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.)
- 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®.
- 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.
- 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.