FDIC insurance eliminates the risks associated with money fund investing.
Diversification of deposits among several FDIC insured banks reduces overall credit exposure.
Cash is available daily.
Deposits up to the program maximum (currently $50M).
Access to millions in FDIC insurance through participating banks.
Avoid the burden of dealing with numerous bank relationships and benefit from a high level of FDIC insurance through a single contact point.
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Customer cash balances are sent daily into the DDM program and allocated into several program banks to ensure high levels of FDIC Insurance.
Funds participating in the Demand Deposit Marketplace program are deposited into deposit accounts at participating banks, which are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 for each category of legal ownership, including any other balances a bank customer may hold directly or through other intermediaries, including broker-dealers. The total amount of FDIC insurance in an account depends on the number of banks in the program. If the balance in the account is greater than the FDIC insurance coverage in the program, any excess funds will not be insured. Customers should read the Program Terms and Conditions carefully before depositing money into the program and for other important customer disclosures and information. To assure their FDIC coverage, customers should regularly review banks in which their funds have been deposited, and notify the sending bank immediately if the customer does not want to allocate funds to a particular bank or banks. The Demand Deposit Marketplace program is administered by Stable Custody Group II, LLC.
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What is the Demand Deposit Marketplace® (DDM) Program?
The Demand Deposit Marketplace (DDM) program is a liquid FDIC insured alternative to money market mutual funds. It enables customers of financial institutions participating in the DDM program (“DDM Participating Institutions”) to obtain millions of dollars of FDIC insurance with daily liquidity and potentially higher returns.
What is the FDIC insurance limit in the account?
Joint accounts receive up to $100 million in FDIC insurance and all other account types receive up to $50 million per TIN. However, individuals in different categories of legal ownership may receive higher amounts.
How are high levels of FDIC insurance achieved?
Cash balances in customer accounts are sent daily into the DDM program. These deposits are allocated in increments of no more than $250,000 to multiple DDM Receiving Banks, which abides by the FDIC pass-through insurance provisions established by the FDIC. By allocating deposits to multiple banks, customers receive high levels of FDIC insurance while maintaining daily liquidity and the convenience of maintaining one bank relationship.
When placed into the DDM program the following business day, are customers’ deposits insured? Until the customers’ funds are swept to the DDM program, such funds will be uninsured to the extent they remain at their Participating Institution overnight in excess of any FDIC insurance available on balances kept at their Participating Institution. Their funds will be insured on the following business day once transferred to the Program.
What if the customer’s Participating Institution fails? Assuming that the first $250,000 of the customer’s funds remains at the Participating Institution (and it is an FDIC-insured bank) with the remainder placed into the DDM program, then the following would occur: (1)An FDIC claim would be filed on behalf of the customer for the $250,000 that remained at the Participating Institution. It typically takes two business days for the FDIC to settle such claims; but could be longer. (2)The funds placed into the DDM program are not impacted. Rather, those funds are placed at other FDIC-insured banks and similarly protected by FDIC insurance and continue to be available to the customer either through: (1) the Participating Institution in a wind-down mode, under the conservatorship of the FDIC, or a transitioning Participating Institution; or (2) Stable.
What if the customer does not want their money deposited in a particular DDM Receiving Bank? Customers have the option to exclude any DDM Receiving Bank they choose. However, by opting out of one or more DDM Receiving Banks, it may affect the maximum amount of FDIC insurance they may receive.
How is the DDM program different from a money market mutual fund sweep?
Unlike DDM, money market mutual funds are not FDIC insured. Operationally the DDM program works similarly to a money market mutual fund sweep, however, deposits are swept into insured accounts held at several FDIC insured program banks instead of pooled money fund investments.
What are the advantages of an FDIC insured account versus a money market mutual fund?
- Provides the safety and explicit guarantee of FDIC insurance backed by the full faith and credit of the US Government that money funds do not offer;
- Eliminates market risks associated with money fund investing;
- Is outside the scope of the SEC’s money fund reforms;
- Offers a highly competitive yield
Can placing funds in the DDM program decrease customers’ overall portfolio risk?
Yes. FDIC insured placements eliminate the market risks associated with money market mutual fund investing and other direct cash instruments.
For more information, please contact your bank representative.
727.335.0500
