Fedwire and National Settlement Services

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The Federal Reserve provides the Fedwire Funds Service, the Fedwire Securities Service, and the National Settlement Service.

Data on these activities and a description of the services appear below. For further information, please see the Federal Reserve Financial Services web site.

Fedwire Funds Service

The Fedwire Funds Service provides a real-time gross settlement system in which more than 9,500 participants initiate funds transfers that are immediate, final, and irrevocable when processed. Participants that maintain a reserve or clearing account with a Federal Reserve Bank may use Fedwire to send payments to, or receive payments from, other account holders directly. Participants use Fedwire to handle large-value, time-critical payments, such as payments for the settlement of interbank purchases and sales of federal funds; the purchase, sale, and financing of securities transactions; the disbursement or repayment of loans; and the settlement of real estate transactions.

In the Fedwire Funds Service, only the originating financial institution can remove funds from its Federal Reserve account. Originators provide payment instructions to the Federal Reserve either on line or off line. On-line participants send instructions through either a mainframe or PC connection to Fedwire, and no manual processing by the Federal Reserve Banks is necessary.

Off-line participants give instructions to the Reserve Banks by telephone. Once the telephone request is authenticated, the Reserve Bank enters the transfer instruction into the Fedwire system for execution. The manual processing required for off-line transactions makes them more costly, and thus they are suitable only for institutions with small, infrequent transfers.

The Fedwire Funds Service business day begins at 9:00 p.m. Eastern Time (ET) on the preceding calendar day and ends at 6:30 p.m. ET, Monday through Friday. For example, on a Sunday, the Fedwire Funds Service will open at 9:00 p.m. ET with a cycle date of Monday, although transfers sent from 9:00 p.m. to midnight ET on Sunday will settle in real time on Sunday. The deadline for initiating third-party transfers (transfers initiated by a depository institution on behalf of its customers) is 6:00 p.m. ET.

Fedwire Securities Service

The Fedwire Securities Service consists of a safekeeping function and a transfer and settlement function. The safekeeping function involves the electronic storage of securities records in custody accounts. The transfer and settlement function involves the transfer of securities between parties.

Transfers of Fedwire book-entry securities are initiated in the same manner as Fedwire funds transfers. More than 9,100 participants maintain a reserve account with a Federal Reserve Bank and use the Fedwire Securities Service to hold and transfer U.S. Treasury and U.S. government agency securities (including mortgage-backed securities), as well as securities issued by certain international organizations such as the World Bank. These securities are held and transferred in electronic (book-entry) form; the U.S. Treasury and international organizations no longer issue physical securities, nor do most federal agencies.

Securities transfers can be made free of payment or against a designated payment. Nonetheless, most securities transfers involve the delivery of securities and the simultaneous exchange of payment for the securities, a transaction called delivery-versus-payment. The transfer of securities ownership and related funds (if any) is final at the time of transfer.

Access to the Fedwire Securities Service is limited to depository institutions and a few other organizations, such as federal agencies, state government treasurer's offices (which are designated by the Department of the Treasury to hold securities accounts), and limited-purpose trust companies that are members of the Federal Reserve System. Nonbank brokers and dealers typically hold and transfer their securities through depository institutions that are Fedwire participants and that provide specialized government securities clearing services.

The core operating hours for the Fedwire Securities Service are 8:30 a.m. to 3:15 p.m. ET, Monday through Friday, excluding designated holidays; during these hours participants can originate on-line securities transfers. On-line participants can initiate reversal transactions until 3:30 p.m. ET and move (reposition) their securities among their securities accounts until 4:30 p.m. ET for payment and until 7:00 p.m. free of payment. Off-line participants can initiate securities transfers or other requests from 9:00 a.m. to 1:30 p.m. ET for same-day processing and until 4:00 p.m. ET for future-day processing. Under special circumstances, participants can ask the Federal Reserve Banks to extend the Fedwire Securities Service operating hours. A complete time schedule and list of holidays is available in appendix B of Operating Circular 7. Guidelines pertaining to the extension of Fedwire hours are also available in Operating Circular 7.

National Settlement Service

The National Settlement Service (NSS) allows participants in private-sector clearing arrangements to exchange and settle transactions on a net basis through reserve or clearing account balances. NSS is available to arrangements that settle across Federal Reserve Districts as well as to arrangements that settle entirely within a single Federal Reserve District. There are approximately seventy NSS participants including check clearinghouse associations, automated clearinghouse (ACH) networks, and credit card processors.

NSS provides an automated mechanism for submitting settlement files to the Reserve Banks, improves operational efficiency, and reduces settlement risk to participants by granting settlement finality on settlement day. NSS also enables Reserve Banks to manage and limit risk by incorporating risk controls that are as robust as those used in the Fedwire Funds Service. Participants can submit NSS files for processing between 8:30 a.m. and 5:00 p.m. ET; files submitted earlier than 8:30 a.m. are queued for processing beginning at 8:30 a.m.