Cash Sweep Program Rates
Our Cash Sweep Program pays interest at specific rates based on the tiers below, which yield a blended rate over the entire balance.
Current Interest Rates and Tiers
Rates are variable and may change at any time. Each day, we calculate the interest on your cash and add it to your account monthly. We round the daily interest amount to the nearest $0.001. If your daily interest is less than $0.0005, then you may not be paid any interest on that day.
To help you get the highest interest rate possible, we combine the cash sweep program funds of all your accounts into one large fund. If you have $10,000 in cash in an individual, retirement, and joint account, we invest your money in the sweep as $30,000, rather than three smaller investments of $10,000. This allows you to reach a higher tier and earn more interest.
Cash Sweep Program Banks
Below are the banks that participate in our Cash Sweep Program:
- $4.5 million for individual accounts
- $9.0 million of joint accounts (held by two people) under the same social security number (SSN)
|Androscoggin Savings Bank||30 Lisbon St.
Lewiston, ME 04240
|BankUnited, N.A||623 5th Avenue
New York, NY 10022
|Chain Bridge Bank||1445-A Laughlin Avenue
McLean, VA 22101
|Citibank||399 Park Avenue
New York, NY 10001
|The Columbia Bank||7505 Greenway Center Drive #201
Greenbelt, MD 20770
|Eagle Bank||7815 Woodmont Ave.
Bethesda, MD 20814
|First National Bank of Pennsylvania||One North Shore Center
Pittsburgh, PA 15212
|Israel Discount Bank||511 Fifth Ave
New York, NY 10017
|Live Oak Banking Company||1741 Tiburon Drive
Wilmington, NC 28403
|Malvern Federal Savings Bank||421 East Lancaster Avenue
Paoli, PA 19301
|Merrick Bank||10705 S Jordan Gateway, Suite 200
South Jordan, UT 84095
|Old Line Bank||1525 Pointer Ridge Place
Bowie, MD 20716
|Revere Bank||319 Main Street
Laurel, MD 20707
|Seaside National Bank & Trust||201 South Orange Avenue
Orlando, FL 32801
|Simmons First National Bank||425 W. Capitol Avenue, 14th Floor
Little Rock, AR 72201
|Texas Capital Bank||2350 Lakeside Blvd, Suite 800
Richardson, TX 75082
|Truxton Trust Company||4525 Harding Rd., Suite 300
Nashville, TN 37205
|Western Alliance Bank||One East Washington Street
Phoenix, AZ 85004
In addition to the Cash Sweep Program Banks your funds can be held by us directly as part of the Cash Sweep Program. When we hold your funds they are insured by SIPC and we never hold more of your cash than would be covered by SIPC insurance.
Cash Sweep Program FAQs
Just open an account—we take care of all of the details for you in the background. All cash is automatically included in the Sweep Program, and will either be swept into FDIC-insured banks participating in our Sweep Program (“Banks”) or held by us under the Sweep Program where it is protected by SIPC-insurance.
For funds we do not hold we automatically distribute your cash across many different Banks. Each deposit in each Bank is FDIC insured to $250,000. When we add more banks to our program, we increase the amount of FDIC insurance available to you automatically. You should know that the insurance applies to each separate account registration—so joint accounts with two owners receive insurance up to $500,000 per Bank. Amounts held under the Sweep Program directly by us are SIPC insured.
Some of the Banks where funds may be swept are well-known national brands, while others appear to be smaller regional banks. Will my cash be safe in all of the Banks?
Federal Deposit Insurance Corporation (FDIC) protection is made available through a government-backed program that operates the same for small and large banks. If any Bank were to fail, your cash would be covered by the FDIC. There are no special steps that you would have to take, and you would be able to withdraw your cash through the normal means provided by us. Amounts held under the Sweep Program directly with us are protected separately by SIPC insurance.
You receive the following advantages: extended FDIC insurance in the millions of dollars per account (see Extended FDIC Insurance for current amounts), the opportunity to earn more interest on your cash balance than it may be earning at your local bank in a checking account, the ability to consolidate lower-yielding cash balance accounts into this account to qualify for a higher rate, plus our check-writing and automated cash transfer services.
It is expected that interest rates payable under the Sweep Program will generally be competitive with rates paid by banks for interest-paying checking accounts Consequently, our rates of return are generally at the low end of rates available in the marketplace and more similar to rates payable on cash in non- or low-interest paying checking accounts than in higher-yielding cash-based deposit accounts. Our interest rates are “tiered” so that as you hold more cash in the Sweep Program you have the opportunity to earn a higher interest rate. We also aggregate the cash in all accounts with the same taxpayer ID number on the account for purposes of the tiering to qualify your cash balance for higher interest rates. Tiering does not affect how much of your cash qualifies for FDIC insurance coverage. For example, an individual account and a retirement account and a joint account with the same taxpayer ID number on each account will be aggregated for purposes of elevating funds into a higher tier which can earn a higher interest rate. The same accounts are not aggregated for FDIC insurance coverage, so you get the benefit of expanded FDIC insurance for the cash you have in each account. All cash held under the Sweep Program directly by us earns the same rate of interest as all other cash in the Sweep Program and is aggregated with all cash swept into Banks for the purposes of elevating cash into a higher-paying tier.
You should compare our rates with those offered at competing banks, brokerages, and mutual funds. You will be able to obtain higher rates elsewhere, but we believe we offer the best package of services, rates, innovative offerings and other benefits for longer-term investors.
We do not support money market funds or other alternatives to our Sweep Program for your uninvested cash. We do have an optional cash investment product—FDIC.PLUS—that usually pays a higher interest amount that you can elect to invest in by entering an order to buy or sell into it just like a stock. FDIC.PLUS has certain minimums and restrictions more akin to certain investment products, and the aggregation described above for the sweep product (FDIC.SWEEP) does not apply to the FDIC.PLUS product. The FDIC.PLUS product is not part of the Sweep Program, but it is subject to the same FDIC insurance limits for an account and counts towards the limits of FDIC insurance payable by any one Bank (in other words, the FDIC insurance limit includes both FDIC.SWEEP and FDIC.PLUS if they are held in the same account).
You may be disadvantaged if your cash balance in the Sweep Program does not qualify for higher-yielding tiers, in which event you will earn less interest on your cash than you would in most money market funds.
Importantly, however, the tiering allows us to pay higher rates to higher balances thereby allowing us to be more competitive for those higher balances, while also allowing us to earn more on accounts where the cash balances are low and the cash balance is being used, for example, more like a checking account (for which many banks usually pay no interest at all). This in turn allows us to keep our membership and other fees low for our smaller accounts and continue to innovate and grow for the future.
The interest applied to your cash balance will be calculated as a blended rate. It is intended that a higher cash balance will qualify for a higher tier and therefore qualify for a higher blended rate, while a lower cash balance will qualify for a lower blended rate. The blended rate will be derived from the current tiers and rates then in effect. All interest rates and annual percentage yields are effective as of the date provided, and are subject to change at any time (this is a variable rate account so rates are subject to change after the account is open). The daily balance method is used to calculate interest. This method applies daily periodic rates to the collected balance in the account each day.
Yes, on qualifying balances our FDIC.PLUS product generally pays a higher rate of return than our Sweep Program product.
The interest paid is generally tied to short-term (monthly) interest rates. Rates paid to customers will generally fluctuate if short-term interest rates fluctuate (above certain levels). The effect of any short-term interest rate fluctuation on rates paid to customers will be determined based on the fluctuation in the short-term interest rate, competitive factors, our costs to operate the Sweep Program, amounts invested in the Sweep Program, the then-current tier structure, and other factors. It is determined overall by a formula which is subject to change upon thirty days written notice. The interest paid by the Banks is set by them based on their deposit needs and is what we receive. We make money based in part on the difference between the amount the Banks pay on cash invested in the Sweep Program and what we pay customers on their cash in the program. Any cash held under the Sweep Program directly by us pays interest to the customer at the identical rate as cash swept under the Sweep Program to a Bank.
The program currently offers in the millions of dollars per account (some accounts are counted together, for example if you have multiple individual accounts). (See Extended FDIC Insurance for current amounts.) FDIC covers both the principal and accrued interest in each account for any bank that fails. SIPC insurance does not apply to any amounts in bank deposits. SIPC insurance covers cash in the Sweep Program that is not held in FDIC-Insured banks but that is held directly with us instead and generally provides protection for cash up to $250,000.
Importantly, for FDIC and SIPC purposes, each account type is calculated separately (individual versus joint versus trust versus business)—so a joint account and an individual account can each have up to, for example, $1 million (for a total of $2 million) and each would be fully covered by the applicable FDIC of SIPC insurance under the Sweep Program. For a more detailed explanation, consult the FDIC website (www.fdic.gov) or the FDIC, Office of Consumer Affairs, by letter (55017th Street, N.W., Washington, DC 20429), by phone (877-275-3342), or by email (email@example.com). You may contact SIPC through its website (www.sipc.org), by mail (Securities Investor Protection Corporation, 805 15th Street, N.W., Suite 800, Washington, DC, 20005), by phone (202-371-8300) or by email (firstname.lastname@example.org).
If you have a cash balance greater than the FDIC coverage in effect at any time, then that excess amount will not be insured, except to the extent it is protected by SIPC insurance. We will, however, either place the excess amount in a single bank, or pro-rate the excess across several banks in the program.
Deutsche Bank is one of the world’s largest banks. Read more information on Deutsche Bank by clicking here.
Deutsche Bank assists in the administration and record keeping for the part of the Sweep Program involving the Banks. It also acts as an intermediary bank for certain Banks.
We act as your agent with the banks in the Sweep Program and as the custodian for cash in the Sweep Program held directly with us.
There are no specific fees for participating in the Sweep Program. However, we make money from the Sweep Program based, for example, on the difference in the rates paid by the Banks on cash invested in the Program and the amount that is paid to you under the Program, which can be viewed as a “fee.”
All accounts that you have with us are eligible for the Sweep Program.
Any available cash you have will be swept into the Sweep Program on a daily basis. If you wish to invest in the FDIC.CASH or FDIC.PLUS offering, then you buy or sell those offerings as if they were a stock. We reserve the right to sweep cash under the Sweep Program directly to us where it is held by us and protected by SIPC insurance. The amount that may be held directly by us from time to time as opposed to deposited in Banks is subject to our discretion and expected to change frequently and from account to account. We will never hold directly under the Sweep Program any amount in excess of the then-applicable SIPC insurance limits. Any amounts in the Sweep Program in excess of the SIPC insurance limit will always be swept to a Bank.
No. There is no minimum balance required.
Yes. We, as the agent, withdraw money from the Sweep Program to satisfy debts created in your brokerage accounts, such as when you buy stocks or write a check.
Current rate information can be found on our website, and the rate you actually earned is listed on your month-end statements.
There is a separate line item in the account summary that lists the balance in the Sweep Program as of the statement end date with the notation that this money is protected by FDIC insurance, but not SIPC insurance, if it is held in a FDIC insured bank, or by SIPC insurance if it is held directly with us, and the rate you earned. There is also a section indicating the names of the Banks to which your money was allocated as of the end of the statement period, or our name if cash is held directly.
As ordinary income.
Yes, the client agreement contains the details of the Sweep Program. Refer to our website (Login page) to view the current agreement and the Sweep Program terms and conditions.
No. You do not receive a passbook or certificate for your cash in the Sweep Program. Evidence of your ownership is reflected in our books and records as the agent and, therefore, on the month end statement you receive from us.
Yes. The Banks will change as banks are added to or deleted from the Sweep Program, and those additions or deletions will increase or decrease the amount of FDIC insurance available at any one time.
You may wish to eliminate any bank with which you already have an account, if the combined total you have in that bank and with us under the Sweep Program would exceed the amount of FDIC insurance available to you from that bank. You are responsible for monitoring the list of banks in the Sweep Program to make this determination. To eliminate a specific bank, simply contact Customer Service. You can not eliminate us as a recipient of your cash.
Cash Sweep Program Terms & Conditions
This document contains important information about our Insured Deposit Cash Sweep Account (“IDCSA”) program.
Brokerage Accounts with IDCSA
Opening or maintaining a brokerage account with us automatically enrolls you in an IDCSA as your sweep vehicle that may include one or more optional cash deposits (“OCDMs”). You appoint us as your authorized agent and custodian pursuant to the terms and conditions of the brokerage account agreement, including this Exhibit, all of which we may modify from time to time by written notice to you. In addition to the automatic sweep function you may also elect to deposit all or some of your cash into an optional cash deposit mechanism (the cash which is placed in the IDCSA just like any cash automatically swept). One or more OCDMs may be made available to you depending on the type of brokerage account you have and perhaps other factors. OCDMs are part of the IDCSA Program and monies in that Program are held at the Program Banks or Direct Banks as described below. Depositing to the Program through an OCDM will require you, or a person acting on your behalf (such as an advisor with authority to do so) to elect specifically to deposit amounts into the IDCSA through the OCDM each time you wish to move money—we will not deposit money into the IDCSA automatically for you through the OCDM as we do for amounts subject to the automatic sweep mechanism. By doing the work to make the automatic deposits yourself and determining how much you wish to deposit on your own, if you are eligible to do so through an available OCDM, you may earn higher yields than on the amounts automatically swept into the IDCSAs.
Our IDCSA Program may use two sets of banks, Program Banks and Direct Banks. In both cases Deutche Bank Trust Company Americas (“DBTCA”) will perform administrative tasks such as record-keeping of customer beneficial interests and permitted withdrawals and interest and fee calculations. With respect to Direct Banks, DBTCA will treat them as though they are Program Banks with the intent that all IDCSA Program accounts satisfy guidelines issued by the Financial Industry Regulatory Authority applicable to us regarding bank sweep programs. Material differences in the handling of cash flows for Program Banks and Direct Banks are set out below.
Regardless of whether the money is deposited through the automatic sweep option or OCDM option, we will place your money in a Federal Deposit Insurance Corporation (“FDIC”) Insured money market account at a depository institution (“Program Bank” or “Direct Bank”, collectively “Bank”). Individual, business, corporate, joint, gifts-to-minors and retirement accounts are all eligible and included in the Program.
Each cash sweep and each deposit through an OCDM from your account is a deposit in a Bank and that deposit is solely the obligation of the Bank and not us. We act only as agent and custodian for you, the depositor. In the event any Bank participating in the IDCSA Program rejects any additional deposits or withdraws entirely or is terminated from the Program by us, then we, as your agent, are authorized by you to move your deposit to another Bank. In the event we are unable to make such alternate arrangements (which we do not expect will be the case), we will transfer your balance to a money market fund that we will have designated as an alternate sweep vehicle and alternate OCDM vehicle, or to your brokerage account (where it will be held as a “free credit”). In either event we will notify you of such action.
Cash balances deposited into the Banks are not covered by the Securities Investor Protection Corporation (“SIPC”). Instead, all cash deposits by account type in the IDSCA (which for all purposes herein includes amounts in the IDCSA deposited through the automatic sweep function or the OCDM) are fully covered by insurance from the FDIC, up to certain amounts.
Ordinarily, an individual bank can only provide insurance of $250,000 for non-retirement accounts and $250,000 for retirement accounts. We provide extended FDIC Insurance by placing your cash in multiple Banks when it meets the limits of any bank. For example, if there were fifteen (15) Program Banks in the Program at such time, the applicable insurance limits are $3.75 million for non-retirement accounts and $3.75 million for retirement accounts (subject to the combined total of all your deposits at a specific Bank, including those accounts you maintain at a Bank outside of the Program). Generally, all of a person’s accounts are counted together if they are of the same account type. For example, all IRAs for individuals are counted together towards the $3.75 million limitation, and all of a person’s individual accounts (including for example accounts held as a sole proprietorship) are counted together towards the $3.75 million limitation. But accounts of a different type (such as IRA versus an individual account versus a corporate account and even versus a joint account) are not aggregated with each other for purposes of these limits. For the number and identity of the current Banks and the available FDIC Insurance, see the current list on our website.
You can get publicly available financial information concerning any or all of the Banks at http://www.ffiec.gov/nicpubweb/nicweb/nichome.aspx and more detail on FDIC insurance from http://www.fdic.gov/deposit/deposits/index.html or by contacting the FDIC Public Information Center by mail at 801 17th Street, N.W., Room 100, Washington, DC 20434 or by phone at 1-877-275-3342.
All questions regarding your Program account should be directed to us, not the Banks. Current interest rates and other information can be obtained by accessing the information on our website. By your continued use of the IDCSA, you agree to the terms provided herein. We may, without notice, refuse any deposit, close any account or impose a fee, if your actions become administratively burdensome.
Our Status and that of the Program Banks
All Banks in our IDCSA Program are depository institutions duly chartered under the laws of the United States or a State thereof, the deposits of which are insured by the FDIC. We are a broker-dealer registered with the Securities and Exchange Commission and a member of FINRA. We are not a bank. All amounts deposited in IDCSAs through the automatic sweep vehicle or an OCDM are held by the respective Banks, not by us. Amounts in the IDCSAs are not covered by SIPC insurance. Amounts held in IDCSAs are insured instead by the FDIC up to $250,000 for both retirement and non retirement accounts per account type per Bank (and the IDCSA Program uses multiple Banks to obtain a multiple of coverage over the $250,000), subject to the combined total of all your deposits at a specific bank, including those deposits made in accounts you maintain at a Bank outside of the Program.
The separate accounts established by us on your behalf will be evidenced by a book entry on the account records of each such Bank. No evidence of ownership, such as a passbook or certificate, will be issued to you. Accordingly all transactions involving your IDCSA must be made through us.
FDIC Insurance for Your Account
The IDCSAs at the Banks are insured in the event a Bank fails by the FDIC, an independent agency of the U.S. government, to a maximum amount of $250,000 per account type including principal and accrued interest to the day the Bank is closed, when aggregated with all other deposits held by you in the same capacity at the same Bank. Your funds become eligible for deposit insurance immediately upon placement in a Bank or deposit account by us as agent for you under the IDSCA Program. While in transit from us to the Program Banks and from the Program Banks to us the funds pass through our intermediary bank (currently DBTCA). Funds in transit from us to Direct Banks and from Direct Banks to us do not pass through an intermediary bank. Funds at DBTCA are also eligible for FDIC Insurance, to a maximum amount of $250,000 per account type, when aggregated with any other deposits held by you in the same capacity at DBTCA. It is possible that your funds in transit at DBTCA will exceed the maximum amount of FDIC coverage available through DBTCA as an individual bank; therefore the amount that exceeds that amount may not be covered by FDIC insurance until such funds are remitted to Program Banks. Certain provisions apply to late received funds (see Interest below).
You may wish to compare the terms, rates of return, required minimum amounts, charges and other features of our IDCSA (both through the sweep mechanism as well as the OCDM) with other accounts and alternative investments at other brokerages. Generally our rates of return are at the low end of rates available in the marketplace and more similar to rates payable on cash in checking accounts than in higher-yielding cash-based investment accounts. If cash sweep rates are material to your decision as to where to have an investment account you should compare our rates with those at other institutions and review the overall package of services and benefits we offer to those offered at such other institutions in making your decisions.
If your funds are deposited into a Bank where you already hold one or more deposit accounts at such Bank in the same capacity in which you hold your account with us, balances in those accounts would be aggregated with your interest in the IDCSA at the same Bank for FDIC insurance purposes. Therefore, you may wish to exercise your right to instruct us not to deposit any of your funds to such a specific Bank.
If your funds exceed the capacity of the Banks to provide deposit insurance, your funds will be swept into a single Bank as selected by us, which may be a Program Bank or a Direct Bank, with such excess not covered by FDIC insurance or multiple Banks on a pro rata basis with such excess not covered by FDIC insurance. We intend to continue to work to increase the FDIC insurance available under our IDCSA Program, by adding additional Banks to exceed the amounts currently available.
There is no minimum initial deposit (but you may earn little or no interest in certain deposit tiers). Funds deposited by us into the IDCSA will begin earning interest from the day they are received by the Banks (see Interest below). Your deposit will be in book entry form, therefore, you will not receive a passbook or a certificate.
The list of Banks participating in the IDCSA Program is updated from time to time and the updated list is available on our website. You may exclude any Bank from being able to receive amounts from your IDSCA at any time. We inform you which Banks your account is deposited in on your monthly statement. We reserve the right to choose the priority of Banks in which your funds are placed. Further, we reserve the right to include additional Program Banks and Direct Banks, as well as delete Program Banks or Direct Banks. We provide notice through postings on our website.
All withdrawals necessary to satisfy debits in your brokerage or transaction accounts will be made by us as your agent. A debit will be created, for example, when you purchase securities or request withdrawal of funds from your brokerage account or when you write a check, or otherwise withdraw funds (such as through an ACH). Checks written on your brokerage account are not drawn directly against the amounts deposited for you at any of the Banks, but the money is transferred back from the Banks to either our intermediary bank (DBTCA) and then to us in the case of Program Banks or simply directly to us in the case of Direct Banks, and then used to satisfy your debit through the IDCSA.
The funds necessary to satisfy debits in your securities account will first be obtained from free credit balances in your brokerage account (if any), and then withdrawals will be made automatically from the IDCSA to the extent of amounts deposited through the automatic sweep function. Only amounts that were deposited into the IDCSA through the automatic sweep mechanism will be made available by us to satisfy a debit in the account automatically. Amounts deposited into the IDCSA through an OCDM must first be withdrawn through the OCDM by you or your agent (through a “sale” on the brokerage platform) after which they may be available to satisfy a debit.
Interest on funds in the IDSCA will accrue daily as simple interest and be credited to your account monthly, at which time it will earn simple interest with your principal balance. Interest begins to accrue on the day of deposit to the Bank and up to, but not including, the day of withdrawal. This method applies a daily periodic interest rate based on the balance level in the IDSCA. The daily rate is 1/365 (or 1/366 in a leap year) of the interest rate. 1099-INT forms will be sent to you indicating the amount of interest paid to your IDSCA by the Banks. For late received funds, primarily new money received into an account by us after noon on a business day when both we and Banks are open and that is to be automatically swept into the IDCSA (usually for late received wires or ACHs or money received on a business day when either we or the banks are closed), such money may or may not be deposited under the Program that day, and if deposited under the Program that day may or may not be available for deposit in multiple Banks that day. If such funds are not deposited under the Program that day, such funds will be deposited under the Program no later than the next business day that we and the Banks are open. If such funds are deposited under the Program that day then they may, until the next business day when both we and the Banks are open, be deposited in a single Bank, (which for this purpose only would include DBTCA), receive only that amount of FDIC insurance available from a single bank, and begin to earn interest only from the next business day when both we and banks are open (at which time such funds shall also be available for deposit in multiple Banks).
Rates earned on amounts automatically swept and on amounts deposited through the OCDM functions will be established periodically by us based on prevailing market and other business conditions and may vary depending on the balance in your account and the mechanism (automatic sweep or OCDM) used to deposit the funds into your IDCSA. Current interest rate information and an explanation of the rate calculation is available on our website (www.FolioInvesting.com).
Rates on the amounts automatically swept will be paid as specified on our website, but generally are expected to be on a blended, tiered basis, meaning that the amounts paid increase on the cash amounts at higher tiers. In addition, the tiers are based on the total amount of cash balances in all your accounts—regardless of account type—that are aggregated at the taxpayer ID level for amounts that are automatically swept. This is different from the aggregation for FDIC insurance purposes. For FDIC insurance purposes you want to keep as many separate “buckets” available as possible so you can obtain additional insurance. For interest rate tiering purposes, you want to aggregate as many accounts together as possible for purposes of receiving higher rates. Under our IDCSA Program we are able to accomplish both goals for the amounts that are automatically swept. For the amounts that are deposited through an OCDM, interest may be earned on a flat rate basis (where all amounts deposited earn the same rate) or on a “dollar one” basis where different rates are paid depending on the total amount deposited through that OCDM in a particular account or folio (the rate is not “blended”). For an OCDM, there is no aggregation of accounts for purposes of determining rates, but there still is for FDIC purposes.
For example, if we were to pay—for amounts that are automatically swept—0.1% on money invested between $0 and $10,000 and 0.5% on money invested between $10,000 and $30,000 and you had a total of $20,000 in two accounts under the same taxpayer ID, one an IRA and one an individual account, then under our IDSCA Program, you would receive 0.1% on the first $10,000 and 0.5% on the second $10,000 (for your aggregated total of $20,000) for tiering purposes. If the same amounts were deposited in the IDCSAs through an OCDM instead of being swept, and the OCDM paid a flat rate of .25% then you would earn .25% on the full $20,000 (because all amounts earn the same rate.) If amounts deposited through the OCDM in the separate accounts/folios paid a rate of 0% for amounts up to $5,000 and 0.5% on all amounts (including from “dollar one”) deposited through that specific account’s/folio’s OCDM if such amount is over $5,000, then the rate paid here would depend on the distribution of the $20,000—specifically if the $20,000 was broken up as $5,000 in one brokerage account/folio and $15,000 in another, then the first one would earn no interest and the other would earn 0.5% on the $15,000. If the $20,000 were evenly divided however, then each $10,000 amount would earn 0.5% (because each is over $5,000). In other words, each amount, whether at the account or folio level, deposited through the OCDM stands on its own for purposes of determining the interest earned and is not aggregated with amounts automatically swept. In all instances, each account, because they are different account types, would still separately qualify for FDIC insurance up to the respective limits for such account types.
The actual rates and tiers are subject to change without prior notice. Current rates and tiers.
No direct fees will be assessed to you or deducted from your specified rate of return for amounts automatically swept. We reserve the right to charge a fee for amounts deposited or withdrawn through an OCDM—any such fee will be disclosed with applicable rates for the OCDM. Fees are collected directly from, or deducted from gross payments made by, Banks depending on the specifics of the operational set-up with each Bank.
In the case of Program Banks, the fee of the intermediary bank (“DBTCA”) will be collected from the Program Banks in the form of fees collected in addition to interest paid on the IDCSAs. We will receive a fee from DBTCA that varies depending on the interest paid on the IDCSAs. The more interest paid to you the less we earn. Under our agreement with DBTCA as the Program sponsor, we would expect that the total amounts payable by DBTCA to us would be in the range of Federal Funds Effective Average Rate (the rate for deposits in U.S. dollars most recently published on the website of the Board of Governors of the Federal Reserve System) plus 10 to plus 275 basis points (“bps”), minus the amounts paid as interest on the IDCSAs.
In the case of Direct Banks, our fee will generally be deducted by us from the gross interest paid on the IDCSAs. Our fee varies depending on the interest paid on the IDCSAs. The more interest paid to you the less we earn.
The actual amounts paid as interest on the IDCSAs are subject to change and vary depending on the tier, the mechanism used for the deposit (automatic sweep or OCDM) and other factors (see our website). Our fee (the “Program Fee”) currently is expected to range, from i) a low of 10 bps to ii) a high of the Federal Funds Effective Average Rate plus 275 basis points or such rate that DBTCA negotiates with each Program Bank less their fee given the low Federal Funds Effective Average Rate. DBTCA expects that its fee under the Program will range from 15 to 50 bps. Given the current uncertainty in the interest rate market, changes in Banks and our ability generally to participate in the Program, the fees payable to us could materially change.
The fees are subject to change and we may also waive all or part of any fee. Other than the Program Fee, and applicable fees imposed by us on a brokerage account or deposits or withdrawals through an OCDM, there will be no charge, fee or commission imposed on your account with respect to the IDCSA. The amount of interest we pay on the IDCSA for given levels of assets in the IDCSA is provided on our website and may vary from time to time.
Activity with respect to your IDCSA, including the Banks in which your IDCSA is invested and the interest rate(s) paid to you, will appear on your periodic brokerage account statement. You may contact us to obtain information about your IDCSA deposits, including balances held on the books of each Bank, activity in the account, and the current interest rate(s) paid to you.
Summary of Certain Relationships
We will act as exclusive custodian and agent with respect to all transactions related to your interest in any IDCSA. No Bank will accept any instructions concerning your interest in an IDCSA on deposit in a Bank through an IDCSA under the Program, unless such instructions are transmitted by us or an authorized agent on our behalf. We will assume the responsibility and the risk of loss for any funds transfers of yours that have theretofore been delivered by you to us until such time as the funds have been received in the deposit account (“Settlement Account”) maintained by us at a designated bank (“Settlement Bank”, which shall be DBTCA, unless another bank is designated by us) for the purpose of transmitting funds from the Program Banks through the Settlement Bank to us, and from us through the Settlement Bank to the accounts at the Program Banks. We will also assume the responsibility and the risk of loss for any funds transfers of yours that have theretofore been delivered by you to us until such time as the funds have been received in the deposit account maintained at a Direct Bank. Withdrawals will be deemed paid by a particular Program Bank when such funds are transmitted by such Program Bank to the Settlement Account and such Program Bank will be released from all liability for such withdrawn funds once the Program Bank delivers those funds to the Settlement Account. Withdrawals will be deemed paid by a particular Direct Bank when such funds are transmitted by a particular Direct Bank to us and the Direct Bank will be released from all liability for such withdrawn funds once it delivers those funds to us. Neither the Program Banks nor the Direct Banks are responsible for the actions of DBTCA or us with respect to the IDSCA Program or otherwise.
Waiver of Confidentiality
You expressly give consent for federal or state regulators to access your customer account information for audit and review purposes.