Clearing House Interbank Payments System

Clearing House Interbank Payments System

The Clearing House Interbank Payments System (CHIPS) is the main privately held clearing house for large-value transactions in the United States, settling well over US$1 trillion a day in around 250,000 interbank payments. Together with the Fedwire Funds Service (which is operated by the Federal Reserve Banks), CHIPS forms the primary U.S. network for large-value domestic and international USD payments (where it has a market share of around 96%). CHIPS transfers are governed by Article 4A of Uniform Commercial Code.

CHIPS is owned by financial institutions. According to the Federal Financial Institutions Examination Council (FFIEC), an interagency office of the United States government, "any banking organization with a regulated U.S. presence may become an owner and participate in the network."[1] CHIPS participants may be commercial banks, Edge Act corporations or investment companies. Until 1998, to be a CHIPS participant, a financial institution was required to maintain a branch or an agency in New York City. A non-participant wishing to make international payments using CHIPS was required to employ one of the CHIPS participants to act as its correspondent or agent.

Banks typically prefer to make payments of higher value and of a less time-sensitive nature by CHIPS instead of Fedwire, as CHIPS is less expensive (both by charges and by funds required).

CHIPS differs from the Fedwire payment system in three key ways. First, it is privately owned, whereas the Fed is part of a regulatory body. Second, it has 47 member participants (with some merged banks constituting separate participants), compared with 9,289 banking institutions (as of March 19, 2009)[2] eligible to make and receive funds via Fedwire. Third, it is a netting engine (and hence, not real-time).

A netting engine consolidates all of the pending payments into fewer single transactions. For example, if Bank of America is to pay American Express US$1.2 million, and American Express is to pay Bank of America $800,000, the CHIPS system aggregates this to a single payment of $400,000 from Bank of America to American Express — only 20% of the $2 million to be transferred actually changes hands. The Fedwire system would require two separate payments for the full amounts ($1.2 million to American Express and $800,000 to Bank of America).

Only the largest banks dealing in U.S. dollars participate in CHIPS; about 70% of these are non-U.S. banks. Smaller banks have not found it cost effective to participate in CHIPS,[citation needed] but many have accounts at CHIPS-participating banks to send and receive payments.


Member list

As of 2009, the member participants (with country of ownership) are:[3]

See also


  1. ^ Fedwire and Clearing House Interbank Payments System (CHIPS)
  2. ^ Fedwire Participant Directory
  3. ^ CHIPS Customers

External links

Wikimedia Foundation. 2010.

Игры ⚽ Поможем написать реферат

Look at other dictionaries:

  • Clearing House Interbank Payments System — (CHIPS) A New York computerised network through which cheques are cleared. Most Eurodollar transactions are cleared through CHIPS. Related links FSMA overview Practical Law Dictionary. Glossary of UK, US and international legal terms. www.pra …   Law dictionary

  • Clearing House Interbank Payments System — ( CHIPS) An international wire transfer system for high value payments operated by a group of major banks. The New York Times Financial Glossary * * * Clearing House Interbank Payments System ˌClearing House ˌInterbank ˈPayments ˌSystem , CHIPS… …   Financial and business terms

  • Clearing House Interbank Payments System — CHIPS A US bankers clearing house for paying and accepting funds. It is an electronic system operated through terminals in bank branches. Participating banks must be members of the New York Clearing House Association or affiliates of it, for… …   Accounting dictionary

  • Clearing House Interbank Payments System - CHIPS — The primary clearing house in the U.S. for large banking transactions. CHIPS settles over 250,000 of trades per day, valued in excess of $1 trillion. CHIPS and the Fedwire funds service used by the Federal Reserve Bank combine to constitute the… …   Investment dictionary

  • Clearing House Automated Transfer System — The Clearing House Automated Transfer System, or CHATS, is a Real Time Gross Settlement (RTGS) system for the transfer of funds in Hong Kong. It is operated by Hong Kong Interbank Clearing Limited, a private company jointly owned by the Hong Kong …   Wikipedia

  • Clearing house (finance) — A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions. These transactions may be executed on a futures exchange or securities exchange, as… …   Wikipedia

  • Clearing House Association, LLC — The Clearing House Association, LLC is the nation’s oldest banking association representing 17 of the world s largest commercial banks, which collectively employ over 2 million people and hold more than half of all U.S. deposits. It is a… …   Wikipedia

  • New York Clearing House — The New York Clearing House Association, the nation’s first and largest bank clearing house, was created in 1853, and has played a variety of important roles in supporting the development of the banking system in America’s financial capital.… …   Wikipedia

  • Clearing (finance) — In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. Clearing is necessary because the speed of trades is much faster than the cycle time for completing the underlying… …   Wikipedia

  • Payment system — A payment system is a system (including physical or electronic infrastructure and associated procedures and protocols) used to settle financial transactions in bond markets, currency markets, and futures, derivatives or options markets, or to… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”