Purpose
The Deposit Broker's Processing Guide (the Processing Guide) is intended to:
- Provide a reference guide to deposit brokers acting as agents for their investor clientele. This site outlines the FDIC's policies and procedures that must be followed by deposit brokers when filing for pass-through insurance coverage on custodial accounts deposited in a failed FDIC Insured Institution.
- Provide copies of forms and a submission file format that deposit brokers must use to provide information for the FDIC to determine pass-through deposit insurance coverage on each custodial account. This information may be downloaded for your convenience.
I. Overview
Custodial deposits held in the name of a broker on behalf of their investors and deposited in an FDIC insured financial institution are covered by federal deposit insurance, the same as if the funds had been deposited directly by the broker’s clients in the same institution. Therefore, federal deposit insurance coverage applies to each of the broker’s clients (pass-through insurance coverage) up to the deposit insurance limit. However, in order to analyze ownership interest and provide pass-through insurance coverage, the FDIC requires the broker who opened the deposit account to provide ownership information after an insured financial institution fails.
The procedures for deposit brokers to provide fund ownership information to the FDIC are described within this guide. You should also refer to the Failed Bank List, which contains information about a specific bank that has failed.
Deposit brokers should review the Processing Guide information and follow the instructions to ensure smooth pass-through deposit insurance coverage, processing, and payment. During this review, the broker should keep in mind the following key information:
- The deposit account balance is set as of the date the institution is closed. Therefore, it is important that deposit broker notify any sub-tier brokers and cease all trades related to deposits at the failed institution.
- All fund ownership information packages submitted by deposit brokers to the FDIC will be dated and time-stamped upon receipt. The order-received process may affect brokers who may have one or various clients in common and who have deposited their common clients’ funds in the same failed institution. The FDIC will allocate insurance coverage to broker’s clients funds included in the completed brokers’ information package submitted first. Therefore, common clients’ funds included in a subsequently submitted broker information package will be subject to the deposit insurance coverage afforded to the first processed package.
- The FDIC will withhold payment on any deposit account until all owners of funds have been identified and until all FDIC required documentation is submitted. The completed information packages will be processed in the order they are received by the FDIC provided all required documentation is included. Incomplete packages will be set aside pending receipt of the missing information.
- The FDIC must receive the custodial fund information directly from the deposit broker who opened the deposit account at the failed FDIC insured institution.
| Updates | |
|---|---|
| April 15, 2024 | The broker submission file format tables under Section V., Broker Input File Requirements, was updated as follows.
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| June 30, 2021 | The FDIC allows for the electronic submission of broker information packages through the new online FDIC Deposit Broker Processing Portal.
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| October 22, 2018 | Added a new page,"VIII. Part 370 Alternative Recordkeeping Entity Processing: Addendum to the Deposit Broker's Processing Guide", under the Table of Contents section. |
| August 5, 2014 | The FDIC established an online subscription service to allow brokers to receive information when either of two events occur that may affect you:
Please note that information will be sent to all registrants and the subscription service will not be used to communicate with individual brokers. Therefore, your receipt of information concerning a bank failure will not necessarily be an indication that you or your firm had brokered funds at the failed bank. |
| August 5, 2014 | Expiration dates on all declaration documents have been updated and are all formatted as Word files. Visit Section VII. Affidavits and Declarations in Printable Format to find the updated documents. |
Feedback
The FDIC is interested in receiving comments and recommendations that may improve the process of distributing insured deposits to deposit brokers, and comments and suggestions about this web site. Please send your comments and questions via e-mail to the Claims Department at bdclaims@fdic.gov
Disclaimer
The sole purpose of this Processing Guide is to facilitate the transmission of information from deposit brokers to the Federal Deposit Insurance Corporation ("FDIC"). Nothing in this Processing Guide should be construed as an endorsement by the FDIC of the practices of a particular deposit broker. Similarly, the Processing Guide should not be construed as a statement of how the FDIC will calculate the insurance coverage of a particular deposit. The rules for determining the deposit insurance are provided in the FDIC's regulations at 12 C.F.R. Part 330
Also, note:
- The FDIC's insurance regulations and the contents of this Processing Guide are subject to change.
- The submission of false information to the FDIC could result in the imposition of serious criminal penalties under 18 U.S.C. §1007.
- Pass-through deposit insurance coverage is not available for deposits held by any trust or other business arrangement that has filed or is required to file a registration statement with the Securities and Exchange Commission pursuant to Section 8 of the Investment Company Act of 1940, subject to the provisions in the FDIC's insurance regulations at 12 C.F.R. §330.11(a)(2).