Welcome » IT Booklets » Wholesale Payment Systems » Securities Settlement Systems » U.S. Government Securities » Fedwire Securities Service
As fiscal agents of the United States, the Federal Reserve Banks
act as the securities depository for all marketable U.S. Treasury
securities, many federal agency securities, and certain
mortgage-backed securities issued by GSEs.The Federal Reserve
also acts as agent and depository for the securities of certain
international organizations, such as the World Bank. U.S.
government securities are issued in book-entry form through the
Federal Reserve's Fedwire Securities Service using either an
auction process or dealer syndicate mechanisms. The Federal
Reserve's Fedwire Securities Service provides for the safekeeping
and transfer of these securities. The safekeeping function involves
the records of securities balances, and the transfer and settlement
function involves the transfer of securities between parties.
When book-entry securities transfers are processed using Fedwire
Security Service, the institution sending the transfer receives
immediate credit in its Federal Reserve (funds) account for the
payment associated with the transfer, and its securities account is
correspondingly debited. The Federal Reserve (funds) account of the
institution receiving a book-entry securities transfer is debited
for the payment amount, and its securities account is credited.
There are more than 9,000 participants in the system and they are
largely composed of depository institutions.
The Federal Reserve's Fedwire Securities Service is supported by
a real-time, delivery-versus-payment (DVP) gross settlement system
that provides for the immediate, final, and simultaneous transfer
of securities against the settlement of funds. This system, known
as the National Book-Entry System (NBES), provides for the
safekeeping and transfer of U.S. Treasury, government agency, and
GSE securities as well as securities issued by certain
international organizations. The safekeeping function involves the
electronic storage of securities records in custody accounts, and
the transfer and settlement function involves the transfer of
securities between parties.
Financial institutions may access the Fedwire Securities Service
via high-speed direct CI, FedLine, or with off-line telephone
connectivity with a Federal Reserve Bank. Financial institutions
may also access certain Fedwire Securities Service inquiry
information via FedLine for the Web. On-line participants, using
either a mainframe or FedLine PC connection to Fedwire Securities
Service, require no manual processing by the Federal Reserve Banks.
Off-line participants provide funds transfer instructions to their
Federal Reserve Bank by telephone, and once authenticated, the
Federal Reserve Bank enters the transfer instruction into the
Fedwire Securities Service system for execution. The manual
processing required for off-line requests makes them more costly
and suitable only for institutions processing a small number of
funds transfer payment orders.