National Settlement Service (NSS)
NSS is a multilateral settlement service owned and operated by the Federal Reserve Banks. It allows participants in private clearing arrangements to settle their net obligations with same-day finality using participant's reserve or clearing account balances maintained at the Federal Reserve Banks. NSS participants include local check clearinghouse associations, automated clearinghouse (ACH) networks, credit card processors, and automated teller machine (ATM) networks.
To use NSS, a settlement agent transmits a settlement file electronically to a Federal Reserve Bank. The file contains a listing of the participants, the settlers (either the participant itself or the participant's correspondent), and the dollar amount of the debit or credit to be posted to the settler's account. If validity checks are satisfied, the Federal Reserve Bank accepts the file for processing and sends an acknowledgment to the agent. The Federal Reserve Bank accepts NSS files for processing and settlement between 8:30 a.m. and 5:30 p.m. Eastern Time. If an institution submits files earlier than 8:30 a.m. Eastern Time, they enter a queue for processing beginning at 8:30 a.m. Eastern Time. The NSS checks each debit balance on the settlement file against the account balance and intraday credit available to the settlers. The system may reject debit balances if a settler does not have a sufficient balance or sufficient intraday credit to cover the debit. Once it has posted all debit entries on the settlement file, NSS posts the credit balances. All transactions are final and irrevocable once the NSS posts them. The settlement for a file is complete when all credits have been posted. The NSS then sends an acknowledgment message to the settlement agent.
NSS offers payment finality similar to that of the Fedwire Funds Service and provides an automated mechanism for submitting settlement files to the Federal Reserve Banks. NSS improves operational efficiency and reduces settlement risk to participants by providing settlement finality on settlement day. It also enables the Federal Reserve Banks to manage and limit risk by incorporating risk controls similar to those used in the Fedwire Funds Service. NSS can settle transactions across Federal Reserve Districts or within a single Federal Reserve District.
Other Clearinghouse, Settlement, and Messaging Systems
Society for Worldwide Interbank Financial Telecommunication (SWIFT)