National Settlement Service
The National Settlement Service allows participants in private sector clearing
arrangements to do multilateral funds settlements on a net basis using balances
in their Federal Reserve accounts. The service provides an automated mechanism
for submitting settlement information to the Reserve Banks. It improves
operational efficiency and controls for this process and reduces settlement risk
to participants by granting settlement finality for movements of funds on
settlement day. The service also enables the Federal Reserve to manage and
limit the financial risk posed by these arrangements because it incorporates
risk controls that are as stringent as those used in the Fedwire Funds Service.
Approximately seventy arrangements use the National Settlement Service,
primarily check clearinghouse associations, but also other types of
arrangements.