{{short description|Financial market infrastructure}} The '''Fedwire Securities Service''' ('''FSS''') is the central securities depository (CSD) for U.S. government securities, owned and operated by the Federal Reserve. As of 2018 it was the world's largest CSD by value of securities held, well ahead of the Depository Trust Company and Euroclear Bank.<ref>{{citation |title=On the future of securities settlement |journal=BIS Quarterly Review |publisher=Bank for International Settlements |location=Basel |url=https://www.bis.org/publ/qtrpdf/r_qt2003i.pdf |date=March 2020 |first1=Morten |last1=Linnemann Bech |first2=Jenny |last2=Hancock |first3=Tara |last3=Rice |first4=Amber |last4=Wadsworth}}</ref>{{rp|69}}
==Overview==
The FSS started when the Federal Reserve began operating a book-entry system for U.S. Treasuries in 1968.<ref>{{citation |url=https://www.sechistorical.org/collection/papers/1990/1999_0101_DTCHistory.pdf |title=A Short History of the Depository Trust Company |date=1998}}</ref>{{rp|2}} Other federal and federally sponsored agencies followed suit in the 1970s and started issuing book-entry securities. In 1985, mortgage-backed securities were also issued in book-entry form by Fannie Mae and Freddie Mac, followed by Ginnie Mae in 1986.<ref>{{citation |publisher=Securities Industry and Financial Markets Association |title=Uniform Practices for the Clearance and Settlement of Mortgage-Backed Securities and Other Related Securities: Clearance and Settlement Infrastructure |page=4.2 |url=https://www.sifma.org/wp-content/uploads/2024/04/TBA_Market_Governance-Uniform_Practices_Manual-Chapter_4_Clearance_and_Settlement_Infrastructure.pdf |date=1999}}</ref>
Thus, the FSS has developed to provide issuance, maintenance, transfer and settlement services for all marketable U.S. Treasury securities and also some securities issued by other federal government agencies, government-sponsored enterprises, and international organizations such as the World Bank.<ref>{{cite web |website=Federal Reserve |url=https://www.federalreserve.gov/paymentsystems/fedsecs_about.htm |access-date={{date|2025-2-15}} |title=Fedwire Securities Service}}</ref> The Fedwire Securities Service is also the key interbank settlement system for Fedwire-eligible securities.<ref>{{citation |url=https://home.treasury.gov/system/files/206/Securities-Settlement-Self-Assessment-8-09.pdf |title=Assessment of the Compliance of the Fedwire Securities Service with the Recommendations for Securities Settlement Systems |date=August 2009}}</ref>{{rp|3}}
== Settlement model and participants == The Fedwire Securities Service supports the safekeeping, transfer, and settlement of eligible securities in book-entry form for depository institutions and other entities that maintain securities accounts with a Federal Reserve Bank. Securities transfers may be made either free of payment or against payment, although most transfers are made against a designated payment.<ref>{{cite web |title=Fedwire Securities Service |url=https://www.federalreserve.gov/paymentsystems/fedsecs_about.htm |website=Federal Reserve |access-date=28 April 2026 }}</ref>
Transfers against payment are settled on a delivery-versus-payment basis, meaning that the transfer of securities and the corresponding transfer of funds occur simultaneously. The Federal Reserve has described this structure as a means of reducing principal risk in securities settlement systems by ensuring that securities are exchanged for funds with finality.<ref>{{cite web |title=Policy on Payment System Risk |url=https://www.federalreserve.gov/paymentsystems/psr/policy07.pdf |website=Board of Governors of the Federal Reserve System |access-date=28 April 2026 }}</ref>
The service is used by participants in the primary and secondary markets for U.S. government securities and related instruments, and forms part of the core infrastructure of the U.S. wholesale financial system.<ref>{{cite web |title=Y2K readiness and the banking industry |url=https://www.federalreserve.gov/boarddocs/testimony/1997/19971104.htm |website=Board of Governors of the Federal Reserve System |access-date=28 April 2026 }}</ref>
==See also== * TARGET2-Securities * BOJ-NET JGB Services
==References== {{reflist}}
Category:Federal Reserve System Category:Central securities depositories
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