Same-Day Funds Settlement

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Same-Day Funds Settlement (SDFS)

A method of settlement used in trading between well-collateralized parties in good-the-same-day federal funds used by the Depository Trust Company for transactions in US government securities, short-term municipal notes, medium-term commercial paper notes, CMOs, and other instruments.

Same-Day Funds Settlement

Describing a transaction on which the settlement date occurs on the same day as the trade date. Most of the time, same-day funds settlement occurs for funds transferred over the Fed Wire service; in other words, this type of settlement occurs only for the least risky securities and funds.
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The SDFS program is scheduled to be extended to the $400 billion commercial paper market on a pilot basis in mid 1989.
Global book-entry offerings of auction-rate and tender-rate preferred stock and notes now are being distributed solely through the SDFS system, and all outstanding issues have been reclassified to SDFS.
Most SDFS coordinators were highly educated, held a graduate degree, and had more than a year of experience working on the SDFSCA program.