds, DTC will receive notification from the Fed that the account was not debited. If this occurs, DTC will notify the Settling Bank of its deficiency. The Settling Bank must then  transfer the required funds to DTC by Fedwire®.
  2. Any Settling Bank that settles for both Participants of DTC and members of NSCC will have its net-net credit or debit balances at each  of DTC and NSCC aggregated and netted to one consolidated amount (See attached Addendum A).  At the end of each settlement day, after the  acknowledgment process is complete, DTC will instruct the Fed to debit the Fed account of each such Settling Bank which has a Consolidated Settlement Debit Amount by the amount determined in accordance with Addendum A.
  3. If a Settling Bank settles only for NSCC participants, DTC will instruct the Fed to debit such bank’s Fed account by the amount of its net-net debit owed to NSCC. If the Settling Bank’s account at the Fed has sufficient funds, it will be debited. If the Settling Bank’s account has insufficient funds, DTC will receive notification from the Fed that the account was not debited. If this occurs, DTC will notify the Settling Bank of the deficiency. Any Settling Bank with a deficiency must then transfer the funds to DTC by Fedwire®

Note– Each Settling Bank must monitor its Settling Bank Account Statement through the Settling Bank Statement function in the Settlement User Interface to ensure that funds have been credited to their account and that no debit balance exists. The Settling Bank must be prepared to transfer funds to DTC by Fedwire® if (i) there is a deficiency in its Fed account, (ii) the NSS File has been processed excluding the Settling Bank’s debit balance, as applicable, in accordance with the Acknowledgment and Refusal Procedures above, or (iii) NSS is unavailable or inoperable. DTC requires that a bank representative authorized to transfer funds be available at the Settling Bank until settlement is complete. If a Settling Bank is unable to access NSS due to extenuating circumstances and will send its wire directly to DTC’s FRBNY account for its debit balance, that Settling Bank must notify the DTC Settlement group prior to the Acknowledgment Cutoff Time.

If funds need to be transferred to DTC's account at the FRBNY, use the following guidelines for sending settlement payments:

  • Enter 026002066 (DTC's ABA number) in the Receiving Bank ABA Number field.
  • Enter DTC SDFS (DTC's telegraphic name) in the Receiving Bank Name field.
  • Enter 1600 in the Type Code field.
    Note–Type Code 1600 is the Fedwire® code for settlement wires. Wires sent with this code can be processed after the Interdistrict Fedwire® cutoff, whereas Type Code 1000 wires cannot. In the event that system problems delay outgoing wires, Type Code 1600 prevents wires to DTC from being rejected by the Fed after the Interdistrict cutoff.
  • Enter OBI = SET (indicating SET as the purpose of the wire) in the Originator to Beneficiary Information (OBI) field.
  • Note–The SET purpose must be indicated in the wire. If another field is used to indicate SET as  the purpose of the wire, OBI and SET must be separated by a space. For example, BBI = OBI SET, where BBI is the field used instead of the Originator to Beneficiary Information (OBI) field.
  • Enter values in other fields in Fedwire® format according to the Settling Bank’s own standard procedures.
  • Submit the instruction. DTC posts the payment as a credit to the Settling Bank’s Account Statement when payment for the net-net debit is received.
  • Review the Settling Bank’s net-net balance via the Settling Bank Statement function to ensure that DTC receives the funds.
    Note–The instruction format described above conforms to Fedwire® standards for funds transfers.  Settling Banks should note that the Originator to Beneficiary Information (OBI) field is required for DTC processing and must be included in all SET wires processed through the Fedwire® system.
  1. If DTC makes a borrowing as a result of the failure of a Settling Bank or Participant to complete timely settlement the Settling Bank or Participant will be charged interest on that borrowing as follows:

 

Interest Rates for Borrowings Made Due to Untimely Payment of Funds

 

Net Debit of Settling Bank or Participant Rate (percent)
First $5 million 2.0
Next $20 million 1.5
Next $50 million 1.0
More than $75 million 0.5

 

Note: A Settling Bank will not be charged interest under this provision with respect to the settlement balance of a Participant or Participants for which the Settling Bank settles where the Settling Bank timely notified DTC of its refusal to settle on behalf of such Participant or Participants.

 EXAMPLE:

Interest is calculated overnight on a 360 day/year basis. For a net debit of $100 million, the interest calculation is:

[($5 mm x 2%) + ($20 mm x 1.5%) + ($50 mm x 1%) + ($25 mm x 0.5%)] /360

which equals $2,847.

  1. a. Settling Banks and Participants are charged flat fees in accordance with the table below if their net settlement obligations are not timely satisfied. This fee is in addition to any interest charged pursuant to Item 1 above.
     
    b. In addition to Item 2a. above, a Settling Bank that settles on behalf of other Participants shall also be charged flat fees in accordance with the table below if it does not, by the Acknowledgment Cutoff Time, (i) affirmatively acknowledge its net-net settlement balance or (ii) notify DTC that it refuses to settle for one or more Participants for which it is the designated Settling Bank. The Settling Bank will not be charged a fee for failure-to-acknowledge or notify DTC of its refusal if it notifies DTC in accordance with Item 7 or Item 9 of the Acknowledgment and Refusal Procedures above that it cannot acknowledge or refuse its net-net settlement balance. This fee is in addition to any fee(s) for failure to timely satisfy a net settlement obligation charged pursuant to Items 1 and 2.a. above.

   

Flat Fees–Untimely Satisfaction of Settlement Balance /Settling Bank Failure-to-Acknowledge its Net Debit or Credit Settlement Balance

Net Balance of Settling Bank or Participant First Occasion Second Occasion Third Occasion Fourth Occasion
$ $ $ $ $
0 to 100,000 100 200 500 1,000
Between 100,000and 900,000 300 600 1,500 3,000
Between 900,00and 1,700,000 600 1,200 3,000 6,000
Between 1,700,00and 2,500,000 900 1,800 4,500 9,000
More than 2,500,000 1,000 2,000 5,000 10,000

EXAMPLE:

For a first occasion $100 million net debit, total fees equal $2,847 (fee interest) + $1,000 (flat fee) = $3,847.

Note–

  1. The number of occasions will be determined as a cumulative sum of the number of occasions incurred by a Settling Bank pursuant to Items 2.a. and 2.b. above over a rolling three-month period. If a Settling Bank or Participant, as applicable, exceeds four occasions in a three-month period, it will be subject to further fees and/or other actions at DTC's discretion.
  2. DTC may waive the fee in appropriate circumstances (e.g. such as a DTC system delay).
  3. A Settling Bank will not be charged a flat fee under this provision with respect to the settlement balance amount of a Participant or Participants for which the Settling Bank settles where the Settling Bank timely notified DTC of its refusal to settle on behalf of such Participant or Participants.

 

The following table describes the DTC Settlement processing schedule. All times are eastern time (ET).

 

Cutoff Time EST 

 

This Occurs

1:15 p.m.

 

DTC's cutoff for syndicate closings.

1:30 p.m.

 

DTC releases all pending delivery account (PDA) positions and reverts to default recycle processing.

2:00 p.m.

 

Cutoff for:

  • Valued MMI issuances.

2:30 p.m.

 

Cutoff for:

  • An Issuing and Paying Agent (IPA) to replace the Unknown Rate with a final rate for distribution - the IPA must successfully transmit the final rate to DTC before 2:30 PM ET.

2:45 p.m.

 

Cutoff for:

  • RAD approval of MMI valued issuance deliver order transactions.

2:55 p.m.

 

Cutoff for:

  • Entering release requests designating position as eligible for CNS.
  • Processing Valued MMI transactions for issuances, MMI DOs and maturity presentments in the MMI Optimization process.

3:00 p.m.

 

Cutoff for:

  • DTC’s receipt of an IPA’s MMI Funding Acknowledgement or refusal to pay notification.
  • An IPA to notify DTC of a Temporary Acronym Payment Failure (as defined below).
  • Forced Receiver Authorized Delivery (RAD) period begins.

Note: A Participant can continue to enter valued and free transactions. However, all valued transactions are forced into RAD and require the receiving Participant's approval.

3:10 p.m.

 

Cutoff for:

  • Pledgees to approve pledge release requests designating position as CNS-eligible.
  • Valued recycle cutoff. All non-MMI valued, CNS transactions and fully paid for and secondary MMI deliveries or maturity presentments that cannot be completed because of insufficient position, collateral, or net debit cap are dropped from the system.

Note: All valued transactions input or approved by Participants after this time will not recycle; they will either complete or drop.

3:15 p.m.

 

Optional "Push" profile that allows Participants to establish a standing withdrawal request for SPP returns and P&I withdrawals. Cutoff for government deposits and withdrawals.

3:20 p.m.

 

Cutoff for Settlement payment withdrawals and principal and income withdrawals.

Note: These are manual withdrawals as opposed to the “Push” profile described above.

3:20 p.m.

 

Forced RAD Delivery Period ends. Cutoff for entering:

  • Valued original DOs including unmatched reclaims
  • Original POs
  • Valued pledges
  • Valued pledge release requests.

Note: If a Participant has made prior arrangements with DTC and its Settling Bank, the Participant can continue to submit valued transactions to its Settling Bank.

3:30 p.m.

 

Cutoff for:

  • Pledgees to approve valued pledge release requests and enter valued release returns
  • RAD approval or cancellation for valued transactions (except MMI valued issuance DOs).

3:45 p.m.

 

DTC calculates DTC and NSCC cross-endorsement balances.

3:45 p.m.

 

DTC finalizes settlement balances for Participants and Settling Banks.

5:00 p.m.

 

Cutoff for:

  • Entering free Fed pledges to the Fed with extensions upon request to the Fed.
  • Pledgors' requests for release of positions pledged to the Fed.
  • Fed to input pledge release returns.
  • Entering valued DOs and pledges to a Settling Bank.
  • Settling Banks to authorize valued DO and pledge transactions.
  • MMI issuing agents to enter free original issuances (new CUSIP).
  • DTC to lift Risk Management Controls.
  • Free non-MMI DOs input after 5:00 p.m. to RAD if that option is activated by the receiving Participant.

6:15 p.m.

 

Cutoff for:

  • Entering free additional MMI issuances (existing CUSIP) and free deliveries
  • Pledgors to enter free pledges and free release requests
  • MMI issuing and paying agents to withdraw MMI securities.
  • IPA deadline to set the MMI MP Pend or Issuer Priority Control (IPC) profile that will be effective for next processing day.
  • OCC member’s release of deposit request and authorization to release positions pledged to the OCC.

6:30 p.m.

 

Cutoff for:

  • Approving or cancelling free MMI issuances through RAD.
  • Inputting day and night position transfer instructions (MA-to-NA transfers).
  • Pledgees to enter free pledge release returns.
  • Pledgees to approve free pledge release requests.

6:30 p.m.

 

Cutoff for the Authorization and Exemption function.

6:35 p.m.

 

Recycle cutoff for all free transactions.

6:45 p.m.

 

Cutoff for inputting segregation instructions.

7:30 p.m.

 

Cutoff for ANE.

8:00 p.m.

 

NDO cutoff.

 

 

DTC cannot grant any Participant an extension of the foregoing deadlines unless a substantial volume of transactions is involved. A Participant should notify DTC as early in the processing day as possible if it thinks it may need to request an input extension. This will allow DTC to discuss alternative methods of input.

To request an extension call DTC's Settlement Hotline at 212-855-5800.



This topic is an Addendum to the End of Day Settlement article, Settlement Payment for Net-Net Debit Balances (refer to step 2.)

Any settling bank that settles for both participants of DTC and NSCC will have its net-net credit or debit balances at DTC and NSCC aggregated and netted to one consolidated debit amount or credit amount as applicable.

DTC shall provide NSCC with services with respect to NSCC’s money settlement operations as described in, and in accordance with, the following procedures* :

  1. For purposes of this procedure, the following terms have the meanings specified:
    1. “Common Settling Bank” means any entity that has qualified and acts as a Settling Bank for both DTC and NSCC in accordance with their respective rules and procedures.
    2. “DTC Credit Amount” or “NSCC Credit Amount” means, as applicable, any net-net credit settlement payment due from the relevant clearing agency to a Common Settling Bank, as determined in accordance with the Rules and Procedures of the relevant clearing agency.
    3. “DTC Debit Amount” or “NSCC Debit Amount” means, as applicable, any net-net debit Settlement payment due to the relevant clearing agency from a Common Settling Bank, as determined in accordance with the respective Rules and Procedures of the relevant clearing agency.
    4. “Consolidated Settlement Debit Amount” means on any Settlement day the net sum, if a negative number (i.e. debits being deemed negative numbers, and credits being deemed positive numbers) of a Common Settling Bank’s applicable DTC Debit or Credit Amount, plus its applicable NSCC Debit or Credit Amount.
  2. For each Common Settling Bank on each Settlement day, DTC, as Settlement Agent, shall aggregate and net the DTC Credit and/or Debit Amount of the Common Settling Bank with the applicable NSCC Credit or Debit Amount of such Common Settling Bank and:

    1. If the Common Settling Bank has both a DTC Debit Amount and an NSCC Debit Amount, then following the acknowledgement of those respective balances by such bank in accordance with DTC and NSCC’s procedures, DTC shall instruct the FED to debit the FED account of such Common Settling Bank by the aggregate sum of such debit balances. DTC, upon receipt of such monies, shall credit NSCC with the amount of the NSCC Debit Amount, and credit DTC with the amount of the DTC Debit Amount, from such Common Settling Bank.

    2. If the Common Settling Bank has both a DTC Credit Amount and an NSCC Credit Amount, then at the time established in DTC and NSCC’s procedures, DTC shall instruct the FED to credit payment to the FED account of the Common Settling Bank with the aggregate sum of such credit balances, and shall debit NSCC with the amount of the NSCC Credit Amount, and debit DTC with the amount of the DTC Credit Amount, for such Common Settling Bank.

    3. If the Common Settling Bank has a Debit Amount at one clearing agency and a Credit Amount at the other, then:

      --If the sum of such DTC Credit Amount and NSCC Debit Amount (or DTC Debit Amount and NSCC Credit Amount, as the case may be) is a positive number, that excess amount (i.e. equal to the positive number) shall be owed by the clearing agency with the Credit Amount to the Common Settling Bank, shall be paid to the Common Settling Bank in the manner provided in clause 3(b) above, and the clearing agency with the Credit Amount shall pay the other clearing agency an amount equal to the Common Settling Bank’s Debit Amount owed to the other clearing agency, in full satisfaction of the Settlement obligation of the Common Settling Bank to the other clearing agency.

      --If the sum of such DTC Credit Amount and NSCC Debit Amount (or DTC Debit Amount and NSCC Credit Amount, as the case may be) is a negative number,then the absolute value of that amount shall be owed by the Common Settling Bank to the clearing agency to which the Common Settling Bank has a Debit Amount, such amount shall be paid by the Common Settling Bank via NSS in the manner provided in clause 3(a) above in full satisfaction of the Settlement obligation of the Common Settling Bank to such clearing agency, and the clearing agency with the Credit Amount shall pay the other clearing agency an amount equal to the Common Settling Bank’s Credit Amount, in full satisfaction of the Settlement obligation of the clearing agency from whom such Credit Amount was owed to the Common Settling Bank.

      --If the sum of such amounts equals zero (i.e. the Credit Amount due from one clearing agency equals the Debit Amount owed to the other clearing agency), then the clearing agency that owes the Credit Amount to the Common Settling Bank shall pay the amount of such Credit Amount to the other clearing agency in full satisfaction of both the Settlement obligation of the Common Settling Bank to the clearing agency owed the Debit Amount and the Settlement obligation of the clearing agency that owes the Credit Amount to such Common Settling Bank. In that instance, no payment shall be due to or from such Common Settling Bank to or from either DTC or NSCC.

    1. Notwithstanding the foregoing, if any Common Settling Bank fails to pay its Consolidated Settlement Debit Amount by the time specified in DTC and NSCC’s procedures, then (i) if that bank has an NSCC Debit Amount, NSCC shall implement its failure to settle procedures, and (ii) if that bank has a DTC Debit Amount DTC shall implement its failure to settle procedures.

    2. Under FRB Operating Circular No. 12, DTC, as Settlement Agent, has certain responsibilities in allocating an indemnity claim made by a FRB as a result of NSS. In making such an allocation, NSCC and DTC will first apportion any such liability between them (and their respective participants) in proportion to the amount of the net-net debit due to each clearing agency by the Settling Bank to which the indemnity claim relates. If that Settling Bank owed a debit to one and had a credit due from the other clearing agency, then the entire indemnity amount will be allocated to the clearing agency to which the Settling Bank owed the debit amount (and for which, via NSS, its FRB account was debited) relating to the indemnity claim. NSCC and DTC will then further allocate the FRB claim among their participants for whom the Settling Bank was then acting. If for any reason such allocation is not sufficient to fully satisfy the FRB indemnity claim, then the remaining loss will be allocated pro rata among all the applicable clearing agency’s participants in the same manner as provided in NSCC’s and DTC’s Rules with respect to a general (i.e., non-system related) loss.



    * DTC will act as “Settlement Agent” (as that term is used in the Federal Reserve Board’s Operating Circular 12 and in NSCC’s Rule & Procedures) for NSCC and NSCC’s Settling Banks, for purposes of (i) receiving and paying, as NSCC’s settling bank and for the account of NSCC, end-of-day money Settlement payments from or to, as applicable, NSCC Settling Banks and participants, (ii) with respect to the FED’s National Settlement Service, as the means of effecting such money settlement for NSCC, and (iii) netting the amounts of those Settling Banks that act as such for both DTC and NSCC, and crediting the account of either NSCC, or DTC, as the appropriate clearing agency, with the settlement amounts determined in accordance with this procedure.

    Settler Agreements provided by the Settling Bank to DTC for delivery to the FRB are hereby deemed to include the Settling Bank’s NSCC Settlement obligations as well as their DTC Settlement obligations.

     

This topic is an Addendum to the End of Day Settlement article Untimely Funds Settlement/Failure to Acknowledge Fees.

In addition, the following procedures apply when a Settling Bank does not timely satisfy its settlement balance.  Unless these procedures indicate otherwise, each paragraph of these procedures applies whether a Settling Bank’s settlement balance is a net-net credit or a net-net debit (or a net credit or net debit if the Settling Bank settles only for itself).  A reference in these procedures to the Participants that settle through a Settling Bank is also a reference to the Settling Bank itself as a Participant.  As supplemented by these procedures, all DTC agreements, rules and procedures relating to Settling Banks and Participants remain in effect.

1. If a Settling Bank that is the designated Settling Bank for other Participants (“Subject Settling Bank”) does not timely settle with DTC on a given settlement date (“Due Date”) in accordance with the timeframes provided in the DTC Settlement Service Guide, DTC will notify each Participant that settles through the Subject Settling Bank.  Each Participant must be prepared in advance to arrange for another bank to pay or receive funds via Fedwire® on the Participant’s behalf upon the instruction of DTC. 

2. In its discretion, DTC may decide not to make payments on the Due Date to some or all of the Participants that settle through the Subject Settling Bank and have net credit balances.  DTC will make such payments through the Subject Settling Bank on the next business day following the Due Date (“Next Business Day”) if, by 10 a.m. on the Next Business Day (the “SB Cure Time”), the Subject Settling Bank completes settlement with DTC and/or all Participants with net debit balances that would otherwise have settled through the Subject Settling Bank have wired payment to DTC in accordance with the preceding paragraph.  If the Subject Settling Bank does not complete settlement by the SB Cure Time, DTC may make such payments to Participants only when DTC settles with all of the Participants that otherwise would have settled through the Subject Settling Bank and had net debit balances on the Due Date.

3. If the Subject Settling Bank and defaulting Participants complete settlement with DTC by the SB Cure Time, DTC will charge the Subject Settling Bank for any interest charges and other costs associated with liquidity costs of completing settlement. Once DTC has completed settlement with the Subject Settling Bank, each Participant that settles through the Subject Settling Bank will be deemed to have settled with DTC for purposes of its net settlement balance on the Due Date and, if any of these Participants also paid its settlement obligation to DTC directly by Fedwire®, those Participants must resolve their obligations with the Settling Bank and, to the extent, if any, that DTC has been overpaid, it will refund the amount directly to the affected Participant unless instructed otherwise by the affected Participant.  DTC will not be responsible for any obligations of the Subject Settling Bank to or from such Participants.