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  2. DDM Program Fundamentals
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Direct-Source Model

In the Direct-Source model, funds are placed into the (DDM Program) on a direct basis, meaning the Sending Institution, acting as agent of its Customer, places its Customer’s funds directly into the DDM Program. In this transaction, the Sending Institution enters into a Services Agreement with R&T.

This model centralizes flow-of-funds responsibility with the Sending Institution originating the deposits while R&T serves as the Administrator of the DDM Program, the DDM Program's designated institution serves as Custodian and Settlement Bank, an affiliate of R&T, Stable Custody Group II LLC acts as Sub-Custodian for the DDM Program.

This page outlines participant roles, eligibility requirements, allowable fund sources, and prohibited fund sources.

Roles and Responsibilities

Sending Institution

In the Direct-Source model, the Sending Institution is federally regulated and therefore:

  • sends funds directly into the DDM Program.
  • acts as the agent for its Customers.
  • ensures customer eligibility and program compliance.

Administrator

See Administrator.

Settlement Bank, Custodian, and Sub-Custodian

See Settlement Bank, Custodian, and Sub-Custodian.

Receiving Institution

See Receiving Institutions.

Sources of Funds

This section outlines the institutional requirements that must be met to originate funds into the DDM Program under the Direct-Source model.

Eligible Sources of Funds

Funds entering the DDM Program through the Direct-Source model must originate from one of the following institutions:

  • Bank
  • Bank Affiliated Trust Company/Federally Chartered Trust Company
  • Credit Union
  • BaaS FinTech

Ineligible Sources of Funds

  • Independent Trust Company/State-Chartered Trust Company
  • Broker Dealer*

*Broker-Dealers can only enter the DDM Program through the DDM-Indirect-Source-Sweep Program.  Separately, R&T offers the RTID program, through which Broker-Dealers may participate in cash sweep programs.

Prohibited Fund Sources

R&T prohibits clients from placing or sweeping funds from the following sources into the DDM Program:

Marijuana-Related Businesses (MRBs)

Funds sourced directly or indirectly from a Marijuana-Related Business

Sanctioned Entities (OFAC)

Funds sourced directly or indirectly from:

  • OFAC-designated Sanctioned Targets
  • Sanctioned jurisdictions

Rules for Entering the Program

This section defines the requirements for institutions sending or receiving funds under the Direct-Source model, including regulatory constraints that affect eligibility.

Sending Institution Requirements

A Sending Institution must be one of the following:

  • FDIC-insured bank or savings association, including trust departments of FDIC-insured institutions
  • Federally Chartered Trust Company
  • Credit Union
  • Financial institution under the Bank Secrecy Act that:
    • is subject to AML program requirement under 31 U.S.C. § 5318(h).
    • falls under the Bank Secrecy Act and its implementing regulations.
    • is supervised by a federal functional regulator (as defined in 31 C.F.R. § 1010.100(r)).

Receiving Institution Requirements

A Receiving Institution (acting as Receive-Only or Reciprocal Institution) must be:

  • FDIC-insured bank or savings association
  • a low-income designated credit union (LICU) and is eligible to accept non-member deposits1

1Receiving credit unions must be LICUs. The reason is that only LICUs are permitted to receive non-member funds.

What's Next

  • Explore DDM's Participation Options to see how a Direct-Source participant chooses between Send-Only or Reciprocal participation.

Updated 9 days ago

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R&T Deposit Networks, LLC, R&T Deposit Marketplace, LLC, R&T Deposit Solutions, LLC and R&T Deposit Programs, LLC (each d/b/a R&T Deposit Solutions), each a Delaware limited liability company, (together, “R&T”) provide administrative, recordkeeping, and/or other services to banks, credit unions, trust companies, wealth management firms, broker-dealers and other institutions with respect to deposit placement and sweep programs, including the Demand Deposit Marketplace® (DDM®), Certificate of Deposit Marketplace Exchange℠ (CDMX℠) and R&T Insured Deposits℠ (RTID®) programs, as well as other services. An affiliate of R&T, Stable Custody Group II LLC (“Stable”), acts as agent of participating sending institutions under the DDM and CDMX programs. R&T and Stable, together, “we”, “us” or “our”. All of our services are provided subject to the terms and conditions of the written agreements and/or agency appointments between us and our clients with respect to those services, and we provide no representations or warranties, express or implied, except as expressly set forth in those written agreements and/or appointments. Click here for our legal and other disclosures. We are not an FDIC or NCUA-insured institution. FDIC insurance only covers the failure of an FDIC-insured institution. NCUA insurance only covers the failure of an NCUA-insured institution. Certain conditions must be satisfied for FDIC and NCUA pass-through deposit insurance coverage to apply. Click here for a list of the FDIC and NCUA-insured institutions with which R&T has a direct or indirect business relationship for the placement of deposits under the DDM, CDMX, and RTID programs, and into which a participating institution may place deposits (subject to the terms of those programs and any opt-outs by the participating institution and/or its customers). While the DDM, CDMX, and RTID programs provide access to an expanded level of FDIC or NCUA deposit insurance coverage on funds placed into the programs (subject to program terms and applicable laws, regulations and guidance, including pass-through insurance coverage requirements), the DDM, CDMX and RTID programs, themselves, as well as our other service offerings, are not insured or guaranteed by the FDIC or NCUA, are not deposits, and may lose value. We are not an affiliate of an FDIC or NCUA-insured institution, we are not an office, division, or sub-division of the FDIC or NCUA, and we are not associated with the FDIC or NCUA or office, division, or sub-division thereof. The primary objective of the DDM, CDMX, and RTID programs is to provide customers with convenient access to expanded deposit insurance coverage on their funds (and not for investment enhancements, higher rates of returns or profits). R&T®, Reich & Tang®, Demand Deposit Marketplace®, DDM®, DepositView®, CDMX®, and RTID® are registered marks, and R&T Direct℠ is a pending mark of R&T Deposit Networks, LLC. of R&T Deposit Networks, LLC. IDEA℠, Certificate of Deposit Marketplace Exchange℠, R&T Insured Deposits℠ are unregistered service marks of R&T Deposit Networks, LLC.

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